Will Asset Recycling Return to America?

In December the new U.S. DOT Advisory Board had its second meeting with DOT Secretary Sean Duffy. One of its recommendations was that the federal government should encourage state and local governments to “recycle” existing revenue-generating infrastructure, with investors entering into long-term brownfield P3 leases and the up-front concession fee being used by the state or local government to fund other needed infrastructure.

The Advisory Board made two specific asset recycling recommendations: First, DOT should offer a modest financial incentive (as Australia did a decade ago) to encourage asset recycling projects. Second, the federal government should allow the infrastructure entity’s long-term tax-exempt bonds to be transferred to the P3 acquirer rather than having to be defeased or paid off.

I recall attending an asset recycling conference in DC in 2017 sponsored by the Australian embassy. And the next year The President’s Initiative for Rebuilding Infrastructure in America discussed Australia’s asset recycling program and laid out tax and policy reforms to encourage asset recycling and increased use of long-term P3 leasing by state and local governments. But there was no immediate follow-through.

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