P3s Soar to Record Levels, Need Grows for Talent with Infrastructure Finance Expertise
Research recently released by the U.S. Department of Transportation (DOT) shows that, since last November, Americans facing rising gasoline prices, have driven 53.2 billion less miles than they did versus the same period a year earlier - topping the 1970s’ total decline of 49.3 billion miles. This marks the eighth month of steady decline. The rapid shift away from gas-guzzling vehicles means consumers are paying less in federal fuel taxes, which go largely to help finance highway and mass-transit systems. Complicating matter, surging costs for asphalt and other construction materials already are straining state and local transportation budgets, making it more expensive to maintain the nation’s roads, bridges and rail networks. Government officials say the trend signals urgent need for new highway financing. “We can’t afford to continue pinning our transportation network’s future to the gas tax,” said U.S. Transportation Secretary, Mary E. Peters. “Advances in higher fuel-efficiency vehicles and alternative fuels are making the gas tax an even less sustainable support for funding roads, bridges and transit systems.”
A growing number of federal and state officials say public-private partnerships (P3’s) and imposing tolls on roads are essential to repairing the nation’s infrastructure. While governments around the world, particularly in Europe and Latin America, have shifted the operation and maintenance of public facilities, including airports, roads, ports and bridges, to private entities for decades, such privatization efforts emerged in the U.S. in recent years… and they are expanding rapidly. As a result, executive search firm, A.E. Feldman, says project and infrastructure finance jobs are opening up for candidates with backgrounds in investment banking as well as experience in analyzing and executing structured financings. The most sought after candidates are those with experience in infrastructure transactions and civic engineering.
Most recently, Blackstone has tapped Trent Vichie of Macquarie Securities to lead Blackstone’s newly unveiled developed-infrastructure business, according to PrivateEquityOnline. The report notes Vichie was instrumental in the Chicago Skyway transaction, a landmark US toll road privatization.
PPPs Soar to Record Levels
The DOT reports that during the first quarter of 2008, motorists consumed nearly 400 million fewer gallons of gasoline- that’s about 1.3% less than during the same period in 2007. As Americans drive fewer miles, less revenue is generated for the Highway Trust Fund from gasoline and diesel sales – 18.4 cents per gallon and 24.4 cents per gallon.
Public-private partnerships, also known as PPP’s or P3’s, have emerged as a way to fund the infrastructure gap. In fact, the number of P3’s in the U.S. transportation sector has soared to record levels in recent years and continues to climb, according to a DOT study.
“This nationwide trend on the part of state and local governments is further proof that innovative approaches to financing and managing transportation are increasingly attractive compared to traditional tax and spend methods,” Secretary Peters said. “States and local governments across the country are recognizing public-private partnerships are an effective means to deliver transportation projects.”
The government report found that more transportation public-private partnerships were completed over the last three years than in any other compatible time period in history. According to the report, more than 20 major highway and transit projects are currently being conducted in partnership with the private sector at various stages of development in the U.S.
The report also found that the use of public-private partnerships is increasing at record pace due to their proven track record of relieving congestion and encouraging infrastructure development, Secretary Peters said. According to the DOT, P3’s accomplish this by substituting or adding private capital for fuel tax revenue and helping leaders tap into the more than $400 billion of private capital available globally today for investment in infrastructure.
The DOT study also shows that states can reduce project costs, accelerate project delivery, and transfer risks to the private sector while also protecting public sector interests through well-balanced concession agreements.
A.E. Feldman has a specialized team of recruiters dedicated to infrastructure and project finance. To learn more about these relevant issues or inquire about existing and future infrastructure finance opportunities, contact A.E. Feldman’s President, Mitch Feldman and the firm’s specialized recruiting team here.
