20.09.2016, 19:56
Fitch: US PPP Growth Constrained Without Federal Leadership
OREANDA-NEWS. The poor condition of US infrastructure is a national issue but future infrastructure investment and growth in public-private partnerships (PPPs) to meet this challenge will be constrained without meaningful leadership at the federal level, Fitch Ratings says. Many states have taken steps to address pressing infrastructure issues but almost all have limitations due to the scale of the problem.
US PPPs have significant potential to grow further as they can offer better planning and lifecycle asset management compared to other publicly funded infrastructure projects. The discipline inherent in the PPP framework can make them an important tool to help bridge the US infrastructure gap, Fitch believes.
Sectors of PPP focus are broadening beyond transportation into social infrastructure (government buildings and higher education facilities), telecommunications and water projects. However, we believe the pace of growth will be restrained as, while there is political consensus that infrastructure investments are necessary little public willingness exists to pay for them.
These views are matched by many in the infrastructure industry. Fitch surveyed a group of infrastructure professionals this summer and found that 83% see US PPPs as a growing market. Approximately half of the group believes that infrastructure investments are a priority for the public, but the vast majority of respondents said that taxpayers are not willing to pay for it.
Almost 40% of the respondents said they expect higher education PPPs to see the highest growth over the next three years while just under 40% said transportation PPPs are the most likely to grow in the near term. Approximately half of the respondents identified the greatest benefit of PPPs as better asset management. In Fitch's view, improved lifecycle asset management is a major consideration for colleges and universities. The growth of the real estate they own and operate can become a distraction from their primary education and research goals.
Most respondents said political risk is highest among PPPs. This perspective was likely influenced by the recent spate of large projects delayed by local communities, state legislatures and state governors. Fitch shares this view and believes that some of those risks can be mitigated by bringing the community to the table earlier in the process.
US PPPs have significant potential to grow further as they can offer better planning and lifecycle asset management compared to other publicly funded infrastructure projects. The discipline inherent in the PPP framework can make them an important tool to help bridge the US infrastructure gap, Fitch believes.
Sectors of PPP focus are broadening beyond transportation into social infrastructure (government buildings and higher education facilities), telecommunications and water projects. However, we believe the pace of growth will be restrained as, while there is political consensus that infrastructure investments are necessary little public willingness exists to pay for them.
These views are matched by many in the infrastructure industry. Fitch surveyed a group of infrastructure professionals this summer and found that 83% see US PPPs as a growing market. Approximately half of the group believes that infrastructure investments are a priority for the public, but the vast majority of respondents said that taxpayers are not willing to pay for it.
Almost 40% of the respondents said they expect higher education PPPs to see the highest growth over the next three years while just under 40% said transportation PPPs are the most likely to grow in the near term. Approximately half of the respondents identified the greatest benefit of PPPs as better asset management. In Fitch's view, improved lifecycle asset management is a major consideration for colleges and universities. The growth of the real estate they own and operate can become a distraction from their primary education and research goals.
Most respondents said political risk is highest among PPPs. This perspective was likely influenced by the recent spate of large projects delayed by local communities, state legislatures and state governors. Fitch shares this view and believes that some of those risks can be mitigated by bringing the community to the table earlier in the process.
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