Gov. Dannel P. Malloy”™s lieutenants are exploring whether to authorize public-private partnerships for infrastructure projects.
Under public-private partnerships, developers get exclusive rights to build major projects that might otherwise be undertaken on the public dime. In exchange for keeping all revenue over a period typically extending at least a few decades, the developer cedes ownership rights to the public entity authorizing the arrangement.
As of 2008, nearly three-dozen states had laws on the books authorizing public-private transactions, with some of those statutes limited to specific projects and others broadly encouraging public-private partnerships, according to a study by the National Council on Public-Private Partnerships.
A study on the potential for public-private partnerships in Connecticut is currently being readied, according to Joe McGee, who oversees public policy for the Business Council of Fairfield County. McGee said revenue projections simply do not add up to the myriad needs the state will have, and extensive support from the federal government is also unlikely.
“The building blocks of economic development are education and infrastructure,” McGee said. “If you”™re not doing those two things, everything else falls apart.”
Benjamin Barnes, secretary of the Connecticut Office of Policy and Management, testified before the General Assembly last month that any bill authorizing the use of public-private partnerships would be intended to expand the amount of capita available to invest in public infrastructure ”“ while emphasizing any such bill should not be regarded as privatizing existing state property or processes.
“We are concerned that the infrastructure needs (for) the state looking forward over ”¦ the next several decades are greater than the potential resources from a conservatively managed bond program,” Barnes said. “I”™m also concerned that the strength of the long-term commitment from the federal government in transportation and other infrastructure is in doubt ”¦ The state needs to begin to take some first steps into evaluating how it can use public-private partnerships to augment the capital that is available for infrastructure, and maybe ultimately if necessary, to replace lost capital in the event that the federal government does not maintain levels of support that we would need them to maintain.”
An oft-cited example of a public-private partnership is a parking garage that a developer agrees to build on state land, deeding title to the building to the state in exchange for a long-term operating agreement ”“ essentially a bet that it will still see a profit from operating revenues over the lifetime of the deal.
Barnes said that more than a dozen states have laws authorizing the use of public-private partnerships, and said the concept is common in Canada and Europe. He said that the New Haven Line and feeder commuter rail branches would particularly benefit from additional sources of capital for parking and even housing.
An added benefit of such arrangements, Barnes said, was that developers assume the risk for completing construction on time and on budget.
“If the project turns out to cost an extra $10 million because one problem or another develops ”“ all kinds of things can add to the costs of construction ”“ the state is on the hook for that,” Barnes said. “Under the traditional public-private partnership arrangement, we would not be responsible. It would be the responsibility of the development entity with whom we had contracted to provide the facility or the infrastructure. They would bear the risk ”¦ of design defects or any of the other issues that could add cost to the project.”
