September 2-September 15, 2015
—
COLORADO REAL ESTATE JOURNAL
— Page 27B
P
ublic-private
partnerships are
rapidly becoming a
featured form of procurement
for construction projects,
which are primarily
infrastructure. Although
there is no strict definition
of a P3, it is generally a
method of project delivery
that is based on a contractual
agreement between a public
entity and a private partner
in which the private partner
(the concessionaire) assumes
responsibility for the design,
construction, finance,
operation and maintenance of
the project.
Depending on the nature of
the project, the concessionaire
may be a well-known national
or international financial
institution, a large construction
company, an infrastructure
investment firm or fund, an
operational company for
toll roads or other revenue
producing infrastructure or
any combination thereof.
In determining whether to
use a P3 for project delivery,
the governmental entity will
take into account whether the
costs to perform the project
itself through traditional
funding and project delivery
systems (including the
combined costs of design,
construction, finance,
operation and maintenance
over its useful life) would be
equal to or lower than cost for
awarding the project to a P3
concessionaire.
Part of the reason for the
increase in use of the P3 model
of project delivery is the urgent
need for infrastructure repairs
and improvements coupled
with the absence of adequate
public funding.
According to the World
Economic Forum’s Global
Competitiveness Report for
2012-2013, U.S. infrastructure –
quality and availability of roads,
railroads, ports, air transport,
electricity and telephones
– is lacking compared with
most advanced countries
and even some developing
ones. The United States ranks
25th, behind nations such as
Bahrain, Oman and Barbados.
Furthermore, state and
municipal governments have
been, and will continue to
be, strapped for cash, and
the federal government
seems politically unwilling
or unable to pass legislation
to fund and manage much
of the needed infrastructure
repairs and development.
Traditionally federal and state
road transportation spending
has relied on revenue from
motor fuel taxes. Those taxes
are no longer adequate given
that Americans are consuming
less fuel, and fuel tax rates
have not increased in over two
decades, as confirmed by New
York Times columnist Thomas
L. Friedman in an August 5,
2015 column, “[t]he gasoline
tax is currently 18.4 cents a
gallon, and was last hiked by
Bill Clinton in 1993 after a
raise by George Bush in 1990.”
Such shortfalls and lack of
funding help explain why
governments are exploring and
turning more frequently to P3s.
At the federal level, the House
Transportation Infrastructure
Committee produced a report
Sept. 17, 2014, encouraging
the use of P3s, particularly for
high-cost, technically complex
projects that otherwise might
not be executed for lack of
funding. Similarly, in July 2014
President Obama launched
a “Build America Investment
Initiative” to encourage
broader public and private
sector collaboration and
expand opportunities for P3s.
There has also been
considerable support for P3s
in Colorado. For example,
Colorado has enacted
legislation that authorizes
RTD to issue bonds and loan
proceeds to private businesses
so they can finance mass
transportation projects. (See
C.R.S. § 32-9-128.5 [West
2015].)
The Colorado General
Assembly also has passed
legislation authorizing CDOT
to use P3s to design, finance,
construct, operate, maintain or
improve toll roads, turnpikes,
HOV toll lanes, new and
existing highways, tunnels,
toll tunnels, bridges and toll
houses. (See, e.g., id. §§ 43-1-
1201 to 43-1-1209, and §§ 43-3-
202 to 43-3-202.5.)
The Colorado Legislature
also passed a statute that
established the High
Performance Transportation
Enterprise in the Funding
Advancement for Surface
Transportation and Economic
Recovery or “FASTER” Act
in 2009. (See id. § 43-4-
806.) The General Assembly
found and declared that
the relative decline of state
and federal motor vehicle
taxes, coupled with the
effects of the economic
Mark D. Gruskin
Shareholder and director, Senn
Visciano Canges PC, Denver
Charles Fuller
Associate,
Senn Visciano Canges PC, Denver
