Maryland and Florida Pass New PPP Legislation

by White & Case LLP
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On April 9, 2013, Maryland Governor Martin O'Malley signed House Bill 560 ("HB560") into law, which extensively revises Maryland's existing public-private partnership ("PPP") statute.1 HB560 formalizes the State's policy on the use of PPPs, streamlines the process of establishing such partnerships, creates a mechanism for submitting solicited and unsolicited proposals, and establishes a review process and associated reporting requirements for oversight of PPPs.

On May 3, 2013, the Florida legislature passed House Bill 85 ("HB85"), which expands Florida's existing PPP statute to cover projects outside of transportation. Like HB560, HB85 creates a process for submitting solicited and unsolicited proposals and establishes rules relating to the oversight of PPPs. Additionally, HB85 sets up a task force responsible for recommending guidelines for establishing a uniform PPP selection and review process.

Both pieces of legislation highlight the increasing utility of PPPs in overcoming state budgetary constraints by injecting private sector financing into public sector infrastructure projects.

Maryland's New PPP Legislation
Proposals to rework Maryland's PPP laws have been under consideration for more than two years, and HB560 incorporates many recommendations for improving PPP practices detailed in the 2012 final report from the state's "Joint Legislative and Executive Commission on Oversight of PPPs." Some of the key aspects of HB560 include:

  • A public policy statement encouraging the use of PPPs to develop and strengthen Maryland's infrastructure assets, to allocate risk between the public and private sectors, to promote new job creation, and to stimulate socioeconomic development;
  • A mechanism for specified reporting2 agencies to adopt regulations for the development, solicitation, evaluation, award, and delivery of PPPs;
  • A faster, two-tiered PPP review process whereby the Board of Public Works ("BPW") conducts an initial review of proposed PPP projects, followed by a second review by lawmakers, BPW, and the public;
  • Improvements in both transparency and confidentiality by mandating PPP proposals be cleansed of confidential information and published online after the first level of review;
  • New wage protections, environmental safeguards, and a minimum procurement requirement for minority business enterprises;
  • New provisions allowing companies to recoup proposal costs for unsuccessful solicitations; and
  • A process for submitting solicited and unsolicited proposals.

Maryland is expected to publish an executive order accompanying HB560 this summer and implementing regulations are expected to follow in the fall.

Florida's New PPP Legislation
HB85 expands Florida's existing transportation PPP statute to cover any project that serves a public purpose. Some of the key aspects of HB85 include:

  • A definition of "private entity" that includes nonprofit organizations;
  • A statement of legislative intent that encourages the use of PPPs to attract private investment and facilitate various bond financing mechanisms, private capital, and other funding sources;
  • The creation of a task force responsible for recommending guidelines to the Florida Legislature for establishing a uniform PPP selection and review process;
  • Procurement procedures for solicited and unsolicited proposals in addition to project qualification and approval requirements;
  • Rules governing comprehensive agreements between public and private entities including provisions for the review, inspection, maintenance, and monitoring of projects; and
  • Financing provisions allowing public entities to lend funds to private enterprises and to utilize federal loans, commercial loans, and inflation hedges.

HB85 is expected to become effective July 1, 2013 following signature by Governor Scott.

Implications
These legislative actions should help to facilitate PPP projects and, as a result, mitigate the growth of the states' debt, increase tax revenues, and accelerate economic revitalization. Maryland state officials anticipate that the contributions of private investors through PPPs will ultimately account for up to 10 percent of the State's capital budget and create as many as 4,000 new jobs. In Florida, HB85 will help the State finance a range of public facilities and critical infrastructure needs, particularly the State's aging water and sewer systems.


1 - Md. Ann. Code, State Finance and Procurement Article, §10A-101 et seq. (2013).

2  - The Department of General Services, Maryland Department of Transportation, Maryland Transportation Authority, the University System of Maryland, Morgan State University, St. Mary's College of Maryland, and Baltimore City Community College.

DISCLAIMER: Because of the generality of this update, the information provided herein may not be applicable in all situations and should not be acted upon without specific legal advice based on particular situations.

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