New Georgia Legislation for Public-Private Partnerships in Water

Last week, Georgia Governor Nathan Deal signed SB 122, which creates a new authority for private sector investors and water service companies to participate in water supply projects. Codified in new Georgia Code §§ 36-91-100 et seq., SB 122 does not overlap with existing statutes, but is a separate, independent authority that may prove useful at helping Georgia meet its future water supply needs, especially in light of the State Water Plan and ongoing restrictions on the use of Lake Lanier by metropolitan Atlanta.

The authority created by SB 122 extends to municipalities, counties, consolidated governments and local water authorities, which covers many local governmental units that are responsible for providing water supplies in Georgia. In addition, the statute allows multiple local authorities to work together on a project, with one agency acting as the designated lead. While the authority to initiate projects does not extend to state agencies, it does permit the state to cooperate with local authorities to facilitate projects or to assume a lead role upon the request of local authorities.

Private entities that are allowed to participate in projects under the act are private persons, firms, associations and corporations, which should cover most every interested party.

Although the legislation was billed for its usefulness in financing new reservoirs, covered projects include a laundry list of water supply infrastructure, such as reservoirs, dams, aqueducts, pipelines, mains, pumping stations, water distribution systems, treatment plants, wells, water meters, electric generating equipment, and any other facilities or equipment used to deliver water to households or businesses for residential, commercial, industrial or agricultural purposes. Virtually any water-related facility or equipment should qualify.

The private sector may participate in the planning, finance, construction, acquisition, operation and maintenance of such projects, or any combination of those actions. The lead local authority is responsible for determining the desirable levels of state, local and private sector participation, but is encouraged to seek input from all affected local governing authorities, the Georgia Environmental Finance Authority, applicable planning organizations and the private financial and construction sectors.

The process for seeking private sector participation uses the typical request for proposals, with a few oddities.

First, the local authority has considerable discretion to establish the factors that will be used to evaluate proposals “based upon a thorough assessment of value” (good), but also “the ability of the final project’s characteristics to meet the goals of the participating local governing authorities and local authorities, consistent with applicable state-wide and regional water plans and local comprehensive plans” (confusing). It is clear that proposals will not be judged based on lowest price, which is good, but with a strange mixture of unfettered discretion and bureaucratic clutter in the statute, it is not hard to imagine proposers feeling either that the factors have been established to favor one firm over others, or that innovative projects have been disfavored simply because they were not included in the prior planning efforts of visionless state employees. These deficiencies may be fixed through adoption of clear, reasonable and defensible evaluation factors.

Second, there is a mid-process public review period that is not entirely clear in its purpose. It is supposed to occur after proposals have been received but before selection, when proposals should still be confidential. Exactly what the public will be able to usefully comment on, and what the local authority will do with such comments, is unclear.

Third, the lead local authority may schedule interviews with each proposer before selection, but must invite all affected local governments, ostensibly even those opposed to the project. That seems unwieldy at best, and fraught with potential disaster at worst. Unfortunately, such an open process continues once a preferred proposer has been selected for negotiation of an agreement.

The legislation is not all bad, however, and it does contain some good changes from other states’ laws. For example, unlike the California Infrastructure Financing Act, SB 122 limits the term of agreements to a respectably long 50 years and does not prohibit state cost sharing for projects. In addition, project agreements may allow the private party to be reimbursed through service payments, user fees, or other consideration deemed appropriate, which is reasonably flexible. The state is required, to the maximum extent feasible, to expedite the issuance of permits, licenses and permissions from the United States, the State of Georgia and all local governing authorities.

In all, SB 122 may be useful for involving private sector investors and water service companies in water supply projects, if the process can be navigated through the potential storms described above. Of course, since the authority is discretionary, it remains to be seen whether any local authorities will take the Legislature up on its offer of private sector assistance. Hopefully, SB 122 can be put to use meeting critical public water supply needs for the State of Georgia.

Leave a Reply

Fill in your details below or click an icon to log in: Logo

You are commenting using your account. Log Out /  Change )

Facebook photo

You are commenting using your Facebook account. Log Out /  Change )

Connecting to %s