PRINTER'S NO. 3899
No. 2822 Session of 1996
INTRODUCED BY GEIST, BARLEY, ZUG, ROBERTS, GAMBLE, BARD AND
SCHULER, JUNE 27, 1996
REFERRED TO COMMITTEE ON TRANSPORTATION, JUNE 27, 1996
AN ACT
1 Authorizing the Commonwealth to enter into agreements with
2 private firms for the development, financing, design,
3 construction and operation of highways; providing for the
4 powers and duties of the Department of Transportation, for
5 studying the feasibility of making existing State highways
6 privately operated highways and for the contracting of
7 maintenance and law enforcement services.
8 The General Assembly of the Commonwealth of Pennsylvania
9 hereby enacts as follows:
10 Section 1. Short title.
11 This act shall be known and may be cited as the Public-
12 Private Highway Partnership Act.
13 Section 2. Declaration of policy.
14 The General Assembly finds and declares as follows:
15 (1) It is essential for this Commonwealth's economic
16 well-being and for the maintenance of a high quality of life
17 for the people of this Commonwealth that this Commonwealth
18 have an efficient transportation system.
19 (2) Public sources of revenues to provide for an
20 efficient transportation system have not kept pace with this
1 Commonwealth's growing transportation needs, and alternative
2 funding sources should be developed to augment or supplement
3 available public sources of revenue.
4 (3) One important alternative is privately funded
5 "build-operate-transfer" highway projects, whereby private
6 firms obtain exclusive development agreements to build all or
7 a portion of a public highway.
8 (4) During the term of the development agreement the
9 private firm will have the right to own or lease the highway
10 from the Commonwealth and charge tolls, user fees or annual
11 lease payments sufficient to retire the private investment in
12 the highway project, including a reasonable return on
13 investment, operate and maintain the highway, retire any
14 outstanding debt issued in support of the highway and make
15 lease payments to the Commonwealth.
16 (5) Privately financed highway projects allow for joint
17 ventures of private firms and public entities that do all of
18 the following:
19 (i) Take advantage of private sector efficiencies in
20 designing and building highway projects.
21 (ii) Allow for the rapid formation of capital
22 necessary for funding highway projects.
23 (iii) More quickly bring reductions in congestion in
24 new and existing transportation corridors.
25 (iv) Require continued compliance with environmental
26 requirements and applicable Federal and State laws that
27 all publicly financed projects must address.
28 (v) Offer the traveling public alternative route
29 selections in many highway project areas.
30 (6) The department should be permitted and encouraged to
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1 test the feasibility of privately built and operated
2 highways.
3 Section 3. Definitions.
4 The following words and phrases when used in this act shall
5 have the meanings given to them in this section unless the
6 context clearly indicates otherwise:
7 "Department." The Department of Transportation of the
8 Commonwealth.
9 "Highway." Travelway surfaces, shoulders, roadsides, rest
10 stops, drainage facilities, bridges, tunnels, signs, markings,
11 lighting and other such fixtures normally associated with a
12 highway.
13 "Highway project." A privately constructed and operated
14 highway which meets the requirements of section 4.
15 "Private firm." An individual, partnership, corporation,
16 unincorporated association or a consortium thereof who or which
17 enters into an agreement with the department pursuant to any of
18 the provisions of this act.
19 Section 4. Projects.
20 (a) Department powers and duties.--The department shall have
21 the power to solicit proposals and enter into agreements with
22 private firms or a consortium of private firms for the
23 construction, ownership and lease of specified highway projects.
24 The department may exercise any power possessed by it,
25 including, but not limited to, eminent domain, with respect to
26 the development and construction of public highway projects, to
27 facilitate the development, construction, financing, operation
28 and maintenance of highway projects under this act.
29 (b) Rights-of-way, easements and permits.--For the purpose
30 of facilitating highway projects, the agreements may include
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1 provisions for the lease of facilities and rights-of-way in and
2 airspace over, adjacent to or under State highways, for the
3 granting of necessary easements and for the issuance of permits
4 or other authorizations to enable the private firm to construct
5 highways. The agreement may also provide the private firm the
6 right of first refusal to undertake projects utilizing airspace
7 owned by the department.
8 (c) Leases.--A highway constructed by a private firm under
9 this act shall at all times be owned by the Commonwealth, unless
10 the department elects to provide for private ownership during
11 all or part of the term of the new agreement. The agreement
12 shall provide for the ownership by or the lease of the highway
13 to the private firm for up to 50 years. In consideration
14 therefor, the agreement shall provide for complete reversion of
15 the privately constructed highway to the Commonwealth at the
16 natural expiration of the lease at no charge to the
17 Commonwealth.
18 (d) Maintenance service agreements.--The private firm shall
19 be responsible for maintenance of the highway. However, the
20 private firm may enter into agreements with the department to
21 provide maintenance. Agreements for maintenance services entered
22 into under this act shall provide for full reimbursement to the
23 Commonwealth for services rendered by the department. In
24 addition, the department may provide services for which the
25 Commonwealth is reimbursed with respect to preliminary planning,
26 environmental certification and preliminary design of the
27 highway project. All such reimbursements may be in cash or in
28 kind.
29 (e) Return on private investment.--Agreements entered into
30 under this act may authorize the private firm to impose fees or
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1 tolls for the use of a highway constructed by it and shall
2 require that over the term of the lease the fees or the toll
3 revenues be applied to payment of the private firm's capital
4 outlay costs for the highway project, the costs associated with
5 operations, toll collection and administration of the highway,
6 reimbursement to the State for the costs of maintenance services
7 and a reasonable return on investment to the private firm. The
8 agreement shall require that any excess toll revenue be applied
9 to any indebtedness incurred by the private firm with respect to
10 the project or be paid into the Motor License Fund. Subsequent
11 to expiration of the lease of a highway to a private firm, the
12 department may continue to charge fees or tolls for use of the
13 highway. The agreement shall determine a negotiated maximum rate
14 of return on investment based on project characteristics. For
15 the purposes of this subsection, capital outlay costs include
16 interest, expense, development costs, permitting costs, design
17 and construction costs, costs associated with the department's
18 review and oversight functions, and costs associated with
19 establishment of a fund to assure the adequacy of maintenance
20 expenditures.
21 (f) Plans and specifications.--The plans and specifications
22 for each highway project constructed under this act shall comply
23 with the department's standards for State projects.
24 (g) State highway system.--A highway constructed by and
25 leased to or from a private firm shall, during the term of the
26 lease, be deemed to be part of the State highway system for
27 purposes of highway identification and enforcement of traffic
28 and fee or toll evasion laws.
29 (h) Federal or State funds.--Nothing in this section shall
30 prohibit the use of available Federal or State funds to
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1 supplement private funding of a highway project. Terms and
2 conditions of the Federal or State funding shall be included in
3 the agreement entered into by the department and the private
4 firm.
5 (i) Additional terms.--Agreements under this section may
6 include any contractual provision that is necessary to protect
7 project revenues and which will not unreasonably inhibit the
8 development of additional transportation facilities.
9 Section 5. Existing highways.
10 The department shall have the power to solicit proposals and
11 its duty shall be to enter into contracts with private firms to
12 operate and to make capital improvements to existing State
13 highways or portions thereof. A private firm entering into such
14 a contract with the department shall be responsible for the
15 operation and maintenance of the State highway. The private firm
16 may impose fees or tolls for the use of the highway. Revenue
17 shall be applied to the payment of the costs associated with
18 operations, including toll collection, highway maintenance and a
19 reasonable return on investment for the private firm. Any excess
20 revenue shall be deposited into the Motor License Fund. The
21 department may make any provisions of section 4 applicable to
22 such contracts.
23 Section 6. Contracting for maintenance services.
24 The department has the power to enter into contracts with
25 private firms for the maintenance of State highways and for the
26 maintenance of State highway vehicles. The department may
27 solicit proposals from private firms to perform such maintenance
28 work. After receiving the proposals, the department shall
29 perform a cost comparison to determine whether the maintenance
30 work can be done by the department or another State agency at
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1 less cost.
2 Section 7. Contracting for law enforcement services.
3 Agreements for law enforcement services for privately
4 operated highways under this act may be entered into with any
5 law enforcement agency and shall provide for reimbursement for
6 services rendered by that agency. The reimbursement may be in
7 cash or in kind.
8 Section 8. Report.
9 The department shall prepare an annual report on the
10 implementation of this act. The report shall summarize progress
11 on highway projects, the feasibility of making existing State
12 highways toll roads and contracting for maintenance services. In
13 addition, the report shall contain recommendations for
14 additional legislation which may provide savings through
15 contracting with private firms. Beginning January 1997, and each
16 year thereafter, the report shall be submitted to the
17 Transportation Committee of the Senate and the Transportation
18 Committee of the House of Representatives and to the Governor.
19 Section 9. Repeals.
20 All acts and parts of acts are repealed insofar as they are
21 inconsistent with this act.
22 Section 10. Effective date.
23 This act shall take effect immediately.
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