A newly established advisory board has presented U.S. Transportation Secretary Sean Duffy with a comprehensive set of recommendations designed to fundamentally reshape how the nation finances and develops its public infrastructure. Comprised of leading experts from the finance, legal, and public-private partnership (P3) sectors, the panel’s guidance aligns directly with Secretary Duffy’s goal of significantly increasing the role of private capital in revitalizing America’s roads, bridges, and transit systems. The central thesis of the board’s report is that a strategic pivot away from historically inefficient government-funded models toward more agile, privately led initiatives is essential for addressing the country’s pressing infrastructure deficit. These proposals represent a concerted effort to create a more attractive and streamlined environment for private investors, potentially unlocking billions of dollars for critical projects across the country.
A New Federal Framework for P3s
The Call for a Centralized P3 Office
At the core of the advisory board’s strategy is the ambitious proposal to establish a federal P3 office, a centralized entity tasked with championing and facilitating public-private partnerships nationwide. This dedicated office would function as a national hub of expertise, moving beyond the current fragmented approach where state and local governments often navigate the complex P3 landscape with limited federal guidance. Its primary responsibilities would include identifying the most promising infrastructure projects suitable for private investment and developing a suite of standardized documents, such as Requests for Proposals and model contracts. This standardization aims to reduce transaction costs, shorten procurement timelines, and lower the barrier to entry for smaller municipalities that lack the internal resources to develop these complex agreements from scratch. Board member Robert Valentine of Macquarie Group stressed that a “laser-focused” team, unburdened by the day-to-day operational duties of existing Department of Transportation staff, is critical for success. He pointed to Virginia’s successful state-level P3 office as a proven model that demonstrates how a dedicated unit can effectively accelerate project delivery and attract significant private capital.
Overcoming Traditional Inefficiencies
The push for a new federal framework is rooted in a strong consensus among the advisors that the traditional, government-led approach to infrastructure projects is plagued by systemic inefficiencies. Historically, public works have been susceptible to significant budget overruns, prolonged delays, and a lack of innovation, which ultimately diminishes the value delivered to taxpayers. The advisory panel argues that the P3 model offers a potent solution by transferring significant risks—such as construction, financing, and long-term maintenance—from the public sector to private partners who are better equipped to manage them. In a typical P3 arrangement, the private entity is contractually obligated to deliver the project on time and on budget, with performance-based payments creating powerful incentives for efficiency and quality. By fostering a competitive environment and leveraging private sector expertise in project management and finance, the proposed P3 office would not only accelerate the delivery of new infrastructure but also ensure that these assets are maintained to a high standard over their entire lifecycle, offering a more sustainable and cost-effective alternative to the status quo.
Financial Incentives and Innovative Models
The Strategy of Asset Recycling
To generate a new and sustainable source of funding for infrastructure, the advisory group strongly advocated for policies that encourage “asset recycling.” This innovative financial strategy involves governments selling or leasing existing, revenue-generating infrastructure assets—such as toll roads, airports, or ports—to private entities. The proceeds from these transactions are then contractually earmarked and reinvested into new, critically needed infrastructure projects that might otherwise go unfunded. The board proposed a two-pronged approach to spur the adoption of this model across the country. The first component involves using federal funds as a “carrot,” offering bonus grants or other financial incentives to state and local governments that successfully complete an asset recycling transaction. This would motivate public entities to monetize underutilized or mature assets, unlocking the capital value held within their existing portfolios. The second component focuses on making these deals more financially attractive through regulatory reform, creating a powerful synergy that could establish a revolving fund for perpetual infrastructure renewal without placing additional burdens on taxpayers.
Reforming Municipal Bond Regulations
A key technical recommendation designed to make asset recycling more financially viable involves a significant change to federal regulations governing municipal bonds. Under current law, when a public asset financed with tax-exempt municipal bonds is sold or leased to a private entity, those bonds must be paid off immediately. This requirement can be a major financial impediment, as it forces the private buyer to secure additional, often more expensive, financing to cover the retirement of this debt, thereby reducing the net proceeds the government receives from the sale. The advisory panel has proposed loosening this restriction to allow the tax-exempt bonds to remain outstanding even after the asset is privatized. This seemingly minor regulatory tweak would have a profound impact, as it would significantly lower the overall financing cost for the incoming private operator. In turn, the private partner could offer a higher upfront payment to the government for the asset, maximizing the public’s return and making the entire transaction substantially more appealing for both sides. This change is viewed as a critical enabler for unlocking the full potential of asset recycling programs nationwide.
A Vision for the Future
The Hudson River Corridor a Tangible Example
To illustrate the transformative potential of their proposed framework, the advisory group presented a tangible and ambitious project: a new bridge-and-tunnel transportation corridor connecting New Jersey and Manhattan. Described as a “game-changing” initiative, this project envisions a complete rethinking of traffic flow into one of the nation’s most congested urban centers. The plan calls for separating commercial and passenger traffic, with commercial vehicles routed through a new, dedicated Hudson River tunnel while a new, modern bridge would serve passenger vehicles, cyclists, and pedestrians. Board members contended that this strategic separation would dramatically improve traffic efficiency, reduce congestion, and enhance safety for all users. Critically, they asserted that the entire multi-billion-dollar corridor could be financed, designed, built, and operated as a comprehensive public-private partnership, requiring no direct taxpayer funding. Secretary Duffy noted that such large-scale, visionary ideas align with President Trump’s preference for “big projects,” positioning the corridor as a prime example of the kind of transformative infrastructure that could be realized under this new, privately-funded model.
Forging a Lasting Legacy
The comprehensive proposals submitted by the advisory board represented a foundational effort to establish a new and more efficient paradigm for American infrastructure delivery. Secretary Duffy expressed his support for the board’s work, articulating a hope that the resulting model would create a durable legacy of innovation that endured well beyond the current administration. The panel’s recommendations were not merely a collection of isolated ideas but a cohesive blueprint designed to systematically remove barriers to private investment and foster a culture of partnership between the public and private sectors. The focus on creating a federal P3 office, incentivizing asset recycling, and reforming financial regulations aimed to construct a self-sustaining ecosystem for infrastructure development. Ultimately, the successful implementation of these strategies was envisioned as the key to unlocking the private capital and expertise needed to modernize the nation’s critical assets and secure its economic competitiveness for generations to come.
