Public-Private Partnership Bill Passes Georgia Senate to Pave Way for Widespread P3 in Georgia

by Eversheds Sutherland (US) LLP

Georgia may soon join the growing ranks of states with broad enabling legislation for all forms of public-private partnerships (or P3). Senate Bill 255 (2013) passed the Georgia State Senate on Monday, February 24, 2014, by a vote of 43 to 8. The Bill now goes to the Georgia House of Representatives, where 11 days of session remain for the House to enact the legislation into law.

P3 allows a public entity (such as the State of Georgia, one of its 159 counties, a city or town, or a municipal body such as a school district or water authority) to “partner” with private entities where the private side of the partnership is responsible for some aspect of a development that would typically be the public entity's responsibility, such as financing, design, operation or maintenance. Georgia currently has P3-enabling legislation permitting the Georgia Department of Transportation (GDOT) to procure transportation projects promoting congestion mitigation or economic development (see O.C.G.A. § 32-2-78 to -80) and for water resources projects (see O.C.G.A. § 36-91-100, et seq.). SB 255 is broader and encompasses all public bodies and types of construction projects.

SB 255 authorizes public entities to accept solicited and unsolicited proposals for the development or operation of a qualifying project that meets a public purpose and public need. The legislation requires an appropriate public entity to enter into an agreement with private entities either through competitive sealed proposals or through a process of competitive negotiation. A P3 agreement under the statute will address requirements for scope of work, performance and payment bonds, letters of credit, or other forms of security, as well as public liability insurance. SB 255 also addresses the effect of significant or material breaches of any contract and powers that are reserved to the public entity. Before accepting an unsolicited proposal, the public authority would be required first to solicit and fairly consider competing proposals.

SB 255, if passed, will create an administrative Guidelines Committee as well as a Joint Legislative Oversight Committee to help regulate the way P3 contracts are awarded and managed. The Guidelines Committee, composed of 12 people, would be responsible for establishing model guidelines for P3 contracting that are mandatory for all state agencies and optional for local governments (so long as the local guidelines are not inconsistent with the legislation). These guidelines will be issued by July 1, 2015, and updated every two years thereafter. The Joint Legislative Oversight Committee will periodically inquire into and review the operations of the Guidelines Committee, as well as how successfully the Guidelines Committee is accomplishing its statutory duties and functions, and will report to the Legislature.

SB 255’s passage Monday means that the bill, introduced by Hunter Hill of the 6th District in March 2013, survives Crossover Day. SB 255 went to the House First Readers Tuesday, February 25, 2014, and will be assigned to the House Transportation Committee. To be enacted, the House must pass the legislation on or before the last day of the 2014 session, March 20, 2014.

Sutherland’s Construction Industry Practice Group continues to closely monitor the state of P3s in Georgia and elsewhere. Should SB 255 pass the House, receive the Governor’s signature, and become law, the construction industry in Georgia can expect significant opportunities for P3 development with state, county, city, and other municipal authorities across Georgia. The types of projects well-suited for P3 run the gambit of the construction industry, including roads and highways, bridges, mass transit and rail, ports and aviation facilities, water distribution and treatment, energy production, and social infrastructure such as schools, prisons, courthouses, convention centers, and public housing.

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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