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P3 State Legislation Update and Opportunities for the Private Sector
Thursday, August 24, 2023

P3 state legislation continues to expand and move forward with governors signing legislation into law and sending some bills back to legislatures for review and revision. The states have in common efforts to define the breadth and depth of projects suitable for public private partnerships and many are working to establish specific offices to manage their infrastructure projects. Suffice it to say that the infrastructure to build infrastructure is being built out through state legislation. 

It’s time for the private sector to pay attention and interact with state governments as each state is marching to the beat of its own drums when it comes to P3 legislation.  The private sector is going to need eyes in the back of its head to predict where to put down stakes. While not necessarily efficient, the market is full of opportunities for the private sector in terms of procurement and financing. Even with state and federal funds, there is a huge need for private sector investment. And, of course, there is the opportunity for the private sector to engage with state government regarding its expertise and financial support for P3 projects.

On our radar this month is California which continues to expand authority for the use of P3s and progressive design build procurement. Progressive design build procurement is a project delivery method that combines elements of both design-build and traditional design-bid-build approaches. Progressive design build involves contractors early and develops project design in stages providing more flexibility and cost control during the development phase with the contractor taking responsibility for both design and construction with input from the public owner.

Noteworthy is California’s newly enacted legislation, SB 145 authorizing Caltrans to take action related to environmental mitigation and to use certain private and public entities for financing. Under newly enacted SB 146 (now Chapter 58), the Department of Water Resources and Caltrans is authorized to use progressive design build for up to eight public works projects per department for any project estimated to exceed US$25 million. Projects include, among others, highway maintenance, installation of stormwater pollution control devices and other facilities, systems, and traffic control devices. One to watch is SB 706 which has been sent back to the Committee on Appropriation. If enacted, SB 706 would provide additional authority for municipal entities to use progressive design build for public works in excess of US$5 million.

Also in the news is Governor Newson’s Executive Order N-8-23 which creates an Infrastructure Strike Team to identify projects, coordinate between federal, state, and local government, prioritize complementary investments and share information and opportunities for improvement across agencies. The Task Force is, or should be, a one stop shop for the private sector. Members include California’s Director of Finance, the Director of the Governor’s Office of Business and Economic Development, the Director of the Office of Planning and Research, the Tribal Affairs Secretary, the Secretary of Transportation, the Secretary of the Natural Resources Agency, the Secretary of Business, Consumer Services and Housing, the Secretary of Food and Agriculture, the Secretary of Labor and Workforce Development, the Secretary for Environmental Protection and the Secretary of Government Operations. The Governor’s Executive Order requires the President of the California Public Utilities to participate on the Strike Team, although it is not clear if this appointment has happened.

Created in May 2023, we are watching to see how the Strike Team implements the Executive Order which requires monitoring projects, coordinating across agencies, and identifying opportunities to leverage state and federal funding. The Strike Team is headed by Mark Tollefson, the state’s senior counselor on infrastructure and we are looking forward for opportunities for the private sector to interact with the Strike Team.  

Last, we note that California continues to face challenges with its strict environmental requirements mandated by the California Environmental Quality Act (CEQA). California has recently passed a package of reforms to CEQA aimed at streamlining environmental reviews. Stay tuned for a future post examining these reforms and their potential impact on infrastructure development and other updates on specific states.

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