Michigan mulls sweeping P3 authorisation

In an effort to show private investors that Michigan is open for business, the state's Senate is considering two bills that would authorise the use of alternative finance in infrastructure projects.

The bills, SB 627 and SB 628, are both sponsored by Republican Senator Mike Kowall of Lake Township.

SB 627, also known as the Michigan Project Delivery Act, would allow public authorities to consider, compare and implement alternative financing strategies for projects, as well as enter into P3 agreements and other ancillary agreements that complement P3s.

It would also enable authorities to bundle two or more projects into a single P3 agreement, as well as give them the option to procure services, award contracts, administer revenues, appropriate funds and exercise the power of eminent domain to acquire property, easements and rights-of-way. 

Both competitive solicitations and unsolicited proposals would be authorised in the current draft. 

Companion bill SB 628 would create authorisation for the state to penalise and collect revenues from motorists who skip out on paying their tolls at designated stations. 

Joseph Pavona, a special advisor to Governor Rick Snyder, said the most immediate applications of the proposed legislation include projects to improve strained freeway pumping station infrastructure around the Detroit metropolitan area and a scheme to build an intermodal transportation centre in the city. 

Detractors believe SB 627 would “allow tolls or user fees on new facilities and on existing roads that were merely repaired with no legislative oversight,” said James Walker, Wisconsin lobbying group National Motorists Legislation representative, in a testimony. “The toll rates would have no legislative controls on amounts or their increases” under the current version of the bill, he added.

Pavona said in a testimony before the Senate Commerce Committee that at the moment the state has no immediate plans to establish a toll road. 

Kowall defended his proposal by saying it is merely a vehicle to deliver a broader set of tools for state and local authorities to acquire infrastructure “under a range of funding and finance mechanisms”. 

Currently, P3s and other alternative finance mechanisms can be considered and utilised on case-by-case basis, but with this new authorisation in place a pipeline of projects could potentially be built up. 

To date, 33 states have passed P3-authorising legislation. A P3 project to revitalise Detroit's aging freeway lighting network reached financial close in August.