Maryland Public-Private Partnership Law in the Spotlight

E-newsletter Issue #115 | May 23, 2013

Maryland is operating under revised guidelines for infrastructure public-private partnerships—known as P3s—thanks to legislation signed last month by Gov. Martin O’Malley. 

The legislation should allow the state to more easily chase private sector dollars for some major transportation projects and help it keep up with neighboring Virginia, which has become a major player in the P3 industry in recent years. Next month, one of the biggest supporters of the legislation—Lt. Gov. Anthony Brown—will step onto a big stage before a Wall Street audience to proclaim Maryland “open for business.”

“I led the effort to pass the public-private partnership law in Maryland because it provides our state with a new and innovative tool to move forward with major infrastructure projects,” said Brown, who recently announced he’ll run for governor next year. 

The legislation, he said, will create 4,000 jobs each year and has the potential to fund 6 to 10 percent of the state’s capital budget. 

“By inviting private industry to work with the public sector to address Maryland’s transportation and other infrastructure needs, we’ll develop real solutions for our state. … Now that we have passed comprehensive P3 legislation—in addition to a new transportation investment act—we are poised to expand our infrastructure, grow and create jobs,” he said.

Brown will be the highest-ranking state official on the dais at the Ninth Annual InfraAmericas US P3 Infrastructure Forum, which takes place June 18-19 at the Crowne Plaza Hotel in New York City. The Council of State Governments is a supporting organization for the conference, which brings together state and federal transportation policymakers and P3 industry executives from the private sector, U.S. pension plans and the capital markets. 

Stacey McIntyre, business development and events director for the Inframation Group, which runs the conference, said it’s important for state government officials “to understand the latest industry trends and developments, to network with their peers from other states and to meet private sector investors. The main reason, however, is to communicate their P3 projects, programs and strategy to a Wall Street audience.”

Brown said those kinds of contacts can pay dividends down the road.

“To create new economic development opportunities, we need to branch out and forge new relationships,” he said. “Meetings like the InfraAmericas forum provide a fantastic chance to put leaders from all industries together with public officials so that we can put our heads together to solve the challenges we face.”

Conference speakers and attendees will have no shortage of issues to discuss in New York, McIntyre said.

“This year’s event will focus on the long-term growth of the P3 industry against a backdrop of a diminished federal transportation program,” she said. 

The conference will focus on state transportation initiatives and policy ideas, such as tolling, credit assistance programs, sales tax increases and P3s.

“It will also showcase states’ experiences with P3s, current thinking, and how they are working with the private sector to further streamline and refine P3 procurement processes,” McIntyre said.

Sessions at the InfraAmericas conference also will highlight:

  • What it will take to accelerate the flow of P3 deals over the next decade;
  •  The public agency decision-making process regarding the value of P3s;
  • Why the East End Crossing project along the Ohio River between Indiana and Kentucky is a path-breaking deal for the U.S. P3 market;
  • What an expanded federal Transportation Infrastructure Finance and Innovation Act, or  TIFIA, credit assistance program means for the U.S. P3 industry;
  • The P3 programs in Chicago and Los Angeles; and
  • The potential for P3 deals in the airport sector.

Speakers include transportation officials from key P3 states, including Colorado, Florida, Indiana, Maryland, Nevada, Ohio, Pennsylvania, Texas and Virginia. 

Virginia’s P3 program may have suffered a setback earlier this month when a circuit court judge ruled the state’s $2.1 billion Midtown Tunnel P3 project in the Hampton Roads area and its tolls are unconstitutional and that the state’s 1995 law allowing P3s involves an unconstitutional delegation of power to the executive branch. Some believe that ruling could also jeopardize other P3 projects that did not receive approvals from the state legislature. 

Brown said Maryland’s new law attempts to strike a balance between the two branches of government, although one of its central provisions gives the state Board of Public Works—a three-member panel comprised of the governor, comptroller and treasurer—a more prominent role in the P3 approval process. The legislation also endeavors to provide the private sector a more predictable and streamlined process and requires competitive bidding for all projects.

“Just like other capital projects, P3s will undergo a thorough review by both the executive and legislative branch,” Brown said. “Our law was drafted to allow the two branches to work together to ensure that future P3s provide the most benefit and right protections for all Marylanders.” 

But that’s not to say Brown sees Maryland as being in a contest with Virginia to win private sector dollars.

“Improving Maryland’s P3 process will spur private industry to compete and create innovative solutions to the challenges we face in Maryland,” he said. “We don’t view P3 as a competition between any two states, but rather as an opportunity for us to work with the private sector to build a better future for more Marylanders.”

Brown said Maryland officials will scan their entire transportation capital program to determine which projects could be completed as public-private partnerships. The state recently requested information from private firms on best practices and innovative approaches to delivering and financing two major transit projects—the Purple Line light rail project in the Washington, D.C., region and the Red Line, a proposed east-west light rail project in Baltimore.

“We’ve received significant interest from the private sector on both projects and are in the beginning stages of determining whether a P3 or traditional solicitation is the best approach for either of these projects,” he said.

Maryland’s new law also will allow the state to accept unsolicited proposals on transportation projects from private investors.

“This feature was requested by the business community and we worked hard to develop an unsolicited process that is balanced, competitive and protects submitters’ proprietary information,” Brown said.

The lieutenant governor believes the new law has safeguards to ensure P3 deals are in the best interest of Maryland taxpayers and that the public and private sectors share the risk burden.

“We worked with the business and labor community to build a fair and comprehensive P3 statute,” Brown said. “Maryland’s new law contains protections and requirements for revenue sharing, oversight and audits, term lengths, the environment, contractors and our workforce. The state will retain control of public assets and work with the private sector to balance the risks of any project.”

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