Public-Private Partnerships for Transportation: A Toolkit for Legislators

Public-Private Partnerships (PPPs or P3s) for Transportation

As state governments struggle to meet growing transportation infrastructure needs while revenues dwindle, leveraging existing resources through the use of public-private partnerships (PPPs or P3s) has become increasingly attractive. As of Dec. 2010, twenty-nine states and Puerto Rico had legislated an authorization framework for transportation PPPs, and more than $46 billion had been invested in these projects over the last 20 years. The legislative trend grew in 2010 as 21 states and the District of Columbia considered 52 legislative measures concerning transportation PPPs.

PPPs are agreements that allow private companies to take on traditionally public roles in infrastructure projects, while keeping the public sector ultimately accountable for a project and the overall service to the public. In PPPs, a government agency typically contracts with a private company to renovate, build, operate, maintain, manage or finance a facility. PPPs cover as many as a dozen types of innovative contracting, project delivery and financing arrangements between public and private sector partners.

Though PPPs are not optimal for many transportation projects, they have been shown to reduce upfront public costs through accelerated or more efficient project delivery. PPPs don’t create new money but instead leverage private sector financial and other resources to develop infrastructure. In the end, a source of revenue such as tolls or other public revenue still is required to pay back the private investment. In this era of fewer viable choices for moving ahead with critical infrastructure development, PPPs are an option many states are contemplating.

The NCSL Toolkit

With the growing interest in PPPs, the debate over their use has become somewhat polarized and reasoned voices have been harder to discern. The NCSL Partners Project on PPPs for Transportation produced the report Public-Private Partnerships for Transportation: A Toolkit for Legislators in December 2010.  The toolkit provides expert guidance, dependable counsel and a compilation of best practices to assist state legislatures as they consider whether and how to pursue PPPs in their states.

Solid, balanced and comprehensive state enabling legislation is the key to thorough consideration and success of PPP projects, while protecting the public interest. The centerpiece of the toolkit is nine principles that promote a sound public policy approach to the consideration of PPPs. Clear explanations of PPP approaches, benefits and controversies, and roles and responsibilities also are provided. As well, the appendices have a wealth of specific state legislative information and detailed instruction on PPP issues.

See press release from Dec. 9, 2010.

The NCSL Partners Project on PPPs for Transportation

State legislators and legislative staff involved with NCSL have been tracking the trends in transportation funding, including PPPs, for several years. In 2008, NCSL formed a working group of state legislators, legislative staff and representatives of private sector entities to assemble reliable information and to identify effective tools for considering PPPs in the context of overall transportation funding decisions. The NCSL Partners Project on PPPs for Transportation met, deliberated and gathered information for 18 months, analyzing legislators’ needs and hearing from a variety of invited experts. It developed the NCSL toolkit and other nonpartisan, balanced and absorbable materials to aid the legislative process, both in their respective states and when considering state-federal relationships.

The project's Phase II (2010 to 2011) was a focused educational and awareness effort to help legislators put the principles developed in the toolkit into practice, as states continued to seek innovative financing solutions for the nation’s transportation needs.  Phase II achieved this through outreach, technical assistance, ongoing meetings and educational sessions with decision makers; follow-up activities in 2012 will include additional in-depth research into PPP policy options. For more information, see the project's Web page.

Key Links and Resources

A full list of resources is available in the report's selected bibliography.

Web Sites

• AASHTO Center for Excellence in Project Finance
• California Public Infrastructure Advisory Commission
• Federal Highway Administration (FHWA) Office of Innovative Program Delivery
• The National Council for Public-Private Partnerships (NCPPP)
• NCSL Partners Project on Public-Private Partnerships (P3s/PPPs) for Transportation
• NCSL Transportation Funding Legislation Database
• Partnerships British Columbia (Partnerships BC)
• Partnerships Victoria 
• Partnerships UK
• Puerto Rico Public-Private Partnerships Authority

Reports

• American Bar Association (ABA), 2010: State and Local Model Procurement Code
• California PATH, UC-Berkeley, 2009: Task B-2: Status of Legislative Settings to Facilitate Public Private Partnerships in the U.S.[California PATH Research Report UCB-ITS-PRR-2009-32]
• The Council of State Governments (CSG), 2010: Public-Private Partnerships in Transportation
• Deloitte, 2006: Closing the Infrastructure Gap: The Role of Public-Private Partnerships
• Deloitte, 2010: Partnering for Value: Structuring Effective Public-Private Partnerships for Infrastructure
• Design-Build Institute of America (DBIA), 2010: Legislation and Advocacy: State Legislation
• Federal Highway Administration (FHWA), 2007: State P3 Legislation
• Federal Highway Administration (FHWA), 2007: User Guidebook on Implementing Public-Private Partnerships for Transportation Infrastructure Projects in the United States
• Federal Highway Administration (FHWA), 2009: Public-Private Partnerships for Highway Infrastructure: Capitalizing on International Experience
• Federal Highway Administration (FHWA), 2010: Working Draft [FHWA Model Legislation for States Considering P3 Authorization]
• Germa Bel and John Foote, 2007: Comparison of Recent Toll Road Concession Transactions in the United States and France
• Global Infrastructure, 2008: A Survey of PPP Legislation across the United States
• National Cooperative Highway Research Program (NCHRP), 2009: Major Legal Issues for Highway Public-Private Partnerships [Legal Research Digest 5]
• National Cooperative Highway Research Program (NCHRP), 2009: Public Sector Decision Making for Public-Private Partnerships: A Synthesis of Highway Practice
• National Journal Expert Blogs, 2009: What Role Should Public-Private Partnerships Play?
• National Surface Transportation Infrastructure Financing Commission, 2009: Paying Our Way: A New Framework for Infrastructure Finance
• National Surface Transportation Policy and Revenue Study Commission, 2007: Transportation for Tomorrow: Report of the National Surface Transportation Policy and Revenue Study Commission
• NCSL, 2006: Surface Transportation Funding: Options for States
• NCSL, 2009: Transportation Funding Outlook 2009 [LegisBrief]
• NCSL Fiscal Affairs Program, 2010: State Budget Update: July 2010
• New York Citizens Budget Commission (CBC), 2008: How Public-Private Partnerships Can Help New York Address Its Infrastructure Needs
• Nossaman, Guthner, Knox and Elliott LLP, 2005: Overview of Key Elements and Sample Provisions, State PPP Enabling Legislation for Highway Projects
• Nossaman, Guthner, Knox and Elliott LLP, 2005: Overview of States with Significant Transportation Public Private Partnership (“PPP”) Authority
• Nossaman, Guthner, Knox and Elliott LLP, 2007: Key Elements of State PPP Enabling Legislation for Highway Projects
• Nossaman LLP, 2009: A Bill for an Act Relating to Public-Private Partnerships for Public Infrastructure
• Nossaman LLP, 2009: State Legislation Authorizing Public-Private Partnerships (PPP) for Transit Projects
• Organisation for Economic Co-operation and Development (OECD), 2007: OECD Principles for Private Sector Participation in Infrastructure
• The Pew Center on the States, 2009: Driven by Dollars: What States Should Know When Considering Public-Private Partnerships to Fund Transportation
• PriceWaterhouseCoopers LLP, 2010: Public-Private Partnerships: The U.S. Perspective
• Public Works Financing, 2010: U.S. & Canadian Transportation Projects Scorecard [no longer available online as of March 2012]
• Reason Foundation, 2009: 2009 Annual Privatization Report
• Regional Plan Association (RPA), 2007: Proceed with Caution: Ground Rules for a Public Private Partnership in New Jersey
• Texas Legislative Study Committee on Private Participation in Toll Projects, 2008: Report of the Legislative Study Committee on Private Participation in Toll Projects.
• U.S. Department of Transportation, 2004: Report to Congress on Public-Private Partnerships
• U.S. Department of Transportation, 2008: Innovation Wave: An Update on the Burgeoning Private Sector Role in U.S. Highway and Transit Infrastructure
• U.S. House of Representatives Committee on Transportation and Infrastructure, 2010: Hearing on Using Innovative Financing to Deliver Highway and Transit Projects
• USPIRG, 2009: Private Roads, Public Costs: The Facts about Toll Road Privatization and How to Protect the Public

Updated March 2012