Florida’s new P3 law not very P3-friendly

HB 7027 is good news for unsolicited proposals but requiring P3s to go through the State Bond Authority could slow down the process considerably.

After expanding its PPP legislation in 2013 to include a broader range of sectors, Florida has enacted a new law that exempts unsolicited proposals from Freedom of Information Act (FOIA) requests, protecting bidders’ confidentiality.

“This legislation is a major improvement in Florida’s P3 legislation,” Roderick Devlin, a principal at Squire Patton Boggs, whose practice focuses on PPPs, told Infrastructure Investor. “This new law could potentially encourage those who have been sitting on the sidelines to submit unsolicited proposals, knowing that the proposal will be kept confidential, as is the case in a traditional P3 procurement process.”

Another side effect of unsolicited proposals being subject to FOIA requests was that a potential bidder would oftentimes try to make the proposal as generic as possible assuming that it would be made public. “That means you may end up with a project that’s not as innovative or beneficial to the public sector as it might otherwise be,” Devlin explained.

House Bill 7027 (Senate Bill 756), which the Florida state legislature passed earlier this month, also provides for the creation of the FDOT Financing Corporation, a non-profit entity that will operate within the Florida Department of Transportation (FDOT).

The Corporation will be governed by a board of directors consisting of the director of the Office of Policy and Budget within the Executive Office of the Governor, the director of the Division of Bond Finance and the Secretary of Transportation. The Bond Finance Director will serve as chief executive of the corporation and in that role will control, direct and supervise its operation.

This provision of the law has been very unpopular with the private sector since the state bond authority is perceived as being against P3s.

“The rationale is that this new entity will streamline the bond process so that Florida can better finance these P3 projects and decrease the debt and equity,” the source said. “Right there is the issue. If you’re decreasing the equity that’s making the projects less attractive because if you’re a private equity fund you need to invest in equity. If the equity investment is driven so low, it will not make sense for the private sector to invest in it.”

By requiring FDOT’s P3 projects to go through the financing corporation and then through the state bond authority, multiple hurdles are also being added to the process that can severely slow it down if not kill P3s altogether.

“That may not be the intention, but it is the reality,” the same source said.

“FDOT was one of the state’s leaders in P3s, but under the new administration, there is concern about whether they will be receding from P3s,” Lee Weintraub, chair of Becker & Poliakoff’s PPP practice, said in an e-mail. 

“There is a healthy concern that passage of these bills will lead to one of the States’ P3 leaders receding from P3s, which of course could have an adverse impact on P3s in Florida,” he added. “We will have to wait and see how the statute is actually implemented to be sure of its consequences.” The law becomes effective 1 July.

To date, Florida has been a leader in the transportation P3 sector, delivering some of the largest P3s in the US, such as the I-4 Ultimate highway, the Port of Miami Tunnel and the I-595 corridor projects.

According to a recent update issued by Squire Patton Boggs, many local governments within the state have also adopted their own P3 policies. Miami-Dade County is an example, which in the second half of last year identified 51 possible projects across all infrastructure subsectors – transportation, water/wastewater, ports and social infrastructure – worth more than $9 billion.

Last April, the Miami-Dade Water and Sewer Department (MDWASD) issued a draft Request for Qualifications for the design, building, financing, operation and maintenance of a biosolids processing facility, one of several water and wastewater projects the department has included in its Capital Improvements Plan.

The state is also considering expanding the I-4 Ultimate project, again as a PPP, while the City of Miami Beach has received an unsolicited proposal for a passenger streetcar project from Greater Miami Translink Partners, a consortium that includes InfraRed Capital Partners and Walsh Investors. The City has invited alternative proposals to be submitted by 10 May.

“Florida hasn’t abandoned P3s but it has lost its momentum,” our source said. “But it wouldn’t take much for Florida to leap into that category quite quickly if they were to do two or three projects. Miami-Dade alone could make Florida the leader in the US P3 market.”