NCSL updates P3 use by the states

Register now

Thirty eight states, Puerto Rico and D.C. have statutorily authorized public-private partnerships for the transportation sector, according to a new update from the National Conference of State Legislatures.

Through February of this year, 20 P3-related bills were enacted by 14 states since 2016.

Included in those bills was broad enabling legislation enacted in Arkansas in 2017, in Kentucky in 2017, in New Jersey in 2018 and in Tennessee in 2016.

Since 1989 when California enacted the first modern P3 legislation enabling them for transportation projects, 15 states have extended their P3 authority beyond transportation to areas such as school construction and construction of drinking water and wastewater facilities. Three separate states authorize P3s only for sectors outside of transportation.

“Public-private partnerships (P3s) are a focus for many state lawmakers across the country as states tackle the increasing demand for updated and new infrastructure facilities,” NCSL said. “A P3 model has been implemented in dozens of states over the past three decades with varying success. Regardless of the project or infrastructure type, experts agree a first step to ensuring successful P3s, both for the public and private sectors, is sound public policy.”

In May, Louisiana announced plans to develop its first P3 to replace a tunnel and lift bridge in the Plaquemines Parish of Belle Chasse. Plenary Group USA Concessions Ltd., the equity member in the joint venture, will negotiate final toll structures and other details of the contract to design, build, finance, operate, and maintain a replacement bridge with the Louisiana Department of Transportation and Development.

NCSL lists five basic types of P3 projects: design-build (DB), operate-maintain (OM), design-build-operate-maintain (DBOM), design-build-finance (DBF) and design-build-finance-operate-maintain (DBFOM).

“I think there’s been an increased comfort level as people have seen that the sky isn’t falling when you engage in them,” said Susan Howard, program director for transportation finance at the American Association of State Highway and Transportation Officials.

"Politically I guess the winds have shifted a bit with people recognizing that not everything can be done with public dollars. But at the same time, P3s don’t work for every project and they are not a panacea.”

The 12 states without P3 authorizing legislation are primarily located in the Upper Midwest.

In the states without P3s, transportation officials Howard has spoken to say the decision to not engage in them has come from higher levels.

“I don’t know what will move the needle for them,” she said. “But I think seeing more of the variety and scope of P3s and how different they can be, could potentially lead to some embracing them down the road.”

The initial focus on transportation-related P3s -- many involving toll roads where the revenue was used to make bond payments -- has expanded into other types of infrastructure since 2010.

Over the last three years, states have provided statutory authority for P3s among a range of projects and for multiple public agencies.

For instance, in 2016 Indiana expanded P3 projects to include communications system infrastructure while Louisiana expanded the state agencies that are permitted to enter into P3s.

Twenty bills involving P3s were introduced in 11 states during 2019 legislative sessions, according to the NCSL database.

Most of those bills failed to be enacted and among the few that did become law, the changes mostly involved tweaking existing authorizations for P3s.

For instance, in May Oklahoma enacted legislation related to the Oklahoma Public and Private Facilities and Infrastructure Act to amend the membership of the partnership committee, delete the specified number of Office of Management and Enterprise Services members and updating statutory references.

Florida passed a bill requiring members of certain authorities to comply with financial disclosure requirements and limiting the time period for which charter county and regional transportation system surtaxes may be levied while setting rules for any extensions.

“Usually every year there are states that either expand eligibility for P3s or tweak their current programs or initiate new P3 enabling legislation,” said Howard.

For reprint and licensing requests for this article, click here.
Public-private partnership State and local finance Washington DC Louisiana