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COMMITTEE ON GOVERNMENT OPERATIONS, VETERAN AFFAIRS AND CONSUMER PROTECTION BILL NO. 35-0058 Thirty- Fifth Legislature of the Virgin Islands March 24, 2023 An Act amending title 29 Virgin Islands Code, by adding a chapter 25 to enact The Public- Private Partnership Agreement Act PROPOSED BY: Senator Marise C. James Be it enacted by the Legislature of the Virgin Islands: 1 SECTION 1. Title 29 Virgin Islands Code is amended by adding a chapter 25 that reads 2 as follows: 3 “§ 1501. Short title 4 This chapter may be referred to and cited as “The Public-Private Partnership Agreement 5 Act.” 6 § 1502. Legislative findings, intent, and purpose 7 (a) The Legislature of the Virgin Islands finds that there is a public need for the 8 construction or upgrade of facilities that are used predominantly for public purposes, and that 9 it is in the public’s interest to provide for the construction or upgrade of these facilities. 10 (b) The Legislature also finds that: 11 (1) There is a public need for timely and cost-effective acquisition, design, 12 construction, improvement, renovation, expansion, equipping, maintenance, operation, 13 implementation, or installation of projects serving a public purpose, including airport and 14 2 seaport facilities, educational facilities, transportation facilities, water or wastewater 1 management facilities and infrastructure, technology infrastructure, roads, highways, 2 bridges, and other public infrastructure and government facilities within the Virgin 3 Islands that serve a public need and purpose, and that the public need may not be wholly 4 satisfied by existing procurement methods. 5 (2) There are inadequate existing local methods of procurement and financing to 6 develop these public infrastructures and government facilities for the benefit of residents 7 of the Virgin Islands, and a public-private partnership has demonstrated that it can meet 8 the needs by improving the schedule for delivery, lowering the cost, and providing other 9 benefits to the public. 10 (3) There may be local and federal tax incentives that promote partnerships 11 between public and private entities to develop and operate qualifying projects. 12 (4) A procurement under this chapter serves the public purpose if the 13 procurement facilitates the timely development or operation of a qualifying project. 14 (c) It is the intent of the Legislature to encourage investment in the Virgin Islands by 15 private entities; to promote the financing mechanisms, private capital, and other funding 16 sources for the development, management, and operation of qualifying projects to meet the 17 needs of the public; and to provide the greatest possible flexibility to public and private entities 18 contracting for the provision of public services. 19 (d) The purpose of a public-private partnership is to establish the goals, structure, roles, 20 and responsibilities of a collaborative working relationship between the Government of the 21 Virgin Islands and nongovernmental private partners. To ensure that these partnerships further 22 the interests of the people of the Virgin Islands, to preserve the integrity of the Government of 23 the Virgin Islands, and to avoid actual or apparent impropriety, the responsible public entity or 24 appropriate designated public officials may enter into partnerships only in accordance with the 25 provisions of this chapter. The public-private partnership must: 26 3 (1) Promote the development, financing, and operation of quality infrastructure 1 projects or services that serve the needs of the people of the Virgin Islands; 2 (2) Promote the use of private sector capital and resources to reduce the total 3 costs of public infrastructure projects or services; and 4 (3) Provide a well-defined mechanism to facilitate and manage collaboration 5 between the Government of the Virgin Islands and private entities. 6 § 1503. Definitions 7 As used in this chapter, except as otherwise specifically provided, the term: 8 (a) “Affected local jurisdiction” means the island, town, or district in which all 9 or a portion of a qualifying project is located. 10 (b) “Comprehensive Agreement” means an agreement between one or more 11 private entities and one or more responsible Government of the Virgin Islands 12 department, agency, or office, contractually providing for the arrangements and 13 responsibilities of all parties in developing or operating a qualifying project in a public- 14 private partnership. 15 (c) “Develop” means to plan, design, finance, lease, acquire, install, construct, or 16 expand. 17 (d) “Fees” means rates, costs, or other charges imposed by the private entity 18 partner on a qualifying project or service for use of all or part of a qualifying project 19 pursuant to a comprehensive agreement. 20 (e) “Interim agreement” means an agreement that authorizes the temporary 21 activities by the private entity partner related to the qualifying project during the 22 negotiation of a comprehensive agreement. 23 (f) “Lease payment” means any form of payment, including a land lease, by a 24 public entity to the private entity for the use of a qualifying project. 25 4 (g) “Material default” means a nonperformance of its duties by the private entity 1 of a qualifying project, as outlined in a comprehensive agreement, that jeopardizes 2 adequate service to the public from a qualifying project and is not remedied following 3 notice and a reasonable cure period. 4 (h) “Operate” means to finance, maintain, improve, equip, modify, or repair, or 5 operate a qualifying project. 6 (i) “Private entity” or “private partner” means any natural person, corporation, 7 general partnership, limited liability company, limited partnership, joint venture, 8 business trust, public benefit corporation, nonprofit entity, other private business entity, 9 or combination thereof. 10 (j) “Project labor agreement” means an agreement that sets forth the terms and 11 conditions for employment of manpower for a qualifying project and must, to the extent 12 possible, enhance employment opportunities for individuals residing in the affected local 13 jurisdiction. 14 (k) “Proposal” means any material, document, and plan with details beyond a 15 conceptual level prepared by or on behalf of a private entity, relating to a qualifying 16 project for which all terms determined to be necessary by the responsible public entity, 17 including costs, payment schedules, financing, deliverables, and project schedule, are 18 defined. 19 (l) “Public building, road, structure, infrastructure, or facility” means any site 20 building, road, structure, infrastructure, or facility used or to be used by the Government 21 to house a government function or functions, including any infrastructure or facility used 22 or to be used by the public or in support of a public purpose or activity. 23 (m) “Public-private agreement” means the agreement between a private entity 24 and the responsible public entity relating to the development, financing, or operation of 25 a qualifying project entered into under the provisions of this chapter. 26 5 (n) “Qualifying Project” means the development, construction, reconstruction, 1 repair, alteration, improvement, extension, operation, and maintenance of any public 2 road, structure, facility, or infrastructure that is used or will be used by the public at large 3 or in support of a public purpose or activity, including, but not limited to: 4 (1) airport or seaport facility; 5 (2) hospital, other medial healthcare, or nursing care facility; 6 (3) sporting, cultural, or recreational facility; 7 (4) civic or educational facility or other building that is used or will be used 8 by a public educational institution; 9 (5) transportation facilities such as roads, bridges, public transit systems, 10 ferry, port facilities; 11 (6) water, wastewater, water management facility, or other related 12 infrastructure; and 13 (7) telecommunications facilities. 14 (o) “Responsible public entity” means any department, board, commission, 15 committee, authority, agency, officer, or other political subdivision of the Government 16 or combination of entities, or other entity that serves a public purpose and is authorized 17 to develop or operate a qualifying project. 18 (p) “Revenues” means all revenues including income; earnings; dedicated tax 19 revenues; fees; lease payments; federal, and local appropriations or the appropriations of 20 other funds available to any department, agency, authority, or instrumentality thereof; 21 bond proceeds; equity investments, service payments, or any combinations thereof 22 arising out of or in connection with supporting the development or operation of a 23 qualifying project, including money received as grants or otherwise from the United 24 States of America, from any public entity, or from any agency or instrumentality of the 25 foregoing in aid of the a qualifying project. 26 6 (q) “Service contract” means an agreement between a responsible public entity 1 and a private entity that defines the terms of the services to be provided with respect to a 2 qualifying project. 3 § 1504. Proposal procedures 4 (a) A responsible public entity may receive unsolicited proposals or may solicit 5 proposals from private partners for the development or operation of a qualifying project and 6 may thereafter enter into a comprehensive agreement with a private entity, or a consortium of 7 private entities, for the building, upgrading, operating, ownership, or financing of facilities. 8 (b) A request for proposal for a qualifying project must be advertised in a newspaper 9 of general circulation or on an appropriate public internet site for not less than 90 days before 10 the date established for submission of the proposals. The request for proposal must include 11 relevant technical submissions, documents, and the evaluation criteria to be used for the 12 selection of the respondent. 13 (c) If the qualifying project includes design work, the solicitation for proposal must 14 include a design criteria package prepared by an architect, a landscape architect, or an engineer 15 licensed in the Virgin Islands. The responsible public entity shall exercise its best effort to 16 retain the licensed design professional who prepares the design criteria package to serve on the 17 project until its completion. The design package must include sufficient, specific, relevant 18 information such as: 19 (1) the legal description of the site, with survey information; 20 (2) interior space requirements; 21 (3) material quality standards; 22 (4) schematic layouts and conceptual design criteria for the qualifying project; 23 (5) cost or budget estimates; 24 (6) design and construction schedules; and 25 (7) site development and utility requirements. 26 7 (d) If the responsible public entity receives an unsolicited proposal for a qualifying 1 project and the responsible public entity intends to enter into a comprehensive agreement for 2 the project, before entering into a comprehensive agreement, the responsible public entity shall 3 publish notice in a newspaper of general circulation at least once a week for two weeks. The 4 notice must: 5 (1) state that the responsible public entity has received a proposal and will accept 6 other proposals for the same project; 7 (2) set the timeframe within which the responsible public entity may accept other 8 proposals; however, the timeframe for allowing other proposals must not be less than 21 9 days, but not more than 120 days after the initial date of publication; and 10 (3) invite the public to submit to the responsible public entity written comments 11 on the project’s potential impact or compatibility with local budgets and infrastructure 12 plans. 13 (e) A responsible public entity may not charge a fee to cover the costs of processing, 14 reviewing, and evaluating proposals received in response to a solicited proposal request and 15 may establish a reasonable application fee to cover the cost to process and review an unsolicited 16 proposal. 17 (f) A private entity that submits an unsolicited proposal shall pay an initial application 18 fee, as determined by the responsible public entity. Payment must be made by cash, cashier’s 19 check, or another noncancelable instrument. Personal checks may not be accepted. 20 (g) If the initial application fee does not cover the costs to evaluate the unsolicited 21 proposal, the responsible public entity shall make a written request for the additional amounts 22 required. The private entity shall pay the requested additional amounts not later than 30 days 23 after receipt of the notice. The responsible public entity may stop its review of the unsolicited 24 proposal if the private entity fails to pay the additional amounts. The responsible public entity 25 shall return the application fee if it does not evaluate the unsolicited proposal. 26 8 (h) If the responsible public entity chooses to evaluate an unsolicited proposal 1 involving architecture, engineering, or landscape architecture, it shall request a professional 2 review and evaluation of the proposed design and construction by an architect, a landscape 3 architect, or an engineer licensed in the Virgin Islands to ensure material quality standards, 4 interior space utilization, budget estimates, design and construction schedules, and sustainable 5 design and construction standards consistent with public projects. The cost of the professional 6 review and evaluation must be covered by the application fee. 7 (i) Upon submitting a proposal, a private partner shall identify those portions of a 8 proposal that the partner considers to be a trade secret or confidential commercial, financial, or 9 proprietary information and provide any justification why the responsible public entity may 10 not disclose the materials upon request. For material to be exempt from disclosure, a private 11 partner shall fully comply with all applicable territorial laws. 12 (j) Patent information are covered until the patent expires. Other information, such as 13 originality of design or records of negotiation, are protected under this section until a 14 comprehensive agreement is reached. Projects under federal jurisdiction or using federal funds 15 must conform to federal regulations and are subject to information disclosure under the 16 Freedom of Information Act. 17 § 1505. Finding of public interest 18 (a) The responsible public entity may enter into a comprehensive agreement for the 19 development or operation of a qualifying project only after a due diligence review and a finding 20 that the proposed project: 21 (1) benefits the public; 22 (2) is for a facility that is owned by the responsible public entity or for a facility 23 for which ownership will be conveyed to the responsible public entity upon completion, 24 expiration, or termination of the comprehensive agreement and upon payment of the 25 amounts financed; 26 9 (3) has adequate safeguards in place to ensure that additional costs or service 1 disruptions are not imposed on the public if there is a material default or cancellation of 2 the comprehensive agreement by the responsible public entity; and 3 (4) has adequate safeguards in place to ensure that the responsible public entity 4 or private entity can add capacity to the proposed project or other facilities serving similar 5 predominantly public purposes. 6 (b) The responsible public entity shall also consider: 7 (1) the qualifying project cost; revenues by source; available financing; internal 8 rate of return on private investments, if governmental funds are assumed in order to 9 deliver a cost-feasible project; and a total cash-flow analysis beginning with the 10 implementation of the project and extending for the term of the comprehensive 11 agreement; 12 (2) the advantages or disadvantages of developing or operating the qualifying 13 project as a public-private partnership versus a traditional procurement, including the 14 anticipated cost over the project life cycle, adjusted for risk and risk transfers; 15 (3) sources of funding and financing for the qualifying project; 16 (4) the general reputation, qualifications, industry experience and financial 17 capacity of the private partner; 18 (5) the proposal’s compatibility with Virgin Islands infrastructure plans; 19 (6) any comments received from the public on the project’s potential impact or 20 compatibility with local budgets and infrastructure plans; and 21 (7) any other criteria that the responsible public entity considers appropriate. 22 § 1506. Project approval requirement 23 (a) Before entering into a comprehensive agreement with a private partner, the 24 responsible public entity shall obtain information to show that the partnership will serve the 25 desired purposes and protect the valuable associated resources of the Virgin Islands. 26 10 (b) The responsible public entity shall: 1 (1) obtain an independent audit of the proposed private-public partnership, 2 including an assessment of projected usage and public costs; 3 (2) as necessary, engage consultants and experts at any point to assist in the 4 evaluation, negotiation, development, or operation of qualifying projects; and 5 (3) consider a reasonable finance plan; the qualifying project cost; revenues by 6 source; available financing; major assumptions; internal rate of return on private 7 investments, if governmental funds are assumed to deliver a cost-feasible project; and 8 perform a total cash-flow analysis, beginning with the implementation of the project and 9 extending for the term of the comprehensive agreement. 10 (c) In addition to the requirements set forth in subsection (b), for an unsolicited 11 proposal, the responsible public entity shall require the private entity to submit a technical 12 study prepared by a nationally recognized expert with experience in preparing analysis for bond 13 rating agencies. In evaluating the technical study, the responsible public entity may rely upon 14 internal staff reports prepared by personnel familiar with the operation of similar facilities or 15 the advice of external advisors or consultants who have relevant experience. 16 (d) Unless waived by the responsible public entity, the private entity shall provide: 17 (1) a description of the qualifying project, including the conceptual design of the 18 facilities or a conceptual plan for the provision of services, and a schedule for the 19 initiation and completion of the qualifying project; 20 (2) a description of the method by which the private entity proposes to secure the 21 necessary property interests that are required for the qualifying project; 22 (3) a description of the private entity’s general plans for financing the qualifying 23 project, including the sources of the private entity’s funds and the identity of any 24 dedicated revenue source or proposed debt or equity investment on behalf of the private 25 entity; 26 11 (4) any pricing or financial terms included in an unsolicited proposal must be 1 specific as to when the pricing or terms expire; 2 (5) the name and address of a person who may be contacted for additional 3 information concerning the proposal; 4 (6) the proposed user fees, lease payments, or other service payments over the 5 term of a comprehensive agreement and the methodology for and circumstances that 6 would allow changes to the user fees, lease payments, and other service payments over 7 time; and 8 (7) additional material or information that the responsible public entity 9 reasonably requests. 10 § 1507. Project qualification and process 11 (a) The private entity, or the applicable party or parties of the private entity’s team, 12 shall meet the minimum industry professional standards to be awarded the qualifying project. 13 (b) The responsible public entity shall take certain safeguards to ensure that: 14 (1) Provision is made for the private entity’s performance and payment of 15 subcontractors, including, but not limited to, surety bonds, letters of credit, parent 16 company guarantees, and lender and equity partner guarantees; and 17 (2) The most efficient pricing of the security package provides for the 18 performance and payment of subcontractors. 19 (c) For the components of the qualifying project which involve construction 20 performance and payment, bonds are required and are subject to the recordation, notice, suit 21 limitation, and other requirements of 31 V.I.C. § 236 or other applicable provisions. 22 (d) After the public notification period has expired for an unsolicited proposal, the 23 responsible public entity shall: 24 12 (1) Rank the proposals received in order of preference; taking into consideration 1 factors that include, but are not limited to professional qualifications, general business 2 terms, innovative design techniques or cost-reduction terms, and finance plans; 3 (2) Perform an independent analysis of the proposed public-private partnership 4 which demonstrates the cost-effectiveness and overall public benefit before the 5 procurement process is initiated or before the contract is awarded; and 6 (3) Charge a reasonable fee to cover any additional costs of processing, 7 reviewing, and evaluating the proposal, including, but not limited to, reasonable attorney 8 fees; fees for financial and technical advisors or consultants; independent experts to 9 review, analyze, and advise the responsible public entity; and for other necessary advisors 10 or consultants. 11 (e) The responsible public entity may then begin negotiations for a comprehensive 12 agreement with the highest-ranked private entity. If the responsible public entity is not satisfied 13 with the results of the negotiations, the responsible public entity may terminate negotiations 14 with the highest-ranked private entity and negotiate with the second-ranked or subsequent- 15 ranked private entities. 16 (f) If only one proposal is received, the responsible public entity may negotiate in good 17 faith with that private entity, if the proposal meets the project approval requirements. If the 18 responsible public entity is not satisfied with the results of the negotiations, the responsible 19 public entity may terminate negotiations with the private entity. 20 (g) The responsible public entity may reject all proposals at any point in the process 21 until a contract with an acceptable proposer is executed. 22 § 1508. Project approval 23 (a) The responsible public entity may approve the development, construction, repair, 24 alteration, improvement, extension, operation, or maintenance of a public infrastructure or a 25 government facility if: 26 13 (1) The responsible public entity solicited proposals for the qualifying project or 1 there is a public need for, or benefit derived from a project of the type that the private 2 entity proposes as the qualifying project; 3 (2) The estimated cost of the qualifying project is reasonable in relation to similar 4 facilities; and 5 (3) The private entity’s plans will result in the timely acquisition, design, 6 construction, improvement, renovation, expansion, equipping, maintenance, or operation 7 of the qualifying project. 8 (b) Approval of a qualifying project is subject to entering into a comprehensive 9 agreement with the private entity. 10 (c) Upon approval of a qualifying project, the responsible public entity and the private 11 entity shall establish a date for the commencement of the qualifying project. The responsible 12 public entity and the private entity may extend the commencement date for a reasonable period. 13 § 1509. Interim agreement 14 (a) Before entering a comprehensive agreement, or during the negotiation of a 15 comprehensive agreement, the responsible public entity may enter into an interim agreement 16 with the private entity, which outlines the development or operation of the qualifying project. 17 An interim agreement: 18 (1) is discretionary and is not required; 19 (2) does not obligate the responsible public entity to enter into a comprehensive 20 agreement; and 21 (3) is limited to the provisions that: 22 (A) authorize the private entity to commence activities for which it may be 23 compensated related to the proposed qualifying project, including, but not limited 24 to, project planning and development, design, environmental analysis and 25 mitigation, survey, other activities concerning any part of the proposed qualifying 26 14 project and ascertaining the availability of financing for the proposed facility or 1 facilities; 2 (B) establish the process and timing of the negotiation of the 3 comprehensive agreement; and 4 (C) relate to an aspect of the development or operation of a qualifying 5 project that the responsible public entity and the private entity deem appropriate. 6 (b) A responsible public entity may enter into an interim agreement with multiple 7 private partners if the responsible public entity determines that is it in the public interest to do 8 so. The responsible public entity must reduce to writing its findings that justifies entering into 9 an interim agreement with multiple private partners. 10 (c) The parties may proceed directly to a comprehensive agreement without the need 11 for an interim agreement. 12 § 1510. Terms of the comprehensive agreement 13 (a) Notwithstanding the existence of an interim agreement between the responsible 14 public entity and a private entity, before developing or operating a qualifying project, the 15 private entity partner that submitted the selected proposal shall enter into a comprehensive 16 agreement with the responsible public entity. The comprehensive agreement, in addition to 17 other contract terms stipulating the obligations of the parties, must include provisions 18 addressing the following: 19 (1) a description of which party will assume responsibility for specific project 20 elements and the deadlines for performing those responsibilities; 21 (2) the allocation of risk management among the parties; 22 (3) the allocation among the parties of the development costs or operation of the 23 project; 24 (4) the delivery of performance and payment bonds, letters of credit, or other 25 security required under Virgin Islands law and acceptable to the responsible public entity 26 15 in connection with the development or operation of the qualifying project in the form and 1 amount satisfactory to the responsible public entity. For the components of the qualifying 2 project which involve construction, the form and amount of the bonds must comply with 3 31 V.I.C. § 236 or other applicable provisions. 4 (5) a provision for the review and approval of the design for the qualifying 5 project by the responsible public entity; but this does not require the private entity to 6 complete the design of the qualifying project before the execution of the comprehensive 7 agreement; 8 (6) a provision for the inspection and monitoring of the qualifying project by the 9 responsible public entity to ensure that the private entity’s activities and maintenance 10 practices are acceptable and that the qualifying project is properly maintained; 11 (7) the private entity’s maintenance of a policy of public liability insurance, a 12 copy of which must be filed with the responsible public entity and accompanied by proofs 13 of coverage, or self-insurance, each in the form and amount satisfactory to the responsible 14 public entity and reasonably sufficient to ensure coverage of tort liability and to enable 15 the continued operation of the qualifying project; 16 (8) periodic filing by the private entity of the appropriate financial statements 17 that pertain to the qualifying project; 18 (9) terms and conditions that govern the rights and responsibilities of the parties 19 during the construction and operation of the qualifying project, and in the event of the 20 termination of the comprehensive agreement or a material default by either party; 21 (10) the duties of the private entity, including the terms and conditions that the 22 responsible public entity determines serve the public purpose. 23 (11) the fees, lease payments, or service payments as may be established by 24 agreement of the parties; and 25 16 (12) a provision by which a private entity expressly agrees that it is prohibited 1 from seeking injunctive or other equitable relief to delay, prevent or otherwise hinder the 2 responsible public entity from developing or operating any project that was planned and 3 that may impact the revenue that the private partner may derive from the qualifying 4 project under a public-private partnership, except that the comprehensive agreement may 5 provide for reasonable compensation to the private partner for the adverse effect on 6 revenues resulting from an unplanned revenue impacting project. 7 (b) The comprehensive agreement may include: 8 (1) A provision providing that the responsible public entity may make grants or 9 loans to the private entity from amounts received from the federal or local government 10 or an agency or instrumentality thereof; 11 (2) A provision under which each entity agrees to provide notice of default and 12 cure rights for the benefit of the other entity, including, but not limited to, a provision 13 regarding unavoidable delay; 14 (3) A provision that terminates the authority and duties of the private entity under 15 this section and dedicates the qualifying project to the responsible public entity or to the 16 affected local jurisdiction for public use; 17 (4) The allocate financial responsibility for cost overruns; 18 (5) Safeguards to mitigate additional costs or service disruptions to the public in 19 the event of material default or cancellation of the agreement; 20 (6) Performance standards and any damages for nonperformance; 21 (7) performance incentives; 22 (8) Accounting and auditing standards to be used to evaluate the financing of the 23 qualifying project; 24 (9) Provision that the qualifying project contain a project labor agreement 25 subject to Virgin Islands law and is in a manner that, to the greatest extent possible, 26 17 enhances employment opportunities for individuals residing in the affected local 1 jurisdiction; 2 (10) For a project that reverts to public ownership, the responsibility for 3 reconstruction or renovations required for a qualifying project to meet all applicable 4 government standards upon reversion to the public entity or to the affected local 5 jurisdiction for public use; and 6 (11) Such other terms and conditions agreed to mutually by the responsible public 7 entity and private entity. 8 (c) The comprehensive agreement may provide for fees as agreed by the parties. The 9 comprehensive agreement may: 10 (1) authorize the private entity to impose fees on the public for the use of the 11 facility; 12 (2) permit the responsible public entity to develop new facilities or increase 13 capacity in existing facilities; 14 (3) permit the responsible public entity to lease existing fee-for-use facilities; 15 and 16 (4) provide that a negotiated portion of revenues from fee-generating uses may 17 be returned to the responsible public entity over the life of the comprehensive agreement. 18 (d) The terms adopted pursuant to subsection (a)(9) must also address the assumption 19 of the duties and responsibilities of the private entity by another entity that funded, in whole or 20 part, the qualifying project or by the responsible public entity; the responsible public entity’s 21 assumption of the development or operation of the qualifying project does not obligate it to pay 22 any obligation of the private entity from sources other than revenues from the qualifying project 23 unless stated otherwise in the comprehensive agreement. The procedures must also provide 24 for the transfer or purchase of property or other interests of the private entity by the responsible 25 public entity. 26 18 (e) The fees provided for in subsection (a)(11) must be the same for persons using the 1 facility under like conditions and must not materially discourage use of the qualifying project. 2 Fees or lease payments established in the comprehensive agreement as a source of revenue may 3 be in addition to, or in lieu of, service payments. 4 § 1511. Duties of the private entity 5 The private entity shall: 6 (1) Develop or operate the qualifying project in a manner that is acceptable to the 7 responsible public entity in accordance with the provisions of the comprehensive agreement. 8 (2) Maintain or contract for the maintenance or improvement of the qualifying project 9 if required by the comprehensive agreement. 10 (3) Cooperate with the responsible public entity in making best efforts to establish 11 interconnection between the qualifying project and any other facility or infrastructure as 12 requested by the responsible public entity in accordance with the provisions of the 13 comprehensive agreement. 14 (4) Comply any lease or service contract. 15 (5) Complete each qualifying project in a manner that complies with the requirements 16 of federal and territorial laws; the comprehensive plan; the responsible public entity’s rules, 17 procedures, and standards for facilities; and such other conditions that the responsible public 18 entity determines to be in the public’s best interest and that are included in the comprehensive 19 agreement. 20 (6) Provide additional services for the qualifying project to the public or to other 21 private entities if the provision of additional services does not impair the private entity’s ability 22 to meet its commitments to the responsible public entity pursuant to the comprehensive 23 agreement. 24 (7) Pay each worker employed by the private entity that has entered into a public- 25 private partnership agreement pursuant to this chapter a wage that is not less than the prevailing 26 19 wage rate for the worker’s craft or trade as determined by the Virgin Islands Department of 1 Labor. 2 § 1512. Eligible funding and financing 3 (a) Financing of a qualifying project may be in such amounts and upon such terms and 4 conditions as may be determined by the parties. The parties may use all revenues that may 5 be available to them and may, to the fullest extent permitted by applicable law: 6 (1) issue debt, equity, or other securities or obligations; 7 (2) enter into leases, concessions, and grant and loan agreements; 8 (3) access any designated territorial funds; 9 (4) borrow or accept grants from any commercial or infrastructure bank; and 10 (5) secure any other financing with a pledge of, security interest in, or lien on 11 any or all its property, including all its property interests in the qualifying project. 12 (b) A private entity may enter into a private-source financing agreement between 13 financing sources and the private entity. But any financing agreement or liens on the property 14 or facility must be paid in full at the closing that transfers ownership or operation of the facility 15 to the responsible public entity at the conclusion of the term of the comprehensive agreement. 16 (c) Prior to commencement of work on a qualifying project, the private entity shall 17 establish a construction account. The construction account must include the funding, financial 18 instruments, or both, that fully capitalizes and funds the project. The funds and instruments 19 must be held in trust for the benefit of the contractor, construction manager, and design-build 20 team. The funds and instruments in the construction account are not the property of the private 21 entity unless all amounts due to the construction account beneficiaries are paid in full. The 22 construction account may not be designated for more than one project. 23 (d) The responsible public entity may: 24 (1) lend funds to private entities; that construct projects containing facilities that 25 are approved under this chapter. 26 20 (2) use innovative finance techniques associated with a public-private 1 partnership, including, but not limited to, federal loans, commercial bank loans, and 2 hedges against inflation from commercial banks or other private sources; 3 (3) provide its own capital or operating budget to support a qualifying project, 4 which may be from any legally permissible funding sources including the proceeds of 5 debt issuances; 6 (4) use a financing agreement for its financing of a facility it owns; and 7 (5) take any action to obtain federal or territorial assistance for a qualifying 8 project that serves the purpose of this chapter and may enter into contracts required to 9 receive federal assistance. 10 (e) To the fullest extent allowed by law, federal and territorial monies may be 11 combined with any private sector monies for any qualifying project. 12 (f) A financing agreement obtained pursuant to subsection (a)(4) may not be used to 13 secure financing by a mortgage on, or security interest in, the real or tangible personal property 14 of the responsible public entity in a manner that could result in the loss of the fee ownership of 15 the property. Any such financing agreement is void. 16 (g) The full faith and credit of the responsible public entity may not be pledged to 17 secure the financing by the private entity for the qualifying project. 18 § 1513. Termination of agreement 19 (a) Upon the expiration or termination of a comprehensive agreement, the responsible 20 public entity may use revenues from the qualifying project to pay current operation and 21 maintenance costs of the qualifying project. 22 (b) If the private entity materially defaults under the comprehensive agreement, the 23 compensation or other payment that is otherwise due to the private entity is payable to satisfy 24 all financial obligations to investors and lenders on the qualifying project in the same way that 25 is provided in the comprehensive agreement or any other agreement involving the qualifying 26 21 project, if the costs of operating and maintaining the qualifying project are paid in the normal 1 course. Revenues more than the costs for operation and maintenance costs may be paid to the 2 investors and lenders to satisfy payment obligations under their respective agreements. 3 (c) A responsible public entity may terminate a comprehensive agreement for cause 4 and may exercise any right or remedy that may be available to it in accordance with the 5 provisions of the comprehensive agreement. 6 § 1514. Sovereign immunity 7 A responsible public entity or an officer or employee thereof does not waive sovereign 8 immunity with respect to participation in, or approval of, any part of a qualifying project or its 9 operation, including, but not limited to, the design, construction, and operation of a qualifying 10 project or the interconnection of the qualifying project with any other public infrastructure or 11 project. 12 § 1515. Construction of chapter 13 (a) This chapter must be liberally construed to effectuate the intended overarching 14 purpose of the chapter. This chapter is cumulative and supplemental to any other authority 15 vested in any local governmental entity and does not limit any local governmental entity in the 16 procurement or operation of a qualifying project pursuant to other regulatory or constitutional 17 authority. 18 (b) Except as otherwise provided, this chapter does not amend existing laws by 19 granting additional powers to, or further restricting any local governmental entity from, 20 regulating, and entering into cooperative arrangements with the private sector for the planning, 21 construction, or operation of a facility.” 22 BILL SUMMARY 23 This bill provides the framework for government entities that seek to enter into public- 24 private partnerships for the construction, upgrade, development, construction, reconstruction, 25 repair, alteration, improvement, extension, operation, and maintenance of any public road, 26 22 structure, facility, or infrastructure to include support of a public purpose or activity, including, 1 but not limited to: airport or seaport facility; hospital, other medial healthcare, or nursing care 2 facility; sporting, cultural, or recreational facility; civic or educational facility or other building 3 that is used or will be used by a public educational institution; transportation facilities such as 4 roads, bridges, public transit systems, ferry, port facilities; water, wastewater, water 5 management facility, or other related infrastructure; and telecommunications facilities. 6 This bill sets forth the procedure for the submittal of solicited and unsolicited proposals; 7 what must be contained in the proposals; the process for reviewing and accepting proposals; 8 the minimum standards that must be met by a private entity; the criteria that must be met to 9 enter into an agreement, whether interim or comprehensive; the duties and responsibilities of 10 the private entity partner; the requirements for funding and financing of projects; and the 11 responsibilities of the parties if the agreement is terminated. The bill also provides for the 12 governmental entities entering into public-private partnerships do not waive sovereign 13 immunity. 14 BR23-0353/March 9, 2023/SLR 15