Legislative Opportunities and Impediments - The Virginia Experience

1. Legislative Opportunities and Impediments - The Virginia Experience Virginia Public Private Partnerships ATRA TECHNIX Program Phil Bomersheim “Activist” Washington D.C. January 11, 2009

2. “Sacred Cows Make the Best Burgers!”

3. Impediments • Laws, Regulations • Same old Way • Special Interests $$$$$ • Politics • Design Build Rules • Similarities in all Governments • Etc., Etc., Etc.,

4. Regulatory Framework in Virginia • Virginia Public Procurement Act • Capital Outlay Manual • Oversight role of the Department of General Services • Design-Build Review Board (1996)

5. Things Begin to Change - 1995 • Public-Private Transportation Act * Allows for unsolicited proposals to develop transportation infrastructure * Utilizes a review process that is outside standard procurement process * Provides for ample review and public input * Final decision made by VDOT Commissioner • Commonwealth Competition Council

6. Public-Private Transportation Act Public Private Transportation Act Allow private entities to enter into agreements to construct, improve, maintain and operate Transportation facilities

7. Public-Private Transportation Act Unsolicited proposals may be submitted IAW the PPTA and Commonwealth Guidelines http://www.virginiadot.org/business/ ppta-default.asp

8. PPTA Success Stories • VMS - Contract for maintenance of 25% of Virginia’s interstate lane miles • Interstate 895 - $325 million, connecting suburbs to Richmond International Airport • Route 288 - $236 million, 17.5 mile beltway around Richmond • Coalfields Expressway - 80 mile “economic development road” in southwest Virginia • Route 28 - six new interchange on access road serving Dulles International Airport • Etc., Etc., Etc.,………………..

9. Infrastructure Needs In Virginia • Local governments rely on property taxes for all construction • “Pay as you go” legacy - debt limits imposed by Virginia Constitution • Taxpayer lawsuits blocked “creative” ways to develop infrastructure • Rapid population growth increasing demands for new schools and infrastructure • Aging state facilities need rehabilitation and/or replacement • Reluctance to issue debt or raise taxes

10. Public-Private Education Facilities and Infrastructure Act of 2002 - background • Virginia revenue crisis further delays capital projects • All new debt is dedicated to college construction and environmental projects • Economic Growth and Tax Relief Reconciliation Act of 2001 creates opportunity for new debt structure • Design-Build Review process has been a failure • PPTA/D-B at VDOT has been a success

11. Public-Private Education Facilities and Infrastructure Act of 2002 - provisions • Allows for solicited and unsolicited proposals to acquire, design, construct, improve, renovate, expand, equip, maintain, or operate a qualifying project • A qualifying project is: • education facility (public school and higher ed) • “any building or facility for principal use by a public entity” • equipment to enhance public safety and security at public buildings • utility and telecommunications infrastructure • recreational facilities

12. Public-Private Education Facilities and Infrastructure Act of 2002 - opposition • AGC immediately opposes - says legislation will crush Virginia contractors • AIA - concerned about impact on members • Speaker of the House - former highway contractor who values competitive low bid system • Opposition requires modifications to the legislation to make it acceptable despite 66 House patrons and 25 Senate patrons

13. Public-Private Education Facilities and Infrastructure Act of 2002 - process • Private entity submits proposal to public body • Public body makes a written determination whether the project is developed using competitive bid or competitive negotiation • Competitive negotiationcan proceedif the public body determines that this method is “likely to be advantageous” because of the “probable scope, complexity or urgency of the project” or “risk sharing, added value, an increase in funding or economic benefit from the project that would not otherwise be available”

14. Public-Private Education Facilities and Infrastructure Act of 2002 - process • Public body must also determine that the project “serves the public purpose” by demonstrating: • Public need • Cost is reasonable in relation to similar facilities • Will result in timely delivery of the project • Public body may charge a reasonable fee to cover processing costs including fees for attorneys and financial and other advisors

15. Public-Private Education Facilities and Infrastructure Act of 2002 - process • Public body enters into a comprehensive agreement with the private entity • Public body retains general oversight of the project to ensure compliance with local standards • Private operator files routine reports with the public body

16. Public-Private Education Facilities and Infrastructure Act of 2002 - funding • Traditional government sources • User fees • Service contracts • Private Activity Bonds • Lease-purchase/sale-leaseback

17. Public-Private Education Facilities and Infrastructure Act of 2002 - benefits • May not use traditional procurement process and bureaucracy • Provides opportunities for cost efficiencies in project development - 15-25% in other states • Leverage low cost financing • Depreciation • Leverage state and local funding streams

18. Public-Private Education Facilities and Infrastructure Act of 2002 - next steps • Resist attempts by opponents to roll-back provisions during 2003 General Assembly • That is funny!!!!!!!!!!! • Experience: Seven Unsolicited Proposals In Capitol Area Amendments were to Add Technology

19. Public-Private Education Facilities and Infrastructure Act of 2002 - information Virginia Senate Bill 681 Public–Private Education Facilities and Infrastructure Act of 2002 http://www.egovcompetition.com Virginia Code § 56-575.1 - § 56-575.16 http://leg1.state.va.us/000/lst/LS508097.HTM