by Eric M. Gruzen
Reason Foundation
March 25, 2014
In recent years, one approach to infrastructure construction upon which the state and local governments have increasingly relied is the public-private partnership (“P3”). P3s place on private entities a broad range of project responsibilities and risks, some of which traditionally have been borne by public agencies alone. Typically, a P3 agreement calls on the private partner to not only design and build a facility, but also finance, operate and maintain it. In exchange, the private party may be entitled to tolls or user fees that the facility generates, or may receive direct payments from the government. California statutory law authorizes the use of P3s for certain state and local government projects, and an ongoing debate has arisen surrounding a major P3 project in Long Beach. However, in a landscape of intense budgetary constraints and fiscal austerity, P3s offer government agencies in California and across the nation an alternative mechanism for financing much-needed infrastructure projects.

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