JETRO attends the IPFA P3 panel discussion at the USC Davidson Conference Center | Print |

By Stephen T. Tanaka
Research & Technology Division, JETRO Los Angeles
Tuesday, December 8, 2009

Los Angeles, CA – The International Project Finance Association (IPFA), together with Aon Corporation and the University of Southern California (USC) Keston Institute for Public Finance and Infrastructure Policy, hosted a seminar to discuss public private partnership (P3) opportunities at the USC Davidson Conference Center. The distinguished panelists discussed the advantages of P3 procurement, and their relation to future infrastructure projects in California.

Peter Luchetti, Partner at Table Rock Capital, stated that his firm has identified 26 potential P3 projects in California for the year 2010 alone, which reflects a 'world class' opportunity for infrastructure investments in comparison to other global projects.

According to Secretary Dale E. Bonner of the California Business, Transportation and Housing Agency, California is already implementing a 20 year plan to spend a projected $10-20 billion on infrastructure alone. This statement comes during a time when California is facing a deficit of approximately $20-21B come January 2010, despite the fact that approximately $60 billion has been cut out of the budget over the last 2-3 years.

Much of the current deficit is derived from public infrastructure that was planned 30-50 years ago and was designed for a lower projected population. In light of legislation signed in February 2009 by Governor Arnold Schwarzenegger (Senate Bill X2 4), the government is now looking at P3s for project procurement in order to address the rapidly growing population of California.

P3 procurement offers the advantages of utilizing private funding while providing increased transparency, project acceleration, risk transfer and lifecycle cost savings. Luchetti stated that governments can expect to save a realistic, bottom-line 15-30% in savings compared to traditional procurement procedures.

The Public Infrastructure Advisory Commission of the California Business Transportation and Housing Agency has identified 10 potential P3 projects, which include: (1) Riverside SR-91 local freeway, (2) I-710 Freight Corridor, (3) Gerald Desmond Bridge, (4) I-710 Tunnel, (5) Schuyler Heim Bridge, (6) Caltrans office buildings D-6 & D-12, (7) San Diego SR-11 & Attendant Roadway, (8) 101 Doyle Drive, (9) MTC Express Lane Network and (10) High Desert Corridor1.

The panel focused their discussion on the SR-710 North Gap Closure ($780M) and I-710 South ($590M) projects, which serve to improve truck traffic flow between the ports of Los Angeles and Long Beach in the south, and expand the connection between the SR-710 and I-210 freeways in the north. Both 710 projects will be funded under Measure R, which was passed by Los Angeles County voters in November 2008, for which a projected $40B will be used to provide traffic relief and transportation upgrades (streets, highways, bus service) throughout the county over a course of the next 30 years.

A complete list of the current and on-going Measure R projects can be found on MTA's Measure R Projects Tracker at: http://www.metro.net/measurer/default.asp

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Other participating panelists included Kurt Ramey, Partner at KPMG, Richard G. Little, Director of The Keston Institute for Public Finance and Infrastructure Policy at USC, and Allan T. Marks, Partner at Milbank, Tweed, Hadley & McCloy LLP. The panel was moderated by Danette Jones of Aon Corporation.

The IPFA is a not-for-profit organization dedicated to project finance and providing assistance for developing infrastructure in countries around the world. IPFA is one of the largest project finance organizations in the world. http://www.ipfa.org/

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1 http://www.publicinfrastructure.ca.gov/page.asp?o=cabth&s=PIAC&p=383078