More on Highway Financing through Public-Private Partnerships

A couple of my blog posts have mentioned the use of public-private partnerships (“PPPs”) as an alternative source of highway construction financing, including my February 6, 2012 story about NCDOT’s plans to widen I-95 (by the way, last Friday, the Federal Highway Administration gave tentative approval to tolling on I-95).

It remains unclear whether any private money might be utilized to finance the I-95 widening project.  What is clear is that PPPs present a host of legal issues that all project participants (and their attorneys) would need to wrestle with should the NCDOT seek private money for I-95, or any other state highway project.

The purpose of this blawg post is to supply three resources for enhancing our collective understanding of the practical implications of PPP financing.  A good place to start is this blog post from the blawg “Best Practices Construction Law,” authored by attorney Matthew J. DeVries, who practices in Virginia and Tennessee.  Mr. DeVries links to the second resource you should consider, and that’s the AGC’s White Paper on Public-Private Partnerships.  Contractors may want to jump to page 13 of the White Paper, which includes a chart summarizing how a PPP could shift typical risk allocations:

For additional depth, consult the National Cooperative Highway Research Program’s Major Legal Issues for Highway Public-Private Partnerships.  It presents several representative case studies and concludes that several successful projects have given PPP participants the flexibility to select the optimal project delivery system for their particular project.  Such flexibility, of course, could mean procurement outside the sealed bid process.

I’ll be keeping an eye on subsequent I-95 developments.  Should the NCDOT begin exploring PPPs, it is hoped that these three resources will provide the contracting community with a foundation for understanding the legal ramifications of this alternative highway financing framework.