S-4555.2
SUBSTITUTE SENATE BILL 6277
State of Washington 68th Legislature 2024 Regular Session
By Senate Transportation (originally sponsored by Senators Liias,
King, Hunt, Nobles, and Shewmake)
READ FIRST TIME 02/05/24.
1 AN ACT Relating to creating a new statutory framework for the use
2 of public-private partnerships for transportation projects; amending
3 RCW 47.56.030, 47.56.031, and 70A.15.4030; adding a new section to
4 chapter 47.10 RCW; adding a new chapter to Title 47 RCW; repealing
5 RCW 47.29.010, 47.29.020, 47.29.030, 47.29.040, 47.29.050, 47.29.060,
6 47.29.070, 47.29.080, 47.29.090, 47.29.100, 47.29.110, 47.29.120,
7 47.29.130, 47.29.140, 47.29.150, 47.29.160, 47.29.170, 47.29.180,
8 47.29.190, 47.29.200, 47.29.210, 47.29.220, 47.29.230, 47.29.240,
9 47.29.250, 47.29.260, 47.29.270, 47.29.280, and 47.29.290; and
10 providing an effective date.
11 BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF WASHINGTON:
12 NEW SECTION. Sec. 1. FINDINGS. (1) The legislature finds that a
13 full set of project procurement, contracting, and funding tools are
14 needed to enable the delivery of transportation projects in a manner
15 most advantageous to the public. Current public-private partnership
16 laws have failed to spur innovative proposals from the private sector
17 or new project delivery approaches from the department. The
18 legislature confirms the findings from previous studies that current
19 laws and administrative processes are the primary obstacle impairing
20 the state's ability to utilize public-private partnerships.
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 1 (2) The legislature finds that a new public-private partnership
2 law is needed to:
3 (a) Transparently demonstrate and deliver better value for the
4 public including, but not limited to, expedited project delivery and
5 more effective management of project life-cycle costs;
6 (b) Provide an additional option for delivering complex
7 transportation projects;
8 (c) Incorporate private sector expertise and innovation into
9 transportation project delivery;
10 (d) Allocate project risks to the parties best able to manage
11 those risks;
12 (e) Allow new sources for private capital;
13 (f) Increase access to federal funding and financing mechanisms;
14 (g) Better align private sector incentives with public
15 priorities; and
16 (h) Provide consistency in the review and approval processes for
17 the full range of project delivery tools and contracting methods.
18 NEW SECTION. Sec. 2. DEFINITIONS. The definitions in this
19 section apply throughout this chapter unless the context clearly
20 requires otherwise.
21 (1) "Commission" means the transportation commission.
22 (2) "Department" means the department of transportation.
23 (3) "Eligible project" means any project eligible for development
24 under section 4 of this act.
25 (4) "Private sector partner" and "private partner" means a
26 person, entity, or organization that is not the federal government, a
27 state, or a political subdivision of a state.
28 (5) "Public funds" means all moneys derived from taxes, fees,
29 charges, tolls, or other levies of money from the public.
30 (6) "Public sector partner" and "public partner" means any
31 federal or state unit of government, bistate transportation
32 organization, or any other political subdivision of any state.
33 (7) "State finance committee" means the entity created in chapter
34 43.33 RCW.
35 (8) "Transportation project" means a project, whether capital or
36 operating, where the state's purpose for the project is to preserve
37 or facilitate the safe transport of people or goods via any mode of
38 travel.
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1 (9) "Unit of government" means any department or agency of the
2 federal government, any state or agency, office, or department of a
3 state, any city, county, district, commission, authority, entity,
4 port, or other public corporation organized and existing under
5 statutory law or under a voter-approved charter or initiative, and
6 any intergovernmental entity created under chapter 39.34 RCW or this
7 chapter.
8 NEW SECTION. Sec. 3. WASHINGTON STATE DEPARTMENT OF
9 TRANSPORTATION POWERS AND DUTIES. (1) The department shall develop
10 policies and, where appropriate, adopt rules to carry out this
11 chapter and govern the use of public-private partnerships for
12 transportation projects. At a minimum, the department's policies and
13 rules must address the following issues:
14 (a) Consistent with section 4 of this act, the types of projects
15 allowed;
16 (b) Consistent with section 7 of this act, a process and
17 methodology for determining whether a public-private partnership
18 delivery model will be in the public's interest;
19 (c) Consistent with section 12 of this act, a process and
20 methodology for determining whether a negotiated partnership
21 agreement will result in greater public value to the state than if
22 the project is delivered using other procurement and contracting
23 methods;
24 (d) The types of contracts allowed, with consideration given to
25 the best practices available;
26 (e) Minimum standards and criteria required of all proposals;
27 (f) Procedures for the proper identification, solicitation,
28 acceptance, review, and evaluation of projects, consistent with
29 existing project procurement and contracting requirements and
30 practices;
31 (g) Criteria to be considered in the evaluation and selection of
32 proposals that includes:
33 (i) Comparison with the department's internal ability to complete
34 the project that documents the advantages of completing the project
35 as a partnership versus solely as a public venture; and
36 (ii) Factors such as, but not limited to: Priority, life-cycle
37 cost, risk sharing, scheduling, innovation, and management
38 conditions;
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 1 (h) The protection of confidential proprietary information while
2 still meeting the need for transparency and public disclosure that is
3 consistent with section 13 of this act;
4 (i) Protection for local contractors to participate in
5 subcontracting opportunities;
6 (j) Specifying that maintenance issues must be resolved in a
7 manner consistent with chapter 41.80 RCW;
8 (k) Guidelines to address security and performance issues.
9 (2) Preliminary rules, policies, and guidelines developed under
10 this section must be submitted to the chairs and ranking members of
11 both transportation committees by November 30, 2026, for review and
12 comment, prior to final adoption by the department.
13 NEW SECTION. Sec. 4. ELIGIBLE PROJECTS. (1) Projects eligible
14 for development under this chapter include transportation projects.
15 (2) For any project that requires the imposition of tolls on a
16 state facility, the legislature must approve the imposition of such
17 tolls consistent with RCW 47.56.820.
18 (3) For any project that requires setting or adjusting toll rates
19 on a state facility, the commission has sole responsibility
20 consistent with RCW 47.56.850.
21 NEW SECTION. Sec. 5. ELIGIBLE FINANCING. (1) Subject to the
22 limitations in this section, the department may, in connection with
23 the evaluation of eligible projects, consider any financing
24 mechanisms from any lawful source, either integrated as part of a
25 project proposal or as a separate, stand-alone proposal to finance a
26 project. Financing may be considered for all or part of a proposed
27 project. A project may be financed in whole or in part with:
28 (a) The proceeds of grant anticipation revenue bonds authorized
29 under 23 U.S.C. Sec. 122 and applicable state law. Legislative
30 authorization and appropriation are required to use this source of
31 financing;
32 (b) Grants, loans, loan guarantees, lines of credit, revolving
33 lines of credit, or other financing arrangements available under the
34 transportation infrastructure finance and innovation act under 23
35 U.S.C. Sec. 181 et seq., or any other applicable federal law;
36 (c) Infrastructure loans or assistance from the state
37 infrastructure bank established under RCW 82.44.195;
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 1 (d) Federal, state, or local revenues, subject to appropriation
2 by the applicable legislative authority;
3 (e) User fees, tolls, fares, lease proceeds, rents, gross or net
4 receipts from sales, proceeds from the sale of development rights,
5 franchise fees, or any other lawful form of consideration. However,
6 projects financed by tolls must first be authorized by the
7 legislature under RCW 47.56.820;
8 (f) Loans, pledges, or contributions of funds, including equity
9 investments, from private entities.
10 (2) Subject to subsection (4) of this section, the department may
11 develop a plan of finance that would require either the state or a
12 private partner, or both, to: Issue debt, equity, or other securities
13 or obligations; enter into contracts, leases, concessions, and grant
14 and loan agreements; or secure any financing with a pledge of funds
15 to be appropriated by the legislature or with a lien or exchange of
16 real property.
17 (3) As security for the payment of any financing, the revenues
18 from the project may be pledged, but no such pledge of revenues
19 constitutes in any manner or to any extent a general obligation of
20 the state, unless specifically authorized by the legislature. Any
21 financing described in this section may be structured on a senior,
22 parity, or subordinate basis to any other financing.
23 (4) The department shall not execute any agreement, including any
24 agreement that could materially impact the state's debt capacity or
25 credit rating, without prior review and approval of the plan of
26 finance and proposed financing terms by the state finance committee.
27 NEW SECTION. Sec. 6. USE OF FEDERAL FUNDS OR OTHER SOURCES. (1)
28 The department may accept from the United States or any of its
29 agencies such funds as are available to this state or to any other
30 unit of government for carrying out the purposes of this chapter,
31 whether the funds are made available by grant, loan, or other
32 financing arrangement. The department may enter into such agreements
33 and other arrangements with the United States or any of its agencies
34 as may be necessary, proper, and convenient for carrying out the
35 purposes of this chapter, subject to subsection (2) of this section.
36 (2)(a) The department may accept from any source any grant,
37 donation, gift, or other form of conveyance of land, money, other
38 real or personal property, or other valuable thing made to the state
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1 of Washington, the department, or a local government for carrying out
2 the purposes of this chapter.
3 (b) Any eligible project may be financed in whole or in part by
4 contribution of any funds or property made by any private entity or
5 public sector partner that is a party to any agreement entered into
6 under this chapter.
7 NEW SECTION. Sec. 7. PUBLIC INTEREST FINDING. (1) The
8 department may evaluate projects that are already programmed for
9 other delivery methods to determine their appropriateness for
10 delivery under a public-private partnership model.
11 (2) Before entering into a formal solicitation or procurement to
12 develop a project as a public-private partnership, the department
13 must make formal findings that utilizing a public-private partnership
14 delivery method is in the public's interest. The department must
15 adopt rules detailing the process and criteria for making such
16 findings. At a minimum, the criteria must consider whether:
17 (a) Public ownership of the asset can be retained;
18 (b) Transparency during the consideration of a public-private
19 partnership agreement can be provided;
20 (c) Public oversight of the private entity's management of the
21 asset can be provided; and
22 (d) Additional criteria that reflects the legislative findings in
23 section 1 of this act.
24 (3) Upon a finding of public interest pursuant to subsection (2)
25 of this section, the department must provide written notification of
26 their finding of public interest and intent to deliver the project as
27 a public-private partnership to the general public, to the chairs and
28 ranking members of the transportation committees of the legislature,
29 and to the governor.
30 (4) Before commencing any solicitation to deliver the project as
31 a public-private partnership, the department must provide an
32 opportunity for public comment on the proposed project and delivery
33 method.
34 (5) Upon a finding of public interest pursuant to subsection (2)
35 of this section, the department may:
36 (a) Solicit concepts or proposals for the identified public-
37 private partnership project from private entities and units of
38 government;
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1 (b) Evaluate the concepts or proposals received under this
2 section. The evaluation under this subsection must include
3 consultation with any appropriate unit of government; and
4 (c) Select potential projects based on the concepts or proposals.
5 NEW SECTION. Sec. 8. USE OF FUNDS FOR PROPOSAL PURPOSES. (1)
6 The department may spend such moneys as may be necessary for stipends
7 for respondents to a solicitation, the evaluation of concepts or
8 proposals for eligible projects, and for negotiating agreements for
9 eligible projects authorized under this chapter. Expenses incurred by
10 the department under this section before the issuance of
11 transportation project bonds or other financing must be paid by the
12 department and charged to the appropriate project. The department
13 must keep records and accounts showing each charged amount.
14 (2) Unless otherwise provided in the omnibus transportation
15 appropriations act, the funds spent by the department under this
16 section in connection with the project must be repaid from the
17 proceeds of the bonds or other financing upon the sale of
18 transportation project bonds or upon obtaining other financing for an
19 eligible project, as allowed by law or contract.
20 NEW SECTION. Sec. 9. EXPERT CONSULTATION. The department may
21 consult with legal, financial, technical, and other experts in the
22 public and private sector in the evaluation, negotiation, and
23 development of projects under this chapter.
24 NEW SECTION. Sec. 10. CONTRACTED STUDIES. In the absence of any
25 direct federal funding or direction, the department may contract with
26 a private developer of a selected project proposal to conduct
27 environmental impact studies and engineering and technical studies.
28 NEW SECTION. Sec. 11. PARTNERSHIP AGREEMENTS. (1) The following
29 provisions must be included in any transportation project agreement
30 entered into under the authority of this chapter and to which the
31 state is a party:
32 (a) For any project that proposes terms for stand alone
33 maintenance or asset management services for a public facility, those
34 services must be provided in a manner consistent with any collective
35 bargaining agreements, chapter 41.80 RCW, and civil service laws that
36 are in effect for the public facility;
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 1 (b) A finding of public interest, as issued by the department
2 pursuant to section 7 of this act;
3 (c) If there is a tolling component to the project, it must be
4 specified that tolling technology used in the project must be
5 consistent with tolling technology standards adopted by the
6 department for transportation-related projects;
7 (d) Provisions for bonding, financial guarantees, deposits, or
8 the posting of other security to secure the payment of laborers,
9 subcontractors, and suppliers who perform work or provide materials
10 as part of the project;
11 (e) All projects must be financed in a manner consistent with
12 section 6 of this act.
13 (2) At a minimum, agreements between the state and private sector
14 partners entered into under this section must specifically include
15 the following contractual elements:
16 (a) The point in the project at which public and private sector
17 partners will enter the project and which partners will assume
18 responsibility for specific project elements;
19 (b) How the partners will share management of the risks of the
20 project;
21 (c) The compensation method and amount for the private partner,
22 establishing a maximum rate of return, and identifying how project
23 revenue, if any, in excess of the maximum rate of return will be
24 distributed;
25 (d) How the partners will share the costs of development of the
26 project;
27 (e) How the partners will allocate financial responsibility for
28 cost overruns;
29 (f) The penalties for nonperformance;
30 (g) The incentives for performance;
31 (h) The account