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Construction Law Authority / Public Construction  / Could Fiscal Cliff Talks Provide Fuel for Public/Private Partnerships?

Could Fiscal Cliff Talks Provide Fuel for Public/Private Partnerships?

The Wall Street Journal reported today that, among the talking points for fiscal cliff avoidance, the government is considering removing the tax exempt status of municipal bonds, which would severely limit the borrowing power of local governments. If this happens, the cost of private capital to fund public facilities and infrastructure would not be so out of whack compared to the cost of public borrowing. This would encourage more public/private partnerships. Currently, when considering alternatives for financing public construction, public agencies compare the higher costs of private capital to the lower costs of issuing municipal bonds. That is one of the factors that could weigh in favor of traditional procurement techniques over public/private partnerships. However, if the tax exempt status of municipal bonds is removed, this would no longer be a factor in favor of traditional procurement. 

Keep an eye on this. If in fact public financing becomes less attractive and the pending public/private partnership bill passes in Florida, P3s in Florida may become much more prevalent in future public construction.

Lee Weintraub

Lee Weintraub

lweintraub@bplegal.com

At age 46, Lee Weintraub was the youngest recipient ever of the Lifetime Achievement Award from the Florida Bar’s Construction Law Committee. Mr. Weintraub is also an adjunct professor of law at Nova Southeastern University Shepard Broad College of Law teaching construction law. Mr. Weintraub has been recognized by Chambers USA – America’s Leading Business Lawyers every year since 2003. Chambers USA noted he focuses on licensing and construction defect litigation, but is particularly renowned for his expertise in the Construction Lien Law. He was also selected in the The Best Lawyers in America© every year from 2006 through 2018.

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