Commercial Investment Real Estate March/April 2018 | Página 20

LEGAL
BRIEFS
Infrastructure
Conundrum
Public-private partnerships are good solutions for renovating
infrastructure, but the risks are considerable.
by Michael A. Bedke
T
18
March | April 2018
Political Reversals
The greatest risk to most P3 deals is the political risk. The P3
graveyard is overflowing with deals that died because of a shift
in the political winds.
Changes in political leadership can kill projects almost over-
night. Florida’s proposed $2 billion high-speed rail project
between Tampa and Orlando is just one example. Political shifts
kill deals. Time also kills deals.
Critical Timing
Obviously, it is important to understand the structure of the
transaction and establish a meaningful timeline. Be sure to
build in the requisite lead time for considerations such as leg-
islative approvals, tax incentives, referendums, bonds, and
validations.
Adhere to the rules of engagement. For example, during black-
out periods do not get cute or creative for communications.
Strictly adhere to the express terms of the request for quotation
or the request for proposal. These requirements are not aspira-
tional in nature.
COMMERCIAL INVESTMENT REAL ESTATE
he buzz and speculation about a national commitment
to improving America’s infrastructure continues. This
is not surprising with a commercial real estate developer
in the White House and members of both political par-
ties recognizing the need to update our aging roads, bridges,
dams, ports, and other projects of a public or quasi-public nature.
Both Wall Street financiers and Main Street workers usually
embrace these major projects.
Long popular in Europe, the public-private partnership model
has started to mature in the U.S. Several states have adopted
specific P3 legislation. As a result, the sector is expanding
beyond traditional P3 deals into social infrastructure projects
for schools, hospitals, courthouses, student housing, and recre-
ational facilities.
While P3s may involve innovation, efficiencies, a faster path to
market, and a mix of public and private funding sources, result-
ing in attractive interest rates and returns, these transactions
have risks. Each project presents its own unusual business risks.
Other risks also should be considered by those contemplating
participation in a P3.