Ohio gets PPP authority under new transportation bill

A $6.8bn transportation budget signed into law by Gov. John Kasich allows the state to pursue solicited and unsolicited PPPs for various types of projects, including highways, airports, ports and rail. Similar legislation is under consideration in several states.

Ohio has become the latest state to enable private investment in its transportation infrastructure after Republican Governor John Kasich signed into law a $6.8 billion transportation budget that includes provisions allowing public-private partnerships (PPPs).

“I’m very excited about the provision of the public-private partnership because even though we have $6.8 billion to spend, it’s never going to be enough for all the needs that we have in our state,” Kasich said during a signing ceremony for the bill.

The bill could lead to a new pipeline of opportunity for private investors interested in transportation infrastructure projects. Ohio, a populous state that serves as a hub for many rail, truck and logistics firms, is in need of new investment to connect its freight facilities, reduce congestion and, with a  9.2 percent statewide unemployment rate, create jobs.

“This is a big, important state that now has PPP opportunity,” said Shirley Ybarra, a transportation analyst at free-market think tank Reason Foundation.  Looking at the bill’s PPP provisions, Ybarra said “I think they’ve got it framed right”.

The provisions cover only the Ohio Department of Transportation. But the provisions give the department broad authority to pursue both solicited and unsolicited proposals for projects for various types of transportation facilities, including highways, airports, ports and “even things like rail spurs”, said Jason Warner, legislative aide to the bill’s primary sponsor, Republican Representative Ross McGregor from Clark County, Ohio.

“We simply don’t have any resources available right now to be making any grandiose projects,” Warner said, pointing out that the Ohio Department of Transportation follows a “fix-it-first” policy for its massive stock of existing infrastructure ahead of building new projects.

“The PPPs will now give us the opportunity to move ahead with some of those projects,” he added, though the bill was not formulated with a specific list of projects in mind.

The bill’s signing marks the latest in a string of states that have recently enabled PPPs for transportation projects. In February 2009, former California Governor Arnold Schwarzenegger signed into law SB 4, a bill that gave state-wide and regional California transportation agencies broad authority to pursue PPPs without limit to location or number. The move was followed a few months later by Arizona and Georgia, which has now begun procuring its first PPP, the $2.3 billion West by Northwest highway improvement project in metro Atlanta.

In total, 29 states had enacted PPPs in some form prior to Ohio, according to a PPP fact sheet provided by an Ohio Department of Transportation spokesperson.

Puerto Rico, a US territory, has also initiated a PPP programme under its current governor, Luis Fortuno, and is pressing ahead with PPPs for toll roads and its main airport, among other projects.

Ybarra, the transportation analyst, sees more PPP legislation on the way.

“I think we’re going to see Michigan this year,” she said, adding: “I’m very optimistic for New York and certainly Pennsylvania”.