ANNAPOLIS, Maryland — The Maryland Board of Public Works would not be able to approve very large public-private joint projects in the state — including the governor’s planned highway widening project — until a credit check, environmental assessment and review from a committee are complete, under legislation advancing in the General Assembly.
House bill 1091, which passed the House on March 14, would require an independent credit rating report of companies participating in public-private partnership agreements — or P3s — costing over $500 million.
The report includes the credit strength of the private entity, impact on state and local government credit rating and a “recommendation of a minimum credit rating to be maintained by the private entity,” according to an analysis of the bill.
A Legislative Policy Committee would need to review all P3 agreements and an environmental impact statement would have to be completed before project approval, according to an analysis of the bill.
The state must be reimbursed for any design expenses and up-front payments, and the state or a successor will take on any toll revenue or other charges if they have to complete a P3 project, according to an analysis of the bill.
Maryland Gov. Larry Hogan, R, has released plans for a $9 billion to $11 billion traffic relief plan that could add four lanes to I-270 in Montgomery County, I-495 and the Baltimore-Washington Parkway, and is expected to use P3s to complete most of the project, according to an analysis of the bill.
The Department of Transportation is preparing an environmental impact statement for Hogan’s plan at the same time it is working to solicit bids. The Purple Line P3 project had its presolicitation report submitted after an environmental survey.
The plan would be completed in phases, with the first part of the project covering “I-495 from the George Washington Parkway in Virginia to I-95,” state Transportation Secretary Pete Rahn said in a written statement submitted to a House committee.
All seven alternatives to the project include Express or High Occupancy Toll Lanes, except for a “No Build” option.
Proponents of the legislation said the bill would not block Hogan’s project, rather it would delay the process so the state could ensure the plan is the best option to alleviate Maryland’s traffic problem.
“We’re not stopping the project, none of us are in favor of stopping traffic,” said Delegate Jared Solomon, D-Montgomery, sponsor of the legislation. “We want to make sure we’re doing this right.”
The point of the bill is to not waste time and resources by planning before parameters could change due to an environmental impact assessment and credit report, Solomon said.
“(The legislation) will have the tendency to slow down the project so we know for sure, up front, what the environmental impact will be (of) … the largest public-private partnership in America,” Delegate Kumar Barve, D-Montgomery, co-sponsor of the bill and chair of the House Environment and Transportation Committee, said.
“If you’re going to undertake a project like this, we should know what the environmental and financial risks are,” Delegate Marc Korman, D-Montgomery, co-sponsor of the bill, said.
Some bill proponents said the project wouldn’t solve all of the region’s traffic woes.
Even if traffic flows better on the highways, interior roads will still be unable to handle the volume of vehicles coming off exit ramps unless the number of cars on the road is reduced, Marc Elrich, Montgomery County executive, told lawmakers at the hearing on Wednesday.
But opponents of the bill said the state’s current law on P3s already provides enough oversight, and that construction needs to begin as soon as possible to prevent unnecessary costs and bring congestion relief to state commuters.
“Marylanders face the second-highest commuting times in the country,” Rahn said in a written statement submitted to lawmakers.
“At the very least, our assessment of (the bill) is that it will delay the project by two years,” costing Marylanders $1.3 billion per year in additional user costs, Rahn told lawmakers at the Senate committee on Wednesday.
Alabama, Colorado, New York, Texas and Virginia have all developed environmental studies at the same time of solicitation of P3 projects costing over $500 million, in order to be more efficient, Rahn wrote.
Public workshops are planned for spring to present a draft environmental impact statement, and the Department of Transportation will work to “avoid displacement of any residence,” Rahn wrote.
However, a small number of homes may be “impacted” by lane expansion, Rahn told lawmakers at the hearing on Wednesday, but wouldn’t specify whether any residences would be demolished.
At a joint committee hearing in January, Rahn said the cost to drivers would be less than those on the privately run portion of I-66 in Virginia, where tolls hit a high of $46.75 last year.
More recently, Rahn compared Hogan’s upcoming plan with what he said were two “successful” projects, the I-95 express toll lanes and the Intercounty Connector.
“The Federal Highway Administration in 2012 even notes that congestion pricing represents the single most viable and sustainable approach to reducing traffic congestion,” Rahn wrote.
However, the cost would have to be high enough to manage the amount of people on the roadways, Rahn said. “We want to reduce congestion, but it also has to be a solution that pays for itself.”
“The idea is to lessen the burden on taxpayers,” but the bill would do the opposite by adding “unnecessary layers of bureaucracy and time that will only serve to make the project more expensive,” and potentially chase away proposals, Susan Swift, executive director of Suburban Maryland Transportation Alliance, said.
The bill limits the inherent flexibility needed in P3 projects, because it would create onerous requirements for companies that would want to bid on building the road, Donald Fry, president and CEO of the Greater Baltimore Committee, said in a written statement to a House committee.
“In 2013, the state’s policy on P3s … created a system that provides certainty and predictability for the private sector,” Fry wrote. “House bill 1091 threatens the thoughtful process created by the Maryland General Assembly.”
The requirement for an environmental impact statement was taken from House bill 91, which had a hearing in January but was never voted out of committee. House bill 102, which would have allowed county governments to veto construction of toll roads, also never got a vote.
Brad German, co-chairman of Citizens Against Beltway Expansion, told Capital News Service that he was disappointed House bill 1091 was the only P3-related bill to pass the House.
However, the legislation could prevent “potential taxpayer liabilities that could be triggered” in the event of unpredicted delays in construction or lower-than-anticipated revenue from tolls, German said.
With only a few days left in the legislative session, time is running out for the bill to reach Hogan’s desk.
The committee will need to look at the bill for a few days before a vote, Sen. Bill Ferguson, D-Baltimore, vice-chair of the Budget and Taxation committee, told Capital News Service on Thursday.
If the bill is vetoed, the legislature will have to wait until next session to attempt to override the governor, which may be after Hogan’s highway project gets the green light, Barve said.
“Most of our work is done,” Barve said. “It takes two to tango, and the ball is in the Senate’s court right now.”