Alexander P. Heckler: Law creates new opportunities

Published: Thursday, October 17, 2013 at 4:02 p.m.
Last Modified: Thursday, October 17, 2013 at 4:02 p.m.

On June 27, Gov. Rick Scott signed into law House Bill 85, "an Act Related to Public Private Partnerships.” The new law facilitates the construction of public-purpose projects by expanding previous legislation on public-private partnerships and creating an alternative procurement process for these projects. This development will increase investment in our state’s economy, create vital construction jobs and modernize our infrastructure.

Public-Private Partnerships, also known as P3s or PPPs are contractual agreements formed between public entities and private enterprises that allow for greater private sector participation in the delivery, financing, operation and maintenance of public buildings and public infrastructure projects. In particular, P3s allow public entities to leverage private funds. As a result, the public sector can develop more projects at a faster pace. While P3s have long been used in Europe, over the past few years this procurement method has rapidly gained popularity in North America.

The new Florida law is designed to encourage private sector investment in the state by allowing local governments (including counties, municipalities, school boards and other political subdivisions of the state) greater flexibility in the procurement of public-purpose projects. Before Bill 85 was enacted into law, there already was P3 legislation for state transportation projects. Under the new law, nearly any project that serves a public purpose may qualify for private-sector funding. That includes airports, railroads, transit facilities, cultural centers, stadium, educational buildings, hospital and nursing homes, as well as highways, bridges, power plants, and water and sewer projects. The law also provides for an unsolicited proposal process where private enterprises can submit a proposal or an idea for a project which is not currently procured. Finally, the law authorizes counties to use P3s for county-owned road construction projects

Florida governments, businesses and residents will greatly benefit from the new law. First, the passage of the P3 law sends a clear message to national and international investors and companies that Florida is open to new infrastructure business. Since these types of partnerships have been successful in Europe and Canada, this development is likely to bring more investment into our state. Second, local governments will now have an alternative to issuing bonds or other forms of debt to fund needed projects. By using P3s, they will be able to shift the project risks and funding responsibility to the private enterprises. Third, with the new law, governments will now be able to rebuild and expand our roads and highways more quickly. This is an important benefit considering that our state has a significant backlog in highway and road construction projects. Lastly, Florida businesses will benefit from the potential revenues resulting from designing, implementing and operating these important projects while creating new construction jobs.

The law also protects the public interest. Before approving a P3 project, a public entity must conduct an independent analysis to ensure that the project has a reasonable estimated cost based on comparable projects. Moreover, if the entity receives an unsolicited proposal, it must provide adequate public notice and allow submittals of additional proposals. The sources of investor funding must also be disclosed and other affected local jurisdictions must be notified. Finally, before approving any project, public entities must ensure that there are adequate safeguards to avoid additional costs or disruptions in case the private party defaults or cancels the agreement.

Currently, several P3 projects are already underway in South Florida, including the PortMiami tunnel to I-395, the expansion of I-595 in Broward County, and a recently completed dormitory at Florida Atlantic University in Boca Raton. The success of these ventures clearly demonstrates the validity of this alternative project delivery mechanism.

In addition to the efforts at the state level, Miami-Dade County is also moving forward with its own P3 program. On July 1, Miami-Dade County Commissioner Juan Zapata passed a resolution that directs the mayor’s office to study the implementation of a P3 program. Simultaneously, Miami-Dade County Mayor Carlos Gimenez has also been developing a P3 plan. In the meantime, the county is also developing a priority list of potential P3 projects for water, sewer, highway and public-transit procurements.

Although I am a lifetime Democrat, I applaud our Republican governor and state Legislature for taking this important step. Certainly, partisan politics take a back seat to keeping our economy moving forward by implementing legislation that will create new jobs and bring new investment to our state. At county level, I also applaud the efforts of Mayor Gimenez and Commissioner Zapata.

Alexander P. Heckler is the founding and co-managing partner of LSN Partners LLC, a Miami-based consulting firm.

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