Thursday, U.S. Senators Todd Young (R-Ind.) and Catherine Cortez Masto (D-Nev.) introduced the Public Buildings Renewal Act of 2019, which incentivizes private financing 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.
“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. 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,” said Senator Young.
“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. 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,” said Senator Cortez Masto.
“Whether it be police stations, court houses, hospitals, or schools, our nation’s infrastructure is one of the most important assets we have. Having the private sector involved in our infrastructure projects allows us to tap into innovation and technology that the public sector may not otherwise have access to,” said Senator Scott. “When we allow public buildings to be eligible for Private Activity Bonds, we reduce the cost of capital for public-private partnerships hoping to invest in our neighborhoods and communities.”
“There are hundreds of billions of dollars in deferred maintenance for public buildings across our country, including for schools, fire stations, and public hospitals. In every community, children should be able to receive a world-class education and public servants should be able to do their jobs in environments built for the 21st century. Our bill would help state and local governments make that a reality,” said Senator Bennet.
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 financing 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 building 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.
To view the bill text, click here.
