Testimony to the
Senate Standing Committee on Transportation
Utilizing Public-Private Partnerships to fund Transportation infrastructure projects in New York State
Acting President & CEO
The Business Council of New York State, Inc.
Date: May 16, 2011
Senator Fuschillo and members of the Senate Transportation Committee, thank you for holding this hearing on such an important economic development subject. I am Heather Briccetti, acting president & CEO, of The Business Council of New York State. The Council represents more than 2,500 employers in New York State of all sizes. Our members employ more than one million New Yorkers. Our members are very interested in the opportunities presented by public-private partnerships or P3’s.
The nation and New York state face daunting infrastructure needs: from education facilities, to water and wastewater facilities; to public safety centers; to information technology infrastructure; to IT services and transportation needs.
P3’s offer a means for New York State to address these needs in a way that helps further community economic objectives; “infrastructure” means much more than roads and bridges and P3s should be thought of in the broadest sense of ‘infrastructure’.
P3s are not THE solution – they’re a part of a solution; that’s where the partnership aspect of the process plays a pivotal role in determining whether a P3 is a success or a failure. P3s should not be viewed as the solution to a budget crisis – or a way to supplant public investment. The P3 process by its nature works best when there is a strong and trusted relationship among the public and private partners who advance the process together. An open and collaborative process between the public and private sectors helps to ensure that P3 projects go well and also provides for an atmosphere which encourages innovation and creativity.
The P3 process also must include the public and other stakeholders – and it is a process which makes its objectives clear from the outset. There are longstanding P3 successes around the world – many countries in Europe and Australia have been using a P3 model for many years. P3s represent between 10 and 15% of all UK investments in public infrastructure.
Recently, Canada, our state’s largest trading partner, has had demonstrated P3 successes.
Much P3 research has already been done in New York State. On June 1, 2009, the NYS Commission on State Asset Maximization issued their Final Report of Recommendations on public-private partnerships in New York State. Six months in the making, this report was very supportive of advancing public-private partnerships in the state.
Their report recommended that the state move forward on public-private partnerships in the areas of Transportation, Social Infrastructure, Higher Education, Energy, Information Technology and Underutilized Property.
Transportation is a key sector where P3’s can be beneficial. The state’s transportation needs are large and continually growing, far exceeding our reliance on fuel taxes, tolls and borrowing to fund the infrastructure.
This requires serious consideration of alternatives to the standard approach to financing, constructing, and operating our transportation system. Key elements driving private sector transportation infrastructure investment are:
- Finance and Energy
- Government Budgetary Constraints
- Maintenance and Obsolescence
- Demographic Trends
- Global Competitiveness
- Availability of Private Capital
Private sector transportation investment would help accelerate projects and keep them on-time and on-budget by implementing:
- Management Efficiencies
- Newer Technologies
- Workplace Efficiencies
- Cash Flow Management
- Personnel Development
- Shared Resources
There are specific transportation projects in New York that have great potential for this kind of collaboration.
- Full replacement of the aging Tappan Zee Bridge as part of the I-287 corridor improvement plan with a rail link to Stewart Airport.
- Peace Bridge to help facilitate trade between the U.S. and Canada.
- Grand Island Bridges to improve travel between the City and suburbs of Buffalo.
- High Speed Rail linking the major cities across upstate New York and New York City
But, public-private partnerships should go well beyond transportation needs. State government has many talented people and access to expertise which can ensure that we not be constrained by near term needs. In an era when state revenues are declining, the opportunity ought not be lost to review the core missions of state agencies. Many worthwhile services provided by state agencies can no longer be met through existing resources and those needs should be evaluated through a P3 lens: whether it’s the rethinking of how wastewater treatment facilities are funded; to thinking broadly about state-owned resources such as our vast network of parks where revenue maximization may not be realized because resources to maintain and expand them may be constrained.
It may be as simple as looking to neighboring states, such as New Hampshire, which in 1998 entered into a 30 year lease agreement for the operation of their state-owned ski facilities. In entering into a lease which protected and ensured the broadest public access (and thus keeping to the state’s objectives) but allowed for the operation of the facility to be professionally managed and operated after competitive procurement. This was NOT privatization of assets; this has served as a means to increase access and use; increase capital investment in the ski area; and ultimately increase revenues to the State of New Hampshire from both lease payments and through a percent of gross revenues generated by the facility. Increasing the state’s return on its assets – while maintaining those assets in the public domain — should be fully explored, and, as New Hampshire has shown – with clear objectives, a tightly written lease and revenue agreements, the goals can be met for a true P3.
We can also look at New York's leadership role with its public and private universities in support of research, development and technology transfer for examples on how P3s can be used to further economic and infrastructure objectives. The P3 partnership which created the College of Nanoscale Science & Engineering demonstrates how complex issues such as intellectual property ownership didn't impede private sector investment and commitment to achieving the outcome — an example of having an equitable transfer of risk and reward.
P3 initiatives with our public universities — SUNY and CUNY — ought to be fully evaluated. The asset portfolio within SUNY and CUNY represent real opportunities to provide P3 solutions for these systems' capital needs and perhaps for ways to leverage research into broader economic P3 partnerships.
In conclusion, New York State needs to improve infrastructure while providing taxpayers needed relief by accessing private capital.
We cannot rely upon Washington to bring our fair share of funding back to New York and P3’s would help to supplement our infrastructure needs.
The growing use of P3’s for transportation and other projects in the United States and across the globe demonstrates a sensible alternative to traditional funding and procurement. Carefully crafted P3’s would help to avoid additional taxes; reduce the State’s reliance on borrowing; green the environment; adapt to a changing global economy; and create jobs.
Thank you for the opportunity to testify at your hearing today.