Lawmakers want to expand public-private construction projects

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Now that Georgia’s first public-private highway project is actually underway, legislators will try to expand the concept into the “vertical construction” of government buildings and facilities.

Sen. Hunter Hill (R-Smyrna) has introduced and is already revising SB 255, which would pave the way for state and local governments to enter into public-private partnerships (P3) for infrastructure projects.

Hill chairs a study committee that held its first hearing Tuesday on SB 255. The committee room was jammed with lobbyists for construction and engineering interests, all of whom seemed to be supportive of the legislation.

“It’s all been very positive,” Hill remarked near the end of the hearing. “Is anyone opposed?”

No one in the audience expressed any objections, so Hill said that in future committee meetings on SB 255 (the next one is scheduled for Sept. 24), the members would try to “make it as good as we can.”

Because of the Great Recession and subsequent economic downturn, state and local governments have cut back substantially on infrastructure projects, a troubling trend for construction and engineering firms that have long depended on this source of revenue.

These companies are hoping that a move to private-public partnerships, where the private firm takes on part of the financial risk involved, would spur more government construction projects.

The General Assembly adopted legislation in 2003 to authorize public-private highway projects, but that law has traveled a rocky road to implementation and only now has the first public-private initiative, the addition of toll lanes to I-75 and I-575 in Cobb County, been launched.

One state entity, the Board of Regents, has employed the public-private approach in the construction of facilities such as dorms, parking decks and cafeterias at Georgia’s public colleges.

Susan Ridley, the vice chancellor for fiscal affairs, told the committee that foundations affiliated with a public university will issue revenue certificates to build a parking deck or dorm – the fees generated by the facility are used to pay off the certificates – and then lease the facility back to the University System.

Through this public-private method, the University System has been involved in 188 campus construction projects at a total cost of $3.7 billion, Ridley said.

“We want to share some of the risks with the market sector,” Ridley said.

Michael Sullivan, a lawyer for the American Council of Engineering Companies (ACEC), said the use of P3 partnerships would give local governments “the ability to leverage the creativity and innovation of the private sector” to get infrastructure built.

“It’s just another tool for development projects that are needed by the state,” said Chris Lloyd, who works in the Richmond office of the McGuireWoods public affairs firm.

While Hill’s bill received a positive reception at Tuesday’s hearing, Hill said he had some reservations about the debts that governments might incur if they got involved in too many public-private projects.

“I’m very concerned about the indebtedness,” Hill said. “I don’t want to just create projects if they’re not in line with the best interests of the taxpayer.”

© 2013 by The Georgia Report

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Tags: Hunter Hill , infrastructure , public private partnerships , vertical construction