John Porcari is Managing Director for Public Policy and Partnerships at Investcorp Corsair Infrastructure Partners and brings more than 35 years of experience in transportation, infrastructure and public-private partnerships, including serving as Deputy Secretary of the U.S. Department of Transportation and twice as Maryland Transportation Secretary.
Few have seen the U.S. Public-Private Partnership (P3) industry from as many perspectives as John Porcari. John is a Managing Director at Investcorp Corsair Infrastructure Partners (ICIP). ICIP’s portfolio companies include Itínere Infraestructuras S.A., a toll road manager and operator, DP World, a leading global logistics company, and Vantage Group, a global leader in airport investment. Vantage is an investor in the LaGuardia Terminal B and JFK Terminal 6/7 redevelopment P3s – two of the first major airport terminal redevelopment P3s procured in the United States.
John also has a long track record of delivering projects on the public side, and at literally every level of government. He was the Deputy Secretary of Transportation during the Obama Administration, and has twice served as the Secretary of Transportation for Maryland. More recently he was the Interim Executive Director of the Gateway Program Development Corporation.
John was also formerly the President of U.S. advisory services for WSP and was the Port Envoy for the Biden-Harris Administration’s Supply Chain Disruptions Task Force.
This month Public Works Financing spoke to John about the future of U.S. airport redevelopment P3s, advice for public sponsors, and the best way the federal government can help state and local agencies drive projects forward.
John Porcari
PWF: You’ve observed the American transportation P3 industry from just about every possible perspective: In the public sector at the federal, state and project level, and from the private side as both an advisor and investor. How do you think the industry has evolved over the last decade or so, and how is it placed now?
JP: Right now is a really exciting time for the American transportation P3 industry. Having seen the market evolve from roles in state and federal government and now through my work at Investcorp Corsair Infrastructure Partners, there is real recognition that we have a massive backlog of needed capital expenditures in the infrastructure sector, particularly in transportation, that is driving an increased willingness to use all the tools available to address that backlog.
However, the biggest change today is among the public sponsors. When I was Secretary of Transportation for Maryland, I initiated the state’s first three P3s, including the Seagirt container terminal at the Port of Baltimore, our Service Plazas on I-95 and the Purple Line transit project. Back then the model was still relatively new in the U.S., and we were figuring it out on the fly.
Today, you can’t walk the halls of the Conference of Mayors without overhearing detailed discussions of P3 procurements or project structuring. The level of knowledge on the public side is completely different, and it gets better and better with every P3. We learn from every project, and public-sector capability continues to grow. That is what makes today’s industry so different from the P3 industry a decade ago.
PWF: The Trump Administration’s Department of Transportation has recently directly intervened to help push forward or even directly procure some noteworthy transportation P3s. From your experience as the Deputy Secretary of Transportation, what are some of the most effective things the federal DOT can do to help sponsors get projects through the planning/procurement process?
JP: I welcome the Department’s involvement and interest in these projects. Direct engagement can be enormously helpful, but it really depends on the type of project. There are different categories of projects, and some have a level of regional or national significance that makes direct federal involvement especially valuable. Most of the projects receiving attention from the Department are cross-jurisdiction megaprojects like Penn Station, or the American Legion Memorial Bridge, or Dulles Airport. These are exactly the types of projects that benefit the most from direct federal involvement, and that is not just in terms of financial assistance. In those cases, the Department can help resolve intergovernmental frictions that naturally occur in a regional megaproject, and help drive the project forward.
Take the Gateway Project in New York, which is near and dear to my heart. With a project of that scale, with that many state or local government agencies or stakeholder groups involved – the federal government is an essential development partner, irrespective of any financial support. Building strong partnerships vertically and horizontally across levels of government makes it much easier for private-sector partners to deliver a quality product.
Some of the projects that USDOT is engaging with have also been out there for some time. As you know, major projects often fail two or three times before they come back and succeed. Sometimes it is about lining up the interests of many different stakeholders and agencies, and sometimes the Department can step into a project that is in a rut and jump start things. Take Penn Station, for instance: It is hard to think of a more diverse set of stakeholders on top of an extremely operationally complex construction scenario.
PWF: Secretary Duffy recently announced that the Department may pursue the creation of a new “P3 Office” to help push projects forward. From your time in the Department, what do you think some of the biggest gaps were in terms of federal capacity to support transportation P3s?
JP: I believe there is room for additional federal capability, particularly in the Secretary’s office. For very large projects, there are many intergovernmental coordination issues that don’t come together until you get to the level of the Secretary’s office, in particular some interdepartmental issues during the National Environmental Policy Act process. One challenge with the NEPA process is that there often isn’t a single person with both the personal responsibility and the authority to make decisions and push things forward.
For that reason, large projects could benefit from both increased technical capability within the Department’s Build America Bureau and then an additional authority, ideally within the Secretary’s office, that acts more like a ramrod driving select nationally-significant projects forward. I would think of it as almost an ombudsman function at the Secretary level.
The other challenge, which is still around today, is that every P3 is bespoke. There is more the Department can do to help reduce some of the bespoke tailoring of U.S. P3s so that states can bring them to market in a more standardized, consistent way.
PWF: OK let’s turn to airports. Vantage is a lead investor in the LaGuardia Terminal B concession as well as the JFK Terminals 6 and 7 redevelopment project. What are some of your lessons learned in actually delivering one of these complex airport terminal redevelopment partnerships, either while construction is still underway like at JFK or during terminal operations now that LaGuardia is there?
JP: At JFK, construction work at Terminal 6 is nearing completion and will be followed by Terminal 7. It is a great example of a fully integrated partnership, with the Port Authority delivering some elements like a roadway network and utilities, while we deliver the terminal. It is going to deliver a beautiful project once it is opened, just like the Terminal B project in LaGuardia, which has been voted the best new terminal by passengers for two years in a row. We are now well into the operational period there and thinking about upgrades and operations in terms of the full lifecycle of the facility to continue delivering a premier experience for travelers.
On construction, one additional area in which a P3 can deliver value for these projects is in streamlining an already complex construction schedule. At LaGuardia, we faced a similar challenge to the one they are going to face at Penn Station: Operations had to continue at full capacity while construction was underway. It’s like doing a heart transplant while running a marathon.
The original construction plan for LaGuardia was extremely complex, with 27 different construction phases. Under the P3 we were able to streamline delivery into a simpler, 7-phase construction schedule that kept operations underway while we built an entirely new terminal.
Operationally, the model can help coordinate a complex operation because it makes the concessionaire singularly focused on the customer experience. At LaGuardia, we have a separate operations center distinct from the FAA center that does all of our land-side operations. That includes everything from the allocation of gates to things like restroom maintenance and curbside queuing. All partners are represented in the operations center, so it is constantly balancing operations across systems and vendors that were otherwise completely siloed. This is completely invisible to customers, but it gives them a more seamless travel experience.
PWF: The Port Authority (PANYNJ) has been a real pioneer in procuring these airport terminal redevelopment P3s. What would you say are some of your biggest lessons learned from the LaGuardia and JFK procurements? What advice would you have for other airport authorities or public sponsors interested in trying to replicate the model for their own terminal redevelopment projects?
JP: I have a couple of suggestions. One is for sponsors to think about these projects from a risk allocation point of view first. Too often they skip it and jump right into financing. Ideally, sponsors should step back and decide what project risks they want to assume, what risks they are comfortable taking, and what risks they do not want to assume.
Making that clear and doing it early can really help a procurement, and it should include the public capital expenditures that the project is avoiding on the P3. There tends to be a lightbulb moment with public sponsors when they realize that they can take the capital they would have allocated to the project and use it on their many other priorities.
And lastly, I’d recommend sponsors step back even further and take a holistic economic development approach to airport and port redevelopment projects. At Investcorp Corsair Infrastructure Partners, that means looking at how to support local businesses and citizens, and including them in the project. It also means thinking of this facility as the front door of your city to the world.
PWF: What do you think the biggest opportunities will look like in the U.S. airport P3 sector going forward? For a little while brownfield concessions were expected to take off, but didn’t. After the LAX (CONRAC, APM) procurements, ancillary projects were seen as a replicable model. Now terminal redevelopment projects appear fashionable.
JP: The Port Authority’s model for terminal replacements can be used across the U.S. The model just needed a sponsor with the size and scale of PANYNJ to pioneer that work. The procurement model allows for a more comprehensive discussion of ground-side airport needs where you aren’t focused on only one element. It enables sponsors and concessionaires to focus on some of the bigger, longer-term drivers like passenger growth and understanding the needs of the airlines.
Think about some of the medium-sized city airports around the country. The unique situation in the U.S. is that the air-side is largely taken care of by the federal government, but the land-side is mostly the responsibility of local government. So, naturally now there are scores of ground-side, medium-sized airport facilities long overdue for transformation, and I think public sponsors will increasingly consider partnerships to complete those projects.
PWF: In every discussion we have on the U.S. airport sector, the subject that keeps coming up is the fact that the [Airport Investment Partnership Program] doesn’t work. If you could take over Congress for a day, what changes would you make to AIPP (or other federal policy touching airport P3s)?
JP: Well, I agree on the AIPP, and we don’t need to argue about whether it works or not anymore – it didn’t work! There were just no takers over the long term and that tells you something.
If I could make a suggestion to Congress, it would be to finally take up the NEPA reforms that they’ve been talking about for years. When I was Deputy Transportation Secretary, we worked hard to streamline and standardize NEPA reviews, but there is only so much an administration can do without Congress.
In my view, the problem with AIPP is that it is simply way too prescriptive and rigid. Needs change over time and every airport is unique in terms of its operating needs. I’d love to see a program modeled after AIPP that gives public sponsors more latitude.