150 California Street, Suite 600
San Francisco, CA 94111
In response to July 17 Presidential Memo–Public-Private Collaboration on Infrastructure Dev/Fin
“The Federal Government can play an important role in supporting, promoting, and expanding
opportunities for public and private partners to work together on developing and financing
infrastructure in these areas
…
The center shall develop and make publicly available case studies, best practices, analytical tools, and
other resources to build expertise and capacity among State, local, tribal, and territorial governments
interested in pursuing innovative financing techniques and approaches in connection with Federal
funding, a financing program, or otherwise
…
And analyze the factors limiting effective collaboration between the public sector and private companies
and investors, both domestic and international, on infrastructure, including infrastructure financing.”
TABLE ROCK’S PROPOSED FEDERAL ACTION PLAN: A PUBLIC-PRIVATE COLLABORATION IDENTIFYING &
OVERCOMING BARRIERS TO INFRASTRUCTURE DEVELOPMENT & FINANCING
100-City Tour: We Understand the Barriers
Table Rock Capital and its many allies in the pursuit of public-private investments have extensive, earned
insight on the specific barriers to private investment in public infrastructure in the U.S. as a result of our
two year, 100-city listening tour. To date, Table Rock has analyzed nearly two hundred cities, identified a
subset that align well with the structures and benefits of the public-private investment model, and
traveled to meet in person and in detail with close to half of those identified. We have met in over thirty
cities to date, sitting across the table from mayors and councils, city managers, utility directors, human
resources managers, finance directors, union heads, Taxpayers and Tea Party leadership,
environmentalists, and business leaders. For two years we have intensively studied and discussed with
these leaders such key factors as their city budgets, capital improvements programs and funding, debt
profiles, pension and health obligations, EPA consent decrees, water supply risks, and affordable rate
structures, all to assess the relative value of a public-private approach for that city and its infrastructure.
Municipal P3 Outreach Status
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Screened
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Initial Meetings
Detailed
Conversations in
Progress
150 California Street, Suite 600
San Francisco, CA 94111
We know how black and white the answers need to get for a private investor to become comfortable
investing, and we know how to package a city’s infrastructure needs in an investable, sustainable, and
creditworthy fashion. What we do not know, after all of this time, is how to accelerate the city’s
understanding and evaluation of the public-private option. This is where the proposed Federal Action
Plan can help not Table Rock, but the public-private market for infrastructure investment itself along
with federal agencies working to grow that market. Just as PFI in the UK, Partnerships in BC, and the
other long-standing public-private institutions internationally have familiarized and standardized the
understanding and evaluation of alternative financing mechanisms for their local and provincial
governments, so can this U.S. initiative break the ice for municipal decision-makers.
While Table Rock is also involved in the analysis of public-private investment structures for state level
flood mitigation projects, local roads upgrades, and school, hospital, and library construction, our
primary focus is currently on the country’s deteriorating water and wastewater infrastructure, which is
overwhelmingly financed and implemented at the municipal level. The water and wastewater capital
improvement needs in the cities pre-screened by Table Rock exceeds $12 billion, presenting the
potential for a considerable new pipeline of infrastructure financing that matches a strong municipal
need with capital that is actively seeking the type of stable, long-term return that infrastructure
investment provides.
City by City Learning Tour: Challenges and Barriers to Public-Private Infrastructure Investment
Table Rock’s outreach efforts present a unique opportunity to understand the potential for and
challenges of advancing public-private infrastructure solutions across the U.S. No other firm has had the
quantity or depth of conversation with such a wide range of municipal leaders on this topic. These
conversations have been overwhelmingly positive, generating strong initial interest as well as detailed
questions around this complex topic. Conversations have centered on rebuilding aging infrastructure
and applying the value gained through construction and operating efficiencies to stabilizing broader
municipal finances. It’s a message of New Deal investment and progress in a time of cuts, cuts, cuts.
However, there are early stage educational, procurement, and political challenges to this type of
investment being realized, challenges that are best met by the more trusted, neutral partners in the
Federal government. These challenges include:
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Exposure & education: Identifying federal networks and connections to city officials and staff
across the country could significantly accelerate their exposure to the concept of public-private
investment. Joint sessions where first the private sector hears from the public participants, and
then the reverse, have been fruitful. Both in person and online, by conference call and webinar,
lining up respected voices from both sides to hear from each other in neutral territory can help
close the gap everyone sees between the infrastructure need and infrastructure capital.
Public revolving evaluation & procurement grant: Cities have a difficult time justifying even
modest allocation of resources to an early-stage analysis. Even very limited financial support to
de-risk, legitimize, and provide standard best practices for this early investigation could go a
long way. If cities with a minimum of $50MM-$100MM in infrastructure need were given an
application process to receive $250,000 of federal evaluation monies, refundable at financial
close, these cities could be supported through the pre-development and evaluation of their
150 California Street, Suite 600
San Francisco, CA 94111
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infrastructure for an alternative delivery procurement. If the resulting objective, standardized
public-private comparator gave a green light for a P3 approach, the City could then apply to
receive a $1MM-$2MM revolving grant, refundable at financial close, to complete their side of
the “pipeline development” (project due diligence, necessary engineering studies, any
permitting, procurement documentation, contractual negotiation).
Pilot funding & standardized support regularizes the market, brings cost down: On a pilot
project basis, allocating several million dollars to a handful of early projects could have
enormous impacts on infrastructure investment, not just by leveraging greater local
infrastructure spending, but also by demonstrating the viability of municipal P3 and unlocking a
far broader financing stream for critical infrastructure needs. Just in one average-sized city
identified above, a $1 million loan could leverage hundreds of millions of dollars of
infrastructure investment.
Credibility until the market has enough models to prove itself: Federal agencies with their
expertise in a wide range of disciplines and trusted relationships can provide the neutral proving
ground for an approach that is still new to U.S. municipal decision-makers, but once repeated
and repeated successfully, can establish its own momentum.
Table Rock is proposing a three step process that specifically addresses the obstacles identified above
and aims to unlock public-private investment as a key financing mechanism for U.S. infrastructure. As
outlined in the previous memo, these three steps include but are not limited to:
1) A federal agency workshop to identify and engage relevant municipal leadership together with
private sector voices;
2) A workshop for local decision makers on the fundamentals of P3;
3) Dissemination of leading templates in P3 evaluation and procurement from decades of international
implementation and model innovations in U.S. evaluation and procurement.
These steps in addition to those more specifically outlined in the previous memo will directly help
overcome the challenges described above. They will use existing federal agency networks to connect
financing and expertise to cities where the P3 concession model has demonstrated potential to enable
infrastructure investment. Without any bias toward whether a particular project should move forward,
nor for any particular private partner participant, these joint efforts can lend credibility to the viability of
a new and distinctly American public-private investment approach.
Next Steps
Table Rock has no desire to create an extended process or extensive layers of working groups and
conferences. The goal here is to build on federal momentum and experience around P3 which appears
to be moving toward a broad recognition that public-private partnerships can address U.S. infrastructure
challenges in a way that purely public approaches cannot. Table Rock and its network of public-private
experts across a wide range of disciplines would like to offer lessons learned from extensive experience
working to form local-level partnerships, better understand how our efforts can help advance the
President’s memorandum at the federal level, and, to the extent that our work aligns with agency
mandates, provide ideas on a framework of support we feel will benefit municipal decision-makers.
150 California Street, Suite 600
San Francisco, CA 94111
Table Rock proposes as a key next step that a workshop at Treasury’s September 9th gathering be
dedicated to the topics above. This conversation can substitute for the recommended federal agency
workshop. This will provide a targeted approach that will allow interested parties to connect with each
other for later follow up. If necessary or desired, interested individuals may plan an additional working
session, but that will be at their discretion. This initial gathering can also provide an opportunity to
discuss the additional steps recommended above: forming a workshop for municipal leaders and using
existing networks to disseminate resources that will inform early public-private exploration.
Most fundamentally, Table Rock believes that sharing existing resources and networks can significantly
accelerate adoption of alternative infrastructure financing mechanisms. While the steps above provide
an initial path forward, sharing of experiences will undoubtedly lead to ideas and collaborations not
identified here. An initial conversation at the Treasury gathering provides a low-cost, low-risk
opportunity to explore future collaboration opportunities toward the common goal of addressing the
nation’s critical infrastructure needs.