House Bill 218 expanding the use of public-private partnerships
Public-private partnerships have been widely discussed over the last 10 years as the public sector looks for creative ways to address the need for more public infrastructure dollars. A public-private partnership (P3) is an alternative procurement model for public infrastructure. The goal of the P3 model is to create more funding and to transfer the risks best managed by the private sector - to the private sector - allowing the public sector to focus on its core mission and strengths.
In Ohio, State Rep. Tom Patton (R-Strongsville) introduced House Bill 218 to expand the use of the P3 model. That bill was recently passed by the House State and Local Government Committee and and is awaiting action by the full House.
Under House Bill 218:
1) Public ownership of the asset is retained throughout the project.
2) The private sector is responsible for designing, building, financing and maintaining the public asset for up to 40-year terms.
3) While an alternative procurement process is provided for, there is still a Notice and Bid requirement.
4) The private sector faces financial penalties for inferior work.
5) The public sector incentivizes the public sector investment via the long term use commitment.
Entities allowed to enter into the public-private partnerships include counties, cities, townships, state agencies, state colleges and universities, public schools, libraries and port authorities. The bill mirrors the process currently used at the Ohio Department of Transportation. It is no coincidence that Rep. Patton established that ODOT opportunity and process under a previous bill he sponsored as the Ohio legislative leader on this issue.
According to an independent study touted by Rep. Patton, every dollar in P3 investment generates $2.8 in economic activity and can produce up to a 25 percent cost savings over the life of the project compared to traditional building methods. We contacted Rep. Patton for this update and he stated that “I firmly believe the expanded role of P3s in Ohio will have a resounding positive economic and social impact on the state, and we should catch up with the other 15 states already reaping these benefits.”