To remove obstacles impeding the use of private investment in the construction, renovation, and replacement of our nation’s aging and dilapidated public buildings, including hospitals, schools, and correctional facilities; thereby improving the quality of life for building occupants and providing fiscal responsibility to taxpayers.
Level the playing field by creating a new category of low cost “Exempt Facility Bonds” suitable for Public Private Partnerships.
Public Private Partnerships have a proven track record for improving both construction execution and operational performance over the life of the facility term. However, the current tax code discourages the use of private finance for public buildings, since private PPP sponsors must raise taxable debt and equity rather than low-cost tax-exempt bonds available to the public sector, effectively negating the opportunity to take advantage of a more robust procurement model.
Over the past 10 years, 19 US transportation projects have taken advantage of Exempt Facility Bonds to spur over $16 billion of investment, thereby creating thousands of jobs, accelerating project completion and generating billions in cost savings for states and localities. However, unlike transportation PPP’s, no federal financing vehicle exists to facilitate private investment in the replacement and renovation of public buildings.
PPP projects are publicly owned and serve a qualified public purpose, although current IRS rules restricting access to tax-exempt finance puts these projects at a financial disadvantage. A new category of Exempt Facility Bonds available to project sponsors would level the playing field and allow PPPs to be evaluated on the merits of performance improvement rather than cost of capital.
Need for P3s
Over 14 million children attend deteriorating public schools that are in need of maintenance and repair projects worth $270 – $500 billion.
Since the start of the recession, 67% of hospitals have put on hold desperately needed capital projects.
42 states have significant shortfalls in infrastructure funding for courthouses, which have resulted in facilities that often do not comply with current codes, disability requirements, and often have inadequate security.
More than 330 city halls listed in the National Register of Historic Places are in disrepair.