Like a mortgage, except the “bank” also mows the lawn, changes the air filters, and cleans the gutters
Private-public partnerships are most often associated with toll roads and airports, where the economics are straightforward. Private companies invest in construction and are repaid through tolls, airline fees, or other concessions as the public uses the facility. What’s less evident is how P3s apply to infrastructure that doesn’t generate direct revenue, or so called “soft” infrastructure: schools, parks, courthouses, and post offices to name only a few. These are vital civic assets and can benefit from P3 structures just as much as traditional concession models, even if the financing is less intuitive.
At a time when the American Society of Civil Engineers (ASCE) Infrastructure Report Card rated America’s schools and parks at D+ and C- respectively, both below the national average of C, creative delivery and financing models are essential to rebuild these public assets. Innovative project delivery like P3s are critical not just for cost savings, but overall speed and resilience.
Unlike toll roads, soft infrastructure doesn’t produce direct revenue streams. In these cases, the private investment functions like a mortgage, except the “bank” also mows the lawn, changes the air filters, and cleans the gutters. The P3 entity designs, builds, finances, operates, and maintains the facility under a long-term agreement. Instead of collecting tolls or tenant rent, it is paid through regular availability payments – monthly or quarterly installments spread over the life of the contract.
Private funding provides up-front capital, advancing essential projects even when public budgets are constrained. Schools, parks, and post offices can be built instead of wasting away on waiting lists. Private capital is not subject to the political headwinds that can kill the necessary tax hikes or bond issuance required to build these projects. Additionally, unlike traditional bond financing, the P3 structure shifts the risk of building and operating the structure from the public to the private entity.
These payments are tied to performance metrics written in the agreement. If the contractor fails to maintain the building or meet service standards, payments can be withheld. This structure locks in maintenance funding and ensures consistent service quality. This is particularly important for public facilities that often lose funding when budgets are tightened. These contractual guarantees cannot be reversed midstream, shielding critical public assets from year-to-year funding cuts or deferred maintenance cycles.
A P3’s involvement over the entire life cycle also provides a far stronger warranty. Typical construction warranties last a few years after turnover; a P3 operator remains accountable for 25 to 30 years. The same entity responsible for maintenance also designed and built the facility, aligning incentives to deliver quality materials and systems that last. At the end of the term, performance standards can require the building to meet specified condition benchmarks before ownership reverts fully to the public.
For schools, libraries, parks, courthouses, and other soft infrastructure, that continuity matters. It means roofs don’t leak for years waiting on a capital plan and HVAC systems aren’t left to fail between budget cycles. P3s for soft infrastructure provides something invaluable: predictable funding, long-term accountability, and public assets that are properly maintained.
Written by Aaron Shavel, Policy Fellow
The Alliance for Innovation and Infrastructure (Aii) is an independent, national research and educational organization working to advance innovation across industry and public policy. The only nationwide public policy think tank dedicated to infrastructure, Aii explores the intersection of economics, law, and public policy in the areas of climate, damage prevention, eminent domain, energy, infrastructure, innovation, technology, and transportation.