January 17, 2008


1. P3 ‘success’ just a big hoax.
2. Foreign companies eyes US infrastructure projects.
3. A slew of new infrastructure funds
4. Corzine to mayors: tax relief hangs on toll plan.
5. CA Gov. backs trestles toll road.

1. P3 ‘success’ just a big hoax. According to blogger Bill Tieleman, when Calif. Gov. Schwarzenegger cites British Columbia’s public-private partnership projects as a state model, he omits cost overruns. "In the vast majority of examples here in BC and elsewhere, the costs are higher as the public gets hosed to provide private corporations with substantial profits," says Tieleman.

2. Foreign companies eyes US infrastructure projects. Germany’s Hochtief AG sees great growth potential for infrastructure projects such as new roads and bridges in the US, according to the Financial Times and reported in Forbes. Hochtief last year bought US-based Flatiron Construction Corp for 240 mln usd to enter the US civil engineering market and tap into the developing US market for public-private partnerships (PPPs). These types of projects see private companies building, for instance, roads at their own cost in exchange for the right to take tolls for a set period of time. At the end of that period the road is turned over to the state. PPP, most common in the UK, Australia and Argentina, are now starting to be introduced in the US, and more than 20 US states have already done the legal groundwork for such programs, according to the newspaper.

3. A slew of new infrastructure funds have been launched in recent months, according to Project Finance International (PFI) (subscription required) and reported in the AE Feldman blog. Altogether, these new funds have raised capital commitments topping $100 million. PFI attributes the surge in infrastructure funds to several contributing factors. First, cash-strapped governments have enacted legislation enabling privatization or public-private partnerships of various forms, creating opportunities for private participation in infrastructure that did not exist just 25 years ago. Moreover, there is a general move among institutional investors away from stocks and bonds and towards alternative investment products, like infrastructure, in a search for higher returns. Pension funds are also beginning to think of infrastructure as a substitute for long duration fixed income and new funds are catering to this demand.

4. Corzine to mayors: tax relief hangs on toll plan. Gov. Jon S. Corzine warned mayors Wednesday that property tax relief could be cut in the new state budget unless he can reduce state debt, providing local officials an ominous picture of what could happen if his toll road plan is not approved, reports the Courier-Post.

5. CA Gov. backs trestles toll road. Gov. Arnold Schwarzenegger is endorsing an Orange County toll road that would cut through one of the state’s most popular beach areas, reports NBC-SanDiego. In a letter to the head of the Coastal Commission, Schwarzenegger on Tuesday described the six-lane Foothill South tollway as "essential to protect our environment and the quality of life for everyone in California." Critics note the road will pass through San Onofre State Beach and say it might degrade the famous surfing spot.