Accountability Economy For-Profit

Guess Who Slipped a Pro-Corporate Provision into the Infrastructure Bill?

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“In the Public Interest” is our best source for alerts about privatization. Here is their latest warning.

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Odds are, the $1.2 trillion Infrastructure Investment and Jobs Act—which is still up for debate but is expected to be passed by Congress later this month—will incentivize privatization in some form or fashion.

As it stands, the bill would allow for more use of private activity bond financing. Private activity bonds, or PABs, are a key financing tool for so-called “public-private partnerships,” or P3s.

P3s are essentially expensive loans that hand some level of control over roads, water systems, school buildings, and other public infrastructure to corporations and private investors. Meaning, despite the warm and fuzzy name, they’re definitely a form of privatization.

Particularly worrying, the bill would also require the use of a problematic procurement tool—called a “value for money” analysis—that’s been causing issues for state and local governments for years.

When a state, locality, or school district wants to explore using a P3 instead of using tried-and-true traditional public financing, they often perform one of these analyses. Sparing you the wonky details, value for money analyses are often biased towards the private sector and chocked full of unfounded assumptions. In other words, they don’t provide an accurate comparison between private and public financing.

Ontario, Canada, learned that the hard way. After going on a P3 frenzy starting in 2001, they decided to take stock of their decision-making. A 2014 audit found that 74 out of 75 projects ended up being more expensive than their initial value for money analyses had estimated—a total of $8 billion more expensive.

Why would our federal government want to incentivize these types of deals? You tell me.

Senators Rob Portman (R-OH) and Joe Manchin (D-WV) slipped the requirement for value for money analyses on federally supported transportation loans into the bill in August. Maybe the fact that Manchin has received more campaign contributions from financial firms than any other industry—including from CBRE, a real estate firm actively pushing P3s—has something to do with it.

Regardless of why, we should prepare ourselves. That’s why we just put out some guidance on value for money analyses—why they’re often problematic and how to do them better.

It’s wonky stuff—so don’t be surprised if your eyes glaze over. The point is to get it into the hands of decisionmakers in your town, city, council, school district, and state.

Email this to your representatives and let them know what’s coming with the infrastructure bill. As always, if you need help understanding or explaining things, get in touch.

Jeremy Mohler
Communications Director
In the Public Interest

In the Public Interest
1305 Franklin St., Suite 501
Oakland, CA 94612
United States

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