Across the country Public-Private Partnership (P3) projects have been becoming more and more popular. The flexibility this format provides is beneficial to all parties involved. P3 projects allow public entities to fund projects without calling for taxpayer dollars. For private parties these partnerships often present a stable long term relationship, which can be rare in the construction industry. Because public property generally cannot be encumbered by private entities, special legislation is required to facilitate P3 projects. There are many benefits to these projects for contractors and subcontractors, but P3 projects can also create problems with liens and bond claims.
New Hampshire P3 Legislation
New Hampshire recently passed Senate Bill 549-FN allowing the Department of Transportation (DOT) to enter into partnerships with private entities. If that sounds familiar, it might be because Louisiana recently passed similar P3 legislation.
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The Act provides that,
“The commissioner, upon the approval of the governor and council and the capital budget overview committee, may enter into agreements with private entities for design-build-finance-operate-maintain or design-build-operate-maintain services for transportation infrastructure projects…provided that such projects shall be approved as part of the state 10-year transportation improvement program…”
The Act only allows for specific projects: projects to design, build, operate and maintain, and those same projects that may call for private financing. It also requires the creation of a P3 Infrastructure Oversight Commission which will advise the DOT Commissioner on P3 projects. The commission will provide support to the DOT in requesting proposals and preparing agreements for P3 projects. The duties of the commission are spelled out in the Act, and the commission must provide a framework for the submission and evaluation process of P3 projects within 6 months. This framework is to include the process for submitting solicited and unsolicited project proposals, an evaluation process for the proposals, and a plan for how public advisors may be utilized throughout projects. Some other duties include holding public hearings about P3 projects, analyzing projects to determine if the P3 format is appropriate, and establishing a framework for P3 contracts.
It’s worth noting that this P3 legislation provides for projects that involve other states. New Hampshire Gov. Maggie Hassan has recently made a push to extend rail service in New Hampshire to create a direct line to Boston. This new P3 legislation could go far in facilitating that.
It seems like P3 legislation is popping up all over the place. And for good reason. These projects allow private entities with capital and expertise the ability to enter into a partnership with public agencies that might not be as properly situated. P3 projects are often tied to green construction which benefit everyone. But there are some drawbacks. Notably, payment problems are typically not contemplated when passing P3 legislation. Regardless, look for more states to embrace Public-Private Partnerships going forward.