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New bipartisan water law promotes use of public-private financing

President Obama recently signed a bipartisan bill to develop the nation’s water infrastructure – the harbors, bays, levees and coastal facilities that are essential to business and people's day-to-day lives. Contained within the broad reach of the full law are provisions that rely on joint federal-private partnerships to promote water infrastructure.

Hurricanes and flooding require new building to reduce risk of storms
Hurricanes and flooding require new building to reduce risk of stormsPhoto by Kena Betancur/Getty Images
New federal water law promotes use of joint public-private projects
New federal water law promotes use of joint public-private projectsPhoto by Spencer Platt/Getty Images

“As more of the world’s cargo is transported on...massive ships, we’ve got to make sure that we’ve got bridges high enough and ports that are big enough to hold them and accommodate them so that our businesses can keep selling goods made in America to the rest of the world,” President Obama said in his prepared remarks on June 10, 2014, the day he signed the bill.

“[M]any of America’s businesses ship their goods across the country by river and by canal, so we’ve got to make sure that those waterways are in tip-top shape,” the President said.

In addition to its lack of earmarks, the Water Resources Reform and Development Act, supported by 48 members of Congress, is notable, in part, because it promotes use of partnerships between the government and private sector as a way to finance water improvement infrastructure.

Sometimes called joint public-private partnerships or P3s, these arrangements rely on the private sector to reduce federal risk, supposedly a net gain for both the government entity involved and its private partners who gain the right to profit from what historically have been government projects.

The new law approves a five-year pilot program to use a form of these public-private partnerships to finance flood control, waste water and water treatment facilities, among other projects, according to materials provided by the National Association of Water Companies. The Secretary of the Army and the Administrator of the Environmental Protection Agency will administer the pilot program.

The water resources law highlights the fact that “public-private partnerships are more broadly accepted,” Petra Smeltzer, Director of Government Relations of the National Association of Water Companies, said.

For years, federal and state governments have financed certain road construction using joint public-private partnerships. “This alternative to taxes and bonds offered governments the ability to shift debt and maintenance costs off their books,” according to the American Bar Association's Government Private Sector Innovation Committee website. “It also allowed governments to offset large upfront capital costs through lease or toll payments.”

“Increasingly, governments and government agencies are using public-private partnerships to reduce environmental harm, support renewable energy, increase energy efficiency and fund technology,” the bar association committee website said.