Spoon-Fed

With a leadership vacuum at federal level around how P3s should be funded, many states are hanging their hopes on the revised Transportation Bill, the TIFIA loan programme, a shiny new infrastructure bank or some combination of all three.

Of course a quick glance at the massively oversubscribed TIFIA earlier this year shows how desperately projects need a federal injection of cash.

So it’s no surprise eyes and ears are focused on expanding it as part of the new Transportation Bill, most likely in a two-year guise taking President Obama neatly to the end of his current term.

However, although the TIFIA has tremendous potential to kickstart projects, there are reservations from investors that too much faith should be placed in federal windfalls from on high.

Speaking at PPP Bulletin’s recent Winning Bids in the US event, Gershon Cohen, head of Lloyds Bank’s capital markets division, was clear that "mammoth institutions or state banks that shell out money" are not the way forward, especially while expertise is still lacking at state level.

"There are pools of capital out there and there is need. You need to marry the two. Focused expertise that can leverage the pools of capital out there.

"The capital will go where there's the least headaches."

With pipeline now identified and many states declaring themselves "open for business", some are realising the real challenge lies closer to home – marrying the funding they do have with the smart procurement of a small number of key projects.

Institutional capacity is building in Virginia – which has launched its own version of a TIFIA loan at state level – and in Georgia, which is allowing the public to decide which P3 projects should proceed.

It’s a welcome development that pipeline is finally starting to take shape but at the same time investors are a lot more politically aware about where deals will actually close.

"We are waking up to the fact that maybe government is not best placed to drive this," said Frank Rapoport, lawyer at McKenna Long & Aldridge at the same event. "It’s down to the governors and mayors."