A New Federal Program is Optimizing Infrastructure Project Delivery

IFACGP grants can support a wide variety of tasks relating to pre-development or pre-construction activities for P3s but, importantly, cannot directly finance projects. However, by allowing public entities to hire employees or advisers to assist with P3s, IFACGP provides states with the opportunity to establish P3 offices specifically to prepare for and facilitate P3 opportunities—or supplement P3 capacity and expertise in states with existing offices. Having dedicated P3 offices is a best practice recommended in a Bipartisan Policy Center report on attracting private capital to public infrastructure. Such expert offices can also help to successfully advance these other key activities that can be supported by IFACGP grants:

Asset Scans: Also known as an asset inventory, an asset scan creates a comprehensive list of all infrastructure assets owned by a public entity and their condition. An asset inventory can help public entities understand their infrastructure liabilities and existing assets in need of maintenance or replacement, helping them better anticipate and plan for future infrastructure investment needs. Asset inventories can also identify opportunities for cost and risk-sharing with the private sector. BPC previously recommended asset inventories as a best practice for all levels of government in order to establish a more modern, efficient infrastructure system across the United States.

• Example: In 2017, the District of Columbia created the Capital Asset Replacement Scheduling System, an asset inventory of nearly its roads, sidewalks, vehicles, pieces of equipment, and buildings. With nearly all District of Columbia-owned assets now included, the district is generally recognized as having one of the most complete capital asset management systems in the country. With the ability to determine the cost of all deferred maintenance across all infrastructure, their asset inventory system has become fundamental to how district officials plan for capital improvements and their annual budget—a financial management practice that has also been viewed favorably by bond rating agencies.

Asset Concessions: An asset concession is a contract that involves a concession agreement or a long-term lease between a public entity and a private sector concessionaire. As part of the agreement, the concessionaire agrees to maintain or improve the performance, service level, and condition of the public asset and is compensated either by the users of the infrastructure (e.g., tolls) or through performance-based availability payments from the public entity.

• Example: In 2014, Staten Island, NY and Elizabeth, NJ began the Goethals Bridge Replacement Project to enhance safety and increase capacity of the bridge. As part of the project, the Port Authority partnered with a private entity to construct the new bridge and manage its operational and capital maintenance for 35 years. The completed bridge included a path for pedestrians and bicyclists. Ultimately, the project was completed slightly ahead of schedule in 2017 with a budget of nearly $1.5 billion. 

Value-for-Money Analysis: A value-for-money analysis compares the long-term benefits and costs of one or more alternative project delivery (i.e., P3) models against a traditional public sector project delivery, determining which approach best meets the public entity’s needs.

• Example: In 2009, Florida began its Interstate 595 Project with the goal of maximizing throughput on the existing asset. The value-for-money analysis found that, among other concerns, if the toll revenue risk was transferred to a concessionaire, the private sector partner would focus on increasing toll revenues instead of throughput. As a result, the public entity entered into a P3 for the construction and maintenance of the interstate but decided that they should retain the toll revenue risk for the project.

IFACGP has the potential to help lower resourced SLTTs undertake innovative projects that may not have otherwise been possible. Often, federal programs include match requirements, making it costly—and potentially cost-prohibitive—for some SLTTs to access federal resources. IFACGP includes a 100% cost share for grants under $1 million with no match requirement, and a 50% cost share for grants over $1 million. This could allow lower-resourced public entities to apply for assistance without straining their budgets. 

Conclusion

P3 projects can be highly beneficial to public sector entities as they can often reduce costs and accelerate construction timelines. Relying on more private sector partners can also help SLTTs manage risk, transferring responsibility to private partners and freeing up public capacity to focus on other local concerns. While P3s are not the right model for every project, under the right conditions, a P3 can deliver a more cost-effective and better-performing project. IFACGP is a significant opportunity for SLTTs interested in delivering more modern, efficient, and sustainable infrastructure projects, but who lack the existing capacity or experience needed to negotiate these complex agreements and deliver a successful P3 project.

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[i] Applications opened in March 2024 for $57.7 million in awards over the first three fiscal years of the grant. There is a cumulative statewide maximum of $4 million during any three-year period.