BILL REQ. #:  S-1580.1 

Read first time 02/09/2007.   Referred to Committee on Transportation.

     AN ACT Relating to modifying transportation innovative partnerships provisions; and amending RCW 47.29.010, 47.29.030, 47.29.060, 47.29.070, 47.29.140, 47.29.160, 47.29.180, 47.29.250, 47.29.280, and 47.29.290.

BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF WASHINGTON:

Sec. 1   RCW 47.29.010 and 2006 c 334 s 48 are each amended to read as follows:
     (1) The legislature finds that the public-private transportation initiatives act created under chapter 47.46 RCW has not met the needs and expectations of the public or private sectors for the development of transportation projects. The legislature intends to phase out chapter 47.46 RCW coincident with the completion of the Tacoma Narrows Bridge - SR 16 public-private partnership. From July 24, 2005, this chapter will provide a more desirable and effective approach to developing transportation projects in partnership with the private sector by applying lessons learned from other states and from this state's ten-year experience with chapter 47.46 RCW.
     (2) It is the legislature's intent to achieve the following goals through the creation of this new approach to public-private partnerships:
     (a) To provide a well-defined mechanism to facilitate the collaboration between public and private entities in transportation;
     (b) To bring innovative thinking from the private sector and other states to bear on public projects within the state;
     (c) To provide greater flexibility in achieving the transportation projects; and
     (d) To allow for creative cost and risk sharing between the public and private partners.
     (3) The legislature intends that the powers granted in this chapter to the commission or department are in addition to any powers granted under chapter 47.56 RCW.
     (4) It is further the intent of the legislature that the commission be authorized to appoint an expert review panel ((be established for each project developed under chapter 334, Laws of 2006)) for single projects as the commission finds desirable or to review more than one project proposed for development under this chapter. An expert review panel((s shall be responsible for reviewing selected proposals, analyzing and reviewing tentative agreements, and making)) shall review, analyze, and make recommendations to the ((governor and the transportation)) commission on ((the advisability of executing agreements under chapter 334, Laws of 2006)) issues presented to the panel for review.

Sec. 2   RCW 47.29.030 and 2005 c 317 s 3 are each amended to read as follows:
     In addition to the powers it now possesses, the commission shall:
     (1) Approve or review contracts or agreements authorized in this chapter;
     (2) Adopt rules to carry out this chapter and govern the program, which at a minimum must address the following issues:
     (a) The types of projects allowed; however, all ((allowed)) state highway projects must be included in the Washington transportation plan or identified by the authority as being a priority need for the state;
     (b) The types of contracts allowed, with consideration given to the best practices available;
     (c) The composition of the team responsible for the evaluation of proposals to include:
     (i) Washington state department of transportation staff;
     (ii) An independent representative of a consulting or contracting field with no interests in the project that is prohibited from becoming a project manager for the project and bidding on any part of the project;
     (iii) An observer from the state auditor's office or the joint legislative audit and review committee;
     (iv) A person appointed by the commission, if the secretary of transportation is a cabinet member, or appointed by the governor if the secretary of transportation is not a cabinet member; and
     (v) A financial expert;
     (d) Minimum standards and criteria required of all proposals;
     (e) Procedures for the proper solicitation, acceptance, review, and evaluation of projects;
     (f) Criteria to be considered in the evaluation and selection of proposals that includes:
     (i) Comparison with the department's internal ability to complete the project that documents the advantages of completing the project as a partnership versus solely as a public venture; and
     (ii) Factors such as, but not limited to: Priority, cost, risk sharing, scheduling, and management conditions;
     (g) The protection of confidential proprietary information while still meeting the need for public disclosure that is consistent with RCW 47.29.190;
     (h) Protection for local contractors to participate in subcontracting opportunities;
     (i) Specifying that maintenance issues must be resolved in a manner consistent with the personnel system reform act, chapter 41.80 RCW;
     (j) Specifying that provisions regarding patrolling and law enforcement on a public facility are subject to approval by the Washington state patrol;
     (3) Adopt guidelines to address security and performance issues.
     Preliminary rules and guidelines developed under this section must be submitted to the chairs and ranking members of both transportation committees by November 30, 2005, for review and comment. All final rules and guidelines must be submitted to the full legislature during the 2006 session for review.

Sec. 3   RCW 47.29.060 and 2005 c 317 s 6 are each amended to read as follows:
     (1) Subject to the limitations in this section, the department may, in connection with the evaluation of eligible projects, accept for review and consider any financing mechanisms identified under subsections (3) through (5) of this section or any other lawful source, either integrated as part of a project proposal or as a separate, stand-alone proposal to finance a project. Financing may be considered for all or part of a proposed project. A project may be financed in whole or in part with:
     (a) The proceeds of grant anticipation revenue bonds authorized by 23 U.S.C. Sec. 122 and applicable state law. Legislative authorization and appropriation is required in order to use this source of financing;
     (b) Grants, loans, loan guarantees, lines of credit, revolving lines of credit, or other financing arrangements available under the transportation infrastructure finance and innovation act under 23 U.S.C. Sec. 181 et seq., or any other applicable federal law;
     (c) Infrastructure loans or assistance from the state infrastructure bank established by RCW 82.44.195;
     (d) Federal, state, or local revenues, subject to appropriation by the applicable legislative authority;
     (e) User fees, tolls, fares, lease proceeds, rents, gross or net receipts from sales, proceeds from the sale of development rights, franchise fees, or any other lawful form of consideration.
     (2) As security for the payment of financing described in this section, the revenues from the project may be pledged, but no such pledge of revenues constitutes in any manner or to any extent a first lien general obligation of the state that would be subject to the state's constitutional debt limit. Any financing described in this section may be structured on a senior, parity, or subordinate basis to any other financing.
     (3) For any transportation project developed under this chapter that is owned, leased, used, or operated by the state, as a public facility, if indebtedness is issued, it must be issued by the state treasurer for the transportation project.
     (4) For other public projects defined in RCW 47.29.050(2) that are developed in conjunction with a transportation project, financing necessary to develop, construct, or operate the public project must be approved by the state finance committee or by the governing board of a public benefit corporation as provided in the federal Internal Revenue Code section 63-20;
     (5) For projects that are developed in conjunction with a transportation project but are not themselves a public facility or public project, any lawful means of financing may be used.
     (6) All financing plans must publicly disclose any possible impacts the plan could have on toll payers, statewide taxpayers, state fund sources, and projects or programs that are direct beneficiaries of state fund sources. Plans utilizing debt as authorized under subsection (3) of this section must be compared against alternative financing options that utilize debt in any structure or combination that would result in the lowest cost of capital that is commercially available. If the commission finds that this alternative financing structure is capable of providing sufficient proceeds to complete the project, the commission may submit a proposal to the legislature to deviate from the financing restrictions under subsection (3) of this section.

Sec. 4   RCW 47.29.070 and 2005 c 317 s 7 are each amended to read as follows:
     The department may accept from the United States or any of its agencies such funds as are available to this state or to any other unit of government for carrying out the purposes of this chapter, whether the funds are made available by grant, loan, or other financing arrangement. The department may enter into such agreements and other arrangements with the United States or any of its agencies, or other states, as may be necessary, proper, and convenient for carrying out the purposes of this chapter, subject to RCW 47.29.080.

Sec. 5   RCW 47.29.140 and 2005 c 317 s 14 are each amended to read as follows:
     (1) The following provisions must be included in any agreement to which the state is a party:
     (a) For any project that proposes terms for stand-alone maintenance or asset management services for a public facility, those services must be provided in a manner consistent with any collective bargaining agreements, the personnel system reform act (chapter 41.80 RCW), and civil service laws that are in effect for the public facility;
     (b) ((Transportation)) State highway projects that are selected for development under this chapter must be identified in the Washington transportation plan or be identified by the authority as being a priority need for the state;
     (c) If there is a tolling component to the project, then it must be specified that tolling technology used in the project must be consistent with tolling technology standards adopted by the department for transportation-related projects;
     (d) Provisions for bonding, financial guarantees, deposits, or the posting of other security to secure the payment of laborers, subcontractors, and suppliers who perform work or provide materials as part of the project;
     (e) All projects must be financed in a manner consistent with RCW 47.29.060. This chapter is null and void if this subsection or RCW 47.29.060 fails to become law or is held invalid by a court of final jurisdiction.
     (2) Agreements between the state and private sector partners entered into under this section must specifically include the following contractual elements:
     (a) The point in the project at which public and private sector partners will enter the project and which partners will assume responsibility for specific project elements;
     (b) How the partners will share management of the risks of the project;
     (c) How the partners will share the costs of development of the project;
     (d) How the partners will allocate financial responsibility for cost overruns;
     (e) The penalties for nonperformance;
     (f) The incentives for performance;
     (g) The accounting and auditing standards to be used to evaluate work on the project;
     (h) For any project that reverts to public ownership, the responsibility for reconstruction or renovations that are required in order for a facility to meet all applicable government standards upon reversion of the facility to the state; and
     (i) Provisions for patrolling and law enforcement on transportation projects that are public facilities.

Sec. 6   RCW 47.29.160 and 2005 c 317 s 16 are each amended to read as follows:
     (1) Before approving an agreement under subsection (2) of this section, the commission, with the technical assistance of the department, must:
     (a) Prepare a financial analysis that fully discloses all project costs, direct and indirect, including costs of any financing proposals;
     (b) Publish notice and make available the contents of the agreement, with the exception of patent information, at least twenty days before the public hearing required in (c) of this subsection; and
     (c) Hold a public hearing on the proposed agreement, with proper notice provided at least twenty days before the hearing. The public hearing must be held within the boundaries of the county seat of the county containing the project.
     (2) The commission must allow at least twenty days from the public hearing on the proposed agreement required under subsection (1)(c) of this section before approving and executing any agreements authorized under this chapter.

Sec. 7   RCW 47.29.180 and 2005 c 317 s 18 are each amended to read as follows:
     ((For projects with costs, including financing costs, of three hundred million dollars or greater, advisory committees are required.))
     (1) The commission ((must)) may establish an advisory committee ((to advise with respect to eligible projects)) for a single project or to provide advice on multiple projects. An advisory committee must consist of not fewer than five and not more than nine members, as determined by the public partners. Members must be appointed by the commission, or for projects with joint public sector participation, in a manner agreed to by the commission and any participating unit of government. In making appointments to the committee, the commission shall consider persons or organizations offering a diversity of viewpoints on the project.
     (2) An advisory committee shall review ((concepts or proposals for eligible projects)), analyze, and submit comments to the public sector partners on issues presented to the committee for their consideration.
     (3) An advisory committee shall meet as necessary at times and places fixed by the department, but not less than twice per year. The state shall provide personnel services to assist the advisory committee within the limits of available funds. An advisory committee may adopt rules to govern its proceedings and may select officers.
     (4) An advisory committee must be dissolved once the project has been fully constructed and debt issued to pay for the project has been fully retired.

Sec. 8   RCW 47.29.250 and 2005 c 317 s 25 are each amended to read as follows:
     (1) In addition to any authority the commission or department has to issue and sell bonds and other similar obligations, this section establishes continuing authority for the issuance and sale of bonds and other similar obligations in a manner consistent with this section. To finance a project in whole or in part, the commission may request that the state treasurer issue ((revenue)) bonds on behalf of the public sector partner. The bonds must be secured by a pledge of, and a lien on, and be payable only from moneys in the transportation innovative partnership account established in RCW 47.29.230, and any other revenues specifically pledged to repayment of the bonds. Such a pledge by the public partner creates a lien that is valid and binding from the time the pledge is made. ((Revenue)) Bonds issued under this section are not first lien general obligations of the state or local government and are not secured by or payable from any funds or assets of the state other than the moneys and revenues specifically pledged to the repayment of such ((revenue)) bonds.
     (2) Moneys received from the issuance of ((revenue)) bonds or other debt obligations, including any investment earnings thereon, may be spent:
     (a) For the purpose of financing the costs of the project for which the bonds are issued;
     (b) To pay the costs and other administrative expenses of the bonds;
     (c) To pay the costs of credit enhancement or to fund any reserves determined to be necessary or advantageous in connection with the ((revenue)) bonds; and
     (d) To reimburse the public sector partners for any costs related to carrying out the projects authorized under this chapter.

Sec. 9   RCW 47.29.280 and 2006 c 334 s 49 are each amended to read as follows:
     (1) The ((department shall)) commission may establish an expert review panel to review, analyze, and make recommendations ((to the governor and the transportation commission on whether to approve, reject, or continue negotiations)) on any aspect of a proposal, project, or a proposed project agreement under this chapter. The department shall provide staff to support the expert review panel, if requested by the panel. The expert review panel may utilize any of the consultants under contract for the department, and the expert review panel may contract for consulting expertise in specific areas as it deems necessary to ensure a thorough and critical review of any ((proposed project agreement)) aspect of their assigned scope of review.
     (2) The ((governor)) commission shall appoint members of an expert review panel that have experience in large capital project delivery, public-private partnerships, public financing of infrastructure improvements, or other areas of expertise that will benefit the panel. The panel shall consist of no less than three, but no more than five members, as determined by the ((governor)) commission.

Sec. 10   RCW 47.29.290 and 2006 c 334 s 50 are each amended to read as follows:
     Upon receiving the recommendations of the expert review panel as provided in RCW 47.29.280, ((and upon consultation with the governor,)) the transportation commission shall either execute the proposed project agreement, reject the proposed project agreement, or continue further negotiations between the state and a private partner. The execution of any agreement or the rejection of any agreement shall constitute a final action for legal or administrative purposes.