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Patrick White

Patrick G. White, Esquire
HB 337, PUBLIC-PRIVATE PARTNERSHIPS:  A DEVELOPMENT BOON OR BANE?

            Whether you pick the idiom "The Third Time's a Charm" or "Three Strikes and You're Out," Florida House Representative Trudi Williams (R-Ft. Myers)[1] has filed a third version of a bill that has in years past died in committee (2011) or failed under different sponsorship (2008 - 2009).  In any event this updated version is moving through committees hoping for the chance of a more public and robust debate of its pros and cons.  As recently reported,[2] the Southwest Florida lawmaker, who's served as SFWMD's chair and as a P.E. in the private sector[3] has valuable experience in assisting many private and public entities with their development and construction projects, is now more optimistic than ever that the timing is right for the new bill to become law.  The Florida Senate's companion bill, SB 576,[4] filed by the Senate's President Pro Tempore, Sen. Mike Bennett (R-Bradenton), as its primary sponsor, enhances the prospect that both of the presently identical bills can be aired fully in each house's committees and then reach its chamber's floor.  But the ever bedeviling "details" are what will matter!

            The 24-page "Florida Public-Private Partnership Act" (the "Act") creates a new Section 287.05712, in the midst of the Florida Statutes pertaining to public procurement.[5]  The Act first defines its new operational terms (a few more pertinent ones follow in quotes) and then sets forth a process for the adoption of procedural guidelines by a "Responsible public entity," (an "RPE" or "entity") for accepting a "Proposal" for a "Qualifying project" that a "Private entity" may "Develop" or "Operate."  The Act's mandatory procedural guidelines differ depending on whether it is a state- or non-state-related "responsible public entity.[6]  But consistent with the Chapter's overall legislative intent [7] and the Act's legislative findings and intent,[8] the legislation focuses on public entities crafting their own guidelines that are reasonable, encourage competition, and guide selection of their public projects.[9]  Although there are limited means to opt out of following its own adopted guidelines, no proposals can be accepted or considered by an RPE until such guidelines are adopted and publicly noticed.[10]  "Qualifying projects" is broadly defined as any "public purpose facility or project" and may include traditional infrastructure such as roads, water & wastewater lines and plants, as well as schools, but also technology infrastructure and any other improvements, including equipment, of facilities and buildings principally serving a pubic purpose.[11]  Similarly, a "public entity" is the state, its agencies or political subdivisions, any public body politic and corporate, including any regional entity serving a public purpose.[12]  Thus, in a self-fulfilling way, any sub-section (4) procurement "action" of the Act that facilitates the timely development or operation of a "qualifying project" serves a "public purpose."[13]

            Next, the Act establishes procurement procedures for all RPE's, while exempting them from the Consultant's Competitive Negotiation Act (aka CCNA) and other state regulatory provisions.[14]  Factors for project selection that may be considered include proposed costs, but the entity is not required to select the "lowest bid offer," as price is only one evaluation factor.  Others include allowing preference for use of local contractors and residents, and project acceleration under a minority business enterprise participation plan, as well as the project's design and the private entity's reputation, experience, and financial capacity.  Other criteria the entity deems "appropriate" may be added and considered as well.[15]  When the entity follows its adopted procurement guidelines its reasons for doing so must be stated in writing;  however, the entity may determine not to proceed under its adopted guidelines if it's less likely to be advantageous to itself and the public.[16]

            The consideration and approval of qualifying projects are set forth next,[17] and an RPE may request "proposals" or invite bids from private entities for a qualifying project ("QP"), while a private entity may request an RPE's "approval" of a qualifying project.[18]  Unless waived by the RPE, the request for approval by a private entity must include information and/or materials responsive to nine specified areas, including location & maps, project description with conceptual designs, how any needed property would be acquired, governmental permits required, financing plans, plus any reasonable request by the RPE;  but the RPE can not approve the request unless there is a public need or benefit, the estimated costs are reasonable in comparison to similar facilities, and the resulting project will be "timely."[19]  RPE's are free at any time to reject a private entity's unsolicited proposal.[20]  Internal staff reports or outside professional experts may be relied upon, and fees for doing so may be charged, essentially making the process cost neutral to other tax payers.[21]  If approved, times to perform must be set[22] and a "comprehensive agreement" entered into by the parties,[23] which may be preceded by an "interim agreement" allowing for time to develop a favorable concept, negotiations on terms, and anything else appropriate.[24]

            Comprehensive agreements must contain provisions addressing ten specified areas and may include provisions for any of three others.[25]  Prior to approving such agreement any "affected local jurisdiction" must be notified via a copy of the private entity's request or proposal.[26]  Each jurisdiction has 60 days to provide the RPE with written comment, and those must include an indication of whether the QP is consistent with their comprehensive plan and compatible with their capital improvement plans and budget/spending plan.[27]  The Act provides a private entity with limited municipal powers and duties to perform its intended functions under the agreement, and focuses on means of financing for construction and operation of the QP.[28]  And thus, the Act affords the private entity and RPE with the ability to utilize any and all federal, state, and local financing or funding resources.[29]  Other provisions of the Act define remedies in the event of a defined "material default" that would allow the RPE to stand in the shoes of the private entity without limiting its claims under law.[30]  The Act does not alter existing sovereign immunity rules.[31]  And similar to the local public-private partnership advisory committees that RPE's may establish to advise their appropriating bodies,[32] a 12 member state oversight commission is established with annual reporting requirements.[33]  Upon adoption, the law would take effect on July 1st, 2012.[34]

            Although no legislative committee or other staff analysis has yet been published, commentators have both applauded and to a lesser degree questioned the bill's anticipated effects.  Notwithstanding its layers of complexity Fort Lauderdale construction attorney Lee Weintraub praises Williams' bill, asking in his blog "Could economic relief for the Florida construction industry be on the way?"  And "[i]t creates a lot of room for creativity in coming up with funding to make these things happen[.]"[35]

            Some contend that the legislation seems to allow construction companies, etc., to make unsolicited proposals for projects, however, only a "request" for approval of a private entity's proposed QP is contemplated by the Act.  All other materials filed are "proposals," which must follow already existing purchasing/procurement rules and procedures for RFP's and/or ITB's.  In addition, a public entity would have to first have in place a method for receiving and reviewing those proposals.  Similarly, a "proposal" by definition means a "detailed proposal accepted by" an RPE, hence one that is deemed responsive to a governmental solicitation.  Thus, the question more properly seems whether the Act provides a means to weigh and balance the cost of an RPE maintaining their own technical and managerial staff versus hiring professionals as needed to review and evaluate proposals and requests.  Under either scenario, given that reasonable fees for such functions are permitted, each RPE will have to find the "sweet spot" where those fees cover costs without driving away requests and proposals.

            Because it is seen as improving the "rules of the game" for future public-private "win-win" deals, the bill has strong support from some members of the construction industry.  With public entities so financially strapped, Richard Watson, legislative counsel for the Association of Builders and Contractors of Florida, has said the bill could breathe life into local economies for projects that are otherwise needed.[36]  And in a very recently aired radio piece, a prominent economist touted the present necessity for more public-private partnerships like those found in the central Florida area.[37]

            Given the new law's potential to harness creative financing methods to bring a much needed capital infusion to Florida and its fiscally strapped public entities, especially for public infrastructure and corresponding jobs, there is cautious reason to believe "charm" may win out and it will soon be easier for contractors and other private entities to build and operate public projects via a mutually beneficial partnership.  For her part, Rep. Williams has been quoted as saying, "It's really a job-creation bill [that will] get jobs on the ground right away."[38]  For those whose livelihood rises and falls with such development projects, their hopes may ride on the political tides for the Act coming in this session.  And for those who have or share their interest (or not), your views may be made known to your elected officials through these web-links: http://www.flsenate.gov/ and http://www.flhouse.gov/.

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[3]   Ms. Williams is CEO and founder of her firm, TKW Consulting Engineers, Inc., based in Ft. Myers.

[5]   see, Chapter 287, Procurement of Personal Property and Services, Part I:  Commodities, Insurance, and Contractual Services, including ss. 287.001 to 287.135; the Act would be sandwiched between Sec. 287.0571, Business case to outsource; applicability, and Sec. 287.0572, Present-value methodology.

[6]   note the distinction drawn below between the definitions for, and use of, the terms "public entity" and a "responsible public entity" in endnote 12.

[7]   see, Sec. 287.001, Legislative intent, recognizing that fair and open competition reduces the appearance and opportunity for favoritism so as to inspire public confidence that contracts are awarded equitably and economically; such that uniform procedures must be utilized, detailed justification be provided, all decisions be documented, and effective monitoring occur, to curb improprieties, and assure effective and ethical procurement.

[8]   the Act, Section1, sub-section (2), finding bases in the current public need for public projects for which there presently are inadequate resources to meet that need by utilizing state and federal tax incentives promoting public and private partnerships; and which states the legislature's intent to encourage flexibility and enhance the size and speed of private investments in the state through the promotion of creative financing sources.

[9]   the Act, Section 1, sub-section (3)(a).

[10]  the Act, Section 1, sub-sections (3)(a) and (4)(c).

[11]  the Act, Section 1, sub-section (1)(l).

[12]  the Act, Section 1, sub-section (1)(k), however, to the extent that the Act in sub-section (3), pertaining to the adoption of guidelines for the selection of projects, uses the defined term "responsible public entity" (emphasis added) in both its sub-section (b) and (c), which respectively apply first to "an agency or institution of the state," and next to all other public entitles that are "not an agency or institution of the state" (emphasis added), i.e., all other more regional, local, or district types of governing public bodies, including the typical "political subdivisions of the state," such as counties, and municipalities;  because an RPE is defined as "an agency or institution of the state," an unintended internal inconsistency is created between either the definitions or operational provisions that should be resolved in subsequent text re-drafting.

[13]  the Act, Section 1, sub-section (2)(a)4.

[14]  the Act, Section 1, sub-section (4).

[15]  the Act, Section 1, sub-section (4), and (4)(a).

[16]  the Act, Section 1, sub-section (4)(b), N.B., although stated to require the RPE's adopted guidelines must be followed unless they are "likely to be advantageous" to the RPE and public, this seems to be a logical non-sequitor, and hence, either the word "not" should proceed "proceeding," OR the word "less" either before "likely"' or "advantageous;"  and thus, to avoid following its adopted guidelines the RPE must base its determination on three precise criteria focused on the project's parameters, risk sharing between the public & private entities, or economic benefits that would be missed (emphasis added by italics to reflect interpreting the Act's provision to mean "not" or "less" would be added to the text);  under either construction the test and criteria to applying the adopted guidelines (or not) are both highly qualitative and subjective.

[17]  the Act, Section 1, sub-section (5) et seq.

[18]  the Act, Section 1, sub-section (5)(a).

[19]  the Act, Section 1, sub-section (5)(b).

[20]  the Act, Section 1, sub-section (5)(c), but notwithstanding having become the RPE's "public record" once submitted, the approval request and any fee presumably charged to review the request in order to determine it warranted rejection both are supposed to be returned;  this provision would benefit from further consideration to avoid what appear to be inconsistencies with general law and most jurisdictions' policies on returning fees.

[21]  the Act, Section 1, sub-section (5)(e).

[22]  the Act, Section 1, sub-section (5)(g).

[23]  the Act, Section 1, sub-section (5)(h), and provisions detailing the content for a defined "comprehensive agreement" (see, sub-section (1)(c)) are set forth in sub-section (7) of the Act, which has both mandatory and discretionary components.

[24]  the Act, Section 1, sub-section (6), sets forth what a defined "interim agreement" (see, sub-section (1)(e)) may include.

[25]  the Act, Section 1, sub-section (7)(a) and (b), for mandatory and discretionary provisions, respectively.

[26]  the Act, Section 1, sub-section (8)(a).

[27]  the Act, Section 1, sub-section (8)(b).

[28]  the Act, Section 1, sub-section (9).

[29]  the Act, Section 1, sub-section (11).

[30]  the Act, Section 1, sub-section (10).

[31]  the Act, Section 1, sub-section (12).

[32]  the Act, Section 1, sub-section (3)(b)8.

[33]  the Act, Section 1, sub-section (14).

[34]  the Act, Section 2.

[36]  see, endnote 2.

[37]   see, http://www.wmfe.org/site/News2?page=NewsArticle&id=12180&news_iv_ctrl=1521, an audio clip also featuring noted economist Hank Fishkind's examples and positive assessment of such partnerships.

[38] see, endnote 2.

 

 

Patrick G. White, Esquire

Mr. White is presently Of Counsel with Porter, Wright, Morris & Arthur, LLP, Attorneys & Counselors at Law, where his primary practice is in the areas of land use and local government law.  He is a Florida Bar Board Certified City, County, & Local Government Attorney who has worked extensively with planners, architects, engineers, contractors, and other land development professionals throughout his career.  Prior to moving to private practice in December 2005, he served as an assistant county attorney for over twelve years in Lee and Collier Counties, practicing in the area of land use law.  Mr. White obtained his B.A. from the State University of N.Y. at Buffalo, where he majored in Environmental Design and Biology, and is a graduate of Stetson University’s College of Law.  He is a member of the Florida Bar’s Environmental and Land Use Law Section, the Real Property and Probate Trust Law Section, and the City, County, & Local Government Law Section, as well as being a member of the Collier County Bar Association’s Real Estate Section.

During his off work hours, Mr. White has focused on efforts to create a National Memorial for the Forty Heroes of Flight 93 lost on 9/11/2001; and he is presently the Vice-President of the Families of Flight 93 as well as the Co-chair of the Flight 93 Memorial Task Force.  Mr. White serves as a Trustee of the South Florida National Parks Trust and enjoys scuba diving, kayaking, and sailing.  He is married to Jennifer B. White, the proud parents of Joseph P. White, all of Naples, Florida.

 

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