A significant piece of legislation recently filed in the U.S. House of Representatives and Senate could lead to significant job creation and the availability of billions of dollars in bond financing opportunities for the construction of public buildings.

For construction companies active in the public-private partnership (P3) or design-build arena, the bipartisan Public Buildings Renewal Act (S. 3177/H.R. 5361) represents a fountain of new work opportunities building or rehabilitating many outdated and dilapidated government-owned facilities—such as public schools, post offices, prisons, courthouses and libraries—that need to be replaced. The companion bills would allow state and local governments to establish P3s for infrastructure improvements through the creation of at least $5 billion in new private activity bonds for public buildings.

The Performance Based Building Coalition, comprised of some of the world’s largest construction industry players and trade associations, heavily advocated for the proposed legislation. Supporters include engineering firm AECOM, insurance giant AON, the American Council of Engineering Companies, Associated Builders and Contractors, and construction firms Hunt Construction Group, John Laing, PC Construction, Skanska, Tishman and many others. Beyond the coalition, the vast majority of the nation’s governors are proponents of the companion bills. 

In a performance-based P3, a private partner designs, constructs (or rehabs), finances and may provide facilities management services under a long-term contract spanning 25 to 40 years. The public entity continues to own the facility, but having a private partner integrate all of the project activities leads to substantial cost savings and superior quality compared to traditional public procurements with an assortment of parties involved. In the last decade, performance-based P3s have facilitated $10 billion in projects and created thousands of high-wage U.S. jobs.

To date, P3s have only been able to tap into the tax-exempt private activity bond funding for transportation projects. California, Colorado, Florida and Texas have been at the forefront of transportation P3 projects, including Florida’s $2.3 billion I-4 Ultimate Improvement Project, Texas’ $847.6 million SH 183 managed lane project and Colorado’s $120 million US 36 project. Despite the leadership of these states in the P3 arena, their ability to repair and replace hospitals, libraries, police stations and many other public buildings is severely limited by the absence of available tax-exempt financing, or private activity bonds, for such projects.

Nearly all U.S. transportation P3 projects have successfully accessed federal financing, with 75 percent taking advantage of private activity bonds, according to the sponsors of the Public Buildings Renewal Act. More than $18 billion worth of transportation P3 projects have moved forward throughout the nation since 2008. Collectively, those projects have enjoyed a $5 billion cost savings due to the availability of tax-exempt bonds and the lower interest rates they carry.

Under the Public Buildings Renewal Act, state and local governments would have a chance to submit a detailed funding application to the Treasury Department. Once the department approves the allocation of funds for a project, the funding sources would have to issue the bonds within two years. Any allocated funding that is not used during the two-year period would go back to the federal government.

If the Public Buildings Renewal Act is adopted, competition for private activity bonds likely will be fierce. States ahead of the curve can leverage their leadership in the P3 sector and track record of highly successful projects to emerge from the pack.


Al Maloof is managing partner of GJB Consulting LLC, an affiliate of the Florida law firm Genovese Joblove & Battista P.A., and is a legislative and policy analyst for the National Performance Based Building Coalition. For more information, email al.maloof@gjb-law.com.