Public-Private Partnership Legislation in Maryland and Pennsylvania

We reported last month that Maryland was on the verge of modernizing its statutory framework for P3s, legislation heavily backed by Governor O’Malley’s administration. The proposed legislation was projected to increase the State’s capital budget by as much as $315 million and create as many as 4,000 jobs.

Unfortunately for Maryland’s infrastructure and residents, the bill fell victim to partisan fights over the State’s budget and failed to pass before the General Assembly session ended at midnight on April 9th. Although there is a chance Governor Martin O’Malley could call a special session to work on the budget and other measures, the P3 legislation will most likely have to wait another year. It looks like Jeffrey Gans, a partner in Pillsbury’s Construction practice and among those leading Pillsbury’s P3 practice, will have to return to Maryland’s legislature to testify once again on the importance of Maryland taking advantage of P3 opportunities.

Although Maryland was unable to enact P3 enabling legislation, chances are looking good that Pennsylvania will have an act authorizing transport P3 projects by as early as this summer. On April 4th, by a 128-66 vote, the State’s House of Representatives approved House Bill 3. The House then sent House Bill 3 to the Senate Transportation Committee for approval on April 10th, where the bill awaits the Senate’s late-April return from recess. Governor Tom Corbett, a supporter of the bill, will likely sign the P3 act into law if it makes it to his desk.

House Bill 3 allows both solicited and unsolicited proposals, which will encourage the industry’s leaders to propose innovative and profitable solutions to Pennsylvania’s infrastructure needs. Additionally, the bill permits the State’s DOT to make availability payments, allowing the State to compensate a private company for its responsibility to design, construct, operate, or maintain a tolled or non-tolled road, thereby decreasing the company’s investment risk.

Besides upgrading the State’s highways and expressways, the act could also convert freight rail lines into commuter lines. With its bridges and roads in very poor condition (Pennsylvania’s bridges were ranked worst in the nation), the State badly needs an influx of capital to jumpstart infrastructure repairs and improvements. House Bill 3, a bill that has been in the works for several years, will hopefully be signed into law this summer.

We will keep you updated on any developments in P3 legislation in both Maryland and Pennsylvania.