Category Archives: Public/Private.Partnerships

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. …

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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. …

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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.

Privatized student housing – Four key trends will differentiate older and newer P3 projects next year

Source: Moody’s Investors Service, May 1, 2018 (Subscription Required)

Privatized student housing projects are vulnerable to negative pressures in the higher education sector, but will hold steady because of solid real estate fundamentals and marginally improving financial performance. … Examining how trends differ between older projects that have been operating for four years or more (seasoned) and new construction that opened in 2015 or later (recent) underscores how a project’s early years carry the most risk, seasoned projects’ upside potential is limited and no project is immune from an unfavorable operating environment. … Rent growth trend diverges for seasoned projects. … Sector maintains solid occupancy despite disappointing initial lease up at some new projects. … Financial performance strengthens overall, but year-to-year fluctuations at individual projects are the norm. … Unfavorable operating conditions contributed to five downgrades last year. …

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U.S. public universities turning to private sector to meet campus needs
Source: Stephanie Kelly, Reuters, August 26, 2016

U.S. public universities are increasingly turning to public-private partnerships to develop student housing and other campus projects, sometimes using the structure to transfer borrowing and liability risks to the private sector. Over the last five years, there has been an “uptick” in universities and colleges leveraging the private sector to deliver housing needs, said Kevin Wayer, an international director and co-president of the Public Institutions group at commercial real estate firm Jones Lang LaSalle. … Use of P3s can contribute to reduced debt on universities’ balance sheets, said Todd Duncan, assistant vice president of housing, food and retail services at the University of Cincinnati’s main campus. While still only a “fraction” of the U.S. municipal infrastructure market, the P3 market is building, Moody’s Investors Service said in a report issued in March. … Universities might engage in P3s for a number of different reasons, including the efficiency that developers can bring to projects, Duncan said. Increased operating costs for institutions and decreased state contributions have led to a financing gap, said Kurt Ehlers, managing director at Corvias Campus Living, a development group. From fiscal 2008 to fiscal year 2016, state spending per student at public two- and four-year colleges decreased 18 percent, according to Michael Mitchell, a senior policy analyst at the Washington, D.C.-based Center on Budget and Policy Priorities. The National Council for Public-Private Partnerships, a non-profit that advocates for P3s, lists 18 types of P3 partnership structures on its website. The council did not have a national figure for how much money is being spent on higher education P3 projects. …

Putting the Public First in Public-Private Partnerships

Source: Gabrielle Gurley, The American Prospect, April 26, 2018
 
… More than a decade later, the Port of Miami Tunnel is the marquee example of a public-private transportation infrastructure partnership. … But the tunnel’s success is deceptive, since the unique factors that converged in South Florida cannot be replicated everywhere. For every Port of Miami Tunnel, scores of ill-conceived projects dot the American landscape. The United States lags behind not only in basic maintenance of existing assets at the end of their life cycles but in building the next generation of roads, bridges, rail, tunnels, and aviation projects. With public funds scarce in a climate of tax-cutting and budgetary austerity, the risk is that the contactor/partner pays the up-front costs but sticks future generations of taxpayers and rate-payers with exorbitant charges. … But states and municipalities can learn to appreciate the differences between partnerships that put the public first and the rip-offs that erode public confidence in government and drain public coffers.

… The Trump administration’s version of an infrastructure initiative relies heavily on private financing, which may or may not materialize. … But the Trump framework is only an exaggeration of recent trends. At best, new fiscal pressures can lead public officials to get creative, seeking private partners who may bring superior engineering, financing, and legal expertise, and better attention to maintenance and operations. But private-sector involvement does not automatically mean a better outcome. Citizens and public officials often forget that the private sector’s prime motive is profit, not philanthropy. If a firm cannot clear a good return on an investment, either the deal will not materialize or the terms will be onerous to the public. Public debates can be marred by false expectations, and confusion or obfuscation of what distinguishes a good partnership from a rip-off. …

Citizen Attitudes Towards Public–Private Partnerships

Source: Eric J. Boyer and David M. Van Slyke, The American Review of Public Administration, April 12, 2018

Abstract
This study examines the factors that influence public attitudes toward public–private partnerships (PPPs) through an analysis of public opinion data collected in 2014. Although previous literature has examined public attitudes toward government contracting and asset privatization, there is little understanding of how the public feels about more collaborative forms of public–private interaction. Counter to previous studies that suggest that support for free enterprise and a disdain for government increases support for private involvement in public services, we find that attitudes toward PPPs are nuanced: Respondents favor them not only when they have positive feelings toward the business sector but also when they also report trust in government. PPPs are thus perceived not as a replacement to public administration, but as a delivery model that demands competence and trust of both public and private partners. The results also explain a previously unstudied relationship between respondent familiarity with PPPs and their attitudes toward them. Counter to expectations, we find that the more familiarity that respondents have with PPPs, the more likely they are to view them favorably. We also identify factors that predict public opinions of PPPs which can inform public outreach and public involvement programs involved with PPPs.

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Opinion: P3 schools fail to make the grade

Source: Tom Graham, Regina Leader-Post, March 31, 2018

If we could build five schools for the cost of four, any responsible government would do it. That is exactly what the Manitoba government decided in its 2018 budget, which rejected the public-private partnership (P3) model to build schools. Manitoba reviewed the evidence and found that for the price of $100 million, it could build five schools the traditional way, instead of four P3 schools. It makes one wonder why our financially challenged Saskatchewan Party government chose the more expensive P3 model to build and maintain 18 schools and other P3 projects. Our government keeps saying that P3 schools save money, but where is the evidence? … What we do know is that we are paying a hefty premium for maintenance contracts for brand-new schools which, if built properly, should not need that much maintenance or repair. Let’s hope the private maintenance companies do not charge $409 to replace a soap dispenser as happened at a P3 hospital in Montreal. There are a few other costs specific to P3 schools that we should mention: the higher interest payments for the private financing of the school construction, the higher consultant costs for reports, and the $500,000 given to each of the companies that bid but did not get the contract. …

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CUPE members in Manitoba celebrate major victory against P3s
Source: CUPE, March 13, 2018

The Manitoba Government has cancelled all plans to involve public-private partnerships (P3s) in the education system, and instead is committing to build five new publicly-funded schools in Winnipeg and Brandon. The government initially planned to build four schools under the P3 model, but after a cost-benefit analysis the savings were found to be enough to build an entire fifth school. …

Kaiser expands footprint on Maui

Source: Kristen Consillio, Honolulu Star Advertiser, April 4, 2018
 
Kaiser Permanente Hawaii has acquired 6.2 acres under its Wailuku Medical Office for $22 million. The state’s largest health maintenance organization — both a medical provider and health insurer with more than 255,000 members statewide — said the investment “allows for greater flexibility and certainty around future operational costs. … The HMO assumed control of three Maui County hospitals on July 1 in the largest privatization in state history. The HMO pledged to inject more resources into Maui Memorial Medical Center, Kula Hospital & Clinic and Lanai Community Hospital, the only acute-care facilities for about 200,000 residents and visitors in Maui County. …

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HGEA nurses disgruntled over Kaiser management
Source: Melissa Tanji, Maui News, February 22, 2018
 
The head of about 800 union workers at Maui Memorial Medical Center said Maui Health System officials need “to step up their game” and start fulfilling “the bill of goods” touted by the private entity to improve former public hospitals on Maui. Randy Perreira, executive director of the Hawaii Government Employees Association, said on Wednesday that in the past several weeks, union hospital workers have been reaching out to the union to express concern about inadequate staffing, mainly nurses, along with not having enough supplies or staff support at Maui’s only acute-care hospital. He reported that employees believe that the July 1 changeover of operations from the quasi-public Hawaii Health Systems Corp. to Kaiser-affiliated Maui Health System at Maui Memorial, Kula Hospital and Lanai Community Hospital has not been as rosy as painted recently in the media. …

The neurosurgeon is out
Source: Chris Sugidono, Maui News, February 11, 2018
 
Maui Health System is in labor negotiations with the Hawaii Government Employees Association and United Public Workers on the unions’ first contract with the new management. HGEA represents 775 nurses and other health care professionals, while UPW has roughly 500 members working in maintenance, food service and laundry.  HGEA Executive Director Randy Perreira said in an email that the union’s goal is to ensure the investments from taxpayers and Kaiser “results in the best patient care and services” for Maui County. He added that he would like Kaiser to retain its current employees and recruit highly qualified and experienced “long-term” health care professionals. …

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Largest Public-Housing System in the U.S. Is Crumbling

Source: Mara Gay and Laura Kusisto, Wall Street Journal, March 18, 2018
 
New York City’s public housing is literally falling apart. The sprawling network of 176,000 apartment units across the five boroughs needs an estimated $25 billion of repairs, up from $6 billion in 2005. Yet annual federal funding for the nation’s largest public-housing program hasn’t kept pace. Residents of decaying brick towers battle leaking roofs and moldy walls, broken elevators and aging infrastructure. This winter, the housing authority’s ancient boilers gave out, leaving more than 320,000 people without heat or hot water. … Mayor Bill de Blasio has blamed public-housing problems on decadeslong funding declines from Washington. The New York City Housing Authority is overseen by HUD. Housing authorities in other major cities, such as San Francisco, Chicago and Atlanta, now manage a vanishingly small share of their units. In some cases, cities have continued to own the land or buildings and they are run largely by private real-estate companies, while in other cases the original buildings are demolished completely. Tenants typically are given Section 8 rental-subsidy vouchers. Critics say New York was too slow to adopt this model. … Bringing in private partners to rehabilitate and manage public housing could generate millions of dollars of new investment but raises fears of privatization in the eyes of many tenants and advocates. Mayor de Blasio was initially resistant to that approach, embracing it only after appeals from Obama administration housing officials and NYCHA Chairwoman Shola Olatoye, according to people familiar with the matter. … So far, the city has transferred one traditional public-housing complex with some 1,400 units over to private management and has plans to complete the same process for 15,000 units over the next decade. …

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Federal Cuts Could Force N.Y.’s Creative Hand
Source: Paul Burton, Bond Buyer, March 24, 2017

The specter of massive cuts in federal domestic aid could force New York City officials to think outside the box about how to salvage programs now financed by the feds. … The New York City Housing Authority alone could lose up to $150 million in operating funds and up to $220 million in capital funding. … “The biggest issue for New York City is the housing program,” said Howard Cure, director of municipal bond research for Evercore Wealth Management. One creative option, according to Cure, is to convert some properties to the federal Rental Assistance Demonstration, or RAD, program, which the Department of Housing and Urban Development operates. It allows public housing agencies to fully own their public housing units and to renovate or redevelop the housing using private financing sources. The renovated or new housing receives rental support for the residents through a project-based Section 8 subsidy. … While Trump has called for more public-private partnerships, New York and other Empire State cities still need approval from state lawmakers to execute P3s. …

Texas city drops its bus service in favor of ridesharing vans

Source: Jon Fingas, Engadget, March 12, 2018

Ridesharing companies often dream of changing the face of public transportation, but one of them is going a step further — it’s becoming the only option for public transportation in one community. Arlington, Texas is replacing its bus service with Via’s ridesharing platform. Pay $3 per trip ($10 for a weekly pass) and you can hop in a Mercedes van that will take you where you need to go, whether your hail it through a smartphone app or a phone call. … The low fares are possible thanks to subsidies from the city, which is providing about a third of the overall project’s cost (about $322,500). The Federal Transit Administration is supplying the rest. Whether or not it lasts for a while depends on the initial experience. … This is arguably one of the larger experiments of its kind, however, and it hints at the potential future of ridesharing: it could become the go-to option for public transportation in cities that can’t afford or justify extensive bus or subway routes. …

Cracks in Sidewalk Labs’ Toronto waterfront plan after fanfare

Source: Jeff Gray, The Globe and Mail, February 23, 2018

… Sidewalk Labs, the unit of Google parent Alphabet Inc. selected to help transform a parcel of land known as Quayside, at the foot of Parliament Street, listed off a dizzying array of technologies it could develop in Canada’s largest city, then sell elsewhere: cameras and sensors that detect pedestrians at traffic lights or alert cleanup crews when garbage bins overflow; robotic vehicles that whisk away garbage in underground tunnels; heated bike lanes to melt snow; even a new street layout to accommodate a fleet of self-driving cars. Four months have passed since Waterfront Toronto, the municipal-provincial-federal development agency, named Sidewalk its “innovation and funding partner” for the project – time enough for some of the gee-whiz talk of hyper-energy-efficient modular buildings and “taxibots” to be replaced by a rising chorus of critics both inside and outside City Hall. Many are concerned about the data Sidewalk could collect. Some say the deal has been shrouded in secrecy. Others fear the company’s vague but sweeping plans could threaten the city’s authority over a massive swath of waterfront or even its public transit system and other key services. … Meanwhile, despite briefings from Waterfront Toronto and Sidewalk executives, some city councillors say they still have little idea what Sidewalk actually intends to do – or where. …

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Beware Of Google’s Intentions
Source: Susan Crawford, Wired, February 1, 2018

In partnering with local governments to create infrastructure, Alphabet says it is only trying to help. Local governments shouldn’t believe it. ….. Beginning last fall, Toronto has been getting a flood of publicity about a deal with Sidewalk Labs, part of Google spinoff Alphabet. Reports describe the deal as giving Sidewalk the authority to build in an undeveloped 12-acre portion of the city called Quayside. The idea is that Sidewalk will collect data about everything from water use to air quality to the perambulations of Quayside’s future populace and use that data to run energy, transport, and all other systems. Swarms of sensors inside and outside buildings and on streets will be constantly on duty, monitoring and modulating.

But Toronto recently revealed that deal has put it in a tough place. A nonprofit development corporation, not the city, made the arrangement with Google that sparked all the publicity—the city itself doesn’t appear to have known a deal with Google was in the works. Now the situation appears messy: The details of the arrangement are not public, the planning process is being paid for by Google, and Google won’t continue funding that process unless government authorities promise they’ll reach a final agreement that aligns with Google’s interests. Those interests include Google’s desire to expand its Toronto experiments beyond that 12-acre Quayside plot.….