27.3 PPPS IN VIRGINIA
27.301 Key Statutes.
A. The Public-Private Transportation Act. The Public-Private Transportation Act (PPTA) allows specified public bodies to contract with the private sector to develop or operate transportation facilities. 13 The terms "develop" and "operate" are defined in the statute and cover a wide-range of activities, including financing, designing, constructing, improving, operating, and maintaining transportation facilities. 14
A "transportation facility" is defined in the PPTA as
[A]ny road, bridge, tunnel, overpass, ferry, airport, mass transit facility, vehicle parking facility, port facility, or similar commercial facility used for the transportation of persons or goods, together with any buildings, structures, parking areas, appurtenances, and other property needed to operate such facility; however, "transportation facility" does not include a commercial or retail use or enterprise "not essential to the transportation of per- sons or goods." 15
In its enactment of the PPTA, the General Assembly found that the public need for the timely development or operation of needed transportation facilities within the Commonwealth "may not be wholly satisfied by existing procurement methods." 16 The intent of the PPTA is to address this need by "[encouraging] investment in the Commonwealth by private entities that facilitates the development and/or operation of transportation facilities when such investment is in the best interest of the public" and by providing public and private entities with "the greatest
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possible flexibility in contracting with each other for the provision of the public services that are the subject of [the PPTA]." 17
In addition to allowing for flexibility in contracting, the PPTA allows flexibility with respect to financing projects. Financing may be in any amount and upon any terms and conditions agreed upon by the parties and reflected in the PPP agreement. A public body may, to the extent permitted by law, (i) issue debt, equity, or other securities or obligations; (ii) enter into leases, concessions, and grant and loan agreements; (iii) access any designated transportation trust funds; (iv) borrow or accept grants from any state infrastructure bank; and (v) secure any financing with a pledge of, security interest in, or lien on any or all of its property. 18 A public body also is authorized to make grants or loans from amounts received from the federal government or state and local governments. Despite the broad range of financing structures permitted under the PPTA, the act itself does not otherwise enlarge, diminish, or affect the authority of a public body to take action that would "impact the debt capacity of the Commonwealth or the affected localities or public entities." 19
Public entities authorized to enter into contracts under the PPTA include (i) the Commonwealth; (ii) any agency or authority thereof; (iii) any county, city, or town; and (iv) any other political subdivision of the foregoing (each referred to in the PPTA as a "public entity"). 20 Public service companies do not qualify as public entities. 21
In addition to falling within the definition of a "public entity," a public body interested in pursuing a PPTA transaction must have "the power to develop and/or operate the qualifying transportation facility" that would be the subject of the transaction. Such a public entity is referred to in the PPTA
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as a "responsible public entity." 22 The PPTA does not address the question of whether a particular public entity has the requisite power to develop and operate a transportation facility. Answering that question requires an analysis of the legal status of the public entity and the scope of the public entity's authority. 23
A responsible public entity may grant approval for the development or operation of a transportation facility pursuant to the PPTA only if it finds that doing so serves the public purpose of the PPTA. The development and operation of a transportation facility serves the public purpose of the act if (i) the private entity can develop and/or operate the transportation facility with a public contribution amount that is less than the maximum public contribution for a transportation facility where the Virginia Department of Transportation (VDOT) or the Virginia Department of Rail and Public Transportation (VDRPT) is the responsible public entity; (ii) there is a public need for the transportation facility; (iii) the plans for developing and/or operating the transportation facility are anticipated to have significant benefits including person throughput, congestion mitigation, safety, development, environmental quality, and land use; (iv) the private entity's plans will result in the timely development and/or operation of the transportation facility or its more efficient operation; and (v) the risks, liabilities, and responsibilities transferred, assigned, or assumed by the private entity provide sufficient benefits to the public to not proceed with the development and/or operation of the transportation facility through other means of procurement available to the responsible public entity. 24
As noted above, for a transportation facility where VDOT or VDRPT is the responsible public entity, the determination regarding whether development of such facility serves the public purpose includes consideration of whether the private entity can develop and/or operate the transportation facility with a public contribution amount that is less than the maximum public contribution. When considering the development and/or operation of a transportation facility under the PPTA, VDOT and VDRPT are required to develop a public sector option for delivery of the transportation facility to
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help ensure competition throughout the procurement process. 25 In essence, the public sector option presents the cost of VDOT or VDRPT, as applicable, developing and/or operating the transportation facility and establishes the maximum public contribution. The public sector option is based on analysis that includes: (i) any mitigation of risk of user-fee financing through assumptions related to competing facilities, compensation for high usage of the facility by high-occupancy vehicles, or other considerations that may mitigate the risk of user-fee financing; (ii) whether VDOT or VDRPT intends to maintain and operate the facility, or if the public sector option is based on the transfer of such responsibilities to the private sector; (iii) the public contribution, if any, that would still be required to cover all costs necessary for the development and/or operation of the transportation facility in excess of financing available should the General Assembly authorize the use of debt secured by a pledge of net revenues derived from rates, fees, or other charges and the full faith and credit of the Commonwealth pursuant to Article X, Section 9(c) of the Constitution of Virginia; and (iv) funds provided to support nonuser fee generating components of the project that contribute to the benefits expected to be realized from the transportation facility pursuant to section 33.2-1803.1(B)(1) of the Virginia Code. 26
B. The Public-Private Education Facilities and Infrastructure Act. The Public-Private Education Facilities and Infrastructure Act (PPEA) allows specified public bodies to contract with the private sector to develop or operate qualifying projects. 27 As in the PPTA, the terms "develop" and "operate" are defined in the PPEA and cover a wide range of activities, including financing, designing, constructing, improving, equipping, modifying, repairing, operating, and maintaining qualifying projects. 28
The term "qualifying project" as defined in the PPEA is quite broad and includes:
| (i) | Any education facility, including, but not limited to a school building, any functionally related and subordinate facility and land to a school building (including any stadium or other facility primarily |
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| used for school events), and any depreciable property provided for use in a school facility that is operated as part of the public school system or as an institution of higher education; | |||
| (ii) | Any building or facility that meets a public pur- pose and is developed or operated by or for any public entity; | ||
| (iii) | Any improvements, together with equipment, necessary to enhance public safety and security of buildings to be principally used by a public entity; | ||
| (iv) | Utility and telecommunications and other communications infrastructure; | ||
| (v) | A recreational facility; | ||
| (vi) | Technology infrastructure, services, and applications, including, but not limited to, telecommunications, automated data processing, word processing and management information systems, and related information, equipment, goods, and services; | ||
| (vii) | Any services designed to increase the productivity or efficiency of the responsible public entity through the use of technology or other means; | ||
| (viii) | Any technology, equipment, or infrastructure de- signed to deploy wireless broadband services to schools, businesses, or residential areas; | ||
| (ix) | Any improvements necessary or desirable to any unimproved locally or state-owned real estate; or | ||
| (x) | Any solid waste management facility as defined in § 10.1-1400 that produces electric energy derived from solid waste. 29 |
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The PPEA also allows flexibility with respect to financing projects. Financing may be in any amount and upon any terms and conditions agreed to in the PPP agreement. The private entity and the public body may propose to use any and all funding resources available to them and may, to the fullest extent permitted by law: (i) issue debt, equity, or other securities or obligations; (ii) enter into leases; (iii) access any designated trust funds; (iv) borrow or accept grants from any state infrastructure bank; and...
