The O’Malley administration estimates Maryland could raise up to $315 million a year from private investors to help pay for highways, bridges and other needed projects, Lt. Gov. Anthony G. Brown said Friday.
Some other states are doing more to tap into such financing, in which investors put up some of the money for infrastructure improvements and later share in the revenue streams, Brown told a forum of state officials and business leaders.
“Right now, Maryland doesn’t look attractive to the private sector because we don’t have a predictable process,” said Brown, who chairs a commission looking into the state’s prospects for more so-called public-private partnerships.
He told the forum at Baltimore City Community College that the state needs to streamline the way it conceives and evaluates such deals.
Brown said the administration expects to propose an improved framework for public-private deals when the General Assembly convenes in January. Among the thorny questions to be resolved is how to provide the appropriate oversight of such partnerships without setting up a process that deters investors from participating.
The concept has had support from Republicans in the past – and has been championed by GOP governors in other states – but could face opposition in Annapolis from foes of Democratic Gov. Martin O’Malley.
The Joint Legislative and Executive Commission on Oversight of Public-Private Partnerships released an estimate Friday that $205 million to $315 million of the state’s annual $3.1 billion capital budget – roughly 6 to 10 percent – could be raised through private sector deals. The panel estimated that projects built through such funding could yield 4,000 jobs.
Transportation is the area in which Maryland has made its biggest splash so far in the public-private arena, with its $140 million deal with Ports America Chesapeake to get the Seagirt Marine Terminal ready to handle larger container ships expected to call on East Coast ports when a widened Panama Canal opens in 2014.
In return for its investment, Ports America has been given a 50-year-lease under which it will manage the facility and take in a share of the revenue paid by shipping lines to use it.
While that January 2010 deal has been widely hailed as a model for public-private transportation deals, Maryland has announced none since then. Late last year, it pulled back from another potential deal – redevelopment of the two travel plazas on the John F. Kennedy Memorial Highway in Northeast Maryland – when a bid solicitation was poorly received by potential investors. The Maryland Transportation Authority is now testing the waters with a revised invitation for proposed deals.
The commission, which has two more meetings scheduled before it reports to O’Malley, is expected to make recommendations on how Maryland can do a better job of identifying opportunities and reaching agreements that will benefit both the public and investors.
In addition to Seagirt, the sate has other public-private partnership deals in place for housing projects at 7 state universities. Besides the travel plaza deal, others in the formative stages include the redevelopment of the State Center complex in Baltimore and construction of a new public health laboratory.
Maryland has lagged behind some of its neighbors, including Virginia and the District of Columbia, in tapping into private money for public projects. Among the proposed projects that Brown said could be considered for such financing are the Red Line and Purple Line light rail projects in Baltimore and suburban Washington and replacement of the U.S. 301 toll bridge over the Potomac River in Southern Maryland.
Brown noted that another commission recently proposed a 15-cent increase in the state’s 23.5-cent-a-gallon gas tax as a way to pay for an $800 million annual backlog in transportation projects.
While he did not suggest that increase wouldn’t be needed, he suggested it wouldn’t be enough in the long term.
“I don’t think we can raise the gas tax high enough in Maryland to address all of our transportation needs,” he said.
The idea of doing more with public-private partnerships has been considered in Maryland before. It surfaced during the administration of Republican Gov. Robert L. Ehrlich Jr., though he was unable to conclude any deals before losing his bid for re-election in 2006.
Notwithstanding a Republican administration’s interest in the concept, Del. Michael D. Smigiel Sr. said Friday that he thinks such deals are an invitation to “cronyism.”
“That’s going to happen no matter who you have in power,” said Smigiel, an Eastern Shore Republican.
Smigiel said he’d prefer to award government projects through traditional bidding, though without regulations that tie contractors’ hands.
In other states, specific public-private partnership deals have run into opposition. Most notably, former Pennsylvania Gov. Ed Rendell’s proposal to enter into a long-term lease of the Pennsylvania Turnpike was thwarted by its critics.
Brown emphasized that the money raised through public-private partnerships isn’t free. While the financing can be stretched out through such deals, he said that ultimately the users of the infrastructure will have to pay.
“The private investors, just like the public-issue bonds, have to be repaid over time,” Brown said.
