Proposed Public-Private Partnership Projects for U.S. Inland Waterways Infrastructure Financing, Operations, and Governance
May 1, 2014
Melvin Price Locks and Dam on Upper Mississippi River Source: USACE
The present rate and pace of federal reinvestment likely cannot ensure the reliability of the aging U.S. inland waterway system. Soy producers have served as leaders in calling attention to the need to examine alternative financing strategies to keep our navigation infrastructure sound and producers globally competitive and to explore innovative solutions in a timely fashion.
Recently, The Horinko Group (THG), on behalf of the U.S. Soybean Export Council (USSEC) in collaboration with the Soy Transportation Coalition (STC), completed a report entitled, Proposed Public-Private Partnership Projects for U.S. Inland Waterways Infrastructure Financing, Operations, and Governance. The report, released earlier this week by STC (see press release), presents the case for an alternative financing strategy to encourage greater private participation in the operations, repair, and maintenance of the inland waterway system. THG’s effort examines the existing financing mechanisms, funding levels, operating practices, and governance arrangement and focuses on practical solutions offered by public-private partnerships (P3s). This analysis, funded by the National Soybean Checkoff program, could further inform efforts to shape a proposed Non-Federal Project Implementation Pilot Program put forth in both the House and Senate versions of the pending Water Resources Reform and Development Act (WRRDA) legislation.
“THG’s report provides producers, policymakers, and potential investors with additional insight regarding the nature and structure of P3s, and looks downrange to consider next steps to the implementation of a P3 project,” says Philip Bradshaw, Illinois producer and former Chair of the U.S. Soybean Board. “A P3 pilot project will address the system’s critical infrastructure early on, as well as provide a model for future expanded efforts. A need exists to begin engaging the investor community to arrive at the requirements of a P3 contract for a specific project, thereby moving the effort more quickly towards locating and engaging potential joint venture partners.”
THG’s report provides a regional perspective focused on a critical segment of the inland waterway system. The contribution of locks on the lower Illinois River and the Upper Mississippi River to agricultural interests, including soybean growers-exporters, is well documented and central to the report’s findings and recommendations.
“Investors will need an accurate picture on condition, current and projected use, cost and revenue data. Investors and their partners will not even engage if there are simply too many unknowns,” says Patrick McGinnis, THG Senior Advisor and Corps retiree. “In the Mississippi Valley, the Corps regionally has been advancing efforts to produce an accurate condition assessment of their navigation portfolio which will provide a necessary starting point for discussions regarding what a specific P3 contract would entail and what private investors would be taking on.”
“Deciding to experiment or test P3s is step one, step two is actually identifying the opportunities offered by a P3 that investors and their partners could successfully finance and undertake,” says Professor Lewis Solomon of The George Washington University Law School, principal report author and THG Senior Advisor. “Fortunately, the condition and priorities for one of the busiest corridors in the system are known. Frankly, we don’t believe this should be approached as an experiment, but rather a planned effort to meet the current maintenance backlog and ensure the system is operationally ready to handle current and future traffic in a safe and reliable fashion.”
THG briefed the results of its analysis to the Board of the STC on February 26, 2014 during the Commodity Classic in San Antonio, TX. In addition to presenting an overview of the report, THG recommended a path forward of next steps to formulate a strong regional pilot P3 project and recruit private investors and joint venture partners.
The Horinko Group looks forward to assisting with advancing this important dialogue. For additional information on the report or next steps being considered, please contact Brendan McGinnis at bmcginnis@thehorinkogroup.org.
To view the full report, visit http://bit.ly/THGInlWatP3Rpt