State Survey of P3 Authorizing Statutes: Texas

Tex. Transp. Code Ann. §§ 222.001 thru 107

Summary

The law authorizes the DOT to participate in the cost of acquiring, constructing, maintaining, or operating a toll facility of a public or private entity, but specifies certain restrictions with regard to the use of public funds. The law allows the DOT to enter into an agreement with a public or private entity to pay pass‐through tolls to that entity as reimbursement for the design, development, financing, construction, maintenance, or operation of a toll or nontoll facility on the state highway system.

Tex. Transp. Code Ann. §§ 223.001 thru 223.210

Tex. Transp. Code Ann. Ch. 228

Tex. Transp. Code Ann. §§ 370.305 thru 370.317

Summary

The law authorizes DOT to enter into comprehensive development agreements with private entities to design, develop, finance, construct, maintain, repair, operate, extend, or expand toll projects. Certain portions of the law expired on Aug. 31, 2009, except in relation to certain non‐tolled managed lanes projects, which expired on Aug. 31, 2011. Chapter 228 relates to state highway toll projects, including county and voter approval requirements for conversion of a state highway to a toll road.

The law also authorized regional mobility authorities to use comprehensive development agreements with private entities to construct, maintain, repair, operate, extend, or expand transportation projects. This authority expired on Aug. 31, 2009, except provisions pertaining to certain non‐tolled and managed lanes projects, which expired on Aug. 31, 2011.

The private entity entering into a comprehensive development agreement under this subchapter must provide a performance and payment bond or an alternative form of security in an amount sufficient to ensure the proper performance of the agreement and protect the DOT and payment bond beneficiaries who have a direct contractual relationship with the private entity or a subcontractor of the private entity to supply labor or material.

The performance and payment bond or alternative form of security must be in an amount equal to the cost of constructing or maintaining the project. If the DOT determines that it is impracticable for a private entity to provide security in this amount, it shall set the amount of the bonds or the alternative security. The amount of the payment security must not be less than the amount of the performance security.

A payment or performance bond or alternative form of security is not required for the portion of an agreement that includes only design or planning services, the performance of preliminary studies, or the acquisition of real property.

Excerpt:

“Sec. 223.205. PERFORMANCE AND PAYMENT SECURITY. (a) Notwithstanding Section 223.006 and the requirements of Subchapter B, Chapter 2253, Government Code, the department shall require a private entity entering into a comprehensive developing agreement under this subchapter to provide a performance and payment bond or an alternative form of security in an amount sufficient to: (1) ensure the proper performance of the agreement; and (2) protect: (A) the department; and (B) payment bond beneficiaries who have a direct contractual relationship with the private entity to supply labor or material.”

Tex. Transp. Code Ann. §§ 366.401 thru 409

Summary

The law permits P3s for tollway projects for turnpikes.

The law requires the private entity to provide payment and performance bonds or alternate security for the cost of constructing and maintaining the project. If the tollway authority finds it impracticable for the private entity to provide bonds or security in the amounts required, the authority will set the amount of the bonds or alternative security. The law provides that the authority may require alternative security in lieu of or in addition to performance and payment bonds. The design and planning services, among other non‐construction items, do not have to be bonded.

Excerpt:

“Sec. 366.404. PERFORMANCE AND PAYMENT SECURITY. (a) Notwithstanding the requirements of Subchapter B, Chapter 2253, Government Code, an authority shall require a private entity entering into a comprehensive development agreement under this subchapter to provide a performance and payment bond or an alternative form of security in an amount sufficient to:

(1) Ensure the proper performance of the agreement; and

(2) Protect: (A) the authority; and, payment bond beneficiaries who have a direct contractual relationship with the private entity or a subcontractor of the private entity to supply labor or material.”

Tex. Gov’t Code Ann. §§ 2267 thru 2268

Summary

The law authorizes the use of P3s for the development of any ferry, mass transit facility, vehicle parking facility, port facility, power generation facility, fuel supply facility, oil or gas pipeline, water supply facility, public work, waste treatment facility, hospital, school, medical or nursing care facility, recreational facility, public building, or other similar public facility and its related infrastructure, or for any improvements necessary or desirable to unimproved real estate owned by a governmental entity.

The law requires performance and payment bonds that comply with the State’s Little Miller Act for all construction activities in the P3. Letters of credit could be required for the development and operation portions of the project.

Excerpt:

“Sect. 2267.058. (a) Before developing or operating the qualifying project, the contracting person must enter into a comprehensive agreement with a responsible governmental entity. The comprehensive agreement shall provide for:

(1) Delivery of letters of credit or other security in connection with the development or operation of the qualifying project, in the forms and amounts satisfactory to the responsible governmental entity, and delivery of performance and payment bonds in compliance with Chapter 2253 for all construction activities.

Sec. 2267.0605. (a) The construction, remodel, or repair of a qualifying project may be performed only after performance and payment bonds for the construction, remodel, or repair have been executed in compliance with Chapter 2253 regardless of whether the qualifying project is on public or private property or is public or privately owned.”

Tex. Transp. Code Ann. §§ 371.001 thru 153

Summary

The law sets forth the requirements for comprehensive development agreements for highway toll projects, including those developed by the state DOT, by a regional tollway authority, or by a regional mobility authority.

No surety bond language.