Testimony of Richard T. Anderson, President New York Building Congress at a Public Hearing on Public
Published on May 16, 2011 by
The Building Congress is a broad coalition of the design, construction and real estate industry. Part of our mission is to support public policies that promote economic development and infrastructure investment in our region.
It has been demonstrated in other states, in Canada, in Europe and elsewhere that public private partnerships are an important tool for the design, financing, construction and maintenance of critical transportation infrastructure.
The Building Congress believes that public private partnerships – or P3s – should be more broadly used in New York, particularly on transportation projects. P3s can also be a useful tool for the creation of water supply, education and public healthcare facilities.
For P3s to be a viable option, legislation must be passed which contains some key elements:
First, legislation should authorize the creation of an Office of Public Private Partnerships to oversee the selection and implementation of P3s. We recommend that the Office be located within Empire State Development to leverage ESD’s financing expertise and background in managing large projects. The Office would then work with individual agencies like the Department of Transportation to design and implement individual projects.
The Office should also be authorized to establish clear rules and guidelines for project selection and to be the entity that selects projects for implementation as P3s. Giving the Office sole responsibility to establish best practices eliminates duplication, focuses limited private resources on priority projects, and reduces conflicting mandates that would arise if this responsibility were left piecemeal to individual agencies.
One specific best-practice that should be required is the industry-standard "value for money analysis." A value for money analysis compares the total project costs of traditional project delivery with an alternative, P3, procurement method. The difference between two models is referred to as the value for money.
The Office should be required to hire a dedicated staff with expertise in the selection, management and financing of public private partnerships. P3s involve complex relationships between government, concessionaires and financial institutions. The public’s welfare should be protected with a commensurate level of expertise.
Second, a broad spectrum of public private partnerships must be permitted. For example, the Design-Build model may be the most effective tool for certain bridge reconstructions. Whereas a Design-Build-Finance-Operate-Maintain model may be the most cost effective approach for the creation of a brand new bridge. There is not a one-size-fits-all approach, and the P3 format used should be appropriate to the project under consideration.
Third, the selection and implementation of P3 projects should not require additional specific legislative authorization. P3s maximize the value of public dollars by permitting the private entity to manage projects from beginning to end, shrinking traditional procurement schedules. Time saved is one of the most important benefits of the P3 model.
We understand legislative authorization will be required for new toll lanes or other new revenue streams on specific projects. But the overall selection and implementation process should not be compromised by political considerations or the legislative calendar.
Fourth, a State infrastructure bank should be created that enables the State to assist in the financing of complex P3 projects. The private sector will bring new sources of financing to the table for the construction of infrastructure. However, flexible, affordable public financing options must remain a key ingredient in order to secure this private money.
While we are supportive of public private partnerships, it must be understood that the creation of expanded P3 authority will not solve the enormous funding gaps at the MTA and DOT.
P3s can create cost efficiencies through consolidated project management and private financing. But at the end of the day, the public must still pay for this infrastructure. And today there is no money for the Kosciuszko Bridge, no money for a Tappan Zee bridge replacement, and not enough money to bring all of the State’s thousands of small span bridges up to a state of good repair.
For years, Albany has diverted money from the Dedicated Bridge and Highway Trust Fund and played shell games with revenues dedicated to the MTA. Gas taxes have not changed since 1996. In the midst of this funding crisis, there is even discussion of reducing the Payroll Mobility Tax.
So, in closing, P3s certainly need to be part of a final agreement on the financing of our transportation agencies. They can significantly reduce the cost of new infrastructure to the public while getting projects completed years ahead of when they might be done using traditional procurement methods.
But they can only be a part of the funding equation. Government leaders must demonstrate the value of infrastructure to the public and they will have to ask the public to pay more for the roads and bridges that support our economy and way of life.
Thank you for this opportunity to testify.
The Building Congress is a broad coalition of the design, construction and real estate industry. Part of our mission is to support public policies that promote economic development and infrastructure investment in our region.
It has been demonstrated in other states, in Canada, in Europe and elsewhere that public private partnerships are an important tool for the design, financing, construction and maintenance of critical transportation infrastructure.
The Building Congress believes that public private partnerships – or P3s – should be more broadly used in New York, particularly on transportation projects. P3s can also be a useful tool for the creation of water supply, education and public healthcare facilities.
For P3s to be a viable option, legislation must be passed which contains some key elements:
First, legislation should authorize the creation of an Office of Public Private Partnerships to oversee the selection and implementation of P3s. We recommend that the Office be located within Empire State Development to leverage ESD’s financing expertise and background in managing large projects. The Office would then work with individual agencies like the Department of Transportation to design and implement individual projects.
The Office should also be authorized to establish clear rules and guidelines for project selection and to be the entity that selects projects for implementation as P3s. Giving the Office sole responsibility to establish best practices eliminates duplication, focuses limited private resources on priority projects, and reduces conflicting mandates that would arise if this responsibility were left piecemeal to individual agencies.
One specific best-practice that should be required is the industry-standard "value for money analysis." A value for money analysis compares the total project costs of traditional project delivery with an alternative, P3, procurement method. The difference between two models is referred to as the value for money.
The Office should be required to hire a dedicated staff with expertise in the selection, management and financing of public private partnerships. P3s involve complex relationships between government, concessionaires and financial institutions. The public’s welfare should be protected with a commensurate level of expertise.
Second, a broad spectrum of public private partnerships must be permitted. For example, the Design-Build model may be the most effective tool for certain bridge reconstructions. Whereas a Design-Build-Finance-Operate-Maintain model may be the most cost effective approach for the creation of a brand new bridge. There is not a one-size-fits-all approach, and the P3 format used should be appropriate to the project under consideration.
Third, the selection and implementation of P3 projects should not require additional specific legislative authorization. P3s maximize the value of public dollars by permitting the private entity to manage projects from beginning to end, shrinking traditional procurement schedules. Time saved is one of the most important benefits of the P3 model.
We understand legislative authorization will be required for new toll lanes or other new revenue streams on specific projects. But the overall selection and implementation process should not be compromised by political considerations or the legislative calendar.
Fourth, a State infrastructure bank should be created that enables the State to assist in the financing of complex P3 projects. The private sector will bring new sources of financing to the table for the construction of infrastructure. However, flexible, affordable public financing options must remain a key ingredient in order to secure this private money.
While we are supportive of public private partnerships, it must be understood that the creation of expanded P3 authority will not solve the enormous funding gaps at the MTA and DOT.
P3s can create cost efficiencies through consolidated project management and private financing. But at the end of the day, the public must still pay for this infrastructure. And today there is no money for the Kosciuszko Bridge, no money for a Tappan Zee bridge replacement, and not enough money to bring all of the State’s thousands of small span bridges up to a state of good repair.
For years, Albany has diverted money from the Dedicated Bridge and Highway Trust Fund and played shell games with revenues dedicated to the MTA. Gas taxes have not changed since 1996. In the midst of this funding crisis, there is even discussion of reducing the Payroll Mobility Tax.
So, in closing, P3s certainly need to be part of a final agreement on the financing of our transportation agencies. They can significantly reduce the cost of new infrastructure to the public while getting projects completed years ahead of when they might be done using traditional procurement methods.
But they can only be a part of the funding equation. Government leaders must demonstrate the value of infrastructure to the public and they will have to ask the public to pay more for the roads and bridges that support our economy and way of life.
Thank you for this opportunity to testify.
The Building Congress is a broad coalition of the design, construction and real estate industry. Part of our mission is to support public policies that promote economic development and infrastructure investment in our region.
It has been demonstrated in other states, in Canada, in Europe and elsewhere that public private partnerships are an important tool for the design, financing, construction and maintenance of critical transportation infrastructure.
The Building Congress believes that public private partnerships – or P3s – should be more broadly used in New York, particularly on transportation projects. P3s can also be a useful tool for the creation of water supply, education and public healthcare facilities.
For P3s to be a viable option, legislation must be passed which contains some key elements:
First, legislation should authorize the creation of an Office of Public Private Partnerships to oversee the selection and implementation of P3s. We recommend that the Office be located within Empire State Development to leverage ESD’s financing expertise and background in managing large projects. The Office would then work with individual agencies like the Department of Transportation to design and implement individual projects.
The Office should also be authorized to establish clear rules and guidelines for project selection and to be the entity that selects projects for implementation as P3s. Giving the Office sole responsibility to establish best practices eliminates duplication, focuses limited private resources on priority projects, and reduces conflicting mandates that would arise if this responsibility were left piecemeal to individual agencies.
One specific best-practice that should be required is the industry-standard "value for money analysis." A value for money analysis compares the total project costs of traditional project delivery with an alternative, P3, procurement method. The difference between two models is referred to as the value for money.
The Office should be required to hire a dedicated staff with expertise in the selection, management and financing of public private partnerships. P3s involve complex relationships between government, concessionaires and financial institutions. The public’s welfare should be protected with a commensurate level of expertise.
Second, a broad spectrum of public private partnerships must be permitted. For example, the Design-Build model may be the most effective tool for certain bridge reconstructions. Whereas a Design-Build-Finance-Operate-Maintain model may be the most cost effective approach for the creation of a brand new bridge. There is not a one-size-fits-all approach, and the P3 format used should be appropriate to the project under consideration.
Third, the selection and implementation of P3 projects should not require additional specific legislative authorization. P3s maximize the value of public dollars by permitting the private entity to manage projects from beginning to end, shrinking traditional procurement schedules. Time saved is one of the most important benefits of the P3 model.
We understand legislative authorization will be required for new toll lanes or other new revenue streams on specific projects. But the overall selection and implementation process should not be compromised by political considerations or the legislative calendar.
Fourth, a State infrastructure bank should be created that enables the State to assist in the financing of complex P3 projects. The private sector will bring new sources of financing to the table for the construction of infrastructure. However, flexible, affordable public financing options must remain a key ingredient in order to secure this private money.
While we are supportive of public private partnerships, it must be understood that the creation of expanded P3 authority will not solve the enormous funding gaps at the MTA and DOT.
P3s can create cost efficiencies through consolidated project management and private financing. But at the end of the day, the public must still pay for this infrastructure. And today there is no money for the Kosciuszko Bridge, no money for a Tappan Zee bridge replacement, and not enough money to bring all of the State’s thousands of small span bridges up to a state of good repair.
For years, Albany has diverted money from the Dedicated Bridge and Highway Trust Fund and played shell games with revenues dedicated to the MTA. Gas taxes have not changed since 1996. In the midst of this funding crisis, there is even discussion of reducing the Payroll Mobility Tax.
So, in closing, P3s certainly need to be part of a final agreement on the financing of our transportation agencies. They can significantly reduce the cost of new infrastructure to the public while getting projects completed years ahead of when they might be done using traditional procurement methods.
But they can only be a part of the funding equation. Government leaders must demonstrate the value of infrastructure to the public and they will have to ask the public to pay more for the roads and bridges that support our economy and way of life.
Thank you for this opportunity to testify.