Academic journal article Journal of Corporation Law

The Evolution of Virginia's Public-Private Partnership Enabling Statutes

Academic journal article Journal of Corporation Law

The Evolution of Virginia's Public-Private Partnership Enabling Statutes

Article excerpt

I. INTRODUCTION II. BACKGROUND III. ANALYSIS   A. Program Flexibility     1. Qualifying Proposal, Facility, and Partner Definitions     2. Delivery Approaches     3. Funding and Financing Approaches     4. Procurement Processes   B. Public Concerns     1. Ensuring Public Value     2. Managing Risk     3. Accountability and Transparency IV. CONCLUSION 

I. INTRODUCTION

Public-private partnerships (P3s) have become an increasingly popular tool for infrastructure development in the United States. This interest arises out of concern about cost overruns, late project delivery, deferred maintenance, declining public funding, and increasing calls for infrastructure renewal and expansion. Used most frequently for transportation infrastructure, the term encompasses a variety of contract types that shift facility construction, financing, operation, and maintenance activities partially to private partners. (1) In contrast to traditional design-bid-build (DBB) procurement approaches, P3 arrangements increase private-sector participation in infrastructure delivery and financing (2) by bundling design, construction, financing, operation, and maintenance phases into a single private-sector delivery arrangement (e.g., design-build (DB), design-build-operate-maintain (DBOM), design-build-finance (DBF), design-build-finance-operate-maintain (DBFOM), and operation and maintenance (O&M)). (3) While the public sector retains facility ownership, P3 agreements typically allow the private partners to recoup their investment through tolls, user-fees, or public payments. By increasing private-sector involvement in infrastructure development, such P3 arrangements can bring new funding to public projects, accelerate development, and support ongoing upgrades or maintenance. (4) Since the United States lacks a generalized, federal P3 statutory framework, each state has developed its own approach to P3 law. (5) While federal programs and legislation have enabled experimentation and alternative financing options, (6) state legislatures have possessed primary responsibility for allowing or denying P3 approaches and for establishing program characteristics. (7) State executive branches are then responsible for implementing appropriate P3 programs within the established statutory guidelines.

At the most fundamental level, effective P3 enabling statutes generate and support operating environments in which public entities can form successful facility or service delivery partnerships. However, given the funding, expertise, and public-interest protections required to evaluate and manage complex P3 arrangements, the enabling statutes must also specify allowable program activities, operating procedures, and lines of authority. (8) The private sector's greater role in P3 delivery mechanisms, compared to traditional public-sector facility and service delivery, challenges P3 enabling statutes to preserve a delicate balance between program flexibility and addressing public-interest concerns. (9) Broader program flexibility enables innovative facility design, financing, and procurement solutions, potentially allowing the public sector to capture broader private-sector benefits. However, when delegating authority to executive and private entities, P3 enabling statutes must also adequately protect the public interest.

As of July 2015, 33 states, the District of Columbia, and Puerto Rico have enacted statutes enabling P3 approaches for transportation infrastructure delivery. (10) As one of the first U.S. states to enable P3 procurement, Virginia's 25 year history with P3 enabling statutes provides a unique opportunity to study the balance between program flexibility and public interest concerns, and its evolution in practice. (11) The following discussion explores the evolution of Virginia's public-private partnership enabling statutes through both program flexibility and public interest frameworks. The discussion begins with a brief historical background of Virginia's enabling statutes, focusing on its four primary P3 enabling acts: the Virginia Highway Corporation Act of 1988 (HCA), the Qualifying Transportation Facilities Act of 1994 (QTFA), the Public-Private Transportation Act of 1995, and the Public-Private Education Facilities and Infrastructure Act of 2002. …

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