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House of Representatives
Session of 2015 - 2016 Regular Session


Posted: December 11, 2014 11:42 AM
From: Representative Eli Evankovich
To: All House members
Subject: Legislation to Permit Municipal P3 Agreements for Water & Sewage (Former HB 2239)
In the near future, I plan to re-introduce legislation, former HB 2239, to amend Title 62 (Procurement) to create definitive guidelines for the use of Public-Private Partnerships (P3) agreements by local governments to build and/or operate water and sewer treatment facilities.

A P3 agreement involves a contract between a public sector authority and a private party, in which the private party provides a public service or project and assumes substantial financial, technical, and operational risk in the project. In some types of P3s, the cost of using the service is borne exclusively by the users of the service and not by the taxpayer. In other types (notably the private finance initiative), capital investment is made by the private sector on the basis of a contract with government to provide agreed services and the cost of providing the service is borne wholly or in part by the government.

There are usually two fundamental drivers for P3s. Firstly, P3s enable the public sector to harness the expertise and efficiencies that the private sector can bring to the delivery of certain facilities and services traditionally procured and delivered by the public sector. Secondly, a P3 is structured so that the public sector body seeking to make a capital investment does not incur any borrowing; rather, the P3 borrowing is incurred by the private sector vehicle implementing the project.

As many of you are aware, last session we passed House Bill 3 (Act 88 of 2012) which established guidelines for the use of P3s in transportation projects. Thus, the concept of using P3s to accomplish projects that benefit the general public is not new. In fact, Act 88 has already spawned many proposed P3 transportation projects that will benefit taxpayers. My bill offers the same opportunity to local governments and school districts to take advantage of the P3 concept to build new sewer facilities, water treatment facilities, school buildings, etc.

The language in this legislation has already been vetted with many interest groups (PA Chamber of Business and Industry, Local Government Groups, e.g.). Pennsylvania would be joining many other states that have already establish comprehensive P3s, including Maryland and Florida. It is important to note that my legislation specifically excludes P3 projects from the requirements of the PA Separations Act, and other associated local government statutes; it is believed by P3 proponents that the use of a single prime bidding process will lead to greater construction efficiencies.

I believe that this proposal will help make Pennsylvania more competitive in the national marketplace. Please join me in this important initiative to move our state forward.

Introduced as HB382