1. Overview and Principles for Implementing State PPP (P3) Legislation Presented at the NCPPP P3 Connect Denver, Colorado Conference By Jim Reed, Group Director – Environment, Energy and Transportation National Conference of State Legislatures (NCSL) July 29, 2014

2. Backdrop: Government Funding Shortfalls Great Recession aftermath, slow growth Climbing out of State budget shortfalls since 2008 Political reluctance to raise new taxes Previous underinvestment in infrastructure Aging infrastructure in all sectors Continuing uncertainty of federal funding and program, less federal funding going forward, i.e. HTF Transportation: Declining gas tax revenues (less driving, electric and hybrid vehicles, millennial’s drive less)

3. The P3 Option Public-Private Partnerships are attractive because they: Can complete projects that cannot be fully funded through traditional means. Expand the pool of available money for transportation projects- private equity. Can create cost savings in terms of lower initial project cost to the public, quicker project completion and long- term operation & maintenance Private sector takes on a portion of the financing risk and other risks. Bring private sector practices and innovations into public projects, which can increase efficiency.

4. Two Key Legislative Factors That Assist States in Developing P3s Robust and Comprehensive PPP Enabling Legislation: Sets up the institutional framework within which PPPs can occur – “PPP enabling laws are important in facilitating private investment in infrastructure. Better designed PPP enabling laws can serve to attract more private investment into a state.” (Geddes and Wagner,Cornell Univ. study using linear probability models to examine P3 laws - August 2012) Creating enhanced public sector expertise by establishing a specialized P3 office

5. 33 States with Transportation PPP Enabling Legislation + Puerto Rico

6. Key Elements: PPP Enabling Legislation Gives broad authority for a variety of P3 projects Creates a robust framework for contracting – Flexibility in application of state procurement laws Defines allocation of risks between public sector and private partners Allows combination of private and public money in financing, also allows revenue sharing Allows availability payments Political approval at an appropriate (early) stage Creates specialty P3 office to handle projects

7. Closing the Expertise Gap: State PPP Offices Arizona Office of P3 Initiatives (DOT) California Public Infrastructure Advisory Commission (BTH) Colorado High Performance Transportation Enterprise (DOT) (Government-owned business) Georgia P3 Program (DOT) Michigan Office for PPPs (Treasury Dept) Ohio Division of Innovative Delivery (DOT) Oregon Office of Innovative Partnerships and Alt. Funding (DOT) Puerto Rico Public-Private Partnerships Authority Texas Best Practices Center (under development) Washington Transportation Partnerships Office (DOT) Virginia Office of Transportation PPPs (DOT) Proposed Federal Center of Innovative Transportation Finance

8. NCSL PPP Principles Principle 1: Be informed. Decision makers need access to fact-based information that supports sound decisions. Principle 2: Separate the debates. Debates about the PPP approach should be conceptually distinct from issues such as tolling, taxes or specific deals. Principle 3: Consider the public interest for all stakeholders. Legislators should consider how to protect the public interest throughout the PPP process.

9. NCSL PPP Principles Principle 4: Involve and educate stakeholders. Stakeholder involvement –early and often--helps protect the public interest, improve buy-in and mitigate political ris k. Principle 5: Take a long-term perspective because P3s are long-term. Legislators should approach PPP decisions with the long-term impacts in mind, looking beyond short-term considerations Principle 6: Let the transportation program drive PPP projects—not the other way around. PPPs should be pursued to support a state’s transportation strategy, not just to raise short-term revenue.

10. NCSL PPP Principles Principle 7: Support comprehensive project analyses. Before pursuing a PPP, it should be shown to be a better option than traditional project delivery. Principle 8: Be clear and transparent about the financial issues. States must carefully assess financial goals, an asset’s value and how to spend any proceeds. Principle 9: Set good ground rules for bidding and negotiations. Legislation should promote fairness, clarity and transparency in the procurement process.

11. NCSL Contact Information Jim Reed Group Director – Environment, Energy and Transportation Denver, Colorado (303) 856-1510 jim.reed@ncsl.org