Some jurisdictions may have requirements that the legislature or some other public entity review and approve a proposed PPP transaction after the arrangement has been negotiated and finalized between the project sponsor and the private participant. For example, California legislation enacted in 2006 authorizes regional transportation agencies to develop and operate HOT lanes with private-sector involvement, but only subject to the approval of the California Transportation Commission.203 Florida recently enacted legislation that requires legislative approval for long-term leases of existing toll facilities by FDOT.204 As noted above, approval from the Indiana legislature is required before IDOT can enter into a PPP transaction for I-69.
These types of approval requirements add significant uncertainty to the process and may dissuade bidders from incurring the significant development costs necessary to establish their proposals. One compromise approach to avoid such an impact would be to require other public entities (such as local or regional transportation authorities) to provide their input when a proposal is first issued or received. This will give the par-ties ample time to address any concerns expressed by such authorities and will preclude a "local veto" that otherwise could dampen the extent of pre-bid and pre-award analysis performed by qualified bidders. Another possible solution is to adopt the approach taken by Oregon, which agreed to reimburse its private partner for all predevelopment costs (up to a cap of $20 million) in the event that a project was not approved for implementation by the Oregon Transportation Commission or otherwise not pursued by ODOT. This is exactly what happened with the Newberg-Dundee Bypass. If the parties had entered into a DBFOM contract for that project, ODOT probably would have had to pay breakup and other termination fees to the consortium.
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203 Cal Stat. & Hwy. Code § 143(A), Cal. Gov't Code § 5956.
204 See Fla. Stat. § 125.01.