Don't Restrict Joint Muni-Finance, P3 Lawyer Warns

06.27.2013
The Bond Buyer

Nossaman Partner Simon Santiago was featured in The Bond Buyer's article "Don't Restrict Joint Muni-Finance, P3 Lawyer Warns."  Mr. Santiago is quoted extensively throughout the article as he provides his perspective on the role of federal policy on infrastructure finance and the importance of continuing support for public-private partnerships.  He points out that challenges include structuring and coordinating procurements and financial closings with the various processes and requirements of federal aid programs and doing a better job explaining the pros and cons of the financing methods.  Mr. Santiago is quoted as saying, "We need to have an honest dialogue. What are the reasons for going public-private partnership?  How does that benefit the public at large?  Especially when it comes to tolling.  If they're not accustomed to user fees, that is something you need to address head-on."

The fact that the Senate's Water Resources Development Act bill would enact a federal loan program for water infrastructure, Water Infrastructure Finance and Innovation Act (WIFIA), but would prevent borrowers from using tax-exempt bonds has sparked a discussion around TIFIA loan restrictions.   Mr. Santiago points out that restricting the ability of projects to use both tax-exempt debt and low-interest federal loans would pose a challenge to some P3 projects, 

"That's a concern, and definitely something that the P3 industry is monitoring," he said. "That would somewhat dilute the utility of using TIFIA."

Mr. Santiago added, "We hope that you can use all of the tools in the toolbox, and you don't have to use one or the other, or be disadvantaged in any way if the project financing structure wants to use both TIFIA and tax-exempt bonds."

Regarding the increased usage of the availability payment structure, used notably in Florida, Mr. Santiago said that "whether that trend is going to continue remains to be seen but it appears that those type of deals are very attractive to the private sector."

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