Growing P3 Momentum Takes Texas

Growing P3 Momentum Takes Texas 

Public possibilities (l-r): Mary Scott Nabers, Strategic Partners; David Spector, CDOT; Norman Dong, GSA; and George Burgess, former Miami-Dade County Manager, discussed strategies for overcoming public hurdles.

by JARED GONSKY, Director of SmartWorlds, in Dallas | March 15, 2016

When a construction industry event boasts more than 100 speakers and draws 1,000-plus attendees in just its fourth year, the topic must really have struck a nerve. That was clearly the case last week in Dallas at the annual P3 Conference on public-private partnerships.

Creative, can-do energy was in abundance at the Sheraton Dallas Downtown Hotel, where the event billed itself as the nation's largest gathering of development professionals from both the public and private sectors, all united by their interest in exploring alternative project delivery (APD). For its part, BuiltWorlds also was on hand to gain greater insight into these partnerships.

Takeaways from the event will spur further discussion on P3s this spring, when BuiltWorlds hosts the second installment of its ongoing SmartWorlds: APD/P3 Infrastructure Financing series. 

• WATCH: For all the presentations from our first SmartWorlds P3 event, click here.

It's a timely topic, too. With funds already tight (at best) for public works projects in virtually all 50 states, the U.S. is regarded as the next biggest market for P3s. Such partnerships typically rely on private development teams to plan, fund, construct, operate and maintain projects, then recoup their investments with the revenues that the projects generate, such as fare from tollways. Lending urgency to the approach is the nation's much-chronicled crumbling infrastructure, which offers enormous potential for P3s to finance long-overdue improvements.

Local leader: Attendees toured the rebuilt, $2.6-billion LBJ Expressway, the largest P3 project to date in Texas. 

Colorado Gov. Hickenlooper stressed transparency.

Conference attendees in both the public and private sectors acknowledged as much.

In addition to scores of presenters, the event boasted a seasoned group of keynote speakers, including Colorado Gov. John Hickenlooper, whose state long has been at the vanguard of P3s. In 2009, amid considerable rancor, state legislators created the High-Performance Transportation Enterprise (HPTE), authorizing the Colorado Dept. of Transportation to execute P3s and other innovative financing techniques. Since then, the concept has supported countless projects.

“A quarter of you in this room are engineers, and engineers just aren't that good at PR. No offense," said Hickenlooper, accompanied by Denver Mayor Michael Hancock. “The one thing we really learned was that you've got to keep all the legislators and the local communities in the process. What we're really focused on right now is being transparent. I mean, every stage of the planning process, we want everyone involved in the community -- anyone connected to the community -- we want involved in that process.”

Among other keynoters: Deborah Flint, executive director of Los Angeles World Airports. In late 2015, L.A. International Airport announced that both an automated 2.25-mi. people mover and consolidated rental car facility, both connected to a central terminal, will be developed via P3s.

Harvey Hilderbran, executive director of Texas Facilities Commission (TFC), outlined a new state law that supplies significant resources to public agencies interested in implementing P3s. Under the auspices of TFC, the year-old Texas Center for Alternative Finance and Procurement works to assist government entities statewide.

Water way finders (l-r): Patrick Cairo, United Water; CH2M's Steve Meininger; NAWC's Michael Deane; Bill Malarkey, Severn Trent Services; and Mark Strauss, American Water.

Representing the private sector was Dale Bonner, executive chairman with Plenary Concessions, an affiliate of Plenary Group, a global developer and operator of public infrastructure. He championed California’s design-build and public-private partnership programs — advancing the Presidio Parkway P3, and the Gerald Desmond Bridge design-build replacement project, among other major projects.

Success stories

Several conference presentations focused on successful P3s and the best practices implemented to execute them, with projects ranging from the Long Beach (CA) Civic Center to the Pennsylvania Rapid Bridge Replacement Project, to the University System of Georgia’s Student Housing. Attendees even received a bus tour of Dallas’s LBJ Expressway, where real-time variable pricing is intended to keep traffic moving. Other workshops got down to the nitty gritty, focusing on risk management and delivery models.

While plenty of research was in circulation, the conference also generated research of its own, courtesy of St. Louis-based Husch-Blackwell, a law firm specializing in real estate. Its survey of P3C attendees from the previous conference found that:

• 45% of public-sector employees and 46% of private employees cite funding shortfall as the most significant reason for P3 participation;

• 41% of public-sector P3C attendees view risk transfer as a strong motive for P3 participation;

• 56% of private sector respondents believe that additional legislation is needed to promote greater use of P3s, though only 39% of public sector respondents agree;

• 80% of public sector participants and 89% of private sector participants expect P3s to emerge as traditional financing models for public works projects.

Although survey results demonstrated agreement among public and private stakeholders on several issues pertaining to P3s, they also revealed the public sector is slightly more reluctant to embrace the delivery method. Among the potential reasons: fear of failure. With that in mind, a growing number of resources are available now to help stakeholders hedge their bets.

Aon's new P3-POINT Tool rates the states and municipalities on their political and regulatory climate for APD.

In fact, one new tool was even unveiled at the conference. Aon Infrastructure Solutions used the event to introduce its new Public-Private Partnership Pursuit and Opportunity in Infrastructure Tool (P3-POINT), which measures the political risk of U.S. and Canadian P3s on scales of “readiness” and “friendliness.” Readiness is based on analysis of relevant local procurement, regulatory, and policy mechanisms, while friendliness evaluates the willingness of areas drive to procure P3 projects. Resulting information assists stakeholders in assessing the viability of P3s in particular jurisdictions.

Meantime, event sponsors like the Association for the Improvement of American Infrastructure (AIAI) and the Performance-Based Building Coalition (PBBC) are undertaking their own initiatives to boost P3 use. AIAI, has developed P3Direct, a partnership program that aims to connect experienced P3 business professionals with members of the public sector, the intent being to promote dialogue and facilitate introduction to professionals and organizations relevant to the P3 arena.

Fo its part, PBBC not only is advocating the introduction of legislation it believes would increase private investment in public projects, but also offering free workshops for states and municipalities interested in investigating the concept. PBBC brings the workshops to the agencies, addressing topics such as project screening, value assessment, procurement, project financing, and drafting a project agreement. PBBC is accepting applications until May 16 for the workshops.

Many public- and private-sector attendees cited a lack of quality partners as a chief obstacle to proceeding with P3 projects. The conference itself served as a launching pad for forging stronger partnerships among private and public interests, paving the way to a brighter future for P3s.

Interested to hear more about P3s? Join the conversation here at BW on May 5 when we present SmartWorlds: APD/P3 Infrastructure Financing - Part II. For more, click here.

Conference supporters included AIAI, JLL, AECOM, Aon, Autodesk, Procore, Mortenson, Skanska, PCL and more.

Michael Armstrong also contributed to this story.