DALLAS -- The Virginia House of Delegates has unanimously approved new legislation aimed at limiting the public sector's potential risks in transportation public-private partnerships.
The state Senate will consider the House bill this week, with quick passage expected.
The legislation, which passed the House by a 98-0 vote on Feb. 3, will help minimize taxpayer liability by early identification of the risks involved in a P3 project, said Gov. Terry McAuliffe.
The bill would prevent a situation like the U.S. 460 project, which was proposed as a P3 project but then later converted to a more conventional design-build effort, said Gov. Terry McAuliffe.
"The P3 program works for the right projects, such as the I-95 and I-495 Express Lanes in northern Virginia where the private sector put their money and resources on the table in expectation of getting a reasonable return on their investment," McAuliffe said. "The P3 program was the wrong procurement tool to deliver the U.S. 460 project in southeastern Virginia, which cost taxpayers $300 million with nothing to show for it."
The legislation was filed at McAuliffe's request by Rep. Chris Jones, R-Suffolk, chairman of the House Appropriations Committee, and Rep. Tom Rust, R-Herndon, chairman of the House Transportation committee.
Doug Koelemay, director of the state P3 office, said the bill would not threaten Virginia's role a P3 leader or its ability to attract new private partners.
"To the contrary, as Virginia continues to build a stronger, more disciplined process, we manage political risk early, keep the public engaged, maintain stakeholder support and reassure private investors," he said. "It's all positive."
The revised guidelines would provide a more accountable public process while encouraging more interest and competition from potential private investors, Koelemay said.
The bill would require that proposed transportation projects be certified early in the process by a steering committee as being in the public interest before the state could sign a P3 procurement agreement.
The steering committee would consist of the staff directors of the House Committee on Appropriations and the Senate Finance Committee, two members of the Commonwealth Transportation Board, a deputy sectary from Virginia Department of Transportation, the chief financial officer from either Virginia DOT or the Department of Rail and Public Transportation, and a non-agency financial expert selected by the transportation secretary.
Later in the process, Virginia's transportation secretary would have to certify before a final P3 agreement could be signed that the project's benefits, risks, and liabilities had not changed since the initial assessment.
The US 460 project was rebid as a design-build effort after the P3 proposal failed without a new risk assessment, McAuliffe said.
"This [legislation] would prevent situations like the U.S. 460 P3 deal, where procurement changed over the course of the project, yet no one was held accountable," McAuliffe said. "There will be no way to duck responsibility for transportation decisions. "
The bill would also require Virginia DOT to establish a process for identifying high-risk P3 projects "to ensure that the public interest is protected."
The private partner in projects costing more than $50 million being built under the state's Public Private Transport Act would have to pay for an independent audit of the project's traffic projections and cost estimates.
The independent assessment would have to include the potential risks and liabilities to the public if the private sector partner defaults on the comprehensive agreement or on bonds issued for the project.
