A Pennsylvania program announced yesterday provides support for the "tipping point" comment by Tony Sanacory and Will Fagan only two weeks ago, in a Duane Morris blog entry. PennDOT plans to award a contract to a P3 entity to repair or replace 558 bridges, and operate those bridges over the next 25 years, per an ENR article. The combination of increasing demand to upgrade infrastructure, coupled with inadequate public funds, is leading states to adopt the P3 funding alternative.
This will mean more roads and bridges with tolls, as P3 operators seek revenue sources to recoup the capital outlays. And those competing for P3 projects should heed the warnings that come from a few of the Australian toll road projects, where inflated traffic projections on some of the projects led to overbidding and ultimately operating company failures, and from the Indiana toll road operator bankruptcy just announced, where debt service combined with long term locked-in toll rates may have been a lethal combination. More opportunities, and more risks.
Disclaimer: This Alert has been prepared and published for informational purposes only and is not offered, nor should be construed, as legal advice. For more information, please see the firm's full disclaimer.