Court strikes down Macquarie-led PPP in Pennsylvania

A court in Pennsylvania has struck down an initial PPP agreement which would have seen Macquarie Capital and a subsidiary of Israeli developer Shikun & Binui lead a consortium to repair and replace nine bridges across the state.

Their Bridging Pennsylvania Partners consortium, which also included Spain’s FCC Construction and six other local partners, was selected in March by Pennsylvania’s Department of Transportation as the “apparent best value proposer” to administer the Major Bridge Public-Private Partnership initiative and was in the process of finalising the design and packaging of the bridges to be built, financed and maintained.

However, in a case brought by local communities, the Commonwealth Court of Pennsylvania has ruled against the state’s DOT and its P3 Board, declaring the Major Bridge P3 Initiative to be “void ab initio” or without legal effect from inception, with the judge finding that the bodies did not follow the correct consultation processes with local communities and Pennsylvania’s General Assembly (GA).

“On February 18, 2021, DOT announced, for the first time, nine specific bridges under consideration for reconstruction and tolling pursuant to the Initiative, including the I-79 Bridge,” the court’s ruling stated. “Thereafter, in a March 24, 2021 letter to the Chair/Secretary, several members of the GA expressed their concern that the Resolution approving the Initiative did not satisfy the requirements of Section 4 of Act 88, which requires that the Board evaluate and approve transportation projects, if they are found to be in the best interests of the Commonwealth.”

Yet, as judge Ellen Geisler noted in her ruling, “the Initiative lacks sufficient specificity, such that the Board cannot have performed, and indeed did not perform, all of its essential duties in approving the Initiative”.

She added: “The Board essentially approved a multibillion-dollar transportation project based on what was essentially a four-page powerpoint recommendation from DOT that failed to delineate which, or how many, pieces of public infrastructure the Initiative would affect.”

Macquarie declined to comment on the decision and its next steps. A spokesperson for the DOT told Infrastructure Investor that it “continues to review the opinion and our options”, with the P3 Board set to meet in two weeks’ time. The PA DOT had been planning to use tolling on the revamped bridges to bring dedicated sources of revenue to the projects.

Infrastructure Investor understands neither the P3 Board nor the private entities have completely given up on the initiative, although local consultation on projects with or without tolling would have to be completely restarted.

Wayne Langerholc Jr, a Republican state senator and chairman of Pennsylvania’s Senate Transportation Committee, said in a statement: “Today’s decision is a win for all Pennsylvanians. A win for all those who stood with us fighting this oppressive overreach. And a win for Pennsylvania businesses who were arbitrarily shut out of the process.”