Georgia enables water PPPs

Georgia has passed a law permitting local governments to contract with private corporations to construct and finance water and wastewater projects across the state.

Governor Nathan Deal, a Republican, signed into law Monday Senate Bill 122, more commonly known as “the reservoir bill”. The new law adds water infrastructure to the list of allowable public-private partnerships (PPPs), following 2009 legislation that established a framework for transportation PPPs in Georgia.

Georgia State Senator Ross Tolleson, a Republican who sponsored the bill, said the legislation stemmed from the needs mandated by a costly statewide plan for water development, and not from private sector demands.

A December 2009 report by the state’s Water Contingency Task Force said Georgia will face a serious shortfall in 2012, when a district judge’s prohibition on using the central Lake Lanier as a water source goes into effect. In order to offset that loss by 2015, the state would need to spend over $3 billion, according to the report.

This legislation is particularly useful at times such as ths when budget cutbacks hinder our ability to invest in new infrastructure  Nathan Deal

Deal said in a statement that Georgia made “structural changes” two years ago that “vastly improved” how the state identifies and constructs reservoirs and water infrastructure. But, he said lack of funding has curtailed essential projects, despite the “punishing drought in recent memory”.

“This legislation is particularly useful at times such as these when budget cutbacks hinder our ability to invest in new infrastructure,” Deal said.

Nathan Deal

Tolleson said in an interview that the legislation could offset concerns about economic uncertainty by giving communities across Georgia an “extra financing tool” beyond bonds.

But he said he did not anticipate a major outpouring of PPPs. The new law will “probably be moderately used”, he predicted.

Wesley Strickland, a lawyer specialising in natural resources and water at law firm Brownstein Hyatt Farber Schreck, said the legislation would primarily enable PPPs for the development of new infrastructure. He said the law does not discuss any disposition of assets from the public sector.

“I don’t think this statute is at all directed toward any sort of local agency sale of water infrastructure to private funds,” he said. “This is really being directed at new projects.”

The law could also allow for a variety of funding mechanisms, including user fees and availiablity payments, according to Strickland.

Richard Norment, executive director of the National Council for Public-Private Partnerships, described the bill as a “solid piece of [PPP] legislation that will be helpful in meeting the critical water supply needs in Georgia and metro Atlanta”.

In the transportation sector, Georgia established legislation permitting PPPs in 2003. The legislation was revised in 2009, and the state’s Department of Transportation is currently pursuing three major PPPs under the new framework.