Legal Authority

A number of legal issues must be considered when deciding whether and how to proceed with a transportation infrastructure PPP. The legal authority to use PPPs to expedite delivery of a needed transportation project is based on prevailing statutes and regulations established by the responsible legislative bodies and regulatory agencies. Exhibit 2.9 lists some of the many legal issues that can be resolved through flexible legislative and regulatory actions, giving the sponsoring agency and private provider the legal authority to advance the project in a timely manner, free of significant legal challenge.

Exhibit 2.9 Legal Issues Associated with Transportation Infrastructure Project PPPs

•  Legal capacity of parties and
legal requirement of the sponsor
to provide services

•  Ability of the private sector to
be involved in infrastructure
development, particularly 
foreign companies

•  Ability of the private sector to
acquire and own public-use
infrastructure, especially foreign
firms

•  Existence and legal basis of cost
recovery and tolling

•  Ability to provide performance
guarantees

•  Property issues of land
acquisition - condemnation, use,
and disposal

•  Administrative coordination

•  Dispute resolution and liability
provisions

•  Special provisions associated
with the use of public funds

•  Competition and anti-collusion
regulations

•  Currency and profit repatriation
rules

•  Public sector borrowing
restrictions

•  Tax and accounting liabilities

•  Adequacy of procurement and
selection procedures

•  Contract provisions

•  Property and intelligent property
law regarding proprietary
technologies and transfer of
know-how

•  Adequacy of oversight and
monitoring procedures

•  Authority of other public entities
over infrastructure assets and 
access to them

•  Authority to regulate services

•  Ability and restrictions over
transfer of private sector contract
responsibilities to other parties

Other Key Success Factors for Transportation Project PPPs

In addition to the factors cited above, other critical factors include the following:

•  Demonstrated transportation need (congestion relief, safety improvement, accessibility, travel time reliability, etc.);

•  Willing public and private sector partners with mutually complementary interests; and

•  Adequate funding or revenues dedicated to the project to make it financially viable relative to the criteria of rate of return on investment for the public partner(s) and a reasonable sharing of scarce public funding if available.

Each of these features must be present for a transportation project PPP to be successfully developed and implemented

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The next three chapters of this study present case studies and cameo descriptions of actual transportation infrastructure projects developed and implemented through PPP arrangements in England, Australia, New Zealand, and other countries which have increasingly turned to PPPs as a way to expedite the financing and delivery of needed surface transportation facilities around the world.