Michigan Likely to Pass on P3 Legislation This Year
Friday, February 07, 2014
Michigan HB 4925 would authorize the Michigan DOT to enter
into P3s for public transportation facilities. The PPP agreement shall
specify the amount of the payment and performance bonds or other security.
The concessionaire for the facility could provide a payment or performance bond
or a letter of credit. If bonds and letters of credit are not available
in reasonably sufficient amounts, the DOT could accept another commercially
reasonable form of security, including parent corporation guarantees, to
supplement available payment bonds, performance bonds, or letters of credit.
The DOT would have to require sufficient security to fulfill the purposes
of a payment and performance bond. In lieu of the concessionaire posting
the security, or to supplement the security posted, the DOT could accept bonds,
letters of credit, and other security from entities other than the
concessionaire so long as the purposes of a payment and performance bond are
SFAA has received reports that the bill is not going to move
this year in Michigan. The P3 issue has raised difficult partisan
political issues in the past when it was considered, even though there is
support for the use of P3s in Michigan. The governor’s office thinks that
there is enough authority in existing law to carry out the projects
currently under consideration as P3s and will go that route. The
sureties will have to monitor potential P3s in Michigan to assure that the
construction portions are bonded.
View PDF version (or visit Government Relations / Public-Private Partnerships (P3s) - Public)