Is P3 Legislation A Good Thing?

Editor’s note: Shane Stacks is a Republican Pulaski County Justice of the Peace representing District 15, a portion of North Little Rock. He can be reached by email at [email protected].

Legislation to provide a framework in Arkansas for Private-Public Partnerships may not sound exciting or fashionable amid the current hot button topics in the 2013 legislative session, but I suppose it’s fashionable to refer to it as P3 seeing as how other states do. A clever wit might take to calling it “P Cubed.”

If you’re State Rep. Warwick Sabin (D-Little Rock), you call it a way to solve public infrastructure needs when there’s not enough public money at hand to do the job. P3 in effect allows private entities to work with public entities for infrastructure projects, which are broadly defined to mean “for public use.”

Sabin is lead sponsor of HB 1251, which has a rather long and important name and is Arkansas’s very own chance at implementing P3 legislation. To hear from Rep. Sabin himself on the subject, check out Roby Brock’s February 15 interview with him.

The basic problem P3 solves is providing for public infrastructure needs when public money isn’t possible using private investment and private capital while at the same time providing a framework with safeguards and oversight.

I have to admit, my personal bent was to be very cautious of what this sounds like on the surface, which to my ears sounded a lot like blurring the lines between private and public entities. I’m not a fan of that, and hoped that P3 wasn’t along those lines.

Turns out, it really isn’t. After talking with Rep. Sabin to get the details and also learning that now that HB 1251 has passed the House it will be carried into the Senate by State Senator David Sanders (R-Little Rock) I am fairly confident that this legislation and the goals behind it are both non-sinister and non-partisan.

I would also like to stress that under HB 1251, public money or debt cannot be leveraged to the benefit of a private entity, only the other way around. In other words, there are safeguards to prevent a private entity exploiting public money (the ever-popular taxpayer money). No public money would be at risk.

Let’s take this out of the abstract and look at how this might apply in the real world. And believe it or not I’m not going to talk about a toll road even though P3 is often looked at as a way to solve road needs when the money just isn’t there.

Recently, the Pulaski County Quorum Court was asked to approve an agreement between the Pulaski County Judge and the State Highway and Transportation Department to enhance a proposed design to replace the Broadway Bridge that connects Little Rock and North Little Rock over the Arkansas River.

The Broadway Bridge is reaching the point where it needs to be replaced before it becomes unsafe (please note it is currently safe). Our Highway Department planned to replace it at no extra cost or tax burden. Judge Villines and others began pushing for something more signature to do something above par for this once in a hundred years opportunity.

This new design includes some very creative elements and is also intended to be a memorial to our military veterans. If you aren’t aware, the existing Broadway Bridge was dedicated to veterans of World War I. Proponents feel it will add to the aesthetic and tourist appeal of the Little Rock metro.

Problem is, like so many good ideas, where does the money for the extras come from? Government, like everything else, has a budget and limited resources.

As already pointed out, the Highway Department was going to provide us a safe, nice new bridge for $59 million at no additional cost or tax burden. The enhanced version costs $20 million more, with the agreement the Pulaski County Justices of the Peace being asked to approve making the Pulaski County Road & Bridge budget shoulder the entire burden.

Given that Pulaski County’s yearly general budget is roughly $60 million, is it the best stewardship of taxpayer money to spend a third of a yearly budget on something that is nice but not necessary, especially when there are existing county infrastructure needs that require our attention on an ongoing basis?

Ultimately, five JPs including myself voted against this proposal. I am not against the bridge design and in fact being a veteran I rather like it. Yet I couldn’t justify what I feel is fiscal irresponsibility in committing to the extra $20 million in just taxpayer money, especially with it hitting just one budget.

Did you catch that? I couldn’t commit to having just Pulaski County fess up the funds when other government and private entities will benefit. According to the arguments we heard for the bridge, tourism would increase which means Little Rock and North Little Rock will benefit from tax revenues (not to mention they get a nice new bridge) and local businesses will have more business to generate those tax revenues.

During public debate, myself and others pointed out it would be nice for multiple entities to work together on enhancing the bridge if it was really such a good idea to do so. In other words, if the community wants it, the community will show they want it with real support. Not only would that be a good litmus test since this wouldn’t be a ballot issue, but it would also help offset the financial burden to any one entity. It was even directly pointed out that a group who really desired the enhanced bridge could offer to fundraise via a capital campaign.

The end game was ten yes votes against five no votes, which was enough to pass the agreement. We’re getting the enhanced Broadway Bridge at an extra cost of $20 million.

As a steward of county taxpayer money, this really bothers and offend me. It just doesn’t feel right and it seems like we have failed the public trust.

But let’s consider a scenario if P3 was in play. Keep in mind this is just a hypothetical scenario and not something that has been proposed.

The new bridge will have stations or kiosks along it with historical information on past wars and also medal of honor recipients. Perhaps it will have those telescopes you put a quarter in to use as well. I’m not sure of all the plans, but the point I am making is this is intended to be a bridge people will walk on and read things and look at interesting stuff.

Somewhere in all that, would there be a possibility of private investment? I certainly think there could easily be.

So let’s bring a P3 proposal to this project and have local private capital in the mix to help offset the cost of the upgrades (remember, we were already getting a $59 million bridge at no extra cost).

You would have a public entity working with a private entity — think of it as “the community showing they want it” — resulting in an enhanced bridge but without the Pulaski County budget, which I am charged with stewarding, taking it directly on the chin and disrespecting our taxpayers. Under P3 legislation, there would also be oversight and guidelines for protection and oversight.

I’m not saying I would have definitely gone with that, I would need to see specifics first, but in general I like the idea a lot better than what was brought to us to approve and which I voted against.

You might say I would think of it as building a bridge with interested parties to get something better.