The Governmental Accounting Standards Board is proposing expanded guidelines for public-private partnerships that recognize their increased use in more varieties of agreements.
GASB’s existing guidance for service concession agreements in
“Statement 60 wasn’t meant to capture all P3s,” said Dean Mead, senior research manager for GASB. “It was meant to deal with what at the time was a burgeoning type of P3, these very long term leases for infrastructure assets.”
Under those original P3s, a private partner would operate and maintain the infrastructure, collect revenues such as tolls and handle the debt payments such as subsequent to a bond offering.
But newer P3s may have the government entity collecting the revenue or require that the private operator turn over the revenue to the government before a payment is made back to the private partner. Those variations wouldn’t meet GASB’s current definition of a service concession arrangement. But in terms of economic substance all of them are very similar transactions.
Two years ago GASB released updated guidance on government leases in
“This proposal, I think, fills in the gaps between our existing literature to make sure that all public-private partnerships and all public-public partnerships as we define them in this proposal will have guidance in terms of how to report,” Mead said.
State and local governments and trade groups have until Sept. 13 to submit comments on the 48-page exposure draft
Susan Howard, program director for transportation finance at the American Association of State Highway and Transportation Officials said the new guidance addresses the use of performance-based availability payments which are being used by a handful of states such as Florida, Georgia, Indiana, Pennsylvania and Texas.
“From my understanding, we’re trying to ensure there is greater transparency and consistency when governments are reporting on P3s and specifically on availability payments,” said Howard. “From AASHTO’s perspective it’s pretty technical and detailed when it comes to accounting systems. My understanding is that there are some transactions that don’t fit the existing rules for disclosing leases and concession agreements with private parties.”
Emily Brock, director of the federal liaison center for the Government Finance Officers Association, said GFOA has no immediate comment on the GASB exposure draft but will file comments before the Sept. 13 deadline.
“I think it’s very complex, which is why we are having the Committee on Accounting and Auditing and Financial Reporting vet it,” Brock said.
The GASB guidance is important to cities and counties that use GAAP accounting.
Glenda Johnson, spokeswoman for the National Association of State Auditors, Comptrollers & Treasurers, said none of her organization’s technical committee members have fully examined the GASB draft.
“NASACT will be forming a consensus response to the exposure draft, but that will not be available until closer to the GASB’s due date for comments,” Johnson said in an email.
