Tennessee Governor William Haslam has approved Senate Bill 2093, a law permitting the use of P3s in public transportation projects.
With the passage, Tennessee becomes the second state this year to pass P3-authorising legislation following Kentucky. It is the 35th state, along with Washington DC and Puerto Rico, to legalise the use of private finance in public infrastructure projects in the US to date.
“The general assembly finds that there is a public need for the timely development, redevelopment and operation of transportation facilities, [that] such public need may not be wholly satisfied by existing [methods],” states the bill. It goes on to add that the assembly felt projects could be carried out “in a more timely or less costly fashion” using P3s, “which serves the public safety and welfare”.
“Investment in this state by private entities […] is encouraged,” the bill says.
The Public-Private Transportation Act, first introduced in January, was originally intended to cover a greater portion of the transportation space. In mid-March, however, the bill suffered the loss of a segment that would have allowed Tennessee's local governments to enter into availability-payment P3s for road and bridge projects. Primary bill sponsor Republican Senator Bill Ketron said in a statement at the time that the roads and bridges portion was removed after pressure from the roadbuilders' lobby.
The final version of SB 2093 signed by Haslam is specifically aimed at bringing transportation facilities to completion or expanding an existing facility for additional capacity, but state departments will also field unsolicited proposals for projects that present public benefits.
It includes the authorisation for contracting, financing and construction, as well as planning, research, feasibility analysis, environmental evaluation, preliminary engineering, designing, acquisition of rights-of-way, relocation of utilities, permitting and environmental mitigation in the service of PPP-contracted projects. Operations and maintenance projects are included.
All solicited and unsolicited project bids are required to be submitted and vetted by the fiscal review committee prior to the signing of agreements. The committee will review the financial structure of deals as well as whether proposed projects will increase the state's debt burden.
Private partners will be responsible for covering the administration costs of filing their bids as well as any fees incurred by the state to monitor compliance and performance. They will be required to prove themselves capable of completing the project according to contract, and it will have to be proven that proposals provide benefit beyond what the associated public agency could provide via similar projects on its own.
The state retains the right to cancel a PPP contract in the event of material default on the part of the private partner, or if deadlines or service standards are not met. The same applies under such circumstance as the private partner fails to comply with a court order.
The law took effect immediately upon being signed by the governor for the purpose of establishing the rule set that will support its provisions. It will not be until 1 October, however, that the law will be implemented in full.