As the federal deficit squeezes the Obama administration's options for financing ambitious new infrastructure projects, public-private partnerships (PPPs) are gaining currency as a possible solution. And in an illustration of PPPs' potential, the $86 billion private-equity firm Carlyle Group yesterday struck a deal with the state of Connecticut to run ... 23 highway rest stops.
The future of public-private partnerships? Hopefully not. (Photo: Time Out NY)The $178 million Connecticut deal is the first PPP in the three years since Carlyle began raising money for its $1.15 billion infrastructure group, according to the Washington Post:
[T]heagreement ... will include putting Subway restaurants as well asDunkin' Donuts locations in the centers, according to a Carlylespokesman. Dunkin' Donuts is owned by Carlyle.
Meanwhile, the same Connecticut governor who called Carlyle's donut investment "an unprecedented commitment to ... meeting the needs of the traveling public" recently vetoed legislation that would have eliminated the need for significant transit fare hikes.
Is this what President Obama meant when he called for "more creative, new approaches" to fixing "infrastructure that is falling apart"? Let's hope not.
Given that government audits have found existing federal transit regulations riddled with obstacles to attracting successful PPPs, perhaps it's not surprising that Carlyle chose to go the donuts route rather than collaborating on Connecticut transit-oriented development projects in the vein of the New York MTA's Beacon Station revitalization.
But that's no reason for Carlyle to take a victory lap while plans for a National Infrastructure Bank (NIB) remain frustratingly unclear. If the administration follows through on its NIB plans, information-sharing and incentives will be needed to prod private capital into genuinely beneficial projects rather than new fast food joints.
For a taste of how groundbreaking federal infrastructure PPPs could happen on the local level, this presentation [PDF] by the deputy general manager of the Boston area's Massachusetts Bay Transportation Authority is a good place to start.
