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Infrastructure

Pennsylvania issues P3 Guidance

Pennsylvania has released guidelines for public-private partnerships under its new P3 authorization law, and announced it would accept unsolicited proposals during the months of May and October.

The implementation and guidance manual, released by the state’s P3 Transportation Board, explains the P3 process under the law passed last July, which allows public entities to enter into agreements with the private sector to finance, construct, and operate transportation infrastructure.

The law defines the term, P3, broadly enough to encompass roads, bridges, ferries, airports, and port facilities, as well as any supporting infrastructure such as parking garages, according to an analysis by law firm Ballard Spahr, LLP.

The manual describes the organization of the board, a seven-member entity including representatives of Pennsylvania’s secretaries of transportation and budget, as well as one gubernatorial appointee and four members appointed by the legislature. The board is able to approve partnerships that appear to be in Pennsylvania’s best interest.

The manual also outlines some requirements with respect to debt financing.

A contract to develop a P3 project must include “requirements for bonds or other forms of security in amounts acceptable to the proprietary public entity.”

Unsolicited proposals, submitted to the state by private parties seeking a business opportunity, must show up front that the private company can secure adequate financing.

“The private entity must demonstrate that it is able to obtain performance and payment bonds, a letter of credit, parent company guarantee or other security acceptable to the P3 office and/or public entity and consistent with the size and complexity of the transportation project,” the manual states.

Pennsylvania’s P3 law also allows for solicited projects, conceptualized by the public sector and offered up for competition to private sector parties. In that case, each potential private partner puts together a proposal to be examined by the P3 Transportation Board.

The board retains the right to determine what financing tools to pursue in the name of the private partner, including private activity bond issuances or requests for assistance under the Transportation Infrastructure Finance and Innovation Act, or TIFIA.

Pennsylvania also announced that it will accept unsolicited proposals from May 1-31 and October 1-31. Even in the case of unsolicited proposals, however, the law requires all P3 procurements to be competitive and states they will not be awarded without an examination of rival proposals.

Once a project is approved for development as a P3, the P3 office or the public entity will undertake a competitive solicitation process under the law,

The guidance is subject to revisions based on the recommendations of the state department of transportation and subject to approval by the P3 Transportation Board.

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