Evolution of the Public-Private Partnership Pipeline

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Thirty-four states, the District of Columbia and Puerto Rico all have legislation allowing them to enter into public-private partnerships.

  • In April 2016, Kentucky Gov. Matt Bevin signed House Bill 309, which allows both the state and local governments to use public-private partnerships, or P3s, to develop transportation and other infrastructure. It requires the establishment of a board to oversee P3 transactions, requires legislative approval for any P3 project with a value of more than $25 million, and specifically prohibits the use of tolls on any P3 project connecting Kentucky and Ohio.1
  • Louisiana Gov. John Bel Edwards signed Senate Bill 195 in June 2016. It authorizes the Louisiana Department of Transportation and Development to solicit and enter into P3 contracts for certain transportation projects.2
  • Alabama lawmakers approved legislation in April 2016 that authorizes the Alabama Department of Transportation to enter into various types of construction agreements with other public and private entities for the construction of a public road, bridge or tunnel and related work. The state DOT is considering the P3 option for the I-10 Bridge and Bayway Widening project in Mobile.3

Having P3 legislation on the books has not always guaranteed quick success in moving P3 projects to fruition.

  • Arizona has had P3 legislation on the books since 2009. In February 2016, the Arizona Department of Transportation finalized its first public-private partnership agreement for the Loop 202 South Mountain Freeway, a 22-mile freeway through downtown Phoenix. Other projects Arizona is considering for P3s include electronic screening for trucks at state ports of entry, a freeway lighting upgrade in Phoenix, a stormwater pump rehabilitation project and a compressed natural gas facilities project.4
  • Prior to the passage of 2016 P3 legislation, Louisiana had a series of P3 statutes on the books passed between 1954 and 2006 but little to show for them. In addition to the new P3 law, state officials are hopeful that legislation passed in 2015 to create a State Transportation Infrastructure Bank could help get such projects financed.5

Some states have made changes to their P3 legislation or taken steps to clarify their goals and procedures with regards to P3s in recent years. 

  • Tennessee Gov. Bill Haslam signed legislation in April that will allow agencies to pursue public-private partnerships for mass transit projects and associated projects such as transport or service vehicles and parking facilities. The legislation was amended to exclude highways, bridges and tunnels after road builders in the state lobbied against that provision. The new law allows developers to submit unsolicited proposals from the private sector, but other firms can submit competing proposals if they do so within 90 days.6
  • The District of Columbia, which approved P3 legislation in 2014, issued guidelines and procedures for P3s in April 2016 and sought public comments.7
  • Florida Gov. Rick Scott signed legislation in April 2016 that will allow the Florida Department of Transportation to leverage the favorable terms available to governmental borrowers in the tax-exempt municipal bond market when entering into long-term financing agreements. It’s expected to give local districts an option to do smaller P3s using bond financing.8 It also requires the Florida Department of Transportation to consult with the Division of Bond Finance of the State Board of Administration in connection with any proposal to finance or refinance a transportation-related P3. The division, which issues bonds and advises on debt management policies, is now also required to make an independent recommendation to the governor about P3 projects.9
  • New Hampshire lawmakers in 2015 established a committee to study and propose legislation for forming public-private partnerships for intermodal transportation.10

While some states still don’t have P3 authorizing legislation, some have nevertheless been able to explore P3s.

  • New York state, which does not have P3 legislation, is home to some of the country’s most significant P3 projects including the $1.5 billion Goethals Bridge project. The Port Authority of New York and New Jersey, which is overseeing the bridge replacement, is a congressionally authorized, federally recognized joint venture between the two states and not an agency of either state and therefore is free to pursue P3s despite the lack of legislation in either state. In June 2016, the Port Authority reached financial close  on a P3 to build a new central terminal at LaGuardia Airport. P3s are also being contemplated for projects like the redevelopment of Penn Station and the development of a Hudson River tunnel thanks to the creation of other joint entities that are not beholden to state legislation.11
  • Michigan has no P3 authorizing legislation but certain public entities in the state are allowed to pursue P3s under the state’s “home rule” powers. In August 2015, the Michigan Department of Transportation reached financial close on the first freeway lighting P3 in the country.12

While P3s in the United States were once synonymous with toll roads, they have begun to appear in a wide variety of other sectors and contexts as well. 

  • California, which has had a number of high profile P3 road projects over the last 15 years, including the State Route 91 Express Lanes in Orange County, the South Bay Expressway in San Diego County and Presidio Parkway in the San Francisco Bay area,13 is also making a name for itself in social infrastructure P3s. These include the Long Beach Courthouse project, completed in 2013; the Long Beach Civic Center, which broke ground in June 2016; and a recently announced campus construction project at the University of California—Merced in the San Joaquin Valley. But the Golden State is not abandoning P3s for transportation entirely. A P3 is planned for the modernization of Los Angeles International Airport and a number of road projects are also in the development pipeline.
  • Kentucky’s first P3 project, announced last year well before the passage of the state’s P3 legislation, is not a road or bridge project. It’s KentuckyWired, a project to build a statewide, open-access fiber optic broadband network that is the largest public-private partnership ever for such a project.14 
  • Other P3s planned around the country include projects to build liquefied and compressed natural gas infrastructure, modernize streetlights, and develop transit projects.

TABLE SOURCES:
Roderick N. Devlin, D. Bruce Gabriel and Carolina Mederos. “Market Update: A Review of Recent Activity in the U.S. Public-Private Partnership (P3) Sector and the Outlook for the Year to Come.” Squire Patton Boggs LLP. March 3, 2016.
P3 Bulletin. “Project Tracker.”
Virginia Public-Private Partnerships Office. Projects
National Council for Public-Private Partnerships.
Minnesota Go. “Public-Private Partnerships at MnDOT: MnDOT’s Experience With Public-Private Partnerships.”
Missouri Department of Transportation. “I-70 Public-Private Partnership.”


ARTICLE REFERENCES:
1 Federal Highway Administration. State P3 Legislation.
2 “Louisiana governor signs P3 bill.” P3 Bulletin. June 24, 2016.
3 “Bids due for Alabama P3 advisory.” P3 Bulletin. June 27, 2016. 
4 Arizona Department of Transportation. Programs and Partnerships: P3 Initiatives: P3 Projects.
5 Kevin Litten. “Infrastructure bank could have local officials exploring more publicprivate partnerships.” The Times Picayune. June 23, 2015.
6 National Council for Public-Private Partnerships. “Tennessee P3 Bill Signed Into Law.” April 29, 2016.
7 Office of Public-Private Partnerships. “Guidelines and Procedures for the Public-Private Partnerships Act of 2014.” April 29, 2016.
8 “Scott signs Transportation Bill.” P3 Bulletin. April 6, 2016.
9 National Council for Public-Private Partnerships. “New Florida Law Changes State’s P3 Procurement Process.” April 5, 2016.
10 General Court of New Hampshire. Chapter 184: SB 88—Final Version.
11 Dan Colombini. “Spreading the News.” P3 Bulletin. Volume 4, Issue 3.
12 Roderick N. Devlin, D. Bruce Gabriel and Carolina Mederos. “Market Update: A Review of Recent Activity in the U.S. Public-Private Partnership (P3) Sector and the Outlook for the Year to Come.” Squire Patton Boggs LLP. March 3, 2016.
13 California Department of Transportation. Public-Private Partnerships.
14 “Kentucky Launches Biggest Public-Private Partnership for Open-Access State Broadband Network.” Press Release. August 31, 2015.

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