States should look to P3’s – Standard & Poor’s.

Those who follow us on Social Media know we have been staunch advocates for P3s. Firm members have served on many public-private partnership panels. We are persuaded on P3’s as evidence mounts of public-private partnership success.

According to a new report from the Standard & Poor’s (S&P) credit ratings agency, states will have difficulty maintaining high credit ratings if they rely too heavily on issuing tax-exempt bonds to pay for expensive, but badly needed, infrastructure projects. Given that  locally owned roads are mostly ineligible for federal funding and the uncertain prospects for receiving long-term federal funding for eligible projects, states should look to alternate financing strategies, such as public-private financing says Standard & Poor’s.

The agency estimated that states would be forced to issue $1.19 trillion in debt though 2020 to cover their share of the $3 trillion in infrastructure investment the American Society of Civil Engineers predicts will be necessary to meet current and future transportation needs, reported the Bond Buyer.

“We anticipate that both, because of what it would do to their direct debt levels and because of the O&M implications of funding the nation’s infrastructure needs with tax-supported debt alone, states will increasingly consider alternative financing strategies. P3s are one such avenue,” the S&P report says.

State and local governments have reduced the issuance of tax-exempt, new-money bonds from an average of $234 billion per year from 1996 through 2010 to an average of $151 billion per year since then. This reflects their recognition that infrastructure projects require outlays, not only for construction, but for decades of operations and maintenance (O&M) as well.

However, tax-exempt debt cannot be used to pay for O&M and federal grant funding only covers the costs of major maintenance projects, an Oct. 27 Infra Insight blog post points out.

The growing popularity of fuel efficient cars and a consistent drop in long-distance road travel are reducing the amount of gas tax revenue states would typically spend on such projects, another S&P report says. The federal government’s refusal since 1993 to raise the gas tax has been widely questioned and many states are reluctant to take this step as well.

Some experts, including Robert Poole of the Reason Foundation, have called instead for the imposition of user taxes as a more reliable means of funding.

Martin J. Milita, Jr. Esq., is senior director at Duane Morris Government Strategies, LLC.

Duane Morris Government Strategies (DMGS) supports the growth of organizations, companies, communities and economies through a suite of government and business consulting services. The firm offers a range of government relations and public affairs services, including lobbying, grant writing; development finance consulting, media relations management, grassroots campaigning and community outreach. Milita works at the firm’s Trenton and Newark New Jersey offices.

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Doris Duke Charitable Foundation: Fund for National Projects

Duane Morris Government Strategies (DMGS) supports the growth of organizations, companies, communities and economies through a suite of government and business consulting services, including grant writing.

The Fund for National Projects, an initiative of the Doris Duke Charitable Foundation, supports projects that strengthen the national infrastructure of the professional nonprofit dance, jazz, presenting, or theatre fields. In addition, the Fund works to improve conditions for the national community of performing artists in the targeted fields. Grants of $60,000 to $200,000 are provided for projects that engage a broad national constituency, occur once (or periodically) rather than annually, and have the potential to significantly impact a field. Examples of eligible projects include research initiatives assessing the national health of arts groups or of individual artists, national convenings for performing arts fields (beyond traditional national annual conferences), and special projects that address unique circumstances that affect an entire professional nonprofit field. Projects by single performing arts entities are not supported. The upcoming deadline for letters of inquiry is February 26, 2016. Visit the Doris Duke Charitable Foundation’s website for program details.

Contact: Martin J. Milita, Jr. Esq., senior director at Duane Morris Government Strategies, LLC. at 973-222-1855 or mjmilita@dmgs.com for more information.

Duane Morris Government Strategies (DMGS) supports the growth of organizations, companies, communities and economies through a suite of government and business consulting services. The firm offers a range of government relations and public affairs services, including lobbying, grant writing; development finance consulting, media relations management, grassroots campaigning and community outreach. Milita works at the firm’s Trenton and Newark New Jersey offices.

Visit his blog at: https://martinmilita1.wordpress.com

Follow him on twitter: @MartinMilita1

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Public-Private Partnership showing success in Northern Virginia

Those who follow us on Social Media know we have been staunch advocates for P3s. Firm members have served on many public-private partnership panels. We are persuaded on P3’s as evidence mounts of public-private partnership success.

Recently, Transurban began seeing substantial returns on its investment in Northern Virginia’s Interstate 95 and Interstate 495 Express Lanes, three years after the stretch of high-occupancy-vehicle lanes on I-495 became operational.

The routes generated $28 million in toll revenues in the September 2015 quarter, a 257 percent increase over the same period the year before, and the average number of daily trips more than doubled to 84,000 according to the company.

Transurban Chairman Lindsay Maxsted attributed the delay in realizing major returns from these public-private partnerships to “the time it took to develop relationships with the state government, which controls the concession for the roads,” reported the Herald Sun.

Transurban formed a consortium with Fluor to design, build, finance and, over 80 years, operate and maintain the $2 billion I-495 project, which runs 14 miles in each direction from the Springfield Interchange to just north of the Dulles Toll Road.

The consortium financed the project through a mixture of equity, private activity bonds and a Transportation Infrastructure Finance and Innovation Act loan from the U.S. Department of Transportation. The lanes opened in 2012. Transurban then invested an additional $280 million in equity in 2014 to keep the project on a firm financial footing during the global economic downturn, the Virginia Department of Transportation (VDOT) reported.

Transurban and Fluor also teamed up to develop the I-95 Express Lanes, which run about 29 miles from the middle of I-95 in Stafford County to Fairfax County. The team provided $854 million of the $925 million it took to build the project, which opened to traffic in 2014. The team will operate and maintain the HOT lanes for 76 years, the VDOT reported.

We continue advocating  for USDOT’s senior procurement executives to develop guidance that will encourage standardization of “state P3 authorities and practices,” including those used to consider unsolicited bids, non-compete clauses and other details in P3 and other types of agreements.

Martin J. Milita, Jr. Esq., is senior director at Duane Morris Government Strategies, LLC.

Duane Morris Government Strategies (DMGS) supports the growth of organizations, companies, communities and economies through a suite of government and business consulting services. The firm offers a range of government relations and public affairs services, including lobbying, grant writing; development finance consulting, media relations management, grassroots campaigning and community outreach. Milita works at the firm’s Trenton and Newark New Jersey offices.

Visit his blog at: https://martinmilita1.wordpress.com

Follow him on twitter: @MartinMilita1

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Gambling mecca gone bad-Atlantic City, NJ

By Martin J . Milita, Jr., Esq.

It seems like only yesterday that Detroit filed for bankruptcy. It’s actually been more than two years since the initial filing, and almost a year since a judge approved the bankruptcy plan.

In the East, the fortunes of Atlantic City have always followed casinos, which is not a good sign in today’s economy. With four of the big gambling houses bankrupt, Atlantic City finds itself hurting for revenue.

The city has a $100 million hole in its budget. This is made worse by the fact that it keeps losing tax refund lawsuits. So far the city has been forced to refund $186 million in taxes after Casino owners contested their assessments.

But the pain isn’t all on the revenue side.

Atlantic City employs 29 city workers per 1,000 residents, almost triple the rate of Newark, with 11 employees per 1,000 residents, and Jersey City, with 10 employees per 1,000 residents. The mayor recommended laying off more than 200 workers, but that would still leave the city with a much higher worker-per-resident ratio than other cities.

So far, the New Jersey government, including the governor, has been quiet on the possibility of a bankruptcy in the state. The state has gone so far as to give the city more time to repay state loans. If Atlantic City goes under, it would be the first municipal bankruptcy in New Jersey since the depression.

While the state government hasn’t mentioned that the city might go bankrupt, it hasn’t taken that option off the table either. It could be that the governor wants to keep all avenues open, since he has the same financial issues at the state level. As long as bankruptcy is possible, he might have more leverage when negotiating pension reforms with unions.

Many other towns, counties, and states have fiscal woes that will only be addressed through some version of bankruptcy or negotiated restructuring. By the time that happens, investors and taxpayers have already lost.

Martin J. Milita, Jr. Esq. is senior director at Duane Morris Government Strategies, LLC.

Duane Morris Government Strategies (DMGS) supports the growth of organizations, companies, communities and economies through a suite of government and business consulting services. The firm offers a range of government relations and public affairs services, including lobbying, grant writing; development finance consulting, media relations management, grassroots campaigning and community outreach. Milita works at the firm’s Trenton and Newark New Jersey offices.

Visit his blog at: https://martinmilita1.wordpress.com

Follow him on twitter: @MartinMilita1

https://www.facebook.com/martin.milita

http://www.dmgs.com/