(This story is part of a Reuters series on infrastructure)
By Michael Erman
NEW YORK, June 8 U.S. voters are increasingly
supportive of privatized investment in the country's
infrastructure, especially in lieu of tax increases or budget
cuts, according to a new poll sponsored by investment banking
firm Lazard (LAZ.N).
The poll, the result of interviews with 1,000 likely voters
nationwide in May, found that 59.8 percent of those questioned
support private investment in public assets like roads,
airports or stadiums. That was up from a support level of 52.2
percent last year and 57 percent in 2007.
"On the broad question of public private partnerships, if
you view that as an available budget tool for governments
together with every other alternative that is a budget tool,
public private partnerships poll better," George Bilicic,
chairman of Lazard's Power, Utilities and Infrastructure
business, told Reuters. "That includes cutting spending,
borrowing more money and raising taxes."
Just over 60 percent of those polled who consider
themselves political moderates favor the spending, according to
Private infrastructure investment has picked up steam in
the United States in recent years. Still, several high-profile
infrastructure deals have been torpedoed under the scrutiny of
voters and politicians, including the failed $12.8 billion
effort to privatize the Pennsylvania Turnpike.
Bilicic stressed that it is important for governments and
investors considering such deals to be able to clearly
demonstrate the benefits of private infrastructure investment.
"The broad question is 'can you structure the private
investment solution in a way that is even more consistent with
the public interest and that would generate even more
SHORTER LEASE LENGTHS HELP
Bilicic said the data in the poll could help government
bodies and private investors understand how to better structure
the deals in order to improve their perception by the public.
"People want their governments to pursue creative solutions
to the fiscal problem," he said. "We see that to be a logical
opening for public private partnerships, assuming they are
properly structured in a manner consistent with legitimate
public policy objectives."
Voters are more likely to back deals with shorter lease
terms, according to the poll.
More than half of the respondents polled said they would be
in favor of renewable 15-year lease terms in new infrastructure
projects. That compares with less than 37 percent support for
lease terms of 20 years, 30 years or longer.
Bilicic suggested that the deals could be structured with a
15-year lease that would automatically renew if certain
operating standards are met -- a structure that could be
beneficial to both investors and voters.
"A shorter lease term polls better, and you can structure
the lease so you can get similar economic benefits as a long
term lease," he said.
The success of a possible deal could also depend on the
type of asset in question.
Private investment in convention centers and stadiums,
trash disposal, parking garages, rail, airports, and roads and
bridges all received more than 60 percent of support in the
poll. Assets like wastewater treatment plants, ports, lotteries
and drinking water systems were all viewed less favorably.
"In the United States, non-energy infrastructure is a brand
new asset class and it's a brand new area of commercial
activity," Bilicic said. "The level of constructive creativity
has been pretty limited and there's a tremendous opportunity
for new structures, new approaches, (and) new ways to work with
governments and stakeholders."