The Greater Chamber’s Public Affairs Steering Committee heard about the pros and cons of the city’s interest in potentially adopting an ordinance for new vertical infrastructure known as Public-Private Partnerships or P3s.
The panel discussion included Rodney Moss, Division Chief Legal Officer and Senior Vice President of Balfour Beatty Construction; Pat DiGiovanni, Deputy City Manager; and Paul Ryan, Managing Director Head of Infrastructure Advisory, Transportation & Energy at J.P. Morgan Securities LLC.
Moss was the primary author of Senate Bill 1048, the Public and Private Facilities and Infrastructure Act of 2011, that allows for a contractual agreement between a public agency and a private sector entity to share in the risk and reward of delivering a service or facility for the use of the general public. Moss suggested that P3s are essentially about risk and that they work because they are output based; tying payment to performance. He also noted that the most important element in the P3 legislation is the requirement for transparency and public education and input.
Deputy City Manager DiGiovanni discussed the potential advantages of P3s for San Antonio, how the City views the P3 tool and potential P3 projects in the near and distant future. He suggested the proposed parking project for HemisFair Park, the consolidated car rental and the streetcar projects are all potential P3 projects. Additionally, the City would need to agree to opt into the ability to use this tool and adopt an ordinance for the structure/guidelines to utilize the P3 mechanism.
In addition to underwriting traditional public finance transactions, Ryan’s team works on P3 transactions advising both public authorities and equity investors. He discussed his experience with P3 financial and legal structured deals and suggested several elements that have made them successful, as well as some of the common elements that lead to failure. He noted good policy must allow for a strong financial framework. This financing mechanism has been effective in the UK, Canada and Australia. He added that the institutional shift in public money management, such as the significant challenges facing public pension funds, make P3s an important and upcoming financing tool.