To facilitate the formation of public-private partnerships, States should create the right climate to attract, encourage, and facilitate the participation of the private sector in the development, financing, and operation of public-private transportation projects.[164] Not all States allow this flexibility. In States that do not allow expansive private-sector participation, new enabling legislation generally will help to encourage private investment in traditional highway programs.[165]
To date, the private sector has had limited opportunities to partner with States and invest in highway infrastructure projects. For example, according to an analysis prepared by a law firm that represents various State and local transportation agencies involved in projects utilizing private sector participation, as of February 2004, 23 States have legal authority for private sector participation in transportation projects.[166] (See Appendix G) Of these 23 States, however, only 21 have legal authority to utilize private-sector participation in highway projects.[167] The law authorizing California to enter into public-private partnerships for transportation projects was repealed in 2004 and New Jersey let its authority expire in 2002.[168]
Virginia was one of the first States to enact a comprehensive public-private partnership law. The Public-Private Transportation Act of 1995 enables Virginia to enter into contracts authorizing private entities to acquire, construct, improve, maintain, and operate certain transportation facilities. According to Virginia's implementation guidelines, the intent of the legislation is to "encourage public/private ventures for transportation facilities which may result in the availability of facilities in a more timely or less costly fashion and to facilitate to the greatest extent possible the federal pooling and funding mechanisms to the end that transportation financing be expanded and accelerated and have the greatest possible flexibility in contracting between public and private entities."[169] The Act allows private entities to submit both solicited and unsolicited project proposals, and the steps involved in evaluating, selecting, and implementing the projects are similar for both types. Private entities also may propose innovative financing methods, such as user fees or service payments.
In 2003, Texas enacted House bill 3588, which provides a myriad of new tools to assist in the delivery of transportation projects and in the formation of public-private partnerships. House bill 3588, among other things, allows the formation of Regional Mobility Authorities (RMAs), expands the tolling authority of the State, authorizes Comprehensive Development Agreements (CDAs), and provides flexibility in funding the Trans Texas Corridor. The RMAs allow individual or multiple counties to develop a regional approach to transportation needs. RMAs may issue bonds or collect tolls, including converting an existing segment of the State's highway system to a toll road with the approval of the Texas Transportation Commission. RMAs have the authority to purchase rights-of-way and may lease portions of the land for non-transportation related purposes. The RMAs also may use surplus revenue for other transportation projects.[170]
House bill 3588 also provides greater tolling authority. Texas may co-mingle toll revenue with State highway funds to build public and private toll roads. Pass-through toll agreements, also known as "shadow" tolls, are allowed. Under a pass-through toll agreement, a local or private entity makes highway improvements using its own funds and is then reimbursed by the State based on the number of vehicles that use the highway.[171]
The legislation also allows the use of the design-build approach to highway construction through CDAs. A CDA may include project design, construction, and financing, right-of-way acquisition, and highway operation and maintenance.[172]
Under House bill 3588, the Trans Texas Corridor is authorized to finance the corridor through bonds and sets funding caps to reserve funding for other transportation projects.[173] This authority will provide the financial flexibility to construct the Trans Texas Corridor without sacrificing funds for other highway projects.
Georgia also enacted legislation in 2003 allowing the formation of public-private partnerships. Senate bill 257 allows private entities to bypass the State's typical bid procedures and instead to submit unsolicited, sealed proposals for projects already in the State's transportation plan. The State then is required to ask for competing proposals on the project. In early 2004, the GA DOT announced that it had received the first proposal under the new law to turn Ga. 316, which runs from Atlanta to Athens, into a toll road.[174] The project would include HOV lanes, new interchanges and overpasses, and miles of access roads.[175]