Hampered by inadequate revenues for roads and highways, the state of Oregon is turning to creative thinking to meet system needs. Amidst development of new concepts such as statewide mileage fees and bundling of bridge repairs in design-build format, Oregon is also entering the entrepreneurial world of public-private partnerships.

Legislation for Oregon Public-Private Ventures

Through passage of Senate Bill 772, the 2003 Oregon Legislature gave the Oregon Department of Transportation (ODOT), private entities, and units of government expansive opportunities for partnership in Oregon transportation projects. These opportunities are embedded in a new legislatively mandated program called the Oregon Innovative Partnerships Program. Separated yet coordinated with traditional ODOT processes, the Innovative Partnerships Program will allow achievement of SB 772’s defined goals for development of an expedited project delivery process and maximization The innovative partnership arrangements that can be formed under this new program are constrained by few statutory restrictions and have potentially broad applications. Eligible projects include “any undertaking that facilitates any mode of transportation” in Oregon.

SB 772 removes a number of state impediments to forming innovative partnerships:

• Allows private sector partners to enter transportation projects as early as the conceptual stage of project development.

• Allows ODOT to solicit proposals, or accept unsolicited proposals, for transportation projects from private firms or units of government.

• Maintains confidentiality of proprietary information submitted with a transportation project proposal and protects negotiations while maintaining public transparency for project development.

• Exempts transportation projects undertaken by ODOT under the authority of the Innovative Partnerships Program from most requirements of the state procurement law. Thus, ODOT may streamline processes for the selection of partners, including prequalification of potential partners.

Program Formation

ODOT is currently in the process of implementing the Innovative Partnerships Program. The complexities of innovative partnerships require employment of outside expertise to assist ODOT in organizing the program and subsequently soliciting, evaluating, and negotiating proposals. The Oregon Innovative Partnership Unit (IPU) staff have surveyed the industry and identified a pool of highly qualified firms to provide this assistance, many of whom represent only public clients, thus avoiding potential conflicts of interest.

With the assistance of selected consultants, IPU staff will develop the following over the next 12 months:

• Administrative Rulemaking

• Operating procedures

• Public involvement and outreach plans

• Intergovernmental coordination strategies

• Integration plan for Innovative Partnerships Program projects with the ODOT project development and delivery process

• Contract templates

• Project evaluation and negotiation strategies

• Risk assessment processes and risk management philosophy

• Project identification criteria

• Qualification processes for potential partners

Administrative Rulemaking

Among the first steps in program development is the establishment of the administrative rules that will govern the program. IPU staff are working with the Oregon Department of Justice to develop proposed rules to be filed with the Secretary of State in February 2004.

The proposed rules will assign to the Oregon Transportation Commission the approval role for project election, proposal solicitations, proposal selection, and approval of partnership agreement. The proposed rules will also create:

• Minimum requirements for submitted proposals, including disclosure requirements for proposal submitters.

• A process for acceptance or rejection of proposals.

• Defined processes for management of unsolicited proposals, including provision for a competitive proposal process.

• Consultation with local governments on issues related to project selection and proposal evaluation.

• Definition of the extent of confidentiality for submitted information.

• A process for suspension of unsolicited proposals for specified categories of projects.

• Special rules for bi-state projects.

Features of Oregon's Public-Private Partnership Legislation

• Establishes a State Transportation Enterprise Fund to pledge moneys to secure debt obligations relating to public-private transportation projects.

• Authorizes bonding of transportation project revenues under a public-private agreement.

• Allows grant anticipation revenue bonds (based on future Federal funds) for public-private initiatives.

• Allows financing arrangements available under TIFIA for public-private initiatives.

• Expands the ability of the Oregon Transportation Infrastructure Fund to assist in financing a public-private transportation project, including ensuring repayment of loan guarantees on behalf of private entities.

• Allows public-private transportation projects to be financed by funds or property contributed by private entities or units of government.

• Expands ODOT’s authority to use eminent domain to allow private sector ownership of any transportation project facilities.

• Allows formation of districts to require all revenues from revenue sources collected within the district from the transportation project to be used exclusively for the benefit of the district.

Conclusion

Oregon intends not to be bound by the constraints of traditional road funding. While certainly not a panacea for road finance problems, the Innovative Partnerships Program will allow Oregon to explore the practical limits of private sector participation in transportation projects. Fear of innovation will not block resolution of the state’s bottlenecks, choke points, and impediments to commerce.