As noted above, one of the greatest impediments to the implementation of PPPs in the highway sector is the lack of sufficient authorizing legislation at the state level. Through June 2008, approximately 23 states had legislation authorizing the use of various PPP arrangements in addition to D/B contracting for transportation projects.126 The most recent states to enact such legislation include Tennessee, which enacted the Tennessee Tollway Act in June 2007,127 and Mississippi, which enacted legislation in 2007 that authorizes state agencies to contract with private entities to design, construct, operate, and maintain new toll roads and bridges under certain conditions.128 However, a number of states-including New York, Massachusetts, and many of the states in the Northeast, and Illinois, Michigan, and many of the states in the Midwest-still do not have any such legislation. At a very general level, this reflects the regional split between the older, historically industrial economies in the Northeast and Midwest, on the one hand, and the newer growth economies in the South and West, on the other hand, in the acceptance of transportation PPP arrangements.
Several of the states with some form of PPP legislation provide only project-specific authority or impose significant restrictions on the ability to engage in PPP arrangements. For example, some states (including Alaska,129 California,130 Indiana,131 Missouri,132 and North Carolina133) have enacted PPP legislation only with respect to specific designated projects or in limited geographic areas. The Missouri legislation enacted such legislation with respect to a proposed bridge project in St. Louis, and any other PPP project would need special legislation to be pursued as a PPP. Similarly, the Alaska legislation only authorizes the Knik Arm Bridge and Toll Authority to use a PPP to finance, design, construct, operate, and maintain a bridge connecting Anchorage and one of its suburbs.
In other states (including Arizona,134 California,135 and North Carolina136), the PPP authority applies only to a limited number of "pilot" or "demonstration" projects. For example, the Arizona legislation authorizes two pilot programs involving up to two solicited and unsolicited proposals. The North Carolina Turnpike Authority is authorized to enter into PPP arrangements for the development, construction, operation, and maintenance of up to nine toll facilities (including a toll bridge). The pilot program approach may be a good way for a state without much PPP experience to "test the waters," but it shows a lack of long-term political and institutional commitment to completing projects under the PPP approach and therefore may dissuade bidders from investing substantial resources in those procurements. Other states have restrictions on the modes of transportation eligible for PPP projects. For example, California legislation enacted in 2006 authorizes PPPs for "fee-producing infrastructure projects" but excludes toll roads on state highways. These types of geographic, modal, or numerical scope restrictions generally limit the ability of project sponsors and private entities to provide innovative solutions to existing transportation problems.
In some cases, state law may authorize D/B and other forms of innovative contracting but may not explicitly authorize state or local entities to engage in long-term lease or other innovative financing transactions. As of April 2007, approximately 42 states provided some form of authority to procure transportation projects using the D/B approach.137 Since April 2007, several states (including Colorado138 and Texas139) have enacted or enhanced their D/B legislation. It is estimated that approximately 15 states (including California,140 Florida, and Georgia141) make extensive use of the D/B approach.142 Such D/B authority often is a precursor to more extensive PPP legislative authority, as state and local highway agencies become more comfortable sharing project risks and rewards with the private sector to expedite projects and control costs.
In certain states, PPP authority is restricted to the state DOT or turnpike authority, and therefore regional and local entities are precluded from using this project delivery method. For example, South Carolina,143 Tennessee,144 Oregon,145 and Utah146 authorize their respective DOTs to construct and operate turnpike facilities through PPP arrangements. In other states, including Florida147 and Colorado,148 quasi-commercial institutions have been established within the DOT to develop and administer highway PPP projects. In Texas, the legislative authority permits Texas DOT, the Texas Turnpike Authority, and Regional Mobility Authorities to enter into comprehensive development agreements with the private sector for highway projects.
In situations where a state or local highway agency lacks authority to engage in PPP arrangements generally or specific types of PPP arrangements such as long-term lease agreements, then enabling legislation will be necessary before state and local highway agencies can consider using PPP approaches to their highway infrastructure needs. Such specific enabling legislation was necessary to authorize the State of Indiana to engage in the Indiana Toll Road transaction. The Indiana statute also authorizes a public-private agreement on I-69 between Indianapolis and Evansville, but prohibits the state from entering into any other similar agreement without specific legislative approval. In addition, as a result of criticism of the Indiana Toll Road deal, the legislation for I-69 requires increased legislative over-sight and gives the Indiana DOT (rather than the Indiana Finance Authority) administrative responsibility for any PPP transaction. Many other states (including Alabama,149 Delaware,150 Florida,151 Georgia,152 Minnesota,153 Oregon,154 Texas,155 Utah,156 and Virginia157) authorize the public sector to grant long-term lease or similar franchises to the private sector to design, build, operate, and maintain toll highways.
In addition to state legislation authorizing the de-sired form of PPP, state legislation also may be required to implement tolling and pricing techniques in a particular transaction.158 State law authority generally is required before a public or private entity can levy tolls or other charges on motorists within the state. This authority is required even if the project would involve tolling and pricing on state and local roads not constructed with federal funds. In the event that the pro-posed project involved a federal-aid highway, appropriate authority for tolling and pricing would be required at both the state and federal levels.
The USDOT Model Legislation is designed to provide a template for states that are considering the use or expansion of the PPP approach to highway infrastructure development. The model statute contains specific provisions that authorize the receipt, evaluation, and acceptance of proposals to enter into PPP arrangements for the development, financing, maintenance, or operation of a highway or other transportation facility.159 Several of the provisions of the USDOT Model Legislation are discussed further throughout this section of the report.
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126 See http://www.apta.com/about/committees/public_private/documents/legis_model.pdf for a map of the U.S. states and territories (including Puerto Rico) with significant PPP legislative authority. As explained further below, most states now have some form of authority to permit design-build contracting for public works projects.
127 Tenn. Code Ann. §§ 54-3-101-54-3-106.
128 Miss. Code Ann. § 64-43-3.
129 See Alaska Stat. §§ 1905, et seq.
130 Cal. Stat. & Hwy. Code § 143(A), Cal. Gov't Code § 5956.
131 Ind. Code § 8-15.5.
132 Mo. Rev. Stat. §§ 238:300-238:367.
133 N.C. Gen. Stat. §§ 136-89.180-136.89.197.
134 Ariz. Rev. Stat. §§ 28-7701-28-7758.
135 Cal. Stat. & Hwy. Code § 143(A), Cal. Gov't Code § 5956.
136 N.C. Gen. Stat. §§ 136-89.180-136.89.197.
137 See U.S. Dep't of Transp., User Guidebook on Implementing Public-Private Partnerships for Transportation Infrastructure Projects in the United States 25 (2007), Exhibit 15 (citing to information from the Design-Build Institute of America).
138 See Colo. Rev. Stat. 43-1-1-1401, et seq.
139 Tex. Transp. Code Ann., ch. 227, 361, 370.
140 See Clark T. Thiel, New California Laws Authorize More Design-Build, Allow Public Contracting Innovations, Tighten Licensing Requirements, Extend Solar Incentives, Expand Tire Recycling, Construction Weblinks, Mar. 5, 2007, available at http://www.constructionweblinks.com/Resources/Industry_Rep orts__Newsletters/Mar_05_2007/newc.html.
141 See Georgia Design-Build rules located at http://www.dot.state.ga.us/DOINGBUSINESS/PoliciesManuals /roads/Pages/DesignBuild.aspx.
142 See U.S. Dep't of Transp., supra note 138.
143 S.C. Code § 57-5-1310, et seq.
144 See Tenn. Code Ann. §§ 54-3-101-54-3-113.
145 Or. Rev. Stat. §§ 383.001-383.019.
146 Utah Code Ann. §§ 63-56.502.5, 72-6-201.
147 Florida Turnpike Enterprise established in 1953, Fla.Stat. Ann. §§ 338.22-338.251.
148 Colo. Rev. Stat. §§ 43-1-1201-1209, 43-4-801-812, 43-3-201-43-3-416.
149 See Ala. Code §§ 23-1-80-23-1-95.
150 Del. Code Ann. tit. 2, pt. II, ch. 20, §§ 2001-2012.
151 Fla. Stat. Ann. 334.50.
152 Ga. Code Ann. §§ 32-2-78-32-2-80.
153 Minn. Stat. Ann. §§ 160.84-160.93.
154 Or. Rev. Stat. §§ 367.800-367.826.
155 Tex. Transp. Code Ann. chs. 227, 361, 370.
156 Utah Code Ann. §§ 63-56-502.5, 72-6-201.
157 Va. Code Ann. §§ 56-556-56-575.
158 Ind. Code § 8-15.5.
159 See USDOT Model Legislation at § 1-101(j), 1-102(b), 1-103(b), 1-104, available at http://www.apta.com/about/committees/public_private/documen ts/legis_model.pdf.