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What's New: Public-Private Partnerships (P3s)

New Texas P3 Guidelines Contain AIAI Provisions Requiring Bonding

Thursday, January 28, 2016  
The Texas Facilities Commission issued its Public Private Partnership (P3) late last year. The guidelines apply to all qualifying P3 projects under the Public and Private Facilities and Infrastructure Act in Chapter 2267 of the Texas Government Code. SFAA and its members worked through the Association for Investment in American Infrastructure (AIAI) to make recommendations for the contents of the guidelines based on AIAI’s best practices, which include bonding. The guidelines provide that the P3 agreement must include a requirement for the delivery of letters of credit or other security for the development or operation of the project, in the forms and amounts satisfactory to the public owner, and delivery of performance and payment bonds in compliance with Chapter 2253 of the Texas Government Code (Little Miller Act) for all construction activities. A copy of the guidelines is attached.

The new guidelines essentially apply to all non-transportation projects. The P3 laws for Department of Transportation (DOT) projects, however, still permit alternative forms of security in lieu of the payment and performance bonds under Chapters 223.205, 366.404 and 370.308 of the Transportation Code. These provisions allow a cashier’s check, U.S. bond or note, an irrevocable bank letter of credit or any other form of security that the DOT finds suitable.
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