Why the P3 industry should be getting excited about legislation

If the volume of bills filed in state legislatures across the United States is any indication, the P3 market is poised for growth in the coming decade. Here we take a look at what’s in the works

Legislators in 20 states have introduced a wide range of bills either permitting or expanding the use of P3s and, interestingly, many of these legislative initiatives go far beyond transportation projects.

According to the American Society of Civil Engineers, school facilities represent the second largest sector of public infrastructure spending and, in a 2021 report, the organization estimated the annual funding gap for the nation’s public school infrastructure to be at least $38bn. This reality is clearly on the mind of governors and elected officials as they seek to bolster P3 procurement laws in their states.

In Kentucky, Governor Andy Beshear signed into law Senate Bill 169, a bill to clarify the intent of the state’s comprehensive P3 laws to include local school boards and specifically grant a local board of education the authority to enter into public-private partnerships on behalf of a local school district.

In Maryland, a state which is known for its high profile P3 transportation projects as well as the successful Prince George’s County Public School P3, the legislature was until recently considering Senate Bill 467, which would establish a work group to study the fiscal and operational viability of P3s for Calvert County Public Schools. The bill was proposed by the delegation representing Calvert County, a community of about 92,000 people located 35 miles southeast of Washington. The bill passed the State Senate unanimously, but the measure died in the House when the legislature recently adjourned.

Infrastructure needs are not just limited to transportation and education projects. As such, several states are considering P3 programs that are expansive and allow for the use of alternative delivery models for a variety of social or community-based projects.

The Illinois legislature is considering Senate Bill 1919, a new law that would establish the Public Private Partnership Act. This broad legislation would allow any public entity to utilize a P3 procurement for nearly any public purpose including medical or nursing care facilities, recreational and tourism facilities, solid waste management and correctional institutions. 

Similarly, Texas Senate Bill 1984 and Rhode Island Senate Bill 803 are also all-encompassing in their definition of public agencies and projects eligible for a P3 contract. Both bills have been assigned to State Senate committees for hearings.

Meanwhile, bills have been filed in the New Jersey legislature to establish the “Energy Infrastructure Public-Private Partnership Program”. The companion bills, A5170 and S3565, have bipartisan support and the sponsors note in the legislation: “The implementation of energy-related projects through public-private partnerships will enable the state to leverage the capital and expertise of the private sector, which will permit necessary and long overdue energy-related projects to be developed.” The bills are awaiting committee hearings in their respective houses.

Indiana has also emerged as one-to-watch, with their new budget bill creating a transportation task force whose duties include studying the potential use of P3s.

Colorado, which passed sweeping P3 initiatives in 2022, has seen the introduction of two bills to clarify and improve the use of P3s for workforce housing projects. Senate Bills 001 and 035 have passed the Senate and are awaiting committee hearings in the House.

Excitingly, states whose leaders have been slow to adopt P3 legislation are beginning to realize they are trailing behind their peers in the delivery of infrastructure and other assets that make them attractive to new business and investment. New Mexico, Tennessee and Mississippi are three of those states, which are now legislating in a bid to catch up. 

The New Mexico legislature is considering House Bill 213 which would allow P3s for the construction or improvement of a public transportation facility or public transportation infrastructure other than a toll road or public construction or improvement of broadband telecommunications network facilities. 

Tennessee saw the passage of Senate Bill 273: legislation to enable P3 procurement for certain transportation-related infrastructure. However, its neighboring state, Mississippi, saw three P3-related bills die in senate committees. The bills would have allowed the use of P3s for electric vehicle charging stations, transportation infrastructure and economic development initiatives.

While public officials know that P3s are not a panacea for all their infrastructure woes, they recognize that it is no longer to any state’s advantage to ignore the benefits offered by the P3 model. The amount of legislation filed and the debates taking place strongly indicate that P3s in the US are needed and here to stay.