Louisiana passes public-private partnership bill for toll road project to Port of New Orleans

Louisiana recently passed a law that marks continued progress towards using public-private partnerships to help meet the state’s road infrastructure needs. Louisiana House Bill 687 will allow the Port of New Orleans to pursue a public-private partnership for the design, construction, and financing of a direct roadway from one of Interstate 10’s connections to the port’s new Louisiana International Terminal. 

Louisiana House Bill 687, co-sponsored by state Rep. Mark Wright (R), Rep. Jason Hughes (D), Rep. Shaun Mena (D), and Rep. Sylvia Taylor (D), and signed by Gov. Jeff Landry, follows last year’s approval of the I-10 Calcasieu River Bridge public-private partnership (P3), which was a significant turning point for improved infrastructure delivery in the state.

The Calcasieu Bridge P3 demonstrates how private capital and expertise can be harnessed to replace an aging, structurally deficient bridge without saddling taxpayers with all the up-front risk and costs.

In January 2024, Louisiana’s Department of Transportation and Development (DOTD) and Calcasieu Bridge Partners signed a $2.1 billion design-build-finance-operate-maintain public-private partnership contract. By July 2024, the state bond commission had approved state-level private activity bonds to finance the remaining capital costs of the project. The projected toll revenues from users of the bridge will fund debt service on those bonds as well as ongoing operations and maintenance.

The Calcasieu Bridge P3 arrangement locked in hard delivery milestones, shifted traffic and revenue risk onto investors, and preserved state budget capacity for other transportation priorities. Early indications suggest the new bridge will open more quickly and at a lower life-cycle cost than if it had followed a traditional pay-as-you-go or all-publicly funded model.

HB 687 wisely builds on this P3 momentum. Rather than defaulting to years of million-dollar studies, incremental state appropriations, and repeat bond issuances, the bill empowers the Port of New Orleans authority to seek a competitive P3 concession as its first procurement option for the St. Bernard Transportation Corridor roadway project. 

By making a design-build-finance-operate-maintain concession the default, the authority can attract qualified concessionaires for the project. Commuters will gain a modern multimodal corridor sooner, and taxpayers will have the confidence of private-sector due diligence at the contract table.

The geography and travel patterns of St. Bernard Parish make it a natural P3 candidate. Projected rising freight volumes over the next two decades through southeast Louisiana’s ports make a direct land connection to the Louisiana International Terminal a necessity, one better addressed sooner rather than later.

Additionally, the Louisiana International Terminal’s proximity to I-10’s connectors make it the shortest path to an interstate for the port terminal. The new corridor will also enhance hurricane evacuation capacity. 

During the legislative process, HB 687 received criticism from St. Bernard Parish residents, including the district attorney, who argued the bill lacked many safeguards and oversight mechanisms that typically come with a public-private partnership. However, HB 687’s approval simply allowed the Port of New Orleans to begin pursuing a public-private partnership. It did not approve any final designs, decisions, or otherwise relating to the Louisiana International Terminal (a separate contract and project) or the St. Bernard Transportation Corridor (the proposed roadway connecting the terminal more directly to I-10). It authorized the Port of New Orleans to start the process for the latter. Any P3, once the private partner or consortium is chosen, would still have to be approved by the Louisiana legislature. This mirrors the process undertaken for the Calcasieu River Bridge project.

HB 687 does not guarantee a successful P3 or project delivery. For example, the bill provides for tolling authority. While viable in P3s with high traffic levels, tolling may not be the best approach for a dedicated freight corridor. A well-structured availability-payment model would instead tie payments to maintaining evacuation-ready standards and keeping congestion relief metrics on track–exactly the accountability that traditional authorities too often lack.

A successful public-private partnership, and any P3 in Louisiana, will still have to undergo the full procurement process. This typically starts with a request for information (RFI), which explores private-sector interest and gathers feedback on the scope and approach of a proposed project. Then the project moves to a request for qualification (RFQ), which narrows the field of potential bidders to a short list of experienced, financially capable firms or consortia. Then, a request for proposals (RFP) is issued to those shortlisted firms to solicit proposals from those firms or consortia for a project. It typically outlines the project requirements and what aspects will be left to the private firm (for example, whether it’s a design-build-finance-operate-maintain contract or not). 

A successful public-private partnership has appropriate provisions for oversight, windfalls (if a toll is used), and conditions under which the contract can be broken and the asset retaken by the state of Louisiana if the concessionaire is found in breach of the contract. All of these will have to be revisited when a consortium or private partner is selected for whichever approach the Port of New Orleans and the state transportation department decide is the best pick, and is still contingent on the legislature’s approval.

With last year’s Calcasieu River Bridge P3 setting a high bar, House Bill 687 could be another step forward in making Louisiana a leader in infrastructure public-private partnerships. A well-executed St. Bernard Transportation Corridor, procured through a competitive public-private partnership, would yield faster timelines, stronger budget safeguards, and measurable performance guarantees–all while protecting public interests.

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Source: https://reason.org/commentary/louisiana-public-private-partnership-bill-road-port-new-orleans/