Fighting the Good Fight
With a new advisory venture up and running, P3 industry pioneer Michael Schneider talks to Dan Colombini about how the market continues to evolve.
"..those watching the market with interest can be assured that while Schneider remains at the forefront of tackling the country's infrastructure deficit, the voice of the private sector will definitely be heard."
March 23, 2018 - To say that the evolution of the US P3 market has been something of a slow burner over the past two decades would be an understatement.
However, despite perhaps taking what, at times, has seemed like the longest and bumpiest of routes possible, the market has made enormous strides in the past few years.
At the forefront of this growth has been Michael Schneider, who has been around to witness almost every bump and turn along this slow journey to success.
Having played a role in the creation of the TIFIA legislation, Schneider also has multifaceted experience as project owner, developer and advisor, as well as recent prominent thought leadership with Parsons Brinckerhoff, InfraConsult and HDR.
"I became involved in the PS marketplace long before the marketplace invented the term public-private partnership", he explains.
"My first project was the Dulles Greenway Tollroad in Virginia, which in the early 1980s was referred to as infrastructure privatization. Subsequent to my involvement on Dulles, I led a team supporting the development of the E-470 Tollway in Colorado. We used arbitrage proceeds to finance the early development work, which of course became disallowable with the passage of the 1986 Tax Reform Act.
"I then worked withtthe County of Orange, California, to develop the concept for creating the Transportation Corridor Agency (TCA), and spent many years as the principal of a major industry consortium serving as the primary technical advisor and general engineering contractor for the newly-separate tolled highways, in an early P3 arrangement. Our approach for using an unprecedented federal load to assist in developing the project led to the creation of the TIFIA program."
With a career that has touched upon every aspect of the infrastructure space in the US, Schneider is aware more than anyone of the issues that have blighted the US market - and continue to do so.
But with many states adopting legislation over the past decade, the understanding of a P3 has never been better across the county. Although there is still more work to be done, especially with this current federal administration yet to announce its exact direction for thedevelopment of infrastructure. Schneider remains confident however.
"A great deal of education has occurred for the public sector to better understand the characteristics of P3s, and the industry has matured substantially with increasing opportunities to engage in alternative project delivery," he says.
"We still seek a more substantial deal flow, but many believe the direction being undertaken by the current administration, while perhaps not increasing infrastructure investment sufficiently to address our current infrastructure crisis, will result in more projects being done as both public-private and public-public partnerships."
So what does he see at the greatest challenge for th industry as we start the second quarter of this year?
"Frankly, I'm hopeful that the administration, Congress, and state and local governments will realize the critical role infrastructure investment plays in our nation's economy and competitiveness," he stresses.
Schneider is hopeful of the role of P3s going forward but believes that it is key for the industry to continue the fight for increased investment in infrastructure at all levels - regardless of what model is being advocated.
It has long been noted of the role the industry must play to push for th right support from governments. However, at the dawn of what has the potential to represent a new infrastructure age under the Trump administration, it has never been more vital. Without this, really driving home the true benefits of P3s cannot be achieved.
"Without such underlying investment, no method of financing and delivering projects will solve our infrastructure deficit," Schneider warns. "We need to debunk the myth that P3s can substitute for the role of the public sector in adequately appropriating funds for transportation, water, energy, and other critical infrastructure."
And it is against this backdrop that he now embarks upon his latest venture. Alongside three additional industry experts, Sharon Greene, Jeff Boothe and Jeff Morales, Schneider has launched new consultancy InfraStrategies in a bid to assist eh US in it's latest push for growth.
The move comes at a time when the importance of collaboration between knowledgeable advisors and willing governments has never been greater. As the willingness to embrace P3s grows, this collaborative spirit will be a vital cog in the wider machine.
"Our primary focus, of course, is transportation," he says. "We are now seeking to increase the awareness and utilization of various alternative delivery models, including P3s, in th public transport marketplace, as the bus and rail developers and operators around the country are beginning to better understand the advantages (as well as the limitations) of public-private partnerships. "
With the team at InfraStrategies well versed in the issues facing both sides of the public and private divide, they should be well placed to hit the ground running.
The question now will be whether the Trump administration can deliver a bill that Schneider and the wider industry craves. While, on the face value, industry enthusiasm for the latest announcements on the federal plans is high, there remains a lingering concern from sections of the market that many investors have yet to hear definitive proposals - and therefore are in a difficult position to begin conducting definitive strategies on how to proceed in the coming years.
But Schneider believes that in many cases the building blocks are in place. All that is now required is the correct method of execution and a willing ness from local government to take the bull by the horns.
"We see the move as actually anticipating a much greater focus on leveraging limited federal resources and devolution of elements of the federal role in infrastructure to state and local governments and the private sector, many of whom have already reached out for support and advice," he adds.
"In addition, we see a much greater level of activity by local governments to develop locally-based, sustainable funding sources and financing approaches. "The level of local ballot initiatives for increasing local taxes and fees will likely increase substantially, and one of the key practice areas that InfraStrategies will stress is the combined experience and resources our team will have to help design, develop, advocate and pass such ballot initiatives."
One thing is clear while the industry awaits instruction from the powers that be, is that the willingness to collaborate has never been greater.
Whether everyone is always pulling in the right direction in the US has always been the real question, however.
The industry now has to stay resolute as the real decisions at all levels see the light of day. But those watching the market with interest can be assured that while Schneider remains at the forefront of tackling the country's infrastructure deficit, the voice of the private sector will definitely be heard.