Cybersecurity
Article | March 23, 2022
We know that an infrastructure bill is coming, and the debate in Congress will likely begin in July. Industry leaders, public officials, think tanks, and economic development organizations have provided lots of input. They know that some of their messages have been heard.
There is no consensus between Democrats and Republicans about how the bill will be structured, but one thing appears certain – Congress must deliver an economic recovery bill. Because infrastructure is considered to be the quickest route to economic recovery, it is safe to assume that large amounts of funding will be allocated to infrastructure projects. Depending on how the final infrastructure bill is structured, the funding could come completely from government or it could be delivered from various types of alternative funding sources.
And, when an infrastructure bill passes, it will almost certainly include funding for the country’s seaports. That’s because America’s sea and inland ports are essential cogs in the country’s economic recovery. Ports have played an incredibly important role in our short-term emergency response to COVID-19. The delivery of vital commodities and products reached recipients through ports. And, despite very difficult times, a vast majority of ports managed to remain open to cargo operations.
Data is always lagging but according to the American Association of Port Authorities, cargo activities at U.S. seaports accounted for 26 percent of the U.S. economy in 2018. A study released by the organization outlines approximately $5.4 trillion in total economic activity and more than $378 billion in federal, state, and local taxes that resulted from economic activity related to ports.
The anticipation of large amounts of revenue through an infrastructure bill is encouraging, but the reality is that there’s already a great amount of activity at most seaports. Planning documents have been completed or updated and contracting opportunities are abundant. Additionally, the potential for public-private partnerships is great.
Florida
The world’s third largest cruise port, Port Everglades, recently received approval from the Broward County Board of County Commissioners for its 20-Year Master/Vision Plan. The county manages the port’s operations, and the plan outlines 50 projects for delivery through 2028. Currently, the projects are projected to cost approximately $3.02 billion. Immediate opportunities include: Terminal 21 redevelopment at a cost of $124 million; the Ro-Ro Yard relocation and expansion for $10 million; upgrades to the Entrance Channel North Wall for $12 million; and other projects estimated at $26 million.
California
The Los Angeles Board of Harbor Commissioners has approved a $1.5 billion budget for Fiscal Year 2020-2021 that includes a $163.6 million capital improvement plan that provides funding for numerous terminal upgrades. Projects include an allocation of $38.1 million for improvements at the Everport Container Terminal and a $4.8 million project designated for the Pasha Terminal. The port’s waterfront public access projects include work at the San Pedro Public Market estimated at approximately $42.3 million. Smaller projects are set for the Wilmington Waterfront Promenade. Security related projects, whichinclude the development of a Port Cyber Resilience Center, are funded at $7.8 million. This port is considered to be North America’s leading seaport by container volume and cargo value, and it facilitated $276 billion in trade during 2019.
Oklahoma
The U.S. Department of Transportation in June awarded a $6.1 million grant to the Tulsa-Rogers County Port Authority for the Tulsa Port of Catoosa. Funding was obtained from the federal Infrastructure for Rebuilding America (INFRA) Program. which provides approximately 50 percent of funding for projects such as the port’s rail switching project. Work will include the improvement of an existing 3-mile industrial rail spur. The completed project is estimated to cost $12.1 million. In 2019, the Public Service Company of Oklahoma entrusted the Tulsa Port Authority with future development of the Inola industrial site by granting an historic land transfer of 2,000 acres. In May 2020, a firm was hired to process survey data so that the project could move forward.
Ohio
A $16 million federal grant was received recently by the Toledo-Lucas County Port Authority. The revenue is designated for a project that will receive an additional $4 million to rebuild and upgrade a mile-long dock wall. The dock-wall reconstruction is expected to take three years to complete and will be done in phases so that port operations can continue unabated. About $6 million of the funding is allocated for construction of a bulk-liquid transfer and storage facility. Currently, the port authority cannot perform liquid cargo movements, but the completion of this project will remedy that as well as allow for multiple sources of commodities.
Texas
The Port of Houston Authority was recently awarded $79.5 million in federal funding to improve 2,700 linear feet of wharf and upgrade 84 acres of yard space at the Barbours Cut Container Terminal. Total cost of the project is $198.7 million. The upgrades will reduce ship delay by providing additional berthing capacity and will decrease truck turn times, idling, and congestion. The port has several other projects planned including an inspection and repair design of wharves at Turning Basin South. Another upcoming project is for construction at the Bayport Terminal Wharf 6. In the fourth quarter of 2020 construction is scheduled to begin on a new maintenance facility at the Barbours Cut terminal.
Washington
A study has been approved by the Port of Woodland to evaluate the potential of a railroad-dependent development on recently acquired port land along Kuhnis Road. The study will provide critical engineering information required for funding applications as well as future port investments. Once funding is secured, contracting opportunities will be available.
There is no doubt that America’s seaports will continue to generate an abundance of contracting opportunities in the future. but contractors now may find projects of interest at almost every port in the nation.
Mary Scott Nabers is president and CEO of Strategic Partnerships Inc., a business development company specializing in government contracting and procurement consulting throughout the U.S. Her recently released book, Inside the Infrastructure Revolution: A Roadmap for Building America, is a handbook for contractors, investors and the public at large seeking to explore how public-private partnerships or joint ventures can help finance their infrastructure projects.
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Government Business
Article | July 14, 2022
With Iran in escalation mood to get n to "Holy War" or "War For Survival of Islam" with Air Striking US and Allied Bases in Iraq which though has hardly given any blow to US Confidence and its Marines deployed there,Iran is going to architect a full blown war which as we know it would feature a series of moves and countermoves, we know it’d be very messy and confusing, and we know it’d be extremely deadly.
But unlike with the path to war, it’s less useful to offer a play-by-play of what could happen. So with that in mind, it’s better to look at what the US and Iranian war plans would likely be — to better understand the devastation each could exact.
How the US might try to win the war
The US strategy would almost certainly involve using overwhelming air and naval power to beat Iran into submission early on. “You don’t poke the beehive, you take the whole thing down,” Goldenberg said.
The US military would bomb Iranian ships, parked warplanes, missile sites, nuclear facilities, and training grounds, as well as launch cyberattacks on much of the country’s military infrastructure. The goal would be to degrade Iran’s conventional forces within the first few days and weeks, making it even harder for Tehran to resist American strength.
That plan definitely makes sense as an opening salvo, experts say, but it will come nowhere close to winning the war.
“It’s very unlikely that the Iranians would capitulate,” Michael Hanna, a Middle East expert at the Century Foundation in New York, told me. “It’s almost impossible to imagine that a massive air campaign will produce the desired result. It’s only going to produce escalation, not surrender.”
It won’t help that a sustained barrage of airstrikes will likely lead to thousands of Iranians dead, among them innocent civilians. That, among other things, could galvanize Iranian society against the US and put it firmly behind the regime, even though it has in many ways treated the population horribly over decades in power.
There’s another risk: A 2002 war game showed that Iran could sink an American ship and kill US sailors, even though the US Navy is far more powerful. If the Islamic Republic’s forces succeeded in doing that, it could provide a searing image that could serve as a propaganda coup for the Iranians. Washington won’t garner the same amount of enthusiasm for destroying Iranian warships — that’s what’s supposed to happen.
An Iranian Army soldier stands guard on a military speedboat, passing by a submarine during the “Velayat-90” navy exercises in the Strait of Hormuz on December 28, 2011. Ali Mohammadi/AFP/Getty Images
Trump has already signaled he doesn’t want to send ground troops into Iran or even spend a long time fighting the country. That tracks with his own inclinations to keep the US out of foreign wars, particularly in the Middle East. But with hawkish aides at his side, like Secretary of State Mike Pompeo, there’s a chance they could convince him not to look weak and to go all-in and grasp victory.
But the options facing the president at that point will be extremely problematic, experts say.
The riskiest one — by far — would be to invade Iran. The logistics alone boggle the mind, and any attempt to try it would be seen from miles away. “There’s no surprise invasion of Iran,” Brewer, who is now at the Center for Strategic and International Studies think tank in Washington, told me.
Iran has nearly three times the amount of people Iraq did in 2003, when the war began, and is about three and a half times as big. In fact, it’s the world’s 17th-largest country, with territory greater than France, Germany, the Netherlands, Belgium, Spain, and Portugal combined.
The geography is also treacherous. It has small mountain ranges along some of its borders. Entering from the Afghanistan side in the east would mean traversing two deserts. Trying to get in from the west could also prove difficult even with Turkey — a NATO ally — as a bordering nation. After all, Ankara wouldn’t let the US use Turkey to invade Iraq, and its relations with Washington have only soured since.
“IT’S ALMOST IMPOSSIBLE TO IMAGINE THAT A MASSIVE AIR CAMPAIGN WILL PRODUCE THE DESIRED RESULT. IT’S ONLY GOING TO PRODUCE ESCALATION, NOT SURRENDER.” —MICHAEL HANNA, A MIDDLE EAST EXPERT AT THE CENTURY FOUNDATION
The US could try to enter Iran the way Saddam Hussein did during the Iran-Iraq war, near a water pass bordering Iran’s southwest. But it’s swampy — the Tigris and Euphrates rivers meet there — and relatively easy to protect. Plus, an invading force would run up against the Zagros Mountains after passing through, just like Saddam’s forces did.
It’s for these reasons that the private intelligence firm Stratfor called Iran a “fortress” back in 2011. If Trump chose to launch an incursion, he’d likely need around 1.6 million troops to take control of the capital and country, a force so big it would overwhelm America’s ability to host them in regional bases. By contrast, America never had more than 180,000 service members in Iraq.
And there’s the human cost. A US-Iran war would likely lead to thousands or hundreds of thousands of dead. Trying to forcibly remove the country’s leadership, experts say, might drive that total into the millions.
That helps explain why nations in the region hope they won’t see a fight. Goldenberg, who traveled recently to meet with officials in the Gulf, said that none of them wanted a US-Iran war. European nations will also worry greatly about millions of refugees streaming into the continent, which would put immense pressure on governments already dealing with the fallout of the Syrian refugee crisis. Israel also would worry about Iranian proxies targeting it (more on that below).
Meanwhile, countries like Russia and China — both friendly to Iran — would try to curtail the fighting and exploit it at the same time, the Century Foundation’s Hanna told me. China depends heavily on its goods traveling through the Strait of Hormuz, so it would probably call for calm and for Tehran not to close down the waterway. Russia would likely demand restraint as well, but use the opportunity to solidify its ties with the Islamic Republic.
President Donald Trump and Mohammed bin Salman, the crown prince of Saudi Arabia, stand side by side in the group picture at the G20 summit on June 28, 2019. Bernd von Jutrczenka/picture alliance via Getty Images
And since both countries have veto power on the UN Security Council, they could ruin any political legitimacy for the war that the US may aim to gain through that body.
The hope for the Trump administration would therefore be that the conflict ends soon after the opening salvos begin. If it doesn’t, and Iran resists, all that’d really be left are a slew of bad options to make a horrid situation much, much worse.
How Iran might try to win the war
Retired Marine Lt. Gen. Vincent Stewart left his post as the No. 2 at US Cyber Command in 2019, ending a decorated four-decade career. Toward the end of it, he spent his time at the forefront of the military intelligence and cybersecurity communities.
If anyone has the most up-to-date information on how Iran may fight the US, then, it’s Stewart.
“The Iranian strategy would be to avoid, where possible, direct conventional force-on-force operations,” he wrote for the Cipher Brief on July 2, 2019. “They would attempt to impose cost on a global scale, striking at US interests through cyber operations and targeted terrorism with the intent of expanding the conflict, while encouraging the international community to restrain America’s actions.”
In other words, Tehran can’t match Washington’s firepower. But it can spread chaos in the Middle East and around the world, hoping that a war-weary US public, an intervention-skeptical president, and an angered international community cause America to stand down.
That may seem like a huge task — and it is — but experts believe the Islamic Republic has the capability, knowhow, and will to pull off such an ambitious campaign. “The Iranians can escalate the situation in a lot of different ways and in a lot of different places,” Hanna told me. “They have the capacity to do a lot of damage.”
Take what it could do in the Middle East. Iran’s vast network of proxies and elite units — like Soleimani’s Islamic Revolutionary Guard Corps — could be activated to kill American troops, diplomats, and citizens throughout the region. US troops in Syria are poorly defended and have little support, making them easy targets, experts say. America also has thousands of civilians, troops, and contractors in Iraq, many of whom work in areas near where Iranian militias operate within the country.
US allies would also be prime targets. Hezbollah, an Iran-backed terrorist group in Lebanon, might attack Israel with rockets and start its own brutal fight. We’ve heard this story before: In 2006, they battled in a month-long war where the militant group fired more than 4,000 rockets into Israel, and Israeli forces fired around 7,000 bombs and missiles into Lebanon.
About 160 Israelis troops and civilians died, according to the Israel Ministry of Foreign Affairs, and about 1,100 Lebanese — most of them civilians — perished, per Human Rights Watch, a US-headquartered advocacy organization. It also reports about 4,400 Lebanese were injured, and around 1 million people were displaced.
But that’s not all. Iran could encourage terrorist organizations or other proxies to strike inside Saudi Arabia, the United Arab Emirates, and other Gulf nations. Last year, it planned and executed drone strikes on two major Saudi oil facilities deep inside the kingdom, convulsing world markets. Its support for Houthis rebels in Yemen would mostly certainly increase, offering them more weapons and funds to attack Saudi Arabia’s airports, military bases, and energy plants.
The US government on April 8, 2019, said it had designated the IRGC as a terrorist organization, marking the first time a US government has made such a designation on a foreign government’s organization. Rouzbeh Fouladi/NurPhoto via Getty Images
Experts note that the Islamic Republic likely has sleeper cells in Europe and Latin America, and they could resurface in dramatic and violent ways. In 1994, for example, Iranian-linked terrorists bombed the hub of the Jewish community in Argentina’s capital, Buenos Aires, killing 85 people and injuring roughly 300 more.
That remains the largest terrorist attack in Latin America’s history, and the possibility for an even bigger one exists. In 2018, Argentina arrested two men suspected of having ties with Hezbollah.
But Chris Musselman, formerly the National Security Council’s counterterrorism director under Trump, told me the US and its allies may have the most trouble containing the proxy swarm in Western Africa.
“We could see a conflict that spread quickly to places the US may not be able to protect people, and it’s a fight that we are grossly unprepared for,” he said, adding that there’s a strong Hezbollah presence in the region and American embassy security there isn’t great. Making matters worse, he continued, the US isn’t particularly good at collecting intelligence there, meaning some militants could operate relatively under the radar.
“This isn’t really a law enforcement function that US can take on a global scale,” he said. It would require that countries unwittingly hosting proxies to lead on defeating the Iranian-linked fighters, with US support when needed.
The chaos would also extend into the cyber realm. Iran is a major threat to the US in cyberspace. Starting in 2011, Iran attacked more than 40 American banks, including JPMorgan Chase and Bank of America. The attack made it so the banks had trouble serving its customers and customers had trouble using the bank’s services.
In 2012, Iran released malware into the networks of Saudi Aramco, a major oil company, which erased documents, emails, and other files on around 75 percent of the company’s computers — replacing them with an image of a burning American flag.
In the middle of a war, one could imagine Tehran’s hackers wreaking even more havoc.
“WE COULD SEE A CONFLICT THAT SPREAD QUICKLY TO PLACES THE US MAY NOT BE ABLE TO PROTECT PEOPLE, AND IT’S A FIGHT THAT WE ARE GROSSLY UNPREPARED FOR” —CHRIS MUSSELMAN, FORMERLY THE NATIONAL SECURITY COUNCIL’S COUNTERTERRORISM DIRECTOR UNDER TRUMP
“I would expect them to have begun selected targeting through socially-engineered phishing activities focused on the oil and gas sector, the financial sector and the electric power grid in that order,” Stewart wrote. “There may be instances now where they already have some persistent access. If they do, I expect they would use it, or risk losing the access and employ that capability early in the escalation of the crisis.”
Recent reports indicate that Iranian cyberwarriors have stepped up their online operations, with a particular emphasis on preparing to attack US firms. Among other moves, they’re aiming to trick employees at major businesses to hand over passwords and other vital information, giving them greater access to a firm’s networks.
“When you combine this increase with past destructive attacks launched by Iranian-linked actors, we’re concerned enough about the potential for new destructive attacks to continue sounding the alarm,” Christopher Krebs, a top cybersecurity official at the Department of Homeland Security, told Foreign Policy last July.
Iranian Supreme Leader Ayatollah Ali Khamenei attends a graduation ceremony of the Iranian Navy cadets in the city of Noshahr on September 30, 2015. Office of the Iranian Supreme Leader/Anadolu Agency/Getty Images
All of this — proxies striking around the world, cyberattacks on enterprise — would happen while Iran continued to resist conventional American forces.
In the Strait of Hormuz, for instance, Iranian sailors could use speedboats to place bombs on oil tankers or place mines in the water to destroy US warships. The Islamic Republic’s submarines would also play a huge part in trying to sink an American vessel. And the nation’s anti-ship missiles and drones could prove constant and deadly nuisances.
Should US troops try to enter Iranian territory on land, Iranian ground forces would also push back on them fiercely using insurgent-like tactics while the US painfully marches toward Tehran.
Put together, Brewer notes succinctly, a US-Iran war would be “a nasty, brutal fight.”
Aftermath: “The worst-case scenarios here are quite serious”
Imagine, as we already have, that the earlier stages of strife escalate to a major war. That’s already bad enough. But assume for a moment not only that the fighting takes place, but that the US does the unlikely and near impossible: It invades and overthrows the Iranian regime (which Trump’s former National Security Adviser John Bolton, at least, has openly called for in the past).
If that happens, it’s worth keeping two things in mind.
First, experts say upward of a million people — troops from both sides as well as Iranian men, women, and children, and American diplomats and contractors — likely will have died by that point. Cities will burn and smolder. Those who survived the conflict will mainly live in a state of economic devastation for years and some, perhaps, will pick up arms and form insurgent groups to fight the invading US force.
Second, power abhors a vacuum. With no entrenched regime in place, multiple authority figures from Iran’s clerical and military circles, among others, will jockey for control. Those sides could split into violent factions, initiating a civil war that would bring more carnage to the country. Millions more refugees might flock out of the country, overwhelming already taxed nations nearby, and ungoverned pockets will give terrorist groups new safe havens from which to operate.
Iran would be on the verge of being a failed state, if it wasn’t already by that point, and the US would be the main reason why. To turn the tide, America may feel compelled to help rebuild the country at the cost of billions of dollars, years of effort, and likely more dead. It could also choose to withdraw, leaving behind a gaping wound in the center of the Middle East.
In some ways, then, what comes after the war could be worse than the war itself. It should therefore not be lost on anyone: A US-Iran war would be a bloody hell during and after the fighting. It’s a good thing neither Trump nor Iran’s leadership currently wants a conflict. But if they change their minds, only carnage follows.
“The worst-case scenarios here are quite serious,” Hanna told me.
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Government Business
Article | July 11, 2022
Wastewater is an integral part of public infrastructure, and contracting opportunities related to wastewater projects often represent multi-million-dollar efforts.
However, because of their very nature, wastewater projects are often overlooked by companies. The projects, for some reason, rarely merit the type of visibility that road, bridge, and rail projects receive.
The COVID-19 pandemic has curbed many things, including public initiatives, but numerous wastewater projects continue to be launched because they are considered critical. Almost all wastewater projects are necessary to either maintain or expand services that citizens must have without interruption.
The following represents only a fraction of wastewater-related infrastructure project opportunities currently being planned throughout the U.S.
Nebraska
In June, the U.S. Department of Commerce’s Economic Development Administration awarded South Sioux City a $12.2 million grant for a wastewater treatment plant. The project, which will support business growth, will be launched in an area that suffered severe flood damage in 2019. The new plant will be built near an opportunity zone, and the grant, which will be matched with another $12.2 million in local funding, should result in the creation of about 60 jobs. This opportunity will move quickly because the completion date and the timeline established for full operation is less than two and a half years.
Arizona
The city of Buckeye has appropriated $3.1 million for construction of an additional discharge point for the Sundance Wastewater Reclamation Facility. Planning and design of the facility is scheduled to begin soon, and construction is planned for the city’s upcoming fiscal year.
The city of Goodyear has announced plans to install wastewater collection lines as part of a 10-year infrastructure improvement plan which is necessary to support population growth. Funding for this project has been secured, and the city will invest more than $20.5 million in this particular construction project.
Oklahoma
One of the challenges with operating any wastewater treatment plant is odor control. In Oklahoma City, the water utilities trust has set aside $5.3 million in fiscal year 2021 to deal with that issue. Due to robust development within close proximity of treatment plants and lift stations, the city will install new odor control systems at various wastewater plants in areas where they are needed.
To augment water supply and to expand the water reuse system, Oklahoma City also has planned other wastewater reuse improvements. A total of $31.4 million has been budgeted for these purposes.
Oregon
With the help of a $2.45 million Community Development Block Grant, the city of Ontario will, in the near future, enter the construction phase of a project to improve its wastewater system. The Oregon Department of Environmental Quality requires that wastewater discharge into the Snake River be at a limit for arsenic that is lower than the federal drinking water standard. To meet those requirements, the city has completed the final design and environmental assessment of wastewater system improvement needs and almost is ready to begin construction. Officials announced in July that funding has been secured.
Minnesota
In the city of Shakopee near Minneapolis, the Blue Lake Wastewater Treatment Plant produces Class A fertilizer. The decades-old wastewater solids drying facility is nearing the end of its useful life, and city officials have budgeted $3.1 million in plant design improvements for fiscal year 2021. The cost projection for the construction, which will follow quickly, has been estimated at $45.9 million. Completion of this project may extend over several years.
The cities of Lake Elmo and Woodbury are collaborating on a project that will provide interceptor facilities to convey wastewater from portions of each city to the Metro Wastewater Treatment Plant in St. Paul. The estimated $5.6 million project budgeted for fiscal year 2021 calls for reconstruction of the Wilmes Lake force main. The project is critical because of population growth in this eastern portion of the Minneapolis metropolitan area. Both design and construction are scheduled to commence in fiscal year 2021.
Texas
The North Texas Municipal Water District, which serves customers in several DFW-area cities, has several wastewater projects slated for the summer and fall. The various projects include a $20 million improvement project for the South Mesquite Regional Wastewater Plant and a $50 million plus project to improve drainage at the Wilson Creek Regional Wastewater Plant. These projects are moving quickly, and interested contracting firms should seek more detailed information immediately.
Washington
The state’s Clean Water State Revolving Fund has awarded a $66 million low-interest loan to the city of Seattle for a Ship Canal Water Quality Project that consists of constructing a storage tunnel between the Ballard and Wallingford neighborhoods. The large-scale project will significantly reduce sewer outflows in the ship canal. The project, a joint effort between Seattle Public Utilities and the King County Department of Natural Resources, is slated for fiscal year 2021.
The Eastsound Sewer and Water District has been granted $4.9 million from the Clean Water State Revolving Fund and has announced plans to upgrade its existing wastewater treatment facility. This project is necessary to address aging equipment, future flow and loading capacity, current standards for redundancy and reliability, and discharge permit requirements. This project also is scheduled for fiscal year 2021.
Water, in all its many uses, is a precious asset, and when water issues are combined with environmental requirements, demand issues, or aging infrastructure, there is no option to delay necessary repair or expansion. Contracting opportunities for water projects throughout the country in the next decade will be exceedingly abundant.
Mary Scott Nabers is president and CEO of Strategic Partnerships Inc., a business development company specializing in government contracting and procurement consulting throughout the U.S. Her recently released book, Inside the Infrastructure Revolution: A Roadmap for Building America, is a handbook for contractors, investors and the public at large seeking to explore how public-private partnerships or joint ventures can help finance their infrastructure projects.
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Article | September 18, 2020
Taxpayers, citizens, and industry leaders may not be totally familiar with Public Facility Corporations (PFCs), but that should change, especially now since public funding for critical projects is at an all-time low. PFCs are becoming somewhat common in many regions of the country.
If the legal entity (PFC) is not familiar, here’s a bit of background. A PFC is a nonprofit corporation created by a sponsoring governmental entity — a city, county, school district, housing authority, or special district. PFCs have broad powers over public facilities, including financing, acquisition, construction, rehabilitation, renovation and repair. A PFC, once created, has the authority to issue bonds on behalf of its sponsoring public entity and once the bonds are funded, the money can be used in numerous ways. This type of legal entity has gained attention because public officials with critical projects are being forced to seek alternative funding sources.
In Texas, public facility corporations are allowed the broadest possible powers to finance or provide for the acquisition, construction and rehabilitation of public facilities at the lowest possible borrowing cost. A sponsor — such as a municipality, county, school district or housing authority — may create one or more of nonprofit public facility corporations. Then, the PFC can issue bonds for the construction of public facilities or finance public facilities or even loan the proceeds of the revenue to other entities for specific purposes.
A report that was released by The University of Texas School of Law found that a house bill approved during the 2015 legislative session “expands the authority of public facility corporations and allows the corporation to exercise any power that a nonprofit corporation might exercise and/or grant a leasehold or other possessory interest in a public facility owned by the PFC.” Here’s a bit more background of what is happening in Texas and there are numerous similar examples throughout the country.
The El Paso Independent School District (EPISD) several years ago created the EPISD Public Facility Corporation to fund construction of central offices through non-voter approved bonds. The corporation issued more than $29 million in bonds. The plan called for the EPISD to repay the bonds with general fund dollars from the district's general fund.
The 2019 Texas Legislative Session ended with a $4 million rider added to the state appropriations budget. The money was provided to the city of Port Aransas to build a $36 million apartment complex for affordable housing. Plans call for the 200-unit complex to be operated by the Port Aransas Public Facility Corporation. The corporation will work in partnership with a private company to develop and manage the property. An investment of approximately $14 million came from the private sector partner, and the Texas Department of Housing and Community Affairs provided an additional $18 million in funding. Site work on the project began in July 2020.
Many school districts have created public facility corporations for construction projects for schools, and many municipalities have also used PFCs. The revenue from these types of bonds is sometimes called lease-revenue bonds. They do not require voter approval. Public facility corporations do not have the authority to raise tax rates, but it is possible for a school board to approve a property tax increase to make payments on the bonds sold by a PFC.
The city of Tioga, located in the Sherman/Dennison region of Texas, constructed a new high school with funding from a public facility corporation. A collaborative initiative was launched with a lease-purchase agreement which allowed the PFC to hold title to the land and facility until the investment was repaid. At that time, the agreement calls for everything to transfer back to the district. Because the current campus was reaching its maximum capacity, a new high school campus had been a priority for the district and this was the funding mechanism selected.
The city of Fate in Rockwell County recently embarked on a public-private partnership to develop an affordable seniors housing community. The projected cost is approximately $30 million. To fund the project, the city created a PFC. Plans are for the city to handle the design, construction, and management of the project in collaboration with the PFC. City leaders will appoint board members to the funding corporation which will then operate the development as a nonprofit. The project is anticipated for completion in January 2022.
There are similar types of alternative types of funding options in other parts of the U.S. In Utah, for instance, the Park City Board of Education approved a PFC which will allow the district to secure revenue for a number of master plan projects. The projects have a combined projected cost of $122 million. The school district had considered the funding option of general obligation bonds, which would require voter approval, but elected to create a Local Building Authority (LBA). This funding option will allow them to fund an expansion of a high school facility to accommodate ninth-graders and expand another campus to allow for eighth-grade students.
Public officials, legislators, government contractors, and taxpayers all should have an interest in watching PFCs as well as other alternative funding sources. Until traditional public funding becomes more available for critical public projects, there will be a need for various types of funding solutions.
Mary Scott Nabers is president and CEO of Strategic Partnerships Inc., a business development company specializing in government contracting and procurement consulting throughout the U.S. Her recently released book, Inside the Infrastructure Revolution: A Roadmap for Building America, is a handbook for contractors, investors and the public at large seeking to explore how public-private partnerships or joint ventures can help finance their infrastructure projects.
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