Communities throughout the Midwest realize that to grow and thrive, they must invest in infrastructure. Many local governments have infrastructure facilities built in the mid-1900s or before—whether public buildings, transportation facilities, or water treatment systems—that need to be replaced, expanded, or upgraded.
But few communities have funding readily available for such long-term capital improvements. Traditional public-funding models often won’t cut it. Cities and counties need access to capital and innovative financing to accomplish the task of building and maintaining the community’s infrastructure in a sustainable manner. One project-delivery method that has been gaining momentum in the U.S. over the past decade is the use of public private partnerships.
A public-private partnership (or “P3”) involves a contractual arrangement between a public authority and a private-sector partner to design, construct, finance, renovate, maintain, or operate a public facility.
In 2018, the Missouri General Assembly modified state law to give cities and counties more flexibility to use P3s. Under RSMo § 227.601, political subdivisions can enter concession agreements with private-sector partners to build, maintain, operate, or finance certain projects. Such “projects,” as defined in § 227.600, include “any pipeline, ferry, port facility, water facility, water way, water supply facility or pipeline, stormwater facility or system, wastewater system or treatment facility, public building, airport, railroad, light rail, vehicle parking facility, mass transit facility, or other similar facility . . . available to a government entity for public use.”
Under the new law, a Missouri city or county considering a P3 arrangement for one of these projects no longer has to get approval from the state Highways and Transportation Commission. The law provides certain parameters for concession agreements, including:
- a preliminary engineering and financial feasibility study must be done;
- the term of the concession agreement cannot exceed 30 years;
- the political subdivision must retain oversight of the operations;
- the political subdivision must retain oversight of the method for setting rates; and
- the political subdivision must have the right to terminate the contract if the private partner doesn’t comply with the concession agreement.
If a community needs to replace or upgrade a public facility, the lawyers at Evans & Dixon can advise on innovative funding and financing solutions, including the use of public-private partnerships. Our attorneys can also help prospective concessionaires (e.g., engineering firms, construction companies, or public-facility operators) by providing sound legal advice and helping to assess risk, negotiate with public partners, or draft contracts.