Managing Director Jay Brown and leading public-private partnership (P3) and infrastructure advisor recently spoke on a panel “Private Investment for the Public Benefit” at the Association for the Improvement of American Infrastructure (AIAI)’s virtual Convention, Sports & Entertainment Facilities (CSEF) Conference.
A key focus of the discussion revolved around the ways in which the COVID-19 pandemic may affect new P3 projects. Jay argues, “we are seeing a lot of positive and justifiable interest in continuing forward with P3 projects that don’t have to financially close for a ways down the road.” The private and public sector industries, lenders and capital markets are still interested in P3 projects despite the pandemic. P3 projects can be economic catalysts that will help generate jobs, tax revenues and revitalize the community in the post-COVID era. Jay says of these partnerships, “post-COVID projects like this all over the country will be really exciting opportunities in the recovery efforts.” P3 projects allow municipalities to leverage private capital and expertise to catalyze economic development for their communities.
There is also the opportunity for the public sector and higher education institutions to leverage or monetize underutilized assets outside of the traditional P3 availability payment financing structure and help bridge revenue shortfalls. Jay says, “more and more, public entities are saying we have valuable assets in our city on our balance sheet, we want to throw those into the mix so we can offset some of the costs of just having to pay an availability payment. The trick is finding developers or teams of developers that can take on those different kinds of risk.” From an advisor’s perspective, Jay suggests, “we are often the P3 whisperer.” Advisors and legal teams can help bridge the gap between the private and the public sectors and help navigate uncertainties that can arise for the public sector during the contracting and business negotiation phase, which often differs from the standard procurement process the public sector is used to. By understanding the risks and opportunities on both the private and public side of the transaction, advisors can bring transparency and clarity around what each side’s objectives are and ultimately lead to a successful P3 transaction.
View the “Private Investment for the Public Benefit” panel here.
