Addressing the Infrastructure Gap
Insight Nuria Haltiwanger, CEO of ACS Infrastructure, discusses the infrastructure gap in North America, and how the P3 model can be used to modernize the continent’s infrastructure.
Nuria Haltiwanger, CEO of ACS Infrastructure, discusses how the public-private partnership model can be used to upgrade and develop infrastructure throughout North America.
Mediaplanet: For those who aren’t as familiar with public-private partnerships, please tell us a bit about it, and why they are so important to North American infrastructure development?
Nuria Haltiwanger: Public-private partnerships or P3s are long-term contracts between public authorities and private developers used to deliver capital infrastructure projects, whereby the long-term risks related to operations and/or maintenance and lifecycle of a newly built asset are retained by the private consortium who are also in charge of their construction.
P3s are a project delivery tool that has become increasingly more important in tackling the significant infrastructure deficit that exists throughout North America. In a P3, at least a portion of the initial capital expenditure is generally financed through private funding, which can help accelerate the delivery of the infrastructure, since public authorities do not necessarily need to have all of the money upfront to pay for the construction, as they would in a traditional design-bid-build delivery model.
This aspect, as well as the overall successful track record for more cost and schedule certainty, make P3s an important tool in addressing infrastructure needs throughout Canada and the U.S.
MP: What are the main differences between the Canadian and U.S. P3 market? How does ACS see those two markets as being similar, and different?
NH: Canada is an international leader in P3s, and has successfully implemented over 200 of them. We at ACS/Dragados have had the honour to be able to work in partnership with all levels of government on these projects. Nine of our assets in our North American portfolio are based in Canada, with an investment value of over $16 billion.
In the U.S., P3s are still relatively new, although gaining interest from various levels of government. One of the big differences between the U.S. and Canadian markets is that Canadian P3s tend to be availability-payment based models, while the U.S. has a significant number of demand/traffic-risk projects which are dependent on tolling or other user fees.
There are a number of states in the U.S., for example, that can only do demand-risk P3s because they lack legislative authority to make availability-payment transactions.
MP: How does the North American P3 market overall compare internationally?
NH: Our international portfolio currently holds 55 assets located in different international markets. At ACS/Dragados we continue to see Canada, and its procurement entities, as a global lead in P3s.
Canada has traditionally been a market with certainty in the pipeline and in the timing for procurement, with stakeholder support for infrastructure delivery.
Canada has also been an open market that fosters competition from both local and international market players. This, along with the ambitious infrastructure plans at all levels of government, continues to make Canada a strategic market for us.
Similarly, we are also encouraged by the focus on infrastructure development that the new administration in U.S. has espoused. We will continue to commit and invest resources in helping advance that development in North America.
MP: Could you touch on one or two of your projects that are about to be made public, and the major lessons/insights you learned from the projects overall?
NH: We have been very lucky this year to be part of two unique opportunities that really demonstrate the value that P3s can help bring.
In March 2017 the City Council of Ottawa agreed unanimously to embark on the implementation of the second stage of its transit plan. ACS played a predominant role in supporting the city during the development of the various alternatives that were contemplated for the procurement of the infrastructure, in particular the East and West extensions to the original Confederation Line.
Our team was also instrumental in negotiating the final arrangement, one that provides value-for-money to the city, fosters open competition, and ultimately consolidates ACS’ status as developer of Ottawa’s world-class LRT system.
The other project was the rehabilitation and renovation of the historic Angels Flight funicular railway in downtown Los Angeles, California. The railway is an iconic L.A. landmark, which was originally built in 1901, but which had sat idle since 2013.
We were able to team with the city and a local non-profit dedicated to its preservation to establish a P3, whereby an ACS/Dragados-led team helped implement necessary safety upgrades, while preserving historic elements of the cars and station. We will operate the system for the next 30 years, taking full fare-box risk on the asset. The agreement includes a revenue-sharing mechanism where certain amounts can go back to the non-profit to be used for charitable purposes around downtown L.A.