California Statutes Authorizing Public-Private Partnership Contracting

Pillsbury - Gravel2Gavel Construction & Real Estate Law

Public-private partnerships are often cited as a key pathway to restoring and enhancing the nation’s infrastructure. They can be challenging arrangements to structure. (As a result of the pandemic, they have even suffered the indignity of having their “PPP” acronym coopted by the Paycheck Protection Program. With apologies to Small Business Administration practitioners, we use “PPP” in this article to refer to the infrastructure tool.)

One gating condition to setting up a PPP is identifying the authority for a public entity to use a contracting method that does not run afoul of the general requirements that (i) works of improvement be let to the lowest responsive bid by a responsible bidder and (ii) design services be awarded through a qualifications-based selection process. Integrated forms of project delivery that vest in a single concessionaire multiple design, construction, financing, operation, maintenance and entrepreneurial roles must find an exception to any applicable background rules.

Some jurisdictions, such as Arkansas and Puerto Rico, have broad statutes that allow the use of PPP in a wide variety of local, regional and statewide projects in the transportation, social, education and utility sectors. California, along with other states, has a patchwork approach, with multiple statutes that cover different kinds of agencies for different kinds of projects. The below chart turns the patches into a quilt, identifying and providing links (current as of January 2022) to a number of these statutes.

Chart: Public-Private Partnership Enabling Statutes (California)

This quilt does not include all statutes applicable to a single project, such as those for the University of California at Merced and the Los Angeles Airports Connector. It does not address innovative means of financing, including federally tax-exempt 63-20 financing for affiliated nonprofit entities. And creative agencies may find build-to-suit leases and development agreements to be useful tools in the real property context. The quilt is only a summary of selected elements of the statute, and it omits discussion of many important exceptions and conditions for use of each such authority.

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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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