Category Archives: Public/Private.Partnerships

Messenger: Cost to start down runway of airport privatization in St. Louis? More than $800,000 per month.

Source: Tony Messenger, St. Louis Post-Dispatch, August 17, 2018

There’s a new payday loan outfit in town, and it’s taking up residence in St. Louis City Hall. It’s called the Bank of Rex. Borrowers beware: The costs of taking a loan from this bank are significant. They are outlined in a series of documents obtained by the Post-Dispatch in a Sunshine Law request that show how much consultants who are working under the control of a nonprofit called Grow Missouri will be paid as they advise the city on whether to privatize operations at St. Louis Lambert International Airport.

The costs are steep, up to $800,000 per month or more for the one to two years it might take to make a recommendation on the airport’s future. If that happens, those monthly costs will be paid by city taxpayers out of the proceeds of what is effectively a risky auction of the city’s top asset. …

Related:

St. Louis aldermen call for transparency as city considers privatization of Lambert
Source: Celeste Bott, St. Louis Post-Dispatch, January 19, 2018

A committee tasked with picking a team of consultants to advise the city on whether to privatize St. Louis Lambert International Airport has met several times but has yet to choose advisers to lead the process. There were 11 submissions for consulting services, Deputy Mayor for Development Linda Martinez told the Post-Dispatch. Only three covered all services sought in the city’s request for proposals, she said, and the others only covered part of the services. The identity of the winning bidder won’t be revealed until a contract is agreed upon. … No vote was taken when the committee met Wednesday. Instead, much of the session was devoted to providing information to several city aldermen, amid growing concern from members of the board that the process, which was greenlighted by the Federal Aviation Administration in April, hasn’t been transparent. … Critics have questioned the need for privatizing Lambert, citing its recent growth, including a 10 percent spike in passengers in 2016, and a strong credit rating. … The effort to explore the benefits and risks of privatization has been a slow one. …

Lambert director has mixed feelings on privatization, pushes Congress on higher fees
Source: Adam Aton, St. Louis Post-Dispatch, March 23, 2017

The director of St. Louis Lambert International Airport said Thursday she’s keeping an open mind about a proposal to privatize its management. Rhonda Hamm-Niebruegge also said she has reservations about the shift’s potential to steer more money from the airport to the city. Mayor Francis Slay traveled to Washington this week to ask for St. Louis’ inclusion in a Federal Aviation Administration pilot program to study leasing airport operations to a private business. St. Louis County Executive Steve Stenger and Lyda Krewson, the Democratic nominee for mayor, have said the idea deserves examination, and political mega-donor Rex Sinquefield has made a six-figure commitment to help pay for the application. The FAA could decide this month whether to include Lambert in the program, starting a decision-making process that could take at least a year. If the change were made, the city still would own the airport and land while a private company leases it. … The city draws about $6 million annually from the airport, and a public-private partnership could bring an “immediate” infusion of more funds, according to the city. … Congress is considering how infrastructure projects might fit into the FAA’s reauthorization legislation. …

Contracting Models Shift Dynamics of Engineering and Construction

Source: Jean Pedley, Journal of the American Water Works Association, July 31, 2018

Whether it’s construction of a new treatment plant or a water main replacement project, successfully delivering capital projects in the water industry requires utilities, engineers, and construction experts to work together effectively. Faced with the need to address aging infrastructure and challenged by restrictive regulations, concerned citizens, and attention to budgets, the water industry needs to explore efficient and innovative models for engineering and construction now more than ever. … This article identifies some of the best practices and tools for alternative project delivery that have been tested in a variety of markets, including power generation and water. Successful alternative delivery projects always involve stakeholders who are adaptable and open to collaboration. In addition, the success of alternative project delivery often depends on integration of advanced tools and technology that create efficiencies in tracking and identifying opportunities to avoid project pitfalls. …

Read full report.

The $1.4 Billion Transit Fund the U.S. Government Won’t Release

Source: Laura Bliss, CityLab, August 15, 2018 

Like a nasty pothole, Trump’s unkept promises on road-and-rail dollars have given transportation fans a mild case of whiplash. But there may be worse harm in another infrastructure lapse on the part of this administration, this one more basic: $1.4 billion promised to transit projects across the U.S., still unallocated by the Federal Transit Administration for no clear reason. From New York to Los Angeles, El Paso to Minneapolis, 17 rail and rapid bus projects are awaiting grants promised by the federal appropriations bill signed into law by Trump in March 2018. But the funds have still not been delivered nearly five months later. Make that 144 days, 20 hours, and 15 minutes later, as of this writing, according to a splashy countdown clock built by Transportation For America, a progressive transportation policy organization. …

Related:

Shovels Down: White House Drives Dagger Into Infrastructure Bill
Source: John T. Bennett, Roll Call, May 25, 2018
 
The White House formally drove a dagger into the passage this year of the kind of massive infrastructure package called for by President Donald Trump. What is on the White House’s legislative agenda for the rest of the year includes another tax package, a farm bill, more federal judiciary nominations — and possibly immigration legislation. White House legislative affairs chief Marc Short told reporters Friday that infrastructure will slide into 2019. He blamed election-year politics, saying Democrats have signaled in recent conversations they are uninterested in handing Trump a victory ahead of the midterm elections. …

Opinion: Rebuilding Schools, Bridges—and Lives
Source: Richard Trumka and Boston Mayor Marty Walsh, Wall Street Journal, May 14, 2018

As unions, businesses, engineers and policy makers celebrate Infrastructure Week from May 14-21, we’re reflecting on the investments that add value to America. For every dollar a country spends on public infrastructure, it gets back nearly $3, according to a 2014 study from the International Monetary Fund. Keep this in mind when you hear that the American Society of Civil Engineers, or ASCE, has called for $2 trillion to repair, renovate or replace water lines, public schools, bridges and mass transit systems. On top of that, another $2 trillion could make America the global leader in the infrastructure technologies of the future, such as high-speed rail and smart utilities. … When you see that the ASCE’s infrastructure report card gives the nation overall a D+, don’t hang your head. The U.S. can get that grade up. But it won’t happen with a plan like President Trump’s , which would cut Washington’s contribution to infrastructure projects from 80% to 20%, quadrupling the burden on cash-strapped cities and states. The true way forward is to do the opposite: Put the federal government back in the business of building America’s future. …

Continue reading

P3 bill signals new infrastructure path for New Jersey

Source: Andrew Coen, Bond Buyer, August 15, 2018 (Subscription Required)
 
Legislation signed by New Jersey Gov. Phil Murphy to expand the state’s use of public-private partnerships lays the groundwork for increased infrastructure investments throughout the state, supporters say. The bipartisan bill Murphy signed Tuesday enables local governments, school districts, public authorities and state colleges to enter into P3s for capital projects. P3 opportunities in New Jersey previously only applied to public colleges and universities. …

Related:

New Jersey bill seeks P3 expansion
Source: Andrew Coen, Bond Buyer, April 13, 2018 (Subscription Required)
 
New Jersey lawmakers are pushing again for an increase in the use of public-private partnerships to jump-start infrastructure improvements in the cash-strapped state. Two and a half years after former Gov. Chris Christie conditionally vetoed an expansion of New Jersey’s P3 program, a state senate committee advanced legislation on April 5 that if enacted would permit localities to enter into P3 agreements for building and highway infrastructure projects. The measure would make local governments, school districts, public authorities and state colleges eligible to enter into P3s where the private entity would assume full or partial financial and administrative responsibility for capital projects. …

How Elon Musk’s O’Hare Express Got The Fast Track In Chicago

Source: Becky Vevea, WBEZ, August 9, 2018

Underneath the popular Block 37 shopping complex in downtown Chicago is a partially finished, unused train station. There are no turnstyles or escalators, just an elevator and a few rectangular openings in the ground. Aldermen approved the “super station” with little discussion in 2005, but it was mothballed before completion. Then-Mayor Richard M. Daley wanted it to be the base for express train service to both Chicago airports. Thirteen years later, with taxpayers still paying off the loan that financed the $218 million station, Mayor Rahm Emanuel has found somebody to fulfill those high-speed dreams: entrepreneur Elon Musk. … Musk said his plan, known as the O’Hare Express, is to build a speedy pod that will shoot through an underground tunnel to get riders between Downtown and O’Hare International Airport in just 12 minutes. Officials said Emanuel and Musk hope to start digging as soon as this fall. But can they fulfill these promises? … Here’s a look at how Chicago’s mayor fast-tracked the express transit to the airport and why that matters to taxpayers, Musk, and the future of express transit elsewhere. …

Related:

Elon Musk and Rahm Emanuel’s New Transportation Scheme Is a Privatization Bonanza
Source: Emma Tai and Stephanie Farmer, In These Times, July 27, 2018
 
In June, Chicago Mayor Rahm Emanuel’s administration selected Elon Musk’s The Boring Company to build a non-stop express train from downtown to O’Hare Airport. The development is yet another example of Emanuel’s plan to transform Chicago into a city for the wealthy few.  Emanuel has stated that Musk’s express train will be fully financed by private investors. But the city’s 2009 parking meter fiasco has taught us that working Chicagoans end up on the losing side of fast-tracked privatization schemes. Morgan Stanley Investment Partners (MSIP) paid the city over $1 billion to lease the city’s parking meter system. But in an information memorandum released in 2010, MSIP estimated that, by the end of the lease in 2084, the firm would rake in over $11 billion from parking meter users by charging higher fares. …

Ruling unlikely to end Puerto Rico Oversight Board struggle with local government

Source: Robert Slavin, Bond Buyer, July 24, 2018 (Subscription Required)

Puerto Rico bankruptcy judge Laura Taylor Swain’s anticipated ruling on the relative powers of the Oversight Board and the local government is unlikely to end the battle for authority over the debt-burdened U.S. territory. Swain will hear oral arguments Wednesday on an adversary complaint filed earlier this month in the Title II bankruptcy case by Gov. Ricardo Rosselló, in which he argued the local government can’t be forced to follow parts of the board’s fiscal plan that deal with policy. Governance issues are likely to remain whatever her ruling, observers said. … Other Puerto Rico government sectors have followed the government in filing adversary complaints challenging the board’s power. On July 9 Puerto Rico Senate President Thomas Rivera Schatz and Puerto Rico House President Carlos Méndez Núñez filed a complaint similar to the governor’s. On Tuesday the biggest minority party in Puerto Rico, the Popular Democratic Party, said it planned to submit an adversary complaint on different grounds on the same day. …

Related:

Puerto Rico governor names new utility head after board members quit
Source: Reuters, July 18, 2018
 
Puerto Rico’s governor on Wednesday named a new executive director of the bankrupt Puerto Rico Electric Power Authority (PREPA), following the resignation of its former head and four of the utility’s seven-member board last week.  Jose Ortiz will replace Rafael Diaz-Granados, who quit a day after being named executive director, leaving the utility with no leadership amid a massive restructuring effort following devastation wrought by Hurricane Maria last September.  Diaz-Granados and the four other board members resigned after Puerto Rico Governor Ricardo Rosello blasted them for agreeing to pay Diaz-Granados an annual salary of $750,000. The PREPA board unanimously elected Ortiz, an engineer, to the post on Wednesday, Rosello’s office said in a tweet. Ortiz, the fifth PREPA executive director named since the hurricane devastated the island and its electric grid last September, is due to take office on July 23. …

Puerto Rico Bondholders Win Ruling Against U.S.
Source: Andrew Scurria, Wall Street Journal, July 16, 2018
 
A federal judge has refused to absolve the U.S. government of liability for investors’ losses on Puerto Rico bonds, a potential blow to efforts to write down the U.S. territory’s $73 billion debt load.  The ruling issued Friday by Judge Susan G. Braden of the U.S. Court of Federal Claims is an incremental victory for hedge funds fighting to get repaid on the $3 billion in Puerto Rico pension bonds These creditors have targeted the U.S. directly, saying the federal government should make them whole for enacting a 2016 law that set them up for losses.  The lawsuit strikes at the heart of the rescue law, known as Promesa, designed to tackle the U.S. territory’s fiscal crisis. Promesa was designed to avoid a taxpayer bailout of Puerto Rico, creating a court-supervised process for wringing debt reductions from creditors instead. …

Continue reading

Unhealthy Skepticism

Source: Suzanne Gordon and Jasper Craven, Washington Monthly, July/August 2018

The Department of Veterans Affairs was back in the news this spring—and, as usual, the news wasn’t good. … But here’s a different story about the VA, from the exact same time period, that major media outlets didn’t bother to report: In March, researchers at the nonprofit research organization RAND published a study revealing the gross inadequacies of New York State’s health care system to effectively treat veteran patients. A month later, RAND found that the quality of VA care was generally better than private health care. These were just the latest of scores of studies that have come to the same conclusion for nearly two decades now. … As the U.S. continues to debate what to do about its unsustainable health care system—and as conservatives continue to push for “free market” solutions, including privatizing the VA itself—the fact that a government-owned and -operated system is outperforming the private sector should be a major story. If VA care is as good or better than the alternative, how would pushing vets into private-sector care make them better off? But that question rarely gets asked, because too many people are unaware that the premise guiding these policies—that the private sector inevitably outperforms government—is false.

… The point is not that the VA has no problems; it does. The point is that by failing to compare it to other health care systems, journalists can present a distorted impression that plays into ongoing efforts to privatize an agency that outperforms the rest of the U.S. health care system on most metrics. … Most recently, with bipartisan support, Congress passed the VA Mission Act, a “reform” package that could massively divert more veterans’ care from the VA to private-sector providers—which, in turn, would likely force the closing of many VA hospitals. Meanwhile, the Trump administration would clearly like nothing better than to be able to outsource lucrative contracts for VA care to its friends in the private sector. If the press doesn’t get this story right soon, America’s biggest and most successful example of government-provided health care will soon pass into history.

Related:

For the first time, a senator is opposing the VA secretary nominee
Leo Shane III, Military Times, July 11, 2018

Senate Veterans’ Affairs Committee members on Tuesday voted to advance the nomination of Robert Wilkie to be the next secretary of Veterans Affairs, but the move came with a symbolic and historic opposition vote against the move. The panel by voice vote sent Wilkie’s nomination to the Senate floor, but with Sen. Bernie Sanders, I-Vt., opposing the move. … Sanders, the former chairman of the committee, said he also intends to vote against Wilkie when his nomination comes to the full Senate for a vote. … “This has less to do with Mr. Wilkie than President Trump,” Sanders said following the vote. “Trump has been very clear about his desire to move to the privatization of the VA, and I suspect any of his appointees will try and move the agency in that direction.”

VA nominee pledges to oppose privatization
Source: Nahaniel Weixel, The Hill, June 27, 2018

President Trump’s nominee to lead the Department of Veterans Affairs on Wednesday said he doesn’t believe in privatizing the agency and pledged to oppose privatization efforts. “My commitment to you is I will oppose efforts to privatize,” even if it runs counter to the White House agenda, Robert Wilkie told a Senate panel. Under questioning from Sen. Bernie Sanders (I-Vt.), Wilkie said he would keep the VA “central” to the care of veterans, but indicated there can be a balance. Democrats and some veterans service organizations believe the White House is being influenced by Charles and David Koch, conservative billionaires who back the group Concerned Veterans for America (CVA), which is pushing to loosen current restrictions on veterans receiving private-sector care. …

Continue reading

Trump Administration Backs Off Reshuffling of Student Debt Collection

Source: Andrew Kreighbaum, Inside Higher Ed, July 9, 2018

The Department of Education planned this month to begin reshaping the role of private debt collection firms in handling student loans by pulling defaulted borrower accounts from a handful of large private contractors. Lawmakers who control the department’s budget had other ideas. After a recent Senate spending package warned the department against dropping the debt collectors, the plan is on hold. And it’s not clear how those companies will figure into the Trump administration’s proposed overhaul of student loan servicing. Private loan servicers handle payments from borrowers on their student loans and provide information on payment plan options. … The tactics and performance of debt collectors have come under attack from Democrats and consumer advocates. And the Education Department has been involved in a years-long legal dispute over contract awards for the collectors. But the Trump administration, in a resolution of that legal fight, in May said it planned to cancel the entire debt collection solicitation. … Members of Congress, who have already expressed concerns about aspects of the department’s so-called NextGen loan servicing system, warned in separate appropriations bills against the move. … The week after Senate appropriators voted the bill out of committee, and just before it planned to start reassigning borrower accounts, the department notified collections firms it was postponing that step. …

Related:

Editorial: The Student Loan Industry Finds Friends in Washington
Source: Editorial Board, New York Times, March 18, 2018
 
Education Secretary Betsy DeVos made clear even before taking office last year that she was more interested in protecting the companies that are paid by the government to collect federal student loan payments than in helping borrowers who have been driven into financial ruin by those same companies. Ms. DeVos’ eagerness to shill for those corporate interests is apparent in a craven new policy statement from the Education Department. The document claims that the federal government can pre-empt state laws that rein in student loan servicing companies if such a law “undermines uniform administration of’’ the student loan program. …

Banks Look to Break Government’s Hold on Student-Loan Market
Source: Josh Mitchell and AnnaMaria Andriotis, Wall Street Journal, March 7, 2018
 
Private lenders are pushing to break up the government’s near monopoly in the $100 billion-a-year student-loan market. The banking industry’s main lobbying group, the Consumer Bankers Association, is pressing for the government to instate caps on how much individual graduate students and parents of undergraduates can borrow from the government to cover tuition. That would force many families to turn to private lenders to cover portions of their bills. While that could mean lower interest rates for some, it could constrain funding to households with blemished credit histories. A group of investors also is lobbying for legislation to provide a clearer legal framework for “income-share agreements,” under which private investors provide money upfront to cover tuition in exchange for a portion of a student’s income after school. …

Continue reading

State, federal lawsuits pin defective DC Metro concrete on contractor

Source: Kim Slowey, Construction Dive, July 13, 2018

The U.S. Department of Justice and the Commonwealth of Virginia have filed suit against Universal Concrete Products Corp., the manufacturer of concrete panels for the Washington, D.C., Metro’s $5.8 billion Silver Line project, alleging violations of the False Claims Act and Virginia Fraud Against Taxpayers Act, as well as unjust enrichment and payment by mistake, according to court documents. Universal was working on the project under a $6 million purchase order contract with design-builder Capital Rail Constructors (Clark Construction Group and Kiewit Infrastructure South). In the July 9 action against Universal and co-defendants Donald Faust Jr., company president and co-owner, and Andrew Nolan, former quality control manager, the Justice Department and Virginia authorities claim that Universal knowingly provided panels that did not have the required air content for use on the Silver Line project and falsified documents so that it would appear the panels met the project specifications. …

Related

Contractor botches Silver Line concrete
Source: Associated Press, April 25, 2018

Concrete panels installed in the $2.6 billion project extending the D.C. region’s Metrorail Silver Line to Dulles International Airport are not as durable as they should be. Thousands of areas along the extension will need to be dealt with. And some of the concrete will need to be completely thrown out, despite being already installed. Charles Stark, director of the Silver Line project, said the concrete is supposed to last 100 years but was not mixed properly by a subcontractor. …

D.C. Circulator operations contract going to a new provider

Source: Luz Lazo, Washington Post, June 4, 2018
 
The District plans to award a 5-year, $140-million contract for the operation of the D.C. Circulator to RATP Dev, a provider of transit systems in cities across four continents, including Washington where it runs the D.C. Streetcar.  The goal is to have a contract in place by July 1 to allow for a 90-day transition; RATP Dev would be the operator effective Oct. 1. The deals needs approval by the D.C. Council.  RATP Dev will run day-to-day operations of the six-route bus system, taking over from First Transit, which has run the Circulator since its inception in 2005. …

Related:

Exclusive: Audit finds DC Circulator buses crumbling, unsafe for service
Source: Max Smith, WTOP, April 7, 2016

Ninety-five percent of DC Circulator buses inspected by an outside firm had at least one safety problem so significant they should have been pulled from service, according to an audit obtained exclusively by WTOP. Transit Resource Center, an independent transit consulting firm, conducted the audit last August, but it was closely guarded until now. The audit found an “unacceptable” number of the most serious safety defects in the Circulator fleet. … Overall, the audit finds the D.C. Department of Transportation and Metro have failed to carry out effective oversight of First Transit, the private contractor that operates the Circulator. DDOT owns the buses, and contracts with Metro to oversee First Transit. The audit notes that First Transit keeps buses for the Potomac and Rappahannock Transit Commission in Northern Virginia up to industry standards with about three smaller defects per bus, but falls woefully short when it comes to the Circulator.

District Exploring a Semi-Privatized Streetcar, Bus System
Source: Lydia DePillis, Washington City Paper, Housing Complex blog, June 26, 2012

Well, this could be a way to build a massive infrastructure project without busting the city’s budget: The District Department of Transportation is asking for ideas on how to bring in private capital for a 22-mile chunk of the original 37-mile streetcar system, and build it over the next five to seven years.

A request for information issued today also includes a proposal for a non-regional bus network, possibly independent from the Washington Metropolitan Area Transportation Authority, that would include and expand upon the Circulator.