During its recent legislative session, the Illinois General Assembly passed House Bill 2878 (P3 Bill), a measure that includes several substantial amendments to the state’s 2011 Public-Private Partnerships for Transportation Act that are designed to spur additional P3 project activity in Illinois. The P3 Bill was passed with broad bipartisan support.
However, Illinois Governor J.B. Pritzker has issued an amendatory veto removing a key provision that explicitly extended P3 authority to certain local units of government (see below). It remains to be seen whether that veto will be overridden or accepted by the General Assembly.
The P3 Bill confirms that the P3 Act enables the following types of projects:
High speed passenger rail;
Intercity passenger rail; and
Other transportation facilities or infrastructure.
Extension of the P3 Model to Illinois Local Units of Government
Under current Illinois law, by virtue of certain combined authorities contained in the P3 Act itself and the Illinois Constitution’s provisions pertaining to “home rule” local governments, the P3 delivery method is generally limited to (i) the Illinois Department of Transportation (IDOT) or the Illinois State Toll Highway Authority (ISTHA); and (ii) Illinois municipalities that possess home rule powers. Home rule municipalities represent approximately 15% of the total number of Illinois municipalities.
Perhaps the most significant component of the P3 Bill is its extension of the P3 model to Illinois local units of government that are not home rule municipalities. Thus, the P3 Bill would facilitate P3 projects for the 85% of municipalities that are not home rule, as well as for other local units of government, such as counties, townships, park districts, and school districts.
Unsolicited Proposals Authorized
Under current Illinois procurement laws and rules, potential private P3 partners are prohibited from submitting a P3 proposal to the State of Illinois without having first been solicited by the State for such a proposal as part of a formal competitive procurement process.
The P3 Bill lifts that ban and creates a process for consideration of the proposal by the public partner. To facilitate that review, the bill also establishes a minimum set of components of such unsolicited proposals (for example, financing plan, project schedule, operating plan) and sets out the criteria by which IDOT, ISTHA, or the local government must evaluate such proposals.
The Governor’s Amendatory Veto
On August 11, Governor Pritzker issued an amendatory veto of the P3 Bill. The amendatory veto is not a traditional veto of the entire P3 Bill. Instead, it affects only certain portions of the bill - specifically, it effectively removes the provisions of the bill that extend the P3 model to non-home rule Illinois local units of government. In his message accompanying the amendatory veto, Pritzker cited concerns regarding oversight, transparency, and procurement protocols relating to local governmental P3s.
The Illinois General Assembly is scheduled to reconvene in late October for its fall legislative veto session. If it overrides the amendatory veto, the provisions enabling Illinois local units of government to pursue P3s will remain intact and will become law.
However, if the General Assembly affirmatively accepts the amendatory veto, provisions enabling local units of government to pursue P3s will be removed from the P3 Bill, and the remaining portions of the bill will become law.
If the General Assembly takes no action on the amendatory veto, the entire measure dies.
Other P3 Initiatives
The Illinois General Assembly has also taken other recent project-specific action on the P3 front:
With respect to the long-discussed South Suburban Airport, 40 miles south of Chicago in Peotone, Illinois, the General Assembly has passed, and the Governor has signed, legislation that allows the project to be developed as a cargo airport P3 and directs IDOT to commence the procurement process by January 2024 to identify the P3’s private partner.
Both chambers of the General Assembly approved a joint resolution that authorizes IDOT to utilize a P3 structure for its I-55 Managed Lanes project, which involves the expansion of I-55 by adding express toll lanes along a 25-mile congested stretch of that interstate between I-90/94 and I-355.
Adam Margolin is a partner at Quarles & Brady and chair of the firm’s infrastructure & P3 practice. A former deputy counsel to the Speaker of the Illinois House of Representatives and senior corporation counsel with the City of Chicago, Adam has extensive experience in both the private and public sectors working on cutting-edge infrastructure and energy projects. Adam’s current practice at Quarles focuses on P3s and renewables projects.
Chris Skey is a partner at Quarles & Brady in the infrastructure & P3 practice. Chris counsels domestic and foreign project developers, investors and owners on transactional matters, strategic planning and compliance related to the legal, legislative, regulatory, and political developments affecting their interests and projects. Chris’s practice includes the representation of private project developers, utilities, large municipalities, and airports developing alternative fuel, on- and off-site energy generation and other infrastructure projects.