- Increase of large infrastructure financings funded by the federal government – The Biden Administration is expected to continue and further advance a 2019 trend that saw the federal government spend $29 billion on infrastructure and a transfer of an additional $67 billion in infrastructure spending to states. Half of this funding went to highways with air and rail being the next biggest categories.
- Corresponding decrease of Public Private Partnerships (PPP) for infrastructure projects given more federal government funding and challenges in recent partnerships – Challenges include lack of public sector capacity and experience among private businesses; dealing with the complexity of the preparation, procurement, and management of PPP contracts; and the demand for extensive resources that can characterize these projects.
- Defaults in the area of commercial real estate debt held by REITs and financial institutions – This trend is a continuation of one that started in 2020 as banks demanded more cash collateral and borrowers halted loan payments amid the Coronavirus 19 (COVID-19) pandemic.
- Continued pressure on tourism related taxes may result in defaults in convention-based hotels and sports and entertainment facilities – Although the introduction of COVID-19 vaccines may encourage more people to travel, it is more likely that the 2020 trends will continue and cities and states will continue to struggle to collect the tourism related taxes pledged to secure the debt issued to build publicly owned convention center hotels and sports and entertainment facilities.
- Without significant federal aid, continued decreases in municipal and state services – As it appears uncertain that the federal government will assist states and municipalities with funding emergency services necessary due to COVID-19, they may be forced to devote resources to these and halt other services.
About the Authors
Warren S. Bloom, who is co-chair of the Greenberg Traurig, LLP’s National Public Finance Practice, represents municipal security credit holders and indenture trustees in both new and existing distressed transactions in more than half of the United States. His experience includes active roles in bankruptcies, foreclosures, and consensual restructurings of municipal transactions both in Florida and throughout the nation.
Franklin D.R. Jones Jr. is co-chair of Greenberg Traurig, LLP’s National Public Finance Practice and focuses his practice on public finance, sports, and entertainment facilities development, project and infrastructure finance, urban development, and local and state governmental matters. He has public law and municipal finance experience in various areas, including municipal financing, stadium and multi-purpose arena development and financing, and structuring public/private joint ventures.