Florida Senate - 2013 CS for SB 84 By the Committee on Community Affairs; and Senator Diaz de la Portilla 578-01022-13 201384c1 1 A bill to be entitled 2 An act relating to public-private partnerships; 3 creating s. 287.05712, F.S.; providing definitions; 4 providing legislative findings and intent relating to 5 the construction or improvement by private entities of 6 facilities used predominantly for a public purpose; 7 providing procurement procedures; providing 8 requirements for project approval; providing project 9 qualifications and process; providing for notice to 10 affected local jurisdictions; providing for 11 comprehensive agreements between a public and a 12 private entity; providing for use fees; providing for 13 financing sources for certain projects by a private 14 entity; providing powers and duties for private 15 entities; providing for expiration or termination of 16 agreements; providing for the applicability of 17 sovereign immunity for public entities with respect to 18 qualified projects; providing for construction of the 19 act; providing an effective date. 20 21 Be It Enacted by the Legislature of the State of Florida: 22 23 Section 1. Section 287.05712, Florida Statutes, is created 24 to read: 25 287.05712 Public-private partnerships.— 26 (1) DEFINITIONS.—As used in this section, the term: 27 (a) “Affected local jurisdiction” means a county, 28 municipality, or special district in which all or a portion of a 29 qualifying project is located. 30 (b) “Develop” means to plan, design, finance, lease, 31 acquire, install, construct, or expand. 32 (c) “Fees” means charges imposed by the private entity of a 33 qualifying project for use of all or a portion of such 34 qualifying project pursuant to a comprehensive agreement. 35 (d) “Lease payment” means any form of payment, including a 36 land lease, by a public entity to the private entity of a 37 qualifying project for the use of the project. 38 (e) “Material default” means a nonperformance of its duties 39 by the private entity of a qualifying project which jeopardizes 40 adequate service to the public from the project. 41 (f) “Operate” means to finance, maintain, improve, equip, 42 modify, or repair. 43 (g) “Private entity” means any natural person, corporation, 44 general partnership, limited liability company, limited 45 partnership, joint venture, business trust, public-benefit 46 corporation, nonprofit entity, or other private business entity. 47 (h) “Proposal” means a plan for a qualifying project with 48 detail beyond a conceptual level for which terms such as fixing 49 costs, payment schedules, financing, deliverables, and project 50 schedule are defined. 51 (i) “Qualifying project” means: 52 1. A facility or project that serves a public purpose, 53 including, but not limited to, any ferry or mass transit 54 facility, vehicle parking facility, airport or seaport facility, 55 power-generating facility, rail facility or project, fuel supply 56 facility, oil or gas pipeline, medical or nursing care facility, 57 recreational facility, sporting or cultural facility, or 58 educational facility or other building or facility that is used 59 or will be used by a public educational institution, or any 60 other public facility or infrastructure that is used or will be 61 used by the public at large or in support of an accepted public 62 purpose or activity; 63 2. An improvement, including equipment, of a building that 64 will be principally used by a public entity or the public at 65 large or that supports a service delivery system in the public 66 sector; or 67 3. A water, wastewater, or surface water management 68 facility or other related infrastructure. 69 (j) “Responsible public entity” means a county, 70 municipality, school board, or university, or any other 71 political subdivision of the state; a public body politic and 72 corporate; or a regional entity that serves a public purpose and 73 is authorized to develop or operate a qualifying project. 74 (k) “Revenues” means the income, earnings, user fees, lease 75 payments, or other service payments relating to the development 76 or operation of a qualifying project, including, but not limited 77 to, money received as grants or otherwise from the Federal 78 Government, a public entity, or an agency or instrumentality 79 thereof in aid of the qualifying project. 80 (l) “Service contract” means a contract between a public 81 entity and the private entity which defines the terms of the 82 services to be provided with respect to a qualifying project. 83 (2) LEGISLATIVE FINDINGS AND INTENT.—The Legislature finds 84 that there is a public need for the construction or upgrade of 85 facilities that are used predominantly for public purposes and 86 that it is in the public’s interest to provide for the 87 construction or upgrade of the facilities. 88 (a) The Legislature also finds that: 89 1. There is a public need for timely and cost-effective 90 acquisition, design, construction, improvement, renovation, 91 expansion, equipping, maintenance, operation, implementation, or 92 installation of public projects, including educational 93 facilities, transportation facilities, water or wastewater 94 management facilities and infrastructure, technology 95 infrastructure, roads, highways, bridges, and other public 96 infrastructure and government facilities within the state which 97 serve a public need and purpose, and that such public need may 98 not be wholly satisfied by existing procurement methods. 99 2. There are inadequate resources to develop new 100 educational facilities, transportation facilities, water or 101 wastewater management facilities and infrastructure, technology 102 infrastructure, roads, highways, bridges, and other public 103 infrastructure and government facilities for the benefit of 104 residents of this state, and that a public-private partnership 105 has demonstrated that it can meet the needs by improving the 106 schedule for delivery, lowering the cost, and providing other 107 benefits to the public. 108 3. There are state and federal tax incentives that promote 109 partnerships between public and private entities to develop and 110 operate qualifying projects. 111 4. A procurement under this section serves the public 112 purpose of this section if such action facilitates the timely 113 development or operation of a qualifying project. 114 (b) It is the intent of the Legislature to encourage 115 investment in the state by private entities; to facilitate 116 various bond financing mechanisms, private capital, and other 117 funding sources for the development and operation of qualifying 118 projects, including expansion and acceleration of such financing 119 to meet the public need; and to provide the greatest possible 120 flexibility to public and private entities contracting for the 121 provision of public services. 122 (3) PROCUREMENT PROCEDURES.—A responsible public entity may 123 receive unsolicited proposals or may solicit proposals for 124 qualifying projects and may thereafter enter into an agreement 125 with a private entity, or a consortium of private entities, for 126 the building, upgrade, operation, ownership, or financing of 127 facilities. 128 (a) The responsible public entity may establish a 129 reasonable application fee for the submission of an unsolicited 130 proposal under this section. The fee must be sufficient to pay 131 the costs of evaluating the proposal. The responsible public 132 entity may engage the services of a private consultant to assist 133 in the evaluation. 134 (b) The responsible public entity may request a proposal 135 from private entities for a public-private project or, if the 136 public entity receives an unsolicited proposal, the public 137 entity shall publish notice in the Florida Administrative 138 Register and a newspaper of general circulation at least once a 139 week for 2 weeks stating that the public entity has received a 140 proposal and will accept for 21 days after the initial date of 141 publication other proposals for the same project. A copy of the 142 notice must be mailed to each local government in the affected 143 area. The scope of the proposal may be publicized for the 144 purpose of soliciting competing proposals; however, the 145 financial terms of the proposal may not be disclosed until the 146 terms of all competing bids are simultaneously disclosed in 147 accordance with the applicable law governing procurement 148 procedures for the qualifying project. 149 (c) A responsible public entity that is a school board may 150 enter into a comprehensive agreement only with the approval of 151 the local governing body. 152 (d) Before approval, the responsible public entity must 153 determine that the proposed project: 154 1. Is in the public’s best interest; 155 2. Is for a facility that is owned by the responsible 156 public entity or for a facility for which ownership will be 157 conveyed to the responsible public entity; 158 3. Has adequate safeguards in place to ensure that 159 additional costs or service disruptions are not imposed on the 160 public in the event of material default or cancellation of the 161 agreement by the responsible public entity; 162 4. Has adequate safeguards in place to ensure that the 163 responsible public entity or the private entity has the 164 opportunity to add capacity to the proposed project or other 165 facilities serving similar predominantly public purposes; and 166 5. Will be owned by the responsible public entity upon 167 completion or termination of the agreement and upon payment of 168 the amounts financed. 169 (e) Before signing any comprehensive agreement, the 170 responsible public entity must consider a reasonable finance 171 plan that is consistent with subsection (9), the project cost, 172 revenues by source, available financing, major assumptions, 173 internal rate of return on private investments, if any 174 governmental funds are assumed in order to deliver a cost 175 feasible project, and a total cash-flow analysis beginning with 176 the implementation of the project and extending for the term of 177 the agreement. 178 (f) In considering an unsolicited proposal, the responsible 179 public entity may require from the private entity an investment 180 grade technical study prepared by a nationally recognized expert 181 who is accepted by national bond rating agencies. In evaluating 182 the technical study, the responsible public entity may rely upon 183 internal staff reports prepared by personnel familiar with the 184 operation of similar facilities or the advice of external 185 advisors or consultants having relevant experience. 186 (4) PROJECT APPROVAL REQUIREMENTS.—An unsolicited proposal 187 from a private entity for approval of a qualifying project must 188 be accompanied by the following material and information, unless 189 waived by the responsible public entity: 190 (a) A description of the qualifying project, including the 191 conceptual design of the facilities or a conceptual plan for the 192 provision of services, and a schedule for the initiation and 193 completion of the qualifying project. 194 (b) A description of the method by which the private entity 195 proposes to secure any necessary property interests that are 196 required for the qualifying project. 197 (c) A description of the private entity’s general plans for 198 financing the qualifying project, including the sources of the 199 private entity’s funds and identification of any dedicated 200 revenue source or proposed debt or equity investment on behalf 201 of the private entity. 202 (d) The name and address of a person who may be contacted 203 for further information concerning the proposal. 204 (e) The proposed user fees, lease payments, or other 205 service payments over the term of a comprehensive agreement, and 206 the methodology and circumstances for changes to the user fees, 207 lease payments, and other service payments over time. 208 (f) Any additional material or information that the 209 responsible public entity reasonably requests. 210 (5) PROJECT QUALIFICATION AND PROCESS.— 211 (a) The private entity must meet the minimum standards 212 contained in the responsible public entity’s guidelines for 213 qualifying professional services and contracts for traditional 214 procurement projects. 215 (b) The responsible public entity must: 216 1. Ensure that provisions are made for the private entity’s 217 performance and payment of subcontractors, including, but not 218 limited to, surety bonds, letters of credit, parent company 219 guarantees, and lender and equity partner guarantees. For the 220 components of the qualifying project which involve construction 221 performance and payment, bonds are required and are subject to 222 the recordation, notice, suit limitation, and other requirements 223 of s. 255.05. 224 2. Ensure the most efficient pricing of the security 225 package that provides for the performance and payment of 226 subcontractors. 227 3. Ensure that provisions are made for the transfer of the 228 private entity’s obligations if the comprehensive agreement is 229 terminated or a material default occurs. 230 (c) After the public notification period has expired in the 231 case of an unsolicited proposal, the responsible public entity 232 shall rank the proposals received in order of preference. In 233 ranking the proposals, the responsible public entity may 234 consider factors that include, but are not limited to, 235 professional qualifications, general business terms, innovative 236 design techniques or cost-reduction terms, and finance plans. If 237 the responsible public entity is not satisfied with the results 238 of the negotiations, the responsible public entity may terminate 239 negotiations with the proposer and negotiate with the second 240 ranked or subsequent-ranked firms, in the order consistent with 241 this procedure. If only one proposal is received, the 242 responsible public entity may negotiate in good faith, and if 243 the public entity is not satisfied with the results of the 244 negotiations, the public entity may terminate negotiations with 245 the proposer. Notwithstanding this paragraph, the responsible 246 public entity may reject all proposals at any point in the 247 process until a contract with the proposer is executed. 248 (d) The responsible public entity shall perform an 249 independent analysis of the proposed public-private partnership 250 which demonstrates the cost-effectiveness and overall public 251 benefit before the procurement process is initiated or before 252 the contract is awarded. 253 (e) The responsible public entity may approve the 254 development or operation of an educational facility, a 255 transportation facility, a water or wastewater management 256 facility or related infrastructure, a technology infrastructure 257 or other public infrastructure, or a governmental facility 258 needed by the responsible public entity as a qualifying project, 259 or the design or equipping of a qualifying project that is 260 developed or operated, if: 261 1. There is a public need for or benefit derived from a 262 project of the type that the private entity proposes as the 263 qualifying project. 264 2. The estimated cost of the qualifying project is 265 reasonable in relation to similar facilities. 266 3. The private entity’s plans will result in the timely 267 acquisition, design, construction, improvement, renovation, 268 expansion, equipping, maintenance, or operation of the 269 qualifying project. 270 (f) The responsible public entity may charge a reasonable 271 fee to cover the costs of processing, reviewing, and evaluating 272 the request, including, but not limited to, reasonable attorney 273 fees and fees for financial and technical advisors or 274 consultants and for other necessary advisors or consultants. 275 (g) Upon approval of a qualifying project, the responsible 276 public entity shall establish a date for the commencement of 277 activities related to the qualifying project. The responsible 278 public entity may extend the commencement date. 279 (h) Approval of a qualifying project by the responsible 280 public entity is subject to entering into a comprehensive 281 agreement with the private entity. 282 (6) NOTICE TO AFFECTED LOCAL JURISDICTIONS.— 283 (a) The responsible public entity must notify each affected 284 local jurisdiction by furnishing a copy of the proposal to each 285 affected local jurisdiction when considering a proposal for a 286 qualifying project. 287 (b) Each affected local jurisdiction that is not a 288 responsible public entity for the respective qualifying project 289 may, within 60 days after receiving the notice, submit in 290 writing any comments to the responsible public entity and 291 indicate whether the facility is incompatible with the local 292 comprehensive plan, the local infrastructure development plan, 293 the capital improvements budget, or other governmental spending 294 plan. The responsible public entity shall consider the comments 295 of the affected local jurisdiction before entering into a 296 comprehensive agreement with a private entity. If an affected 297 local jurisdiction fails to respond to the responsible public 298 entity within the time provided in this paragraph, the 299 nonresponse is deemed an acknowledgement by the affected local 300 jurisdiction that the qualifying project is compatible with the 301 local comprehensive plan, the local infrastructure development 302 plan, the capital improvements budget, or other governmental 303 spending plan. 304 (7) COMPREHENSIVE AGREEMENT.— 305 (a) Before developing or operating the qualifying project, 306 the private entity must enter into a comprehensive agreement 307 with the responsible public entity. The comprehensive agreement 308 must provide for: 309 1. The delivery of performance and payment bonds, letters 310 of credit, or other security acceptable to the responsible 311 public entity in connection with the development or operation of 312 the qualifying project in the form and amount satisfactory to 313 the responsible public entity. For the components of the 314 qualifying project which involve construction, the form and 315 amount of the bonds must comply with s. 255.05. 316 2. The review of the plans and specifications for the 317 qualifying project by the responsible public entity and, if the 318 plans and specifications conform to standards acceptable to the 319 responsible public entity, the approval by the responsible 320 public entity. This subparagraph does not require the private 321 entity to complete the design of the qualifying project before 322 the execution of the comprehensive agreement. 323 3. The inspection of the qualifying project by the 324 responsible public entity to ensure that the private entity’s 325 activities are acceptable to the public entity in accordance 326 with the comprehensive agreement. 327 4. The maintenance of a policy of public liability 328 insurance, a copy of which must be filed with the responsible 329 public entity and accompanied by proofs of coverage, or self 330 insurance, each in the form and amount satisfactory to the 331 responsible public entity and reasonably sufficient to ensure 332 coverage of tort liability to the public and employees and to 333 enable the continued operation of the qualifying project. 334 5. The monitoring by the responsible public entity of the 335 maintenance practices to be performed by the private entity to 336 ensure that the qualifying project is properly maintained. 337 6. The periodic filing by the private entity of the 338 appropriate financial statements that pertain to the qualifying 339 project. 340 7. The procedures that govern the rights and 341 responsibilities of the responsible public entity and the 342 private entity in the course of the construction and operation 343 of the qualifying project and in the event of the termination of 344 the comprehensive agreement or a material default by the private 345 entity. The procedures must include conditions that govern the 346 assumption of the duties and responsibilities of the private 347 entity by an entity that funded, in whole or part, the 348 qualifying project or by the responsible public entity, and must 349 provide for the transfer or purchase of property or other 350 interests of the private entity by the responsible public 351 entity. 352 8. The fees, lease payments, or service payments. In 353 negotiating user fees, the fees must be the same for persons 354 using the facility under like conditions and must not materially 355 discourage use of the qualifying project. The execution of the 356 comprehensive agreement or a subsequent amendment is conclusive 357 evidence that the fees, lease payments, or service payments 358 provided for in the comprehensive agreement comply with this 359 section. Fees or lease payments established in the comprehensive 360 agreement as a source of revenue may be in addition to, or in 361 lieu of, service payments. 362 9. The duties of the private entity, including the terms 363 and conditions that the responsible public entity determine 364 serve the public purpose of this section. 365 (b) The comprehensive agreement may include: 366 1. An agreement by the responsible public entity to make 367 grants or loans to the private entity from amounts received from 368 the federal, state, or local government or any agency or 369 instrumentality thereof. 370 2. A provision under which each entity agrees to provide 371 notice of default and cure rights for the benefit of the other 372 entity, including, but not limited to, a provision regarding 373 unavoidable delays. 374 3. A provision that terminates the authority and duties of 375 the private entity under this section and dedicates the 376 qualifying project to the responsible public entity or, if the 377 qualifying project was initially dedicated by an affected local 378 jurisdiction, to the affected local jurisdiction for public use. 379 (8) FEES.—An agreement entered into pursuant to this 380 section may authorize the private entity to impose fees for the 381 use of the facility. The following provisions apply to the 382 agreement: 383 (a) The responsible public entity may develop new 384 facilities or increase capacity in existing facilities through 385 agreements with public-private partnerships. 386 (b) The public-private partnership agreement must ensure 387 that the facility is properly operated, maintained, or improved 388 in accordance with standards set forth in the comprehensive 389 agreement. 390 (c) The responsible public entity may lease existing fee 391 for-use facilities through a public-private partnership 392 agreement. 393 (d) Any revenues must be regulated by the responsible 394 public entity pursuant to the comprehensive agreement. 395 (e) A negotiated portion of revenues from fee-generating 396 uses must be returned to the public entity over the life of the 397 agreement. 398 (9) FINANCING.— 399 (a) A private entity may enter into a private-source 400 financing agreement between financing sources and the private 401 entity. A financing agreement and any liens on the property or 402 facility must be paid in full at the applicable closing that 403 transfers ownership or operation of the facility to the 404 responsible public entity at the conclusion of the term of the 405 comprehensive agreement. 406 (b) The responsible public entity may lend funds to private 407 entities that construct projects containing facilities that are 408 approved under this section. 409 (c) The responsible public entity may use innovative 410 finance techniques associated with a public-private partnership 411 under this section, including, but not limited to, federal loans 412 as provided in Titles 23 and 49 C.F.R., commercial bank loans, 413 and hedges against inflation from commercial banks or other 414 private sources. In addition, the responsible public entity may 415 provide its own capital or operating budget to support a 416 qualifying project. The budget may be from any legally 417 permissible funding sources of the responsible public entity, 418 including the proceeds of debt issuances. A responsible public 419 entity may use the model financing agreement provided in s. 420 489.145(6) for its financing of a facility owned by a 421 responsible public entity. A financing agreement may not require 422 the responsible public entity to indemnify the financing source, 423 subject the responsible public entity’s facility to liens in 424 violation of s. 11.066(5), or secure financing by the 425 responsible public entity with a pledge of security interest, 426 and any such provisions are void. 427 (d) A responsible public entity shall appropriate on a 428 priority basis as required by the comprehensive agreement a 429 contractual payment obligation, annual or otherwise, and the 430 required payment obligation must be appropriated before other 431 noncontractual obligations of the responsible public entity. 432 (10) POWERS AND DUTIES OF THE PRIVATE ENTITY.— 433 (a) The private entity shall: 434 1. Develop or operate the qualifying project in a manner 435 that is acceptable to the responsible public entity in 436 accordance with the provisions of the comprehensive agreement. 437 2. Maintain, or provide by contract for the maintenance or 438 improvement of, the qualifying project if required by the 439 comprehensive agreement. 440 3. Cooperate with the responsible public entity in making 441 best efforts to establish interconnection between the qualifying 442 project and any other facility or infrastructure as requested by 443 the responsible public entity. 444 4. Comply with the comprehensive agreement and any lease or 445 service contract. 446 (b) Each private facility that is constructed pursuant to 447 this section must comply with the requirements of federal, 448 state, and local laws; state, regional, and local comprehensive 449 plans; the responsible public entity’s rules, procedures, and 450 standards for facilities; and any other conditions that the 451 responsible public entity determines to be in the public’s best 452 interest and that are included in the comprehensive agreement. 453 (c) The responsible public entity may provide services to 454 the private entity. An agreement for maintenance and other 455 services entered into pursuant to this section must provide for 456 full reimbursement for services rendered for qualifying 457 projects. 458 (d) A private entity of a qualifying project may provide 459 additional services for the qualifying project to the public or 460 to other private entities if the provision of additional 461 services does not impair the private entity’s ability to meet 462 its commitments to the responsible public entity pursuant to the 463 comprehensive agreement. 464 (11) EXPIRATION OR TERMINATION OF AGREEMENTS.—Upon the 465 expiration or termination of a comprehensive agreement, the 466 responsible public entity may use revenues from the qualifying 467 project to pay current operation and maintenance costs of the 468 qualifying project. If the private entity materially defaults 469 under the comprehensive agreement, the compensation that is 470 otherwise due to the private entity is payable to satisfy all 471 financial obligations to investors and lenders on the qualifying 472 project in the same way that is provided in the comprehensive 473 agreement or any other agreement involving the qualifying 474 project, if the costs of operating and maintaining the 475 qualifying project are paid in the normal course. Revenues in 476 excess of the costs for operation and maintenance costs may be 477 paid to the investors and lenders to satisfy payment obligations 478 under their respective agreements. A responsible public entity 479 may terminate with cause and without prejudice a comprehensive 480 agreement and may exercise any other rights or remedies that may 481 be available to it. The full faith and credit of the responsible 482 public entity may not be pledged to secure the financing of the 483 private entity. The assumption of the development or operation 484 of the qualifying project does not obligate the responsible 485 public entity to pay any obligation of the private entity from 486 sources other than revenues from the qualifying project unless 487 stated otherwise in the comprehensive agreement. 488 (12) SOVEREIGN IMMUNITY.—This section does not waive the 489 sovereign immunity of the state, any responsible public entity, 490 any affected local jurisdiction, or any officer or employee 491 thereof with respect to participation in, or approval of, any 492 part of a qualifying project or its operation, including, but 493 not limited to, interconnection of the qualifying project with 494 any other infrastructure or project. A county or municipality in 495 which a qualifying project is located possesses sovereign 496 immunity with respect to the project, including, but not limited 497 to, its design, construction, and operation. 498 (13) CONSTRUCTION.—This section shall be liberally 499 construed to effectuate the purposes of this section. 500 (a) This section does not limit any state agency or 501 political subdivision of the state in the acquisition, design, 502 or construction of a public project pursuant to other statutory 503 authority. 504 (b) Except as otherwise provided in this section, this 505 section does not amend existing laws by granting additional 506 powers to, or further restricting, a local governmental entity 507 from regulating and entering into cooperative arrangements with 508 the private sector for the planning, construction, or operation 509 of a facility. 510 (c) This section does not waive any requirement of s. 511 287.055. 512 Section 2. This act shall take effect July 1, 2013.