SB-0627, As Passed Senate, December 1, 2016

SUBSTITUTE FOR

SENATE BILL NO. 627

A bill to authorize certain public authorities to develop

certain eligible projects and to enter into certain agreements; to

impose certain conditions on those agreements; to impose certain

powers and duties on certain state and local officials and

employees; to authorize the financing of certain eligible projects;

and to exempt certain property from certain taxes.

THE PEOPLE OF THE STATE OF MICHIGAN ENACT:

Sec. 1. This act shall be known and may be cited as the

"Michigan alternative project delivery act".

Sec. 3. As used in this act:

(a) "Develop" or "development" means the study, planning,

design, acquisition, construction, reconstruction, rehabilitation,

improvement, repair, financing, management, operation, or

maintenance of an eligible project and any other service related to

an eligible project. Develop or development also includes the

imposition, charging, assessment, collection, and enforcement of

user fees related to an eligible project.

(b) "Eligible project" means 1 or more of the following:

(i) A transportation project.

(ii) A facility project.

appurtenance, or other real property necessary or desirable for the

delivery of health care or laboratory facilities. Facility project

also includes services related to the delivery of health care or

laboratory facilities.

(d) "Local unit of government" means 1 or more of the

following:

(i) A county.

(ii) A city.

(iii) A township.

(iv) A village.

(v) A school district.

(vi) An intermediate school district.

(vii) A community college.

(viii) A public university.

(ix) An authority of an entity described in this subdivision.

(e) "Private party" means a person that is not the United

States, another nation, this state, another state, or a local unit

of government, or a political subdivision of the United States,

another nation, this state, another state, or a local unit of

Senate Bill No. 627 as amended December 1, 2016

government.

(f) "Public authority" means this state<<, a state department, or

a state agency. >>

(g) "Public-private agreement" means an agreement between a

public authority and 1 or more private parties for the development

of an eligible project. A public-private agreement may include 1 or

more local units of government.

(h) "Transportation project" means any roadway, railway,

transit system, building, structure, appurtenance, or other real

property used directly or indirectly in the transportation of

persons or the transportation or storage of goods, substances, or

vehicles. Transportation project also includes services related to

the transportation of persons or the transportation or storage of

goods, substances, or vehicles. A transportation project does not

include a bridge or other infrastructure directly associated with

an international border crossing.

(i) "User fees" means user fees, consumption charges, rents,

license fees, or similar or ancillary charges relating to the use

of eligible projects. User fees also include fees and charges for

creating, maintaining, and administering an account, including

credit card, bank, and similar fees and charges.

(j) "Work product" means any technical or financial concepts

that are 1 or more of the following:

(i) Included in a bidder's response to a request for

qualifications or in a bidder's proposal for the development of an

eligible project.

(ii) Submitted by a bidder for review by the public authority

in accordance with the public authority's request for

qualifications or request for proposals for the development of an

eligible project.

(iii) Raised by a bidder at a meeting with the public

authority prior to the due date for proposals, including any

alternative technical or financial concepts, ideas, innovation,

technology, techniques, methods, processes, unique uses of

commercial items, design concepts, solutions, construction means

and methods, project execution approach, drawings, reports, plans

and specifications, information, and submittals that constitute

intellectual property of the bidder for the development of an

eligible project.

(iv) Raised in any negotiations between the public authority

and a bidder prior to award and execution of a public-private

agreement.

Sec. 5. (1) A public authority may do 1 or more of the

following:

(a) Consider, compare, and implement various methods for

procuring and developing eligible projects, including methods that

are alternatives to methods traditionally used by the public

authority.

(b) Enter into public-private agreements to develop eligible

projects.

agreements, including, but not limited to, 1 or more of the

following:

(i) Agreements with financial, legal, and other consultants

with specialized knowledge to do 1 or more of the following:

(A) Assist in the study, planning, design, structuring,

drafting, procurement, evaluation, and negotiation of public-

private agreements.

(B) Assist in the administration of public-private agreements

and the operation or maintenance of eligible projects.

(ii) Agreements between the public authority and 1 or more of

the following:

(A) A private party.

(B) A private party's lenders.

(d) Work together with other public authorities to develop

eligible projects through public-private agreements.

(e) Bundle 2 or more eligible projects under 1 public-private

agreement.

(f) Procure services, award contracts, administer revenues,

appropriate funds of that public authority, and take any other

action as may be required in connection with the development of

eligible projects through public-private agreements.

(g) Subject to applicable law, exercise the power of eminent

domain to acquire property, permanent or temporary easements,

rights-of-way, or other rights in property that are necessary to

develop an eligible project, regardless of whether the property

will be owned in fee simple by the public authority or whether that

property will be leased to, licensed to, or operated by a private

party in connection with the development of the eligible project

through a public-private agreement.

Senate Bill No. 627 as amended December 1, 2016

(2) Nothing in this act expands the type of asset or provision

of type of services that a public authority is otherwise authorized

to develop under existing laws applicable to that public authority.

(3) A public-private agreement is subject to all of the

following, as applicable:

(a) The fair and open competition in governmental construction

act, 2011 PA 98, MCL 408.871 to 408.883.

(b) The local government labor regulatory limitation act, 2015

PA 105, MCL 123.1381 to 123.1396.

<<(4) A public authority shall hold a public hearing not less than every 5 years after the completion of an eligible project to conduct a public review of the eligible project.>>

Sec. 7. (1) Prior to developing an eligible project, a public

authority shall consider and compare various methods for the

development of an eligible project and identify the proposed

delivery method.

(2) Notwithstanding any other provision of state law, the

public authority may use any procurement method and process that

the public authority determines is appropriate to solicit private

parties and award public-private agreements under this act,

including, but not limited to, any of the following or combination

of the following, at the public authority's discretion:

(a) Calls for project proposals that private parties are

invited through a competitive process to submit to develop an

eligible project.

(b) Competitive solicitations using 1 or more of requests for

qualifications, prequalification or short-listing of qualified

proposers, requests for proposals, preproposal meetings with

individual short-listed proposers, revised proposals, and final and

best offers.

authority determines that there is sufficient merit to pursue any

unsolicited proposal, reasonable opportunity for other persons to

submit competing proposals for consideration and possible contract

award is provided.

(d) Negotiations with 1 or more bidders prior to award.

(3) For any procurement in which the public authority issues a

request for qualifications, request for proposals, or similar

solicitation document, the request shall generally set forth the

factors that the public authority will evaluate when reviewing the

submittals. The public authority may, in its discretion, determine

which factors it will consider and the relative weight of those

factors in the evaluation process to obtain the best value for the

public authority. Evaluation methodologies for selection may

include best value, low bid or proposal, lowest responsible or

adjusted bid or proposal, qualifications-based selection, lowest

public contribution, most expansive project, or any combination of

the foregoing or any other evaluation methodology for selection

that the public authority determines appropriate for the eligible

project.

(4) The public authority may pay stipends or payments for work

product on terms and conditions and in the amounts as determined in

the public authority's discretion in the following circumstances,

or in other circumstances that the public authority determines to

be appropriate in its discretion:

(a) To short-listed or prequalified bidders if the public

authority cancels the procurement prior to the due date for

proposals in the request for proposals.

(b) To bidders that submit a proposal provided that the public

authority determines that the proposal is responsive to the public

authority's request for proposals or similar solicitation document

and meets all requirements established by the public authority for

the eligible project.

(5) In exchange for a stipend or payment for work product, the

public authority may require the bidder to grant to the public

authority the right to use some or all of the work product

contained in the proposal.

(6) The public authority may identify in a request for

qualifications, request for proposals, or similar solicitation

document a process whereby bidders may request and receive

authorization to deviate from technical and financial

specifications, subject to demonstrating to the public authority

that the deviations provide the same or greater quality, utility,

function, and value.

(7) Notwithstanding any other provision of law, the public

authority may do 1 or more of the following:

(a) Provide exclusive protest remedies in its requests for

qualifications, requests for proposals, or similar solicitation

documents.

(b) Limit the rights of private parties responding to

solicitation documents to protest matters arising in connection

with the procurement.

documents expressly waive all other rights and remedies that may be

available under applicable law.

(8) Except as expressly provided otherwise in this subsection,

a writing prepared, owned, used, in the possession of, or retained

by the public authority in the performance of an official function

shall be a public record and shall be made available to the public

in compliance with the freedom of information act, 1976 PA 442, MCL

15.231 to 15.246. Documents and other analysis used in the

decision-making process and preparation of the procurement

documents and proposals shall not be subject to release or

disclosure by the public authority until final award and execution

of the public-private agreement and the conclusion of any protest

or other challenge to the award or the lapse of the protest period

without challenge, absent an administrative or judicial order

requiring such release or disclosure. However, if the public

authority decides not to pursue or complete an eligible project,

then documents and other analysis used in the decision-making

process or in the preparation of the procurement documents or

proposals not otherwise exempt from disclosure shall be a public

record and shall be made available to the public in compliance with

the freedom of information act, 1976 PA 442, MCL 15.231 to 15.246.

(9) The characterization by the private party of information

as being confidential trade secrets or commercial or financial

information exempt from disclosure is not binding upon the public

authority if the information is not afforded that protection under

this act or state law.

(10) When developing a facility project under a public-private

agreement, the public authority shall consult with the state budget

director regarding the future fiscal impact on the affected state

department, state agency, or authority of this state.

Sec. 9. (1) Any lawful source of public or private funding and

financing, or combination of these, may be utilized for the

development of an eligible project under this act.

(2) A public-private agreement may require the private party

to arrange for all or a portion of the financing required for the

eligible project. A public authority may also elect in its

discretion to contribute funds or financing required for the

eligible project in lieu of or in combination with funding or

financing arranged by the private party. A public authority may

elect in its discretion to participate with the private party in

any gains realized through revenue sharing, cost-saving sharing

agreements, or the refinancing of the eligible project, as

determined by the public authority in its discretion.

(3) A public authority may accept from the United States, any

state, or a local unit of government or any political subdivision

of the United States, any state, or a local unit of government

funds or credit assistance as is available to it for carrying out

the purposes of this act, whether the funds are made available by

grant, loan, guaranty, line of credit, or other financing

arrangement. A public authority may enter into these arrangements

and other agreements with the United States, any state, or a local

unit of government or any political subdivision of the United

States, any state, or a local unit of government, as may be

necessary, proper, and convenient for carrying out the purposes of

this act. A public authority may seek allocation for, issue, and

provide for the issuance of private activity bonds under applicable

federal, state, or local programs, including as described in 26 USC

141. A public authority may apply for or facilitate the application

for or secure financing from any source and make funds available to

1 or more private parties either directly or through other public

authorities.

(4) A public authority may accept from any source any grant,

donation, gift, or other form of conveyance of land, money, other

real or personal property, or other valuable thing made to the

public authority for carrying out the purposes of this act.

(5) A public authority may impose and collect user fees,

increase the user fees, and use lawful measures to enforce the user

fees or authorize another person to impose, collect, increase, and

enforce the user fees to the same extent as available to the public

authority. Subject to the public-private agreement, the use,

application, and sharing of collected user fees shall be determined

by the public authority. User fees may be imposed, charged, and

collected by manual, digital, or electronic means, including by

video, transponder, tag, camera, and any other suitable technology

or means. A public-private agreement may also include a schedule,

formula, or mechanism for the adjustment of user fees during the

term of the public-private agreement.

(6) Bonds, notes, and other obligations may be issued under

applicable law for the purposes of providing funding for an

eligible project. Revenues, including user fees, generated or

received pursuant to a public-private agreement may be directed to

a segregated account and pledged for the repayment of bonds, notes,

Senate Bill No. 627 as amended December 1, 2016

or other obligations without appropriation. Bonds, notes, or other

obligations supported by revenue received from or payments made

pursuant to a public-private agreement shall not be considered a

debt of this state. Any financing may be structured on a senior,

parity, or subordinate basis with any other financing or funding.

<<(7) Notwithstanding any other provision of this act, if any property of a public authority is leased, at the conclusion of the lease the property remains property of the public authority.>>

Sec. 11. (1) A public-private agreement may include 1 or more

of the following provisions:

(a) Provisions addressing the allocation and management of

project risks, including, but not limited to, design, construction,

geotechnical, delay, permitting, governmental approvals, change of

law, utility adjustments, change in utility costs, operations and

maintenance, force majeure, insurance availability and costs,

inflation, and financing risks.

(b) Provisions addressing payments on terms determined by the

public authority, including, but not limited to, milestone

payments, progress payments, availability or service fee payments,

and other compensation.

of its contractors provide proposal, performance, or payment

security. Performance or payment security if required may be in the

amounts determined by the public authority and in the form of

bonds, guarantees, letters of credit, committed equity, or any

other type of financial instrument, or any combination of these,

each as determined by the public authority.

(d) Provisions requiring that the private party lease or lease

back or otherwise be granted licenses, rights of entry, or rights

to operate the eligible project through the term of the public-

private agreement.

(e) Provisions requiring that either the public authority or

the private party provide the utilities required during the

development of the eligible project, including the right and

authority to adjust, relocate, or protect-in-place existing

utilities.

(f) Provisions allowing or requiring the use of arbitration or

other alternative dispute resolution procedures to resolve disputes

between the parties to a public-private agreement. The alternative

dispute resolution procedures may include, but are not limited to,

binding or nonbinding process, arbitration or mediation, the

establishment of a board to hear disputes, or resort to the courts.

(g) Provisions establishing criteria for determining

substantial completion, final acceptance, occupancy, or service

readiness of the eligible project and any applicable commissioning

of the eligible project.

(h) Provisions addressing the public authority's requirements

for programming, operations, use, and change in use of the eligible

project and flexibility to expand, rehabilitate, or reconstruct the

eligible project.

(i) Provisions addressing, as applicable, the operations,

maintenance, and facilities management services, including

maintenance and renewal, to be provided by the private party, the

public authority, or third parties.

(j) Provisions addressing responsibility for maintenance and

rehabilitation in order for an eligible project to meet the

standards determined by the public authority, in its discretion, at

Senate Bill No. 627 as amended December 1, 2016

the end of the term of the public-private agreement.

(k) Provisions specifying events of default and remedies

available to the private party, the public authority, and third

parties.

(l) Provisions setting forth the technical standards and

specifications with which the private party must comply.

(m) Provisions that provide requirements for insurance with

the coverages and deductibles as determined by the public authority

to be appropriate in its discretion.

(n) Provisions regarding the maintenance and auditing of the

private party's books and records.

(2) A public-private agreement shall not be entered into for

an initial period exceeding 50 years from final acceptance or

occupancy or service readiness of the eligible project, as

applicable.

<<(3) A public-private agreement may not prohibit a public authority from constructing, repairing, reconstructing, or expanding a facility that competes for user fees with the eligible facility developed under the public-private agreement.>>

Sec. 13. (1) The authority granted under this act supplements

and is independent of any existing authority and does not limit,

replace, or detract from existing authority.

(2) This act does not affect or impair a public-private

agreement or other agreement entered into before the effective date

of this act.

(3) Nothing in this act shall be construed to prevent a public

authority or a local unit of government from using other legal

authority to enter into public-private agreements or other

agreements for either of the following:

(a) For the development of eligible projects described under

this act.

(b) For the development of projects outside the scope of this

act.

Sec. 15. Property developed under and subject to a public-

private agreement shall be exempt from any and all state and local

ad valorem and other property taxes that otherwise might be

applicable.

Sec. 16. (1) A public authority may impose user fees as

provided in section 9(5).

(2) User fees shall be administered, collected, and enforced

as provided by law.

(3) In addition to other rights and remedies available to a

public authority or a private entity under a public-private

agreement, a person who fails to pay a user fee imposed for use of

a transportation project authorized by a public-private agreement

is liable for, and shall pay, 3 times the amount of the user fee.

In addition to other rights and remedies available to a public

authority or a private entity under a public-private agreement, if

the required sum remains unpaid for 180 days, the public authority

or another person authorized to do so by the public authority may

bring a civil action against the person to collect the unpaid sum

in a court having jurisdiction. If the civil action results in a

judgment against the defendant, the defendant shall also be

required to reimburse the plaintiff for all costs of enforcement

and collection, including filing and legal fees.

(4) During the period that a person owes and has failed to pay

user fees for a transportation project under subsection (3), the

person and a motor vehicle owned or leased by the person may be

barred from using the transportation project.

(5) Except as provided in section 675b of the Michigan vehicle

code, 1949 PA 300, MCL 257.675b, involving leased vehicles, proof

that a particular vehicle used a transportation project without

payment of an applicable user fee, together with proof from the

department of state of the name of the vehicle's registered owner,

creates a presumption that the vehicle's registered owner was the

person who used the transportation project, who failed to pay the

user fee, and who is prima facie responsible for the unpaid user

fees. If the conditions of section 675b of the Michigan vehicle

code, 1949 PA 300, MCL 257.675b, are satisfied, the lessee or

renter of a motor vehicle and not the leased vehicle owner is the

person liable under this section, for which purposes the person

that gives notice of unpaid user fees to the vehicle's registered

owner shall be given the notice that would otherwise be given to

the clerk of the court or parking violations bureau under section

675b of the Michigan vehicle code, 1949 PA 300, MCL 257.675b.

Sec. 17. Nothing contained in this act shall limit or modify

the rights and powers of law enforcement officers to enforce

traffic violations and other laws upon any eligible project

developed under this act or the subject of a public-private

agreement.