At the American Association of State Highway and Transportation Officials 2025 Spring Meeting in Hartford, CT, a knowledge session focused on how public-private partnerships or P3s can better optimize risk and leverage private capital – especially for complex infrastructure projects.
[Above photo by AASHTO]
Sponsored by infrastructure consulting firm HNTB, the session – moderated by Tim Gatz, executive director of the Oklahoma Department of Transportation – featured John Brady, national practice consultant for HNTB; Butch Eley, deputy governor and commissioner of the Tennessee Department of Transportation; Marc Mastronardi, deputy chief engineer for the Georgia Department of Transportation; and Steve DeWitt, senior vice president for business development at ACS Infrastructure.
The session’s participants also discussed their first-hand experiences with long-standing federal financing programs such as the Transportation Infrastructure Finance and Innovation Act or TIFIA program, Railroad Rehabilitation and Improvement Financing or RRIF, and Private Activity Bonds or PABs and the outlook for those fiscal instruments and P3 partnerships as a whole for 2025 and beyond.
“I’ve been in the industry for more than three decades; I’ve seen a lot of projects delivered from start to finish,” noted Oklahoma DOT’s Gatz.
“What we really want to recognize in this session is the constant pace of change,” he said. “While our goal remains the same – deliver projects that safely get people where they need to go and that facilitate our economy – sometimes successful project delivery means using traditional funding sources and sometimes we’ve got to turn to more innovative solutions.”
HNTB’s Brady explained that one of the largest challenges in the P3 arena is how private companies and public agencies not only balance the risks facing each party when undertaking major infrastructure projects but also how to share the value as well.
“It is not only about how the risks and opportunities are allocated, but how that value is allocated not only between the project developer and owner but the traveling public as well,” he said. “That’s a difficult kind of three-legged stool, but we need to find a way to do it. That, I think, brings about the best outcome in figuring out the benefits [of P3s] for each state. That is something we’re very focused on.”
Tennessee DOT’s Eley said his state quickly became involved in P3s when “it became clear to us that legislature was not going to raise taxes” in order to fund critical transportation investments. As a result, the legislature passed a bill that not only approved the use of P3s but also allowed Tennessee DOT to expand its use of “alternative delivery” project processes as well.
“From the get go, we’ve sent a signal that this [P3 effort] is part of our [infrastructure] program, not just for a project here or there,” Eley noted. “Now, P3s are not the answer for everything – it’s about using them to address the right need, in the right place, at the right time. P3s are about offering more solutions; about helping us deploy the right delivery method for the transportation projects needed by our states. We as owners have to recognize the transportation project landscape from a perspective of ‘critical mass’ and we must work to balance all of the risk factors.”
Georgia DOT’s Mastronardi offered a similar perspective on P3s. “To Butch’s comments, there’s a point where you realize you need another delivery mechanism – you need a bigger wrench to turn that bolt,” he said. “P3s for us are that mechanism, but the challenge that we found as you go into them is to really understanding how much you don’t know as an [infrastructure] owner. Fundamentally, it comes down to what levels risk are you willing to tolerate.”
Mastronardi pointed out that “risk” within the scope of a P3 is “just an underpinning of how you’re going to deliver a project.”
ACS’s DeWitt emphasized that “underpinning” is indeed critical when discussing P3 projects. “We’ve got to remember, these are big construction projects that require a lot of attention to ensure we hit the marks as we go forward,” he said. “These are not small undertakings and there’s no instant gratification with infrastructure; it takes time to deliver these projects. So you’ve got to continue to make sure that whether that be a legislature or a congressional delegation or the public in general, understand what you’re accomplishing and why and more importantly, how you are doing it with a P3.”
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