Private firms eyeing public projects
Cities and states need an estimated $1.5 trillion to fix crumbling bridges, roads and utility plants. Taxpayers traditionally have paid for those kinds of projects. But governments are heading for Wall Street to get the job done. John Dimsdale reports.
A construction worker operates a bulldozer while moving pebbles that will serve as abase for concrete as a re-decking construction project continues on Interstate-95 northbound in Philadelphia. (William Thomas Cain/Getty Images)
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TEXT OF STORY
KAI RYSSDAL: More of us were buying couches and computers last month than the experts had been guessing. The Commerce Department told us today orders for what're called durable goods rose almost a percent and a half in July. That's a pretty good jump the way things have been going. And those higher estimates for tomorrow's last report on Q2 gross domestic product are a result.
But real estate prices are in the still in dumps. The stock market's stuck. So, investment banks and private equity firms are looking for places to spend their money. All they need to do is look out the window. By one estimate, financially strapped cities and states need $1.5 trillion to fix up our crumbling bridges, roads and utility plants.
Taxpayers have traditionally been hit up to pay for those kinds of projects. But Marketplace's John Dimsdale reports governments are increasingly heading for Wall Street to get the job done.
JOHN DIMSDALE: Next month, the Pennsylvania legislature decides whether it will earn $13 billion leasing the nation's oldest toll road, the Pennsylvania Turnpike, to private investors. Florida and Chicago are also asking for bids on a highway and airport.
I asked Steve Steckler, of Infrastructure Management Group, why would local governments want to turn their infrastructure over to private operators?
STEVE STECKLER: Because the fact is their assets may be more valuable in someone else's hands. Someone may be able to manage the facility more efficiently, market it more effectively. It's the same equation whether you're dealing with public or private entity.
But Robert Puentes at the Brookings Institution asks why can't local governments run those projects just as efficiently. He thinks they have another motive.
ROBERT PUENTES: We know there is considerable reluctance to raising gas taxes or highway tolls to pay for infrastructure. So in some ways this could be a way to outsource the raising of transportation revenues from the public to the private sector.
Investment banks and private equity firms have amassed $250 billion to spend on public infrastructure. But Steve Steckler says it'll be a while before that happens.
STECKLER: The amount of money that has been raised to this point vastly exceeds the volume of deals out there into which money can be placed.
But that could be changing as governments consider leasing water and sewer projects, electricity plants, even prisons and college dormitories.
In Washington, I'm John Dimsdale for Marketplace.
Comments
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From baltimore, MD, 08/28/2008
The last line of the story about considering privatizing college dorms had one error. The reporter is wrong this is already being done. I worked for a firm that did privatized housing for universities across the country for over 5 years. There is ton of money being invested in these deals. You may want to do a story about that. As the firm I worked for has written over $500 million of development for schools. I worked for the arm that would run these projects for the schools. They can be great for the schools and the governments but like any private/public partnership the details are key.
08/27/2008
It's high time to refute the nonsense. All across the country, public utilities bring reliable and far cheaper power than the IOUs (investor owned utilities).
This is a very BIG deal--and it has absolutely major effects on anything and everything regarding economic development.
I'll be happy to give you details on this, right here in the heartland--but take it to the bank, private ownership and management uber alles is a fundamental Republican FRAUD, and you know it!
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