Stocchi Traces the Important Role of Public-Private Partnerships

The important place of public-private partnerships (P3s) as a tool in the highway funding toolbox was the focus of Emanuela Stocchi’s last public presentation as IBTTA President, to a session earlier today on capacity-building for highway construction in the Western Balkans.

Stocchi’s talk opened Day Two of a three-day conference in Rome hosted by Italian state highway agency ANAS S.p.A., the Central European Institute, and the World Road Association PIARC.

Drawing on the tolling industry’s wide and geographically dispersed experience with P3s, Stocchi delivered a primer on a technique that offers greater flexibility to finance essential transportation services, and can be deployed in combination with tolling—particularly when traditional forms of public funding have lost pace with the demand for highway construction, maintenance, and refurbishment. Stocchi’s remarks provided and overview of the role P3s play in the EU transportation policy orientations to foster growth and economic recovery as well as in the U.S.

“P3s, like tolling, become more attractive when government funding is constrained, since they allow improvements to advance and the associated public benefits to be realized much more quickly,” she told participants.

A Flexible Instrument

Stocchi explained that IBTTA supports greater flexibility for governments to deploy tolling and P3s, together or as separate instruments, to help them fund the mobility services their constituents need and expect.

P3s themselves are a diverse enough concept to offer agencies a lot of flexibility in designing and using them.

“The term ‘P3’ is a descriptor for a broad class of potential agreements between private businesses and governments for the provision of transportation and other infrastructure projects,” she noted. “They can address the construction of new facilities, maintenance of existing ones, or can deal with discrete elements of a transportation operation” like back office, customer service, or maintenance operations.

She added that P3s entail a degree of risk to all parties, but can also help them save time and money. The key to success is to negotiate agreements “that protect the long-term interest of both the government and the developer,” even if that requires a new degree of sophistication for some jurisdictions that have never used P3s in the past.

Everyone Wants Good Results

Her talk touched on some of the continuing disagreements around P3s. Advocates see them as the best hope for injecting new resources into the maintenance and expansion of transportation systems. But opponents worry they could be a disruptive force that drives up the cost of the surface transportation network without careful regulation.

There’s something fundamental that both sides agree on: everyone wants a safe, reliable system that keeps a modern society mobile.

Stocchi traced the different types of P3s in use in the United States, from large-scale asset leases, to build/design/operate agreements, to conversions of troubled assets. And she acknowledged that, as with any kind of human endeavor, some projects have worked out better than others.

Fundamentally, each P3 results in the creation of public infrastructure,” and that infrastructure is invariably an important public good.

Which means it’s worth the process of digging into the details, negotiating an agreement that delivers a “win” for all parties, and committing to the community engagement required to build public support for a project.

“Government-level public works are often viewed by the public as inefficient, slow, and expensive but may be acceptable for lack of other alternatives,” she said. “The public can become incensed if they feel they are being taken advantage of by third-party operators.” That risk can be largely avoided as long as a P3 is structured to satisfy the needs of the government owner, the public and the private sector partner.

Mark your calendar for IBTTA’s 2018 Summit on Finance and Policy, July 22-24, 2018 in Portland, Oregon.