It was a long time coming, but House Bill 3 (HB 3) is law as of last Thursday, making Pennsylvania, like Virginia and Florida, a US state with viable public-private partnership (PPP) legislation.
The lawmaking general assembly on Saturday, June 30, passed HB 3, which Governor Tom Corbett – a private sector advocate who created a think tank to examine PPP legislation – signed into effect.
The newly endorsed framework is geared toward transportation infrastructure, and will put each proposed project in front of a seven-member “P3 Board,” for review and approval. The state legislature then has a 20-day window to contest a board-backed project.
The law is expected to ease in future legislation aimed at social infrastructure, and is concerned with adding capacity by way of greenfield project advancement.
Reaction to the law was mostly positive. Pennsylvania and state capital Harrisburg in particular has been a high-profile failure at privatisation. A 2008 bid to privatise the Pennsylvania Turnpike as well as an on-again, off-again effort to lease parking and a waste incinerator in Harrisburg have fallen through.
In each case, a lack of a standard PPP framework has been blamed, and industry personnel familiar with the Keystone State, as Pennsylvania is known, agreed that establishing a state-wide law is a positive development.
“This is a big piece of the puzzle,” said attorney Frank Rapoport. Rapoport, chair of the global infrastructure and PPP practice for Philadelphia law firm McKenna Long & Aldridge, has testified in front of Keystone State legislature about privatisation.
According to Rapoport, the North East US, including Pennsylvania, New York and New Jersey, is a potentially massive market for the asset class, and enabling legislation can attract private capital. But people also noted the state had to overcome its poor track record with privatisation to encourage private investment, pointing out that unsolicited bidding, like that seen in Virginia, is unlikely.
The non-official PPP committee Corbett established is the third such panel Pennsylvania has implemented – its first was convened in 2006. The current committee enlisted New York boutique banking concern Greenhill & Company as a PPP adviser.
HB 3 was drawn up by House transportation committee chairman Rick Geist, a Republican, who championed the bill for its job-creating potential.
Pennsylvania embarked on what would have served as a touchtone PPP for the US with its would-be $12.8 billion, 75-year lease of its turnpike under then-Governor Ed Rendell. Rendell, however, was rebuffed in a contentious example of ‘political will’. Similarly, a parking concession set to net Pittsburgh $450 million was cancelled in the city council.
As for Harrisburg, the city, now in state-appointed receivership, is auctioning its parking and waste incinerator, well after a previous closely debated examination of leasing both.