TxDOT sunset review legislation revives bill to limit toll road PPPs

After stalling in the Texas house, a controversial bill to grant public entities rights of first refusal for toll road projects has now made it through both legislative chambers of the US’ second most populous state. The bill’s text was inserted into a larger piece of legislation to revamp the Texas Department of Transportation in accordance with Texas' sunset provisions for state agencies.

A controversial measure to limit the use of public-private partnerships (PPPs) for toll road projects has now passed both chambers of the Texas legislature after the Texas senate voted in favor of related legislation with exactly the same provisions.

On Monday evening the Texas senate voted in favor of House Bill 300 – a 246-page long overhaul of the state’s Department of Transportation (TxDOT) – which also included the text of Senate Bill 17.

Senate Bill 17 limits the use of comprehensive development agreements between public and private sectors, a form of PPP, by granting public entities the right of first refusal for developing toll road projects before they are tendered to the private sector. It also requires private sector operators to set a purchase price up front for their concessions if the state ever needs to terminate the contract early, as opposed to paying fair market value, and limits the duration of non-compete clauses to 30 years.

Texas enacted a moratorium on comprehensive development agreements in May 2007, but the TxDOT overhaul includes text from another bill that would again enable their use. Now, despite the lift on the moratorium, many PPP industry observers are nervous that Senate Bill 17 will scare off the private sector from infrastructure investment in Texas if it is signed into law.

Senate Bill 17 passed the Texas Senate in early April and was moved to the house for approval, where it stalled and will most likely not reach the floor for a vote, a legislative aide to the bill’s sponsor, Sen. Robert Nichols, told InfrastructureInvestor.

House Bill 300, though, has already passed the Texas House of Representatives. On 11 May it received 138 yays and 6 nays in the 150-member chamber, with 1 present vote. The bill is an overhaul of TxDOT in response to the Texas’s sunset laws, which stipulate a so-called “sunset” date every 12 years when a state agency will be abolished unless legislative action is taken to extend its life.

TxDOT sunsets on 1 September of this year and legislators in both chambers have made it a priority to reform the agency before extending its life. In February 2008, TxDOT admitted to a $1.1 billion accounting error in its budget which triggered a financial audit and fueled public outcry to make it more transparent and accountable.

The senate version of House Bill 300 includes 10 new amendments that will now be re-considered by the house before the legislation is officially sent to Texas Governor Perry for enactment into law.

None of the amendments pertained to the text of Senate Bill 17 that is embedded in the sunset legislation, according to the legislative aide.

In related news, a bill to ban TxDOT from influencing public opinion about the use of toll roads through advertising or marketing materials is scheduled for a reading in the Texas Senate tomorrow. It has already passed the house.

Any bill that doesn’t pass both chambers of the legislature by midnight on Wednesday, 27 May, won’t be actionable until the state’s next legislative session in 2011.