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Infra Insight Blog Law & Policy

Massachusetts Authorizes PPPs

Posted in Financing, Legislation, PPPs

In addition to the recent passage of comprehensive P3 legislation in Arizona and California, the newly created Massachusetts Department of Transportation (MassDOT) has also been authorized to utilize public private partnerships for transportation projects. Provisions for design-build-operate-maintain (DBOM) and design-build-finance-operate-maintain (DBFOM) procurements are included in Senate Bill 2087, commonly known as the “Transportation Reform Act,” under which MassDOT was formed. Under the Act, P3’s may be used for a new or existing highway, road, bridge, tunnel ferry, airport, parking facility, seaport, rail facility or other transportation facilities.

Massachusetts has opted to take markedly different approaches to funding DBOM and DBFOM projects. Payments under DBOM contracts must come in whole or in part from funds appropriated prior to award of the contract or must be secured by tolls or other user charges. In contrast, for DBFOM projects, no public funds may be appropriated to pay for the services provided by the contractor.  These restrictions could prove to be a significant hurdle to financing some projects.

Another notable feature of MassDOT’s new P3 program is the establishment of a P3 Infrastructure Oversight Commission which will comment on and approve all requests for proposals (RFPs) for DBOM or DBFOM services. The seven member commission will be composed of experts with experience in the fields of transportation law, public policy, public finance, management consulting, transportation or organizational change. At least one of the commission members will be a representative from the Massachusetts Organization of State Engineers and Sciences.

The P3 portion of the Transportation Reform Act also includes provisions for:

  • Asset sales and leases
  • Procurement method and evaluation factors
  • Stipends
  • Funding
  • Confidentiality
  • Contents of the concession agreement
  • Creation of a public-private partnership oversight commission.

Click here to view the entire Tranportation Reform Act.

  • Jeff Mullan

    Thanks for the post on this item. I am glad that Nossaman has launched this blog and am following it closely.

    Massachusetts is in the midst of a enormous change to the way it delivers transportation services and is preparing for the new Massachusetts Department of Transportation on November 1.

    MassDOT is a consolidated, intermodal authority to be governed by a five member board. It combines the assets of the Mass. Highway Department, Mass. Turnpike Authority, all of the bridges and some of the parkways now under the control of the Department of Conservation and Recreation, and the Tobin Bridge. It also includes our Registry of Motor Vehicles, Aeronautics Commission, and through a separate legal entity, the MBTA. It does not include the Massachusetts Port Authority, although MassDOT’s Secretary has a seat on Massport’s board.

    The landmark legislation includes PPP authorizations. As Mr. Petrov notes, the statute presents some financial challenges. It is still significant in that it is the first time we have general authorization to pursue PPPs from the legislature. As we examine all of our options, we will explore the use of PPPs in limited circumstances, particularly with non-core assets. There are some opportunities.

    Keep up the good work.

    Jeffrey Mullan
    Executive Director
    Massachusetts Turnpike Authority