By: Phillips H.B. No. 3789
A BILL TO BE ENTITLED
AN ACT
relating to the development of toll projects through public-private
partnerships.
BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF TEXAS:
SECTION 1. Subtitle G, Title 6, Transportation Code, is
amended by adding Chapter 373 to read as follows:
CHAPTER 373. PUBLIC-PRIVATE PARTNERSHIPS FOR TOLL PROJECTS
SUBCHAPTER A. GENERAL PROVISIONS
Sec. 373.001. DEFINITIONS. In this chapter:
(1) "Public-private partnership" means a contractual
agreement between a toll project entity and a private entity that
provides for private sector participation in the design,
construction, financing, operation, and maintenance of a toll
project under this chapter.
(2) "Toll project" means one or more tolled lanes of a
highway or an entire toll highway and any improvement, extension,
or expansion to the highway, including:
(a) a facility to relieve traffic congestion and
promote safety;
(b) a bridge, tunnel, overpass, underpass,
interchange, entrance plaza, approach, toll booth, toll plaza,
service road, ramp, or service center;
(c) an administration, storage, or other building,
operations center, maintenance or other facility, equipment, or
system the toll project entity considers necessary to operate the
project;
(d) property rights, easements, and interests the toll
project entity acquires to construct, maintain, or operate the
project;
(e) a parking area or structure, rest stop, park, and
any other improvement or amenity the toll project entity considers
necessary, useful, or beneficial for the operation and maintenance
of the project; and
(f) a nontolled facility that is appurtenant to and
necessary for the efficient operation and maintenance of the
project, including a connector, service road, access road, ramp,
interchange, bridge, or tunnel.
(3) "Toll project entity" means an entity authorized by law
to acquire, design, construct, finance, operate, and maintain a
toll project, including:
(a) the department under Chapter 228;
(b) a regional tollway authority under Chapter 366;
(c) a regional mobility authority under Chapter 370;
or
(d) a county under Chapter 284.
(Sections 373.002-373.050 reserved for expansion)
SUBCHAPTER B. PUBLIC-PRIVATE PARTNERSHIPS
Sec. 373.051. PUBLIC-PRIVATE PARTNERSHIPS AUTHORIZED. (a)
A toll project entity may enter into a public-private partnership
that provides for the design, development, financing,
construction, maintenance, repair, operation, extension, or
expansion of a toll project.
(b) A regional tollway authority, a regional mobility
authority, or a county under Chapter 284 may not enter into a
public-private partnership pursuant to this chapter for a toll
project that extends beyond the boundaries of the toll project
entity and any counties adjacent to the toll project entity.
(c) The department may not enter into a public-private
partnership pursuant to this chapter for a toll project that
extends beyond the boundaries of a department district and any
counties adjacent to the district.
(d) A toll project entity may negotiate provisions relating
to professional and consulting services provided in connection with
a public-private partnership authorized by this section.
Sec. 373.052. PROCESS FOR ENTERING INTO PUBLIC-PRIVATE
PARTNERSHIPS. (a) If a toll project entity enters into a public-
private partnership, the toll project entity shall use a
competitive procurement process that provides the best value for
the toll project entity.
(b) A toll project entity shall publish a notice of
availability of a request for qualifications or proposals in
connection with the procurement of a public-private partnership
under this chapter in the Texas Register and shall publish the
request for qualifications or proposals on the toll project
entity's website.
(c) A toll project entity that intends to enter into a
public-private partnership under this chapter shall issue a request
for qualifications that includes:
(1) information regarding the project location,
scope, budget, and schedule;
(2) the criteria to be used to evaluate the responses
and the relative weight given to the criteria;
(3) a deadline by which responses must be received;
and
(4) any other information the toll project entity
considers relevant or necessary.
(d) The toll project entity shall evaluate each response to
the request for qualifications based on the criteria described in
the request for qualifications and may qualify or shortlist private
entities to submit detailed proposals under Subsection (e). The
toll project entity must qualify or shortlist at least two private
entities to submit detailed proposals for a project under
Subsection (e) unless the toll project entity does not receive more
than one proposal or one response to a request under Subsection (c).
(e) The toll project entity shall issue a request for
detailed proposals from all private entities qualified or
shortlisted under Subsection (d) if the toll project entity
proceeds with the further evaluation of a proposed public-private
partnership. A request under this subsection may require
additional information relating to:
(1) the private entity's qualifications and
demonstrated technical competence;
(2) the feasibility of developing the project as
proposed;
(3) engineering or architectural designs;
(4) the private entity's ability to meet schedules;
(5) a financial plan, including costing methodology
and cost proposals;
(6) the information identified in Section 373.059
concerning the rights of the toll project entity to purchase the
interest of the private entity in the toll project that is the
subject of the public-private partnership; and
(7) any other information the toll project entity
considers relevant or necessary.
(f) A private entity responding to a request for detailed
proposals issued under Subsection (e) may submit alternative
proposals based on public-private partnerships having different
terms, with the alternative terms in multiples of 10 years, ranging
from 10 years from the later of the date of final acceptance of the
project or the start of revenue operations by the private entity to
50 years from the later of the date of final acceptance of the
project or the start of revenue operations by the private entity,
not to exceed a total term of 52 years or any lesser term provided in
a public-private partnership agreement.
(g) In issuing a request for detailed proposals under
Subsection (e), the toll project entity may solicit input from
entities qualified under Subsection (d) or any other person. The
toll project entity may also solicit input regarding alternative
technical concepts after issuing a request under Subsection (e).
(h) The toll project entity shall evaluate each proposal
based on the criteria described in the request for detailed
proposals and select the private entity whose proposal offers the
apparent best value to the toll project entity.
(i) The toll project entity may enter into negotiations with
the private entity whose proposal offers the apparent best value.
(j) If at any point in negotiations under Subsection (i) it
appears to the toll project entity that the highest ranking
proposal will not provide the toll project entity with the overall
best value, the toll project entity may enter into negotiations
with the private entity submitting the next highest ranking
proposal.
(k) The toll project entity may withdraw a request for
qualifications or a request for detailed proposals at any time. The
toll project entity may then publish a new request for
qualifications.
(l) A toll project entity may accept unsolicited proposals
for a proposed public-private partnership. If a toll project
entity accepts an unsolicited proposal pursuant to this subsection,
the toll project entity shall issue a request for competing
proposals and qualifications that includes the information
required by Subsection (c) and shall evaluate those proposals and
qualify or shortlist private entities to submit detailed proposals
consistent with Subsection (d). The toll project entity may
require that an unsolicited proposal be accompanied by a
nonrefundable fee sufficient to cover all or part of its cost to
review the proposal.
(m) The toll project entity may prescribe the general form
of a public-private partnership agreement and may include any
matter the toll project entity considers advantageous to the toll
project entity. The toll project entity and the private entity
shall finalize the specific terms of a public-private partnership.
(n) Notwithstanding the requirements of this section, if a
toll project entity has entered or enters into a comprehensive
development agreement or a public-private partnership for one or
more segments or phases of a toll project, it may enter into a
public-private partnership, one or more facility implementation
agreements, or any other agreement which provides for the design,
construction, financing, acquisition, maintenance, or operation of
any additional segments or phases of the toll project if such
agreement is with the same party that was a party to the previous
comprehensive development agreement or public-private partnership.
No additional process shall be required prior to execution of an
agreement under this subsection provided that the toll project
entity finds that the terms and conditions of such agreement are
fair and reasonable.
(o) Subchapter A of Chapter 223, Transportation Code, and
Chapter 2254, Government Code, do not apply to a public-private
partnership entered into under this chapter.
Sec. 373.053. CONFIDENTIALITY OF INFORMATION. (a) To
encourage private entities to submit proposals under this chapter,
the following information is confidential, is not subject to
disclosure, inspection, or copying under Chapter 552, Government
Code, and is not subject to disclosure, discovery, subpoena, or
other means of legal compulsion for its release until a final
contract for a proposed project is entered into:
(1) all or part of a proposal that is submitted by a
private entity for a public-private partnership, unless the private
entity consents to the disclosure of the information;
(2) supplemental information or material submitted by
a private entity in connection with a proposal for a public-private
partnership, unless the private entity consents to the disclosure
of the information or material; and
(3) information created or collected by the toll
project entity or its agent during consideration of a proposal for a
public-private partnership.
(b) After the toll project entity completes its final
ranking of proposals under Section 373.052(h), the final rankings
of each proposal under each of the published criteria are not
confidential.
Sec. 373.054. PERFORMANCE AND PAYMENT SECURITY. (a)
Notwithstanding Section 223.006, Transportation Code, and the
requirements of Subchapter B, Chapter 2253, Government Code, a toll
project entity shall require a private entity entering into a
public-private partnership under this chapter to provide a
performance and payment bond or an alternative form of security in
an amount sufficient to:
(1) ensure the proper performance of the agreement;
and
(2) protect:
(A) the toll project entity; and
(B) payment bond beneficiaries who have a direct
contractual relationship with the private entity or a subcontractor
of the private entity to supply labor or material.
(b) A performance and payment bond or alternative form of
security shall be in an amount equal to the cost of constructing or
maintaining the toll project.
(c) If the toll project entity determines that it is
impracticable for a private entity to provide security in the
amount described by Subsection (b), the toll project entity shall
set the amount of the bonds or the alternative forms of security.
(d) A payment or performance bond or alternative form of
security is not required for the portion of a public-private
partnership that includes only design or planning services, the
performance of preliminary studies, or the acquisition of real
property.
(e) The amount of the payment security must not be less than
the amount of the performance security.
(f) In addition to or instead of a performance and payment
bond, the toll project entity may require one or more of the
following alternative forms of security:
(1) a cashier's check drawn on a financial entity specified
by the toll project entity;
(2) a United States bond or note;
(3) an irrevocable bank letter of credit; or
(4) any other form of security determined suitable by
the toll project entity.
(g) The toll project entity by rule shall prescribe
requirements for an alternative form of security provided under
this section.
Sec. 373.055. OWNERSHIP OF TOLL PROJECTS. A toll project
that is the subject of a public-private partnership with a private
entity, including the facilities acquired or constructed on the
project, is public property and shall be owned by the toll project
entity or another public entity to which the toll project entity may
transfer the project.
Sec. 373.056. LIABILITY FOR PRIVATE OBLIGATIONS. The toll
project entity may not incur a financial obligation for a private
entity that designs, develops, finances, constructs, maintains, or
operates a toll project under this chapter. The state or a
political subdivision of the state is not liable for any financial
or other obligations of a project solely because a private entity
constructs, finances, or operates any part of the project.
Sec. 373.057. TERMS OF PRIVATE PARTICIPATION. (a) The toll
project entity shall negotiate the terms of private participation
under this chapter, including:
(1) methods to determine the applicable cost, profit,
and project distribution among the private entity and the toll
project entity;
(2) reasonable methods to determine and classify toll
rates and responsibility for the setting of tolls;
(3) acceptable safety and policing standards; and
(4) other applicable professional, consulting,
construction, operation, and maintenance standards, expenses, and
costs.
(b) A public-private partnership entered into under this
chapter must include a provision providing for the purchase by the
toll project entity of the interest of a private entity in the
public-private partnership and related property as required by
Section 373.059 and may include any other provision the toll
project entity considers appropriate.
(c) The toll project entity may enter into a public-private
partnership under this chapter with a private entity only if the
project is identified in the department's unified transportation
program or is located on a transportation corridor identified in
the statewide transportation plan.
(d) Section 373.056 does not apply to the obligations of the
toll project entity under a public-private partnership.
(e) Notwithstanding anything in Section 201.112,
Transportation Code, or other law to the contrary, and subject to
compliance with the dispute resolution procedures set out in the
public-private partnership agreement, an obligation of the toll
project entity under a public-private partnership entered into
under this chapter to make or secure payments to a person because
of the termination of the agreement, including the purchase of the
interest of a private participant or other investor in a project,
may be enforced by mandamus against the toll project entity in a
district court located in a county where all or part of the toll
project entity is located, and the sovereign immunity of the toll
project entity is waived for that purpose. Notwithstanding the
foregoing, the district courts of Travis County shall have
exclusive jurisdiction and venue over and to determine and
adjudicate all issues necessary to adjudicate any action brought
against the commission or the department under this subsection. The
remedy provided by this subsection is in addition to any legal and
equitable remedies that may be available to a party to a
public-private partnership.
(f) If the toll project entity enters into a public-private
partnership with a private entity that includes the collection by
the private entity of tolls for the use of a toll project, the
private entity shall submit to the toll project entity for
approval:
(1) the methodology for:
(A) the setting of tolls; and
(B) increasing the amount of the tolls;
(2) a plan outlining methods the private entity will
use to collect the tolls, including:
(A) any charge to be imposed as a penalty for late
payment of a toll; and
(B) any charge to be imposed to recover the cost
of collecting a delinquent toll; and
(3) any proposed change in an approved methodology for
the setting of a toll or a plan for collecting the toll.
(g) A public-private partnership with a private entity that
includes the collection by the private entity of tolls for the use
of a toll project may be for a term not longer than 50 years from the
later of the date of final acceptance of the project or the start of
revenue operations by the private entity, not to exceed a total
term of 52 years.
Sec. 373.058. PROHIBITION AGAINST LIMITING OR PROHIBITING
CONSTRUCTION OF TRANSPORTATION PROJECTS. (a) A public-private
partnership may not contain a provision that limits or prohibits
the construction, reconstruction, expansion, rehabilitation,
operation, or maintenance of a highway or other transportation
project, as that term is defined by Section 370.003, by the toll
project entity or other governmental entity, or by a private entity
under a contract with the toll project entity or other governmental
entity.
(b) Except as provided by Subsection (c), a public-private
agreement may contain a provision authorizing the toll project
entity to negotiate with the private entity for the loss of toll
revenues attributable to the construction by the toll project
entity of a limited access highway project located within an area
that extends up to four miles from either side of the centerline of
the project developed under the agreement, less the private
entity's decreased operating and maintenance costs attributable to
the highway project, if any. A provision under this section may be
effective only for a period of 30 years or less from the effective
date of the agreement.
(c) A public-private partnership may not require the toll
project entity to provide compensation for the construction of:
(1) a project contained in the state transportation
plan or a transportation plan of a metropolitan planning
organization in effect on the effective date of the public-private
partnership agreement;
(2) work on or improvements to a highway project
necessary for improved safety, or for maintenance or operational
purposes;
(3) a high occupancy vehicle exclusive lane addition
or other work on any highway project that is required by an
environmental regulatory agency;
(4) a transportation project that provides a mode of
transportation that is not included in the project that is the
subject of the public-private partnership; or
(5) a highway designated an interstate highway.
(d) The private entity has the burden of proving any loss of
toll revenue resulting from the construction of a highway project
described by Subsection (b).
(e) A public-private partnership that contains a provision
described by Subsection (b) must require the private entity to
provide compensation to the toll project entity in the amount of
any increase in toll revenues received by the private entity that
is attributable to the construction of a highway project described
by Subsection (b), less the private entity's increased operation
and maintenance costs attributable to the highway project, if any.
Sec. 373.059. TERMINATION BY PURCHASE. (a) A
public-private partnership agreement must contain a provision
authorizing the toll project entity to purchase, under terms
agreed to by the parties:
(1) the interest of a private entity in the toll
project that is the subject of the agreement; and
(2) related property, including any interest in a
highway or other facility designed, developed, financed,
constructed, operated, or maintained under the public-private
partnership agreement.
(b) The provision must include a schedule stating a specific
price for the purchase of the toll project at certain intervals
from the date the project opens, not less than one year and not to
exceed five years, over the term of the public-private partnership
agreement.
(c) The provision must authorize the toll project entity to
purchase the private entity's interest at a stated interval in an
amount not to exceed the lesser of:
(1) the price stated for that interval; or
(2) the then fair market value of the private entity's
interest, provided that the fair market value is not less than the
private entity's outstanding debt at that time, plus reasonable
costs associated with the purchase as defined in the public-private
partnership agreement.
(d) A toll project entity may not, under any circumstance,
purchase the private entity's interest for an amount higher than
the stated interval amount.
(e) A contract provision to purchase the private entity's
interest at the then fair market value as described by Subsection
(c)(2) must contain a provision, mutually agreed on by the toll
project entity and the private entity, detailing the calculation
used to determine that value.
(f) The toll project entity shall request a proposed
termination-by-purchase schedule in each request for detailed
proposals and shall consider and score each schedule in each
evaluation of proposals.
(g) A private entity shall, not later than 12 months before
the date that a new price interval takes effect, notify the toll
project entity of the beginning of the price interval. The toll
project entity must notify the private entity as to whether it will
exercise the option to purchase under this section not later than
six months after the date it receives notice under this subsection.
(h) A toll project entity must notify the private entity of
the toll project entity's intention to purchase the private
entity's interest under this section not less than six months
before the date of the purchase.
Sec. 373.060. TERMINATION OF CERTAIN PUBLIC-PRIVATE
PARTNERSHIPS. (a) If a toll project entity elects to terminate a
public-private partnership under which a private entity receives
the right to operate and collect revenue from a toll project, the
toll project entity may:
(1) issue bonds or other obligations to:
(A) make any applicable termination payments to
the private entity; or
(B) purchase the interest of the private entity
in the toll project or related property; or
(2) provide for the payment of obligations of the
private entity incurred pursuant to the public-private partnership
agreement.
(b) A toll project entity has the same powers and duties
relating to the financing of payments under Subsection (a)(1) as
the toll project entity has under other applicable laws of this
state, including Chapters 228, 284, 366, and 370 of this code and
Chapter 1371, Government Code, relating to the financing of a toll
project of that entity, including the ability to deposit the
proceeds of bonds or other obligations and to pledge, encumber, and
expend the proceeds and revenues of a toll project as provided by
law.
(c) The powers held by the toll project entity include the
power to authorize the issuance of bonds or other obligations and to
pay all or part of the costs of a payment described in Subsection
(a)(1), in the amount determined by the toll project entity. Costs
associated with a payment under Subsection (a)(1) are considered a
cost of the project.
(d) This section shall be liberally construed to effect its
purposes.
Sec. 373.061. ACQUISITION OF PROPERTY. The acquisition of
property for a toll project subject to a public-private partnership
under this chapter shall be subject to all other laws regarding the
acquisition and condemnation of property by the toll project
entity, including Chapter 21, Property Code.
Sec. 373.062. RULES, PROCEDURES, AND GUIDELINES GOVERNING
SELECTION AND NEGOTIATING PROCESS. (a) A toll project entity shall
adopt rules, procedures, and guidelines governing selection of a
private entity for a public-private partnership and negotiations to
promote fairness, obtain private participation in projects, and
promote confidence among private entities. The rules must contain
criteria relating to the qualifications of the participants and
the award of the contracts.
(b) The toll project entity shall have up-to-date
procedures for participation in negotiations under this chapter.
(c) The toll project entity has exclusive judgment to
determine the terms of a public-private partnership.
SECTION 2. Sections 223.201(a) and (b), Transportation
Code, are amended to read as follows:
(a) Subject to Section 223.202, the department may enter
into a comprehensive development agreement with a private entity to
design, develop, finance, construct, maintain, repair, operate,
extend, or expand a:
(1) toll project; or
(2) facility or a combination of facilities on the
Trans-Texas Corridor;
(3) state highway improvement project that includes
both tolled and nontolled lanes and may include nontolled
appurtenant facilities;
(4) state highway improvement project in which the
private entity has an interest in the project; or
(5) state highway improvement project financed wholly
or partly with the proceeds of private activity bonds, as defined by
Section 141(a), Internal Revenue Code of 1986.
(b) In this subchapter, "comprehensive development
agreement" means an agreement that, at a minimum, provides for the
design and construction, rehabilitation, expansion, or improvement
of a project described in Subsection (a) and may also provide for
the financing, acquisition, maintenance, or operation of a project
described in Subsection (a).
SECTION 3. Section 284.003(a), Transportation Code, is
amended to read as follows:
(a) A county, acting through the commissioners court of the
county, or a local government corporation, without state approval,
supervision, or regulation, may:
(1) construct, acquire, improve, operate, maintain,
or pool a project located:
(A) exclusively in the county;
(B) in the county and outside the county; or
(C) in one or more counties adjacent to the
county;
(2) issue tax bonds, revenue bonds, or combination tax
and revenue bonds to pay the cost of the construction, acquisition,
or improvement of a project;
(3) impose tolls or charges as otherwise authorized by
this chapter;
(4) construct a bridge over a deepwater navigation
channel, if the bridge does not hinder maritime transportation;
(5) construct, acquire, or operate a ferry across a
deepwater navigation channel;
(6) in connection with a project, on adoption of an
order exercise the powers of a regional mobility authority
operating under Chapter 370; or
(7) enter into a comprehensive development agreement
with a private entity to design, develop, finance, construct,
maintain, repair, operate, extend, or expand a proposed or existing
project in the county to the extent and in the manner applicable to
the department under Chapter 223 or to a regional tollway authority
under Chapter 366, provided that a comprehensive development
agreement that provides for the design, construction, and financing
of a toll project and also provides for the acquisition,
maintenance, or operation of the project must comply with the
requirements of Chapter 373, Transportation Code.
SECTION 4. Sections 366.401, Transportation Code, is
amended by adding Subsection (e) to read as follows:
(e) A comprehensive development agreement entered into
pursuant to this subchapter that provides for the design,
construction, and financing of a toll project and also provides for
the acquisition, maintenance, or operation of the project must
comply with the requirements of Chapter 373, Transportation Code.
SECTION 5. Sections 370.305(a) and (b), Transportation
Code, are amended to read as follows:
(a) An authority may use a comprehensive development
agreement with a private entity to construct, maintain, repair,
operate, extend, or expand a transportation project.
(b) A comprehensive development agreement is an agreement
with a private entity that, at a minimum, provides for the design
and construction of a transportation project and may also provide
for the financing, acquisition, maintenance, or operation of a
transportation project.
SECTION 6. Sections 223.201(f), (h) and (i), Transportation
Code, and Sections 370.305(d), (e) and (f), Transportation Code,
are repealed.
SECTION 7. This Act takes effect immediately if it receives
a vote of two-thirds of all the members elected to each house, as
provided by Section 39, Article III, Texas Constitution. If this
Act does not receive the vote necessary for immediate effect, this
Act takes effect September 1, 2011.