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Public-Private Partnerships Now Permitted on Road Construction Projects

On July 5, 2012, Governor Tom Corbett signed legislation that authorizes public-private partnerships (“P3”) for road, transit and other transportation related projects.

The Pennsylvania P3 Act, 74 Pa. C.S. §§ 9101-9124, applies to “transportation facilities,” which includes typical transportation structures such as bridges, roads and parking lots, but which also includes multimodal facilities, airports, terminals and ports, together with their associated structures. Under the Act, the rights for use or control of a P3 transportation facility are transferred from PennDOT to another public owner or to a private development entity.

The development agreement can include the following services: (1) operations and maintenance, (2) revenue collection (including tolls), (3) design and/or construction (including design-build), (4) development and other activities that enhance traffic flow, reduce congestion, or improve safety, and (5) financing. The Act also authorizes any other “innovative or nontraditional project delivery method or agreement or combination of methods or agreements that the public entity determines will address the transportation needs of the Commonwealth and the public entity and serve the public interest.” 74 Pa. C.S. § 9108. It certainly appears that the legislature was allowing public-private partnerships to attempt innovative ways to address Pennsylvania’s infrastructure crisis.

P3 projects will be subject to approval by a newly-created Public-Private Transportation Partnership Board (the “P3 Board”). The P3 Board will have seven members: the Secretary of Transportation, the Secretary of the Budget, a member appointed by the Governor and four legislative appointees. The Board is responsible for evaluating and approving P3 projects. P3 projects can be presented to the Board by both public and private entities and proposals may be submitted on an unsolicited basis. The Act provides little guidance for the standard by which projects will be evaluated, stating only that projects can be approved when the Board finds that the project is in the best interests of the Commonwealth and the public entity that is the owner of the facility. The General Assembly has retained the power to rescind the Board’s approval of a project that would be owned by the Commonwealth, but must act within 20 calendar days or 9 legislative days, whichever is longer.