Texas legislators consider creating P3 center
Witnesses who testified before a Texas legislative committee recommended that the state establish a P3 center that would provide expert advice on the procurement process.
The Economic and Small Business Development Committee of the Texas House of Representatives met earlier this month, at the direction of House Speaker Joe Straus, who wants the committee to suggest ways to improve the Public and Private Facilities and Infrastructure Act (SB 1048) that was enacted in 2011. The legislation primarily concerned social infrastructure projects.
Industry representatives were unanimous in their recommendation that the state establish a P3 center to advise state agencies and potentially county and municipal agencies as well.
The unit could be modeled on provincial agencies in Canada that are focused on P3 procurement, said Rodney Moss, regional managing director of risk management company Aon Risk Solutions, who testified on behalf of the Association for the Improvement of American Infrastructure (AIAI).
A P3 center would lead to a larger pipeline of P3 projects and also lead to a more standardized and predictable project procurement process, Moss said. “That’s how a pipeline is created,” he told the committee.
Still seen as exotic
George Tapas, vice president of engineering firm URS said a P3 center could include a staff of 15-25 people with expertise in various disciplines needed for P3 procurement. The center would be augmented by a pool of advisors from the private sector, who would be used as needed, he said.
Tapas said Virginia’s Office of Transportation Public Private Partnerships (OTP3) and Puerto Rico’s Public Private Partnership Authority (PPPA) could be looked at by Texas as possible models.
To many state agencies, P3s are looked at as “exotic,” Tapas said. A public agency involved in P3 procurement “may wonder if I did the right thing,” he said.
Not one social infrastructure project has reached financial closed in Texas since SB 1048 became law, said Tim Merriweather of The Banister Group. Merriweather advocated that the P3 center operate as a non-profit corporation and work closely with local entities that are looking to undertake P3 projects.
TxDOT has expertise
However, the Texas Department of Transportation (TxDOT)does not need a P3 center, Russell Zapalac , chief planning and project officer at TxDOT told one of the legislators, in response to a question. TxDOT has the required expertise to execute P3 projects.
TxDOT has USD 11bn worth of P3 projects currently under construction and another USD 5bn in procurement, Zapalac said.
Many local governments that want to enter into P3 agreements can find the procurement process complex, time-consuming and expensive, C. Brian Cassidy, partner at Locke Lord, told InfraAmericas. At the same time, the private sector may look at investing in social infrastructure in Texas with some trepidation, as a plan to redevelop the Capitol complex in Austin, which would have moved forward as a P3, was canceled after resistance from legislators.
A P3 center could be a benefit if it can provide needed expertise and does not add an extra layer of bureaucracy for a project to go through, Cassidy said.
The committee will issue a report to Straus on the hearing this fall and could include a recommendation concerning potential legislation.
Hickenlooper’s veto marks a “maturity step” for US P3s, Frank Rapoport, chief strategy advisor at AIAI and senior partner at Peckar & Abramson, said, as a US governor has used his veto power to keep a P3 program moving forward.