The U.S. public-private partnership activity exhibited a weakness in the past year, yet the long-term trend of an increasing number of P3s remained robust. The future outlook seems promising with a healthy project pipeline and infrastructure funds eagerly looking to invest. The southeast region maintained its lead in this space, with significant projects lined up in states like Georgia, Louisiana, and Tennessee. Notably, availability-payment P3s continued to be favored over revenue-risk deals.
Despite a noticeable drop in infrastructure fund investments last year, the top 100 funds managed to raise a total of $1 trillion over the past five years. This marks a significant milestone for the industry. Public pension funds also showed a continued interest in investing in infrastructure, although many had to seek opportunities outside the U.S. due to a lack of suitable assets domestically. The issue of infrastructure privatization faced political opposition in several states, highlighting the U.S.’s position as a global laggard in this area.
The southeast region emerged as the most active one for P3s in the U.S., with states like Louisiana, Georgia, and Tennessee increasingly turning to toll lanes to address congestion and offset declining gas tax revenues. Various major projects, such as the replacement of aging bridges and the implementation of managed lanes, are in the pipeline. However, political factors in states like California and Texas have hindered the wider adoption of P3s, despite the potential benefits they offer.
The U.S. faces challenges in infrastructure P3s due to political opposition and the availability of low-cost financing through tax-exempt municipal bonds. The lack of legislative support in many states has limited the growth of P3 activity. However, there are opportunities for expansion, as indicated by states like Illinois, which recently passed legislation allowing for unsolicited bids and the addition of express toll lanes. Increasing awareness among political leaders about the financial advantages of P3s could lead to a substantial boost in activity across the country.
The U.S. public-private partnership landscape presents a mix of challenges and opportunities. While the overall trend of increasing P3s is encouraging, obstacles such as political opposition and financing options need to be addressed to unlock the full potential of infrastructure projects. By leveraging the experience of successful P3 regions and educating policymakers about the benefits of these partnerships, the U.S. can pave the way for a more robust and sustainable infrastructure development model.