The Los Angeles County Metropolitan Transportation Authority wants more autonomy to enter public-private partnerships for highways.

LOS ANGELES — A bill to give the Los Angeles County Metropolitan Transportation Authority more autonomy in public-private partnerships for highway projects could be affected by California's transportation funding gridlock.

"I'm hearing that the other transportation bills contemplated will not get passed until an agreement is reached on funding," said Fred Kessler, a partner with Nossaman LLP, a national law firm. "The leaders are not ready to push the other pieces without solving the funding piece."

Democratic leaders announced Wednesday night that they had failed to reach an agreement during a special session on transportation on a long-term funding solution for the state's backlog of road repairs.

Instead, the legislature will form a special committee this fall to grapple with transportation funding issues.

Democratic proposals to add a $65 vehicle registration fee and raise the cigarette tax by $2 per pack were shot down by minority Republicans, from which a few votes would be needed to secure the required two-thirds supermajority vote.

LA Metro's P3 bill, Assembly Bill 12, was introduced August 26 and has not been heard in committee, but would likely evolve in committee discussions, said Michael Turner, LA Metro's director of state affairs for government relations.

The main thrust of the bill, according to Turner, is that LA Metro would no longer have to have projects approved by the California Transportation Commission, which has slowed projects. It would also have some autonomy from the California Department of Transportation, although it would still have to reach an agreement with Caltrans, because the finished project would be a state highway, which falls under Caltrans purview.

It reduces risk for the private partners if they don't have another layer of regulation, Turner said.

With state transportation funding so constrained - since the gas tax has not been raised in 20 years - some counties have been funding highway projects on their own. LA Metro leaders wonder why if they are funding the project, and also have their own independent board to review projects, they should have to under a second regulatory process through the transportation commission. That is the situation the legislation seeks to change, Turner said.

"Some counties have provided the bulk of funding for expansion projects on state highways," Turner said. "That has created a dialogue with the state as to what is the appropriate level of government to review projects."

LA Metro already uses P3s on its rail projects - and has faith in its system, Turner said.

LA Metro's bill also would give it free rein in terms of procurement including the ability to review unsolicited proposals, rather than having to go through a request for proposal process.

"Under LA Metro's new legislation, they would still need an agreement with Caltrans, and there would still be negotiating, but it would be less fraught, because there would be no issue of Caltrans supervising and controlling everything," Kessler said. "It would also grant LA Metro authority to toll state highways under their own direction."

The changes LA Metro seeks would expand the scope of projects from highway, public street, rail or related facilities to include such items as rights-of-ways, high occupancy toll lanes, stations, terminals and air and land rights, according to a blog published in a Nossaman newsletter by Kessler and Andree Blais, also a partner.

LA Metro and other state transit agencies currently have the authority to enter development lease agreements with private corporations to build highways, albeit with much state oversight. But even that authority is due to lapse on Dec. 31. LA Metro's bill seeks to modify that authority, but a separate effort seeks to extend Section 143, the existing legislation. The legislature's failure to reach an agreement on transportation funding could also impact the extension, which was also being heard in the special session.

Even getting the extension passed would require heavy lifting by legislators because Caltrans professional engineers union has a lot of clout with legislative Democrats and has typically opposed public-private partnerships, Kessler said.

 

 

Subscribe Now

Independent and authoritative analysis and perspective for the bond buying industry.

14-Day Free Trial

No credit card required. Complete access to articles, breaking news and industry data.