Washington, D.C. – U.S. Senators Catherine Cortez Masto (D-Nev.) and Todd Young (R-Ind.), members of the Senate Finance Committee, introduced the Public Buildings Renewal Act of 2019, which incentivizes private investment to rebuild schools and public buildings through public-private partnerships. Senators Tim Scott (R-S.C.) and Michael Bennet (D-Colo.) also joined as cosponsors of the bipartisan legislation that aims to spur needed infrastructure improvements.
“Throughout Nevada, I’m hearing from teachers and administrators about the need for critical investments in infrastructure for our public schools that have long deferred crucial maintenance, repairs, and construction. Public libraries, hospitals, courts, police and fire stations across our country face similar challenges,” said Senator Cortez Masto. “Congress can cut red tape today to keep our citizens safe and prolong the lifespan of our public buildings. I’m proud to join Senator Young in this effort to remove barriers to investing in critical infrastructure and improve the condition of our nation’s public buildings.”
“We owe it to our students and teachers, our firefighters and nurses, and all taxpayers to find a way to upgrade our schools and public buildings. This is a public health and safety issue that impacts not just Hoosiers, but all Americans,” said Senator Young. “Our bill will enable local governments to access private financing to support public building projects for the first time, so that much needed building upgrades can occur. I look forward to working with my colleagues to advance this critical legislation.”
In the United States, public-private partnerships (P3s) have been primarily used for transportation projects and are currently ineligible to use federal tax exempt facility bonds. The Public Buildings Renewal Act would open the American public buildings market to P3s. By adding public buildings as a new class of projects eligible for financing with Private Activity Bonds, state and local governments can more easily invest in public building projects, such as schools and hospitals. By creating a $5 billion Private Activity Bond allocation for state and local governments, public buildings can access private investment for the first time. In 2017, this legislation was estimated to reduce revenues by $18 million over 5 years and $48 million over 10 years by the Joint Committee on Taxation.
Once enacted, state and local governments would be able to enter into long-term contracts with a private sector company to design, build, finance, and/or operate the building for a defined period of time. Private investment in public buildings provides state and local governments with access to private capital, accelerated project development, reduced risk, and the ability to spread out payments over the length of the contractual term. The ownership of the building, however, would always remain with the government entity.