Water Bill to Boost Public-Private Partnerships


We have previously written regarding critical repairs and updates needed for the Nation’s aging infrastructure. We have also noted the need for private investment to get these capital-intensive infrastructure projects off the ground. An Act recently passed with strong bipartisan support by Congress and expected to be signed into law as early as this week by President Obama seeks to promote private investment in water infrastructure projects through innovative financing programs and the use of public-private partnerships (“P3s”).

The Water Resources Reform and Development Act of 2014 (“WRRDA”) (H.R. 3080) establishes a five-year pilot program – the Water Infrastructure Finance and Innovation Act (“WIFIA”) – which provides low-interest federal loans and loan guarantees for major water infrastructure projects. WIFIA authorizes the Army Corps of Engineers and the Environmental Protection Agency to provide up to $175 million in direct loans and loan guarantees for the construction of critical water infrastructure projects, including those delivered through P3s. WIFIA is modeled after the Department of Transportation’s Transportation Infrastructure Finance and Innovation Act, a successful federal program which has supported major P3 transportation projects.

In addition, WRRDA creates a separate 15-project pilot program – the Water Infrastructure Public-Private Partnership Program – to assess the use of P3s to accelerate projects in such areas as hurricane, storm, and flood damage reduction; coastal harbor improvement; and aquatic ecosystem restoration. These pilot projects authorize the Army Corps of Engineers to enter into agreements with private entities and state and local governments to help address a significant project backlog.

It is estimated that the U.S. water and sewer infrastructure will need an investment of between $600 billion and $1 trillion in the coming decades. Given the magnitude of capital needed and the critical nature of these projects, P3s seem to be an ideal structure for accomplishing the work, particularly given the current financial pressures faced by the government and its agencies. If WRRDA and its programs prove successful, it makes sense to expand such financing programs and encourage the use of P3s to fund projects addressing other sectors of the Nation’s infrastructure.