Over the last several years, the public-private partnership (P3) market has started to take off. More projects than ever before are planned or underway, and many communities are benefiting.
However, even P3-active cities such as Chicago and Los Angeles find themselves with enormous needs still unmet. Huge sums of capital sit on the sidelines in the accounts of global investors. That money could be put to work, but most of these projects, given current market trends, will go undone. Communities will continue to suffer for lack of the basic infrastructure that ensures health, competitiveness and growth.
What is holding up the market? Why are critical needs going unmet?
The answer is that the market is preoccupied with financing only mega-projects, $800-million-plus ones. Investors and other P3 firms will grab a road here, a bridge there, a civic center over there. At the end of the day, not many projects are getting done this way.
When a public official raises questions about whether a medium-sized project can be done down the block, it is simply deemed not bankable — not big enough, complex enough, revenue-generating enough. As a result, vital water, transportation and other infrastructure needs go unmet.