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Win or lose, the pulling together of the construction industry’s three heavyweights this month to oppose a deal-killer P3 bill in Colorado is a turning point in the American market for private development and financing of public works infrastructure.
The growing use of the availability pay model for U.S. transportation P3s is motivating large and small contractors to support P3s. In Colorado, “We reached a single voice,” says Richard Fierce, a senior vice president at Fluor Enterprises. “There is widespread support in the construction industry for P3s.”
The Associated General Contractors (AGC), the American Road and Transportation Builders Association (ARTBA) and the Association for the Improvement of American Infrastructure (AIAI) variously contributed to the statewide campaign to get Colorado Gov. John Hickenlooper to veto SB 14-197, the Transportation Enterprise Transparency Act.
The bill would require legislative approval of non-compete clauses, compensation events on individual projects, and agreements whose term exceeds 35 years. The governors’ staff indicated in late May that he will veto the bill. If so, that would mean P3 procurement would be governed by a market-tested 2009 law used to award a revenue-risk DBFOM concession on U.S. 36.
Four other P3 projects are being considered by Colorado DOT and the High Performance Transportation Enterprise (HTPE), which was created in the 2009 law to procure P3s.
ARTBA and AIAI have actively supported P3s through advocacy, policy development, best practices and active involvement on specific issues. ARTBA, for example, submitted an amicus brief in a constitutional dispute over Virginia DOT’s Midtown Tunnel concession contract.
AIAI has assembled many of the construction industry’s top executives to advocate specifically for P3s (not for projects). AON’s Rodney Moss and other industry activists helped rally support for AGC’s local chapter in its effort to win a veto in Colorado.
Until now, AGC has been the “silent partner” on P3s, says Fierce, who is both president of AIAI and a member of ACG, which has 95 chapters. AGC headquarters’ May 9 letter to Hickenlooper means the association has found its voice on P3s, he says.
“It’s a sign of maturity” in the P3 market, says Brian Deery, AGC’s Senior Director, Highway & Transportation Division, Government & Public Affairs. AGC has been interested but largely silent on P3s. Now, “we have opinions and positions,” he says.
The local leader of the pro-P3 coalition, Tony Milo, executive director of the Colorado Contractors Association, says, “We’re definitely at a turning point on this issue.”
Using Colorado DOT funds to build large projects drains money away from smaller projects. Using a P3 approach to improve CDOT’s lean cash flow can only help small contractors. P3s “have become a necessity,” he says.
Public Works Financing is a monthly newsletter covering P3s in all infrastructure markets, since 1988. It is widely read and cited in the media, academic research, federal reports and congressional testimony.