As I sat lodged in my club chair across the desk from one of best friends and an up and coming financial advisor - who's work hours and commitment to client satisfaction often resemble those of our own - I couldn't keep my gaze from the miniature bull that lined the forward facing edge of his desk. Small and static, yet somehow intimidating; it exudes a sense of optimism, aggressiveness and confidence. It's a common find in the world of investment advisors, a seven thousand pound version of it is even appropriately placed in front of the Standard Oil Building in Battery Park. It's message is one of a of a proactive attitude.
It is exactly the opposite of how the design industry operates. We are a reactive lot. You need not take my word for it - listen in on the conversations of principals and partners over cocktails in a public setting. You're sure to catch references about the opportunities the economy is presenting or commentary on the state of commercial lending and what opportunities it affords - or doesn't afford for that matter. We tend to wait for the right opportunity to come to us. Too often, a project is born when an e-mail or a phone call comes in from a client with an idea and some semblance of a plan to finance it.
What if we became a bit more bullish? What if we were to take a more proactive approach to projects and invite folks in the private sector with the capital and the interest in building to join forces with us and others to deliver buildings and infrastructure to a public sector which often times lacks the ability to procure and more often lacks the capital to build?
Well, it would probably look a lot like what California S.B. X2 4 [Extra Session] and A.B. 1467 were written to allow: Public Private Partnerships. These provide the framework for an alternate method of delivering projects. One which allows the public sector to form partnerships with private entities for the purpose procurement of public facilities. Where public agencies may have the need but lack the resources to allocate land, design, financing, construct, operate and maintenance facilities, the private sector can step in a provide each or all. "Comprehensive project delivery" as Rick Norment of the National Council of Public Private Partnerships [http://www.ncppp.org/] helped paraphrase for me in a recent conversation.
--
While I was familiar with P3 from the development courses I had taken as an undergrad, I only recently learned about the nuances of structuring a deal and the supporting legislation we have in many states when I was awarded an AIA Scholarship to attend the Project Delivery Symposium in Dallas late last year.
In concept, the terms are quite simple, let the private sector carry the
cost while the public sector takes on the operations while both benefit from the use.
In good times or bad, public agencies must commit to their obligation to balanced budgets.
Often times, this will require that spending on improving and/or building facilities be put on hold.
However, public need on the other hand, can never be put on hold.
Our needs are consistent and increase with the growth of the population and the growth of our country's metropolitan regions.
"The reality is that the need for infrastructure - schools, roads, prisons, courthouses, parking garages - doesn't go away as the economy goes up and down."
Explains Geoffrey Stricker, Managing Director at Edgemeoor Infrastructure & Real Estate [http://www.edgemoordevelopment.com/profiles/stricker]
In practice, there are many moving parts to a P3 deal which by their very nature make it a challenging route to pursue. Nobody will claim that it is a simple and streamlined method of project delivery. What many, including Mr. Norment will tell you is that it is a highly collaborative and comprehensive method of project delivery.
In California, initial legislation was drafted and approved in 1989 with the passing of A.B. 680, however, recent legislation has widened the breadth of P3 projects which are feasible. While the focus of projects is on transportation related projects, new provisions have afforded us the opportunity to award P3 contracts for court facilities and correction facilities in addition to roads, bridges and overall transportation infrastructure.
--
Enter the Long Beach Superior Courthouse Project:
In short, this 5-story, 31 courtroom, $490 million, 545ksf courthouse facility will serve as a model for Public Private Partnership deals in California for years into the future. Currently in construction, the project takes advantage of the above legislative provisions to procure a new court facility for a municipality which had neither the resources nor the bond capability to deliver such a project without the use of private partners.
"This court building is the first social infrastructure project in the United States procured under the principles of Performance-Based Infrastructure (PBI) contracting. Under the PBI agreement, the Judicial Council of California (JCC) will own the building, and the Superior Court of Los Angeles County will occupy approximately 80% of the space. The JCC will pay LBJP an annual, performance-based service fee for 35 years. The PBI delivery method will leverage the private sector’s access to financing, technological expertise, and management efficiency to quickly provide a high-quality facility that will serve the Superior Court of Los Angeles County." [Source: http://www.longbeachcourtbuilding.com/]
Had AECOM [Architects], Clark Construction Group [Builders], Edgemoore Real Estate [Realtors], Johnson Controls [Commissioners and Building Operators] and Meridiam Infrastructure [Equity Fund Managers and Financiers] waited around for the phone to ring from the City of Long Beach to call inquiring about a replacement courthouse the wait would have likely outlasted the next three recessions. Instead, they took the innovative route to identify a public need for infrastructure, formed a collaboration with the collective expertise that could not be matched by any single public agency and utilized the framework of state legislation to create a project.....bullish by any standards.
shaunt.yemenjian@gmail.com
#ProjectDeliveryKnowledgeCommunity