Last week, ENR’s Digital Wire highlighted an article in the Pittsburg Post-Gazette by Jon Schmitz about Pennsylvania’s new law to boost private investment in public projects through PPPs. According to the article, there are numerous major projects in the pipeline that will garner interest from private investors, including highways, bridges and other transportation facilities.
Under the new law, PPP proposals would go before a panel made up of seven transportation and budget members appointed by the governor and legislative leaders. "The Legislature would have the ability to override the panel’s decisions but would have to act within 20 days." According to Schmitz, 33 other states have similar laws.
What are some of the most important legal aspects when looking at a public private partnership? Here are a few:
- Understand the PPP enabling legislation in your state. As evidenced by the new Pennsylvania law, each state will have to explore whether use of PPPs for roads, bridges and other infrastructure projects can be successful. If so, then the enabling legislation must provide the mechanism to achieve the right contracting goals.
- Understand that PPPs don’t create new money. Instead, the arrangement relies on the private sector and other resources to help develop the infrastructure. Public funds will eventually be a part of the equation to pay back the private investment.
- Understand the different risks involved with PPPs. If you are going to participate in a project involving alternative financing, you need to understand the new risks and opportunities that you will encounter. For example, the AGC of American published a White Paper on Public Private Partnerships (pdf), which gives a good overview of the history of PPPs, the legislative hurdles encountered by states, and the legal issues to consider by contractors.