Under current regulations, only Maryland’s Transportation Department has the authority to pursue public-private partnerships. The measure would expand that power to the state’s Department of General Services — the umbrella agency responsible for nearly all procurement, buildings and construction.
It would allow the state to lease public assets for up to 50 years and would set up a process for companies to make unsolicited proposals to take over management of state facilities.
In exchange for constructing roads or buildings or upgrading existing ones, the state would guarantee investors a stable return or free them to operate the facilities as for-profit businesses if they share with the state a percentage of earnings.
Developers building roadways or bridges would most often turn a profit with a share of tolls, although other arrangements could include the state entering long-term leasing agreements to pay back investors.
House Democrats, however, have not stopped there. Last week, they amended the bill multiple times, adding another controversial element that would make it easier for the state and private investors to proceed quickly once they agree on a deal.
The House version of the legislation imposes deadlines for court challenges from losing investors or others objecting to such arrangements. It also gives the state and its private partners new powers to seek the dismissal of such lawsuits.
The most controversial revision was the House Democrats’ vote to apply the restrictions retroactively. Maryland has entered four public-private partnerships under current law. One of the partnerships has successfully created thousands of construction jobs and upgraded facilities at a Baltimore port terminal in exchange for turning over long-term control of the facility to private enterprises. The other three have been or are being challenged in court.
This month, the state approved a $500 million plan to turn over control of two Interstate 95 travel plazas — Maryland House and Chesapeake House — to a Spanish company for 35 years. The company will construct buildings and manage them for what an executive said is expected to be a return on investment in the “mid-teens” over the life of the contract. The company that currently operates the two rest areas charged that the state unfairly let the Spanish company change its proposal in private negotiations with state officials.
State Center controversy
More consequentially, the bill could short-circuit a recent decision by a court-appointed special master to force the O’Malley administration to produce thousands of documents justifying its decision to bankroll an eight-city-block development in Baltimore that would house thousands of state employees.
Known as State Center, the potential $1.5 billion project is Maryland’s most expensive foray into privatization. The administration has maintained that the development is needed to get workers out of aging and, in some cases, unsafe state buildings. But opponents, including Baltimore Orioles owner Peter G. Angelos, have charged that the state will waste untold millions of dollars by paying roughly 40 percent more per square foot in rent than the going rate for vacant space in many office buildings.
Critics maintain that O’Malley has sought to use the State Center project as a way to subsidize redevelopment of a large swath of the city.
Aides to Brown, the administration’s point man on the bill, said he had not taken a position on the amendment that would affect State Center.
Del. Luiz R.S. Simmons (D-Montgomery), a defense lawyer, blasted the amendment Saturday, saying it had made the bill a “Trojan horse for the worst kind of special interest.”
Del. Maggie L. McIntosh (D-Baltimore) began the effort to amend the bill to limit court challenges. On the House floor Saturday, she urged lawmakers to move forward with the revision, arguing that it didn’t prescribe whether the state would win or lose, but only that the court must rule quickly “because time is money in development. Time is money when you’re trying to get a business in Maryland.”