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Summary of Legislation: HB 3391 would authorize the Texas Department of Transportation (TxDoT) to enter into a comprehensive development agreement for a non-tolled state highway improvement project. The bill lists certain projects that would be approved under the new authority, and the terms requisite for entering into an agreement. This bill presents termination for convenience procedures.
Analysis: This bill grants more flexibility to TxDot to enter into public-private partnerships for the financing of road projects. Termination for convenience is a type of agreement in which the government reserves the right to unilaterally terminate a contract at any time with or without giving any reason. A provision of the bill requires that if the termination for convenience clause is exercised, the government must purchase the interest of the private participant and any related property owned by the private participant. This protects private businesses from loss they might otherwise incur if the government terminated the contract without being required to fulfill its obligation. On the other hand this provision leaves open the potential for the cost to taxpayers to be significantly higher than expected for the project. We remain neutral on HB 3391.