On January 19, 2007, the Federal Transit Administration published a notice (the "Notice") in the Federal Register [1] containing the definitive terms of the Public-Private Partnership Pilot Program (the "Pilot Program") authorized by Congress in the Safe, Accountable, Flexible, Efficient Transportation Equity Act: A Legacy for Users ("SAFETEA-LU"). [2] Section 3011(c) of SAFETEA-LU authorizes the U.S. Secretary of Transportation to establish and implement a pilot program to demonstrate the advantages and disadvantages of public-private partnerships ("PPPs") for certain new fixed guideway capital projects funded by FTA. The Secretary may select up to three projects ("Pilot Projects") to participate in the Pilot Program.
The FTA Notice states that the Pilot Program is intended to study whether, in comparison to conventional procurements, PPPs achieve any of the following benefits:
• Reducing and allocating risks associated with new construction,
• Accelerating project delivery,
• Improving the reliability of projections of project costs and benefits, and
• Enhancing project performance.
The Pilot Program will study projects that, among other things, utilize methods of procurement that integrate risk-sharing and streamline project development, engineering, construction, operation, and maintenance. FTA states that the amount and terms of private investment to be made in such projects will be a significant consideration in selecting projects to participate in the Pilot Program. PPPs eligible under this program may include DB, DBOM, fixed price contracts, equity investments, and other risk sharing arrangements.
Projects selected under the Pilot Program will be eligible for a simplified and accelerated review process that is intended to substantially reduce the time and cost to the sponsors of New Starts [3] reviews. The Notice also provides important clarifications regarding the relationship between the procurement process and NEPA approvals.
The Notice is highly detailed, and should be read in its entirety. The purpose of this summary is to point out certain significant features of the Pilot Program.47
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47 Summary courtesy of Nossaman Guthner Know & Elliott LLP. FTA Announces Terms of the Public-Private Partnership Pilot Program to Encourage Private Investment in Transit Projects, by Karen J. Hedlund and William B. Fisher. January 31, 2007, with additional input provided by AECOM Consult, Inc. April 2007.