HB 485
Department of Legislative Services
Maryland General Assembly
2021 Session
FISCAL AND POLICY NOTE
Third Reader - Revised
House Bill 485 (Delegate Solomon)
Environment and Transportation and Education, Health, and Environmental Affairs
Appropriations and Budget and Taxation
Public-Private Partnerships and the Collection of Video Tolls
This emergency bill establishes the Public-Private Partnership Oversight Review Board,
alters the review and approval process for public-private partnerships (P3s) valued at more
than $500 million, and expands the requirements for all P3 agreements. It also requires the
Maryland Department of Transportation (MDOT) to complete a traffic analysis prior to
submitting a P3 agreement for the proposed expansion of Interstate 495 and Interstate 270
(I-495/I-270). The bill extends by three years the authorization in Chapter 547 of 2018 for
the Maryland Transportation Authority (MDTA) to recall unpaid video tolls from the
Central Collection Unit (CCU) and to waive a portion of the unpaid toll or civil penalty
under specified circumstances. It also specifies that P3 agreements for roads or bridges
may not include a noncompete clause that would inhibit any transit or road maintenance
projects (instead of only State-funded transit projects).
Fiscal Summary
State Effect: Likely no effect in FY 2021. General fund expenditures increase by
$238,400, and Transportation Trust Fund (TTF) expenditures increase by at least $75,000,
in FY 2022 to staff the board and conduct the traffic analysis, respectively; out-years reflect
ongoing staffing costs. General fund expenditures increase further beginning as early as
FY 2022 to conduct independent credit assessments and risk analyses when needed. Other
effects – due to extension of the termination date of Chapter 547 – continue through most
of FY 2024, as discussed below. The bill may negatively affect the viability and financing
of P3 projects by delaying their approval and redirecting revenues away from bondholders.
(in dollars) FY 2021 FY 2022 FY 2023 FY 2024 FY 2025
Revenues $0 $0 $0 $0 $0
GF Expenditure 0 238,400 229,500 231,900 234,800
SF Expenditure 0 75,000 0 0 0
Net Effect $0 ($313,400) ($229,500) ($231,900) ($234,800)
Note:() = decrease; GF = general funds; FF = federal funds; SF = special funds; - = indeterminate increase; (-) = indeterminate decrease
Local Effect: The bill does not materially affect local government operations or finances.
Small Business Effect: Minimal.
Analysis
Bill Summary:
Public-Private Partnership Oversight Review Board
The board is required to:
 review P3 presolicitation reports;
 make recommendations regarding the designation of a public infrastructure asset
as a P3;
 consult with a reporting agency in reviewing an unsolicited P3 proposal (which a
reporting agency must submit to the board for its review);
 review best practices regarding P3s; and
 monitor the implementation and operation of existing P3s.
The board is staffed by the Department of Legislative Services (DLS) and may request
technical assistance from the Treasurer, the Comptroller, or other appropriate agency.
Approval Process for P3s Valued at More Than $500 Million
The procedures described below apply only to P3 projects (or proposed projects) with a
value that exceeds $500 million. For the purpose of determining the total value of a project
that will be developed in phases, the total value is equal to the sum of the total value of
each phase of the project.
A reporting agency must submit a presolicitation report for a transportation facilities
P3 project to the P3 Oversight Review Board that must include separate reports for each
contract under the P3. Within 60 days of receiving the report, the P3 Oversight Review
Board must report and make recommendations to the Board of Public Works (BPW) and
the budget committees of the General Assembly. (For purposes of P3s, “budget
committees” is redefined to include the House Environment and Transportation Committee
rather than the House Committee on Ways and Means.) The budget committees, in
consultation with the appropriate policy committees, have 60 days to review and comment
on the board’s report and recommendations before BPW may designate the project as a P3.
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A copy of a proposed P3 agreement must be submitted to the Legislative Policy Committee
(LPC) and the P3 Oversight Review Board in addition to other entities in current law. BPW
may not approve the agreement until (1) either the budget committees or LPC, depending
on the timing, have reviewed and commented on the agreement; (2) independent
assessments of the impact on the State’s credit rating are completed for each contract in
the agreement by a financial advisor chosen by the State Treasurer; and (3) a risk analysis
with specified items is completed for each contract by a financial advisor chosen by the
State Treasurer.
Requirements for All P3 Agreements
If a reporting agency has determined that a P3 project will be developed in separate phases,
it must submit for approval separate presolicitation reports for each phase of the project.
A proposed P3 agreement must include financial information regarding each contractor
and any subcontractor that will provide products or services under the agreement.
For projects that require the State or a successor agency to take over operations and
maintenance of the project at a future date, the terms must specify that all toll revenue or
other charges be assigned to the State or a successor agency. In addition, the terms of the
P3 must require the reimbursement of the State for advanced project expenses, as specified.
I-495/I-270 Traffic Analysis
Prior to submitting a P3 agreement for the expansion of I-495/I-270 to BPW, MDOT must
complete and submit to BPW a traffic analysis on the impact of the COVID-19 pandemic
and resulting increases in telework throughout the region on the traffic patterns and volume
on the two interstate highways.
Current Law: Chapter 5 of 2013 established a new framework for the approval and
oversight of P3s. Chapter 5 defined a P3 as a method for delivering public infrastructure
assets using a long-term, performance-based agreement between specified State
“reporting” agencies and a private entity where appropriate risks and benefits can be
allocated in a cost-effective manner between the contract partners, in which:
 a private entity performs functions normally undertaken by the government, but the
reporting agency remains ultimately accountable for the public infrastructure asset
and its public function; and
 the State may retain ownership of the public infrastructure asset and the private
entity may be given additional decision making rights in determining how the asset
is financed, developed, constructed, operated, and maintained over its life cycle.
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A “public infrastructure asset” is a capital facility or structure, including systems and
equipment related to the facility or structure intended for public use.
Chapter 5 establishes the public policy of the State to utilize P3s, if appropriate, for
(1) developing and strengthening the State’s public infrastructure assets; (2) apportioning
between the public sector and the private sector the risks involved in the development and
strengthening of public infrastructure assets; (3) fostering the creation of new jobs; and
(4) promoting the State’s socioeconomic development and competitiveness. The public
policy also asserts that private entities that enter into P3s must comply with the provisions
of the Labor and Employment Article and the federal Fair Labor Standards Act.
BPW must approve all P3 agreements, but a reporting agency may not issue a public notice
of solicitation or request that BPW designate a project as a P3 until the Comptroller,
Treasurer, budget committees, and DLS have had at least 45 days to review and comment
on a presolicitation report that contains specified information (for transportation facilities
projects, the presolicitation report is submitted only to the budget committees and DLS).
Once a P3 agreement is formed, BPW may not approve the agreement until (1) a copy of
the agreement is submitted simultaneously to the Comptroller, Treasurer, budget
committees, and DLS; (2) the Treasurer, with the Comptroller, analyzes the agreement’s
effect on the State’s capital debt affordability limits and submits the analysis to the budget
committees and DLS; and (3) the budget committees have reviewed and commented on the
agreement within 30 days.
Reporting agencies may establish P3s in connection with any public infrastructure asset for
which they are responsible, and they may establish specific functions within their agencies
dedicated to P3s. P3 agreements may include provisions that are necessary to develop and
strengthen a public infrastructure asset.
P3 agreements involving road, highway, or bridge assets may not include a noncompete
clause that inhibits the planning, construction, or implementation of State-funded transit
projects.
Toll Violations and Chapter 547 of 2018
A motor vehicle incurs a video toll when the vehicle passes through an MDTA toll facility
(such as the Chesapeake Bay Bridge or Intercounty Connector) but does not pay the toll
using cash or an E-ZPass. MDTA is required to send the registered owner of a motor
vehicle that has incurred a video toll a notice of toll due. The owner then has 30 days to
pay the toll amount. An owner who fails to pay the amount due is subject to a civil citation
and civil penalty. The civil penalty amount is set by regulation and is currently $25.
(MDTA reduced the civil penalty amount from $50 to $25 effective July 1, 2020.)
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A person who receives an MDTA citation for failure to pay a toll (a toll violation) must
either pay the toll and penalty in the allotted timeframe or elect to go to court. If a person
fails to elect to stand trial or pay the prescribed video toll and civil penalty, is adjudicated
to be liable after trial, or fails to appear at a trial after having elected to stand trial, MDTA
may (1) collect the video toll and the civil penalty by any means of collection as provided
by law and (2) notify the Motor Vehicle Administration. MDTA may waive any portion of
a video toll due or civil penalty assessed for a toll violation until the debt is referred to
CCU.
Chapter 547 of 2018 expressly authorizes MDTA to recall a delinquent account from CCU
if (1) the account exceeds $300 in unpaid video tolls and associated civil penalties; (2) the
video tolls in question were assessed within a 30-day period; and (3) mitigating factors
exist with respect to the tolls and penalties, as determined by MDTA. Prior to the enactment
of Chapter 547, MDTA could only recall an account from CCU if there was an error with
the toll violation that was MDTA’s fault. Chapter 547 also authorizes MDTA to waive any
portion of unpaid tolls or penalties that are recalled from CCU. Chapter 547 is set to
terminate May 31, 2021; the bill extends the termination date to May 31, 2024.
State Fiscal Effect:
Public-Private Partnership Oversight Review Board
There is currently one major P3 project being carried out (the Purple Line) and another in
the solicitation/procurement process (the expansion of I-495/I-270). Each project is
extremely complex in design and operation and expected to cost billions of dollars. As the
bill requires the P3 Oversight Review Board to monitor the implementation and operation
of existing P3 projects on an ongoing basis, and board activities may often overlap with
the legislative session when DLS staff are fully committed, DLS requires additional staff
and consulting support to staff the board. Although the bill is an emergency measure, it is
assumed that staffing costs begin July 1, 2021.
Therefore, general fund expenditures increase by $238,367 in fiscal 2022, which accounts
for a start-up delay until July 1, 2021. This estimate reflects the cost of hiring one analyst
to staff the board on a full-time basis and contracting with a consultant with expertise in
the operation and financing of P3 projects. It includes a salary, fringe benefits, one-time
start-up costs, and ongoing operating expenses, including consulting fees.
Position 1.0
Salary and Fringe Benefits $82,622
Consulting Fees 150,000
Operating Expenses 5,745
Total FY 2022 DLS Expenditures $238,367
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Future year expenditures reflect a salary with annual increases and employee turnover and
ongoing operating expenses.
Independent Credit Rating Assessments and Risk Analyses
The bill requires the State Treasurer to select a financial advisor to conduct specified risk
and credit analyses, so it is assumed that the State Treasurer, rather than a reporting agency
or a private partner, must also pay for the analyses to be done. The State Treasurer’s Office
(STO) indicates that the cost of a single such analysis likely ranges from $79,000 to
$195,000. No expenditures are anticipated to be needed in fiscal 2021; a reliable estimate
for future years is not feasible because the bill requires two separate analyses for each
contract and it is not known how many different contracts will result from the I-495/I-270
P3 project or other proposed projects.
STO also advises that the 30-day timeframe (in current law) for completion of an
independent assessment likely limits the depth and scope of any such review.
I-495/I-270 Traffic Analysis
MDOT advises that a traffic analysis that examines only traffic volume on and around the
two highways costs approximately $75,000. The cost of the study increases if it involves
any simulations of future demand, purchasing historic traffic data, and other possible
features of the analysis. Accordingly, TTF expenditures increase by at least $75,000 in
fiscal 2022. Completion of the study likely delays and/or negatively affects the viability of
the project.
P3 Project Viability and Delays
Several provisions in the bill have the likely effect of delaying or extending the approval
process for future P3 projects and/or making them less viable. Additional reviews by the
oversight board likely extend the timeline for proposed projects. Also, the provision that
requires, when the State or a successor agency takes over a project, that revenues be
assigned to the State or the successor agency may dissuade investors in P3 projects to the
extent that they view that provision as potentially denying them a return on their
investment. To the extent that project delays or reduced investor interest in a P3 increase
the costs associated with major construction projects, those provisions may negatively
affect the financing of P3 projects.
Video Tolls and Penalties
The effects on nonbudgeted revenues, special fund revenues and expenditures, and general
fund revenues that have resulted from the implementation of Chapter 547 continue through
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most of fiscal 2024 due to the extension of the termination date. A precise estimate of the
effects of Chapter 547 – which continue under the bill – cannot be reliably estimated, as
the effects depend on (1) how many future accounts involve or will involve mitigating
factors that make them eligible for recall and (2) how much of the debt that is recalled and
collected or waived under Chapter 547 would have been collected by CCU in the absence
of the Act. However, the general effects – which continue under the bill – are summarized
below.
 MDTA nonbudgeted revenues decrease to the extent that MDTA recalls and waives
some or all of a customer’s outstanding tolls and penalties from CCU but increase
to the extent that doing so allows the collection of toll and penalty revenues that
would not have otherwise been collected. It is unclear whether the overall effect is
a net increase or decrease in revenues.
 CCU special fund revenues decrease to the extent that debt is recalled by MDTA
and, therefore, not collected by CCU. Special fund expenditures decrease
correspondingly as CCU spends less time and fewer of its resources attempting to
collect the recalled debt.
 General fund revenues also decrease (likely minimally) to the extent that debt is
recalled and collected by MDTA instead of CCU, because CCU reverts a portion of
the 17% fee it collects on outstanding debt back to the general fund. For the debt
that is recalled and collected by MDTA, this general fund revenue is lost.
For context, MDTA advises that during the first 13 months that Chapter 547 was in effect
(1 month in fiscal 2018 and all of fiscal 2019), MDTA recalled from CCU about
$6.5 million in outstanding toll violation debt. Of that total, approximately $1.0 million
was collected, approximately $5.4 million was waived, and approximately $90,000 is still
outstanding. Data for fiscal 2020 is not instructive because MDTA temporarily stopped
collections of toll violations due to the COVID-19 pandemic.
Additional Information
Prior Introductions: HB 1424 of 2020, a similar bill, passed the House as amended, but
no further action was taken on the bill.
Designated Cross File: SB 361 (Senator Rosapepe) - Education, Health, and
Envir