Public-Private Partnerships in California
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August 2018 Public-Private Partnerships in California How Governments Can Innovate, Attract Investment, and Improve Infrastructure Performance Acknowledgments This report was developed and written by Will Hewes, Director Dale Bonner, Executive Chairman – Plenary Concessions at Table Rock Infrastructure Partners, and Sean Randolph, Mike Marasco, CEO – Plenary Concessions Senior Director at the Bay Area Council Economic Institute. The Bay Area Council Economic Institute would like to thank William Gorham, Senior Associate – Plenary Group many people for providing input and reviewing this report. Stuart Marks, Group Co-Head, Origination (West) – Plenary Group Samara Barend, Senior Vice President, North America Strategic Development Director for Public-Private Sia Kusha, Group Head, Project Development and Partnering– Partnerships – AECOM Capital Plenary Group Ignacio Barandiaran, Principal – Arup Stan Williams, Vice-President, Project Development – Poseidon Water Orion Fulton, Associate Principal – Arup Victoria Stackwick, Principal Legislative Analyst – San Diego Michael Gomez, Director, Public Finance – Barclays Association of Governments Chris Roberts, Director – Barclays Investment Bank Carey Batha, Senior Environmental Scientist – San Francisco Rachel Factor, Senior Planner – BART Bay Conservation and Development Commission Zach Knight, Co-Founder and Managing Partner – Larry Goldzband, Executive Director – San Francisco Bay Blue Forest Conservation Conservation and Development Commission Nick Wobbrock, Co-Founder and Partner – Tilly Chang, Executive Director – San Francisco County Blue Forest Conservation Transportation Authority Nizar Melehani, Program Manager (retired) – California Jim Bourgart, Transportation and Infrastructure Policy – Department of Transportation San Mateo County Fred Silva, Senior Fiscal Policy Advisor – California Forward Bob Marks, Transportation and Infrastructure Policy – San Mateo County Andrew Fahlund, Senior Program Officer – California Water Foundation Keith Lew, Deputy Director – Sonoma County General Services Department Mark Taylor, Chief of Staff, Office of Mayor Robert Garcia – City of Long Beach Suzanne Smith, Executive Director – Sonoma County Transportation Authority Ian Parker, Managing Director, Public Sector and Infrastructure Banking – Goldman Sachs Daryl Halls, Executive Director – Solano Transportation Authority Mark Pisano, Senior Advisor and Board President – Infrastructure Funding Alliance Michael Bennon, Managing Director – Stanford Global Projects Center Dan Feitelberg, Principal – KPMG Peter Luchetti, Managing Partner – Table Rock Joshua Schank, Chief Innovation Officer – LA Metro Office of Infrastructure Partners Extraordinary Innovation Mark Zabaneh, Executive Director – Transbay Yousef Salama, Innovation Manager for Public-Private Joint Powers Authority Partnerships – LA Metro Office of Extraordinary Innovation Richard Cummings, Director, Strategic Planning and Jonathan Dingle, Investment Director – Meridiam Communications – University of California, Merced John Dionisio, Business Development Director, North America Ed Klotzbier, Associate Chancellor – University of California, – Meridiam Merced Dan Carol, Senior Advisor on Infrastructure and Energy – Wes Sullens, Director of Codes Technical Development – Office of California Governor Edmund G. Brown U.S. Green Building Council Colin Kelly, Healthy Watersheds California Manager – Jeremy Sigmon, Director, Technical Policy – U.S. Green Pacific Forest Trust Building Council Laurie Wayburn, Co-founder, Co-CEO, and President – Shelley Doran, Senior Vice President – Webcor Builders Pacific Forest Trust Scott Boardman, Executive Director – West Coast Michael Houle, Senior Advisor – Partnerships BC Infrastructure Exchange John Heisse, Partner – Pillsbury Winthrop Shaw Pittman LLP Carsten Voecker, Principal, Director–North America – Robert James, Partner – Pillsbury Winthrop Shaw Pittman LLP Woods Bagot Contents Executive Summary ...................................................1 Napa Civic Center ............................................... 26 Los Angeles Convention Center ......................... 27 Introduction ...............................................................3 Los Angeles Civic Center .................................... 27 Infrastructure Investment Status ................................ 3 Sonoma County Government Center.................. 27 The Role of Public-Private Partnerships ..................... 7 San Vicente Pumped Storage Project ................. 28 California P3 Background .......................................... 8 Santa Clara Valley Water District ......................... 28 Global P3 Adoption ................................................... 9 Central Contra Costa County Sanitary District .... 28 P3 Adoption in the U.S. ........................................... 10 Santa Clara County Civic Center ......................... 29 A New Challenge: Adaptation to Climate Change .... 12 LA Metro .............................................................. 29 Chapter 1 Huntington Beach Desalination ........................... 29 California’s P3 Experience: The Past Five Years ......13 San Francisco Broadband .................................... 30 Long Beach Civic Center ..................................... 13 San Diego Association of Governments: Otay Mesa East Port of Entry and Downtown UC Merced .......................................................... 14 Bus Stopover and Multiuse Facility ..................... 30 Rialto Water & Wastewater Partnership .............. 16 Long-Term Opportunities ........................................ 30 Long Beach Courthouse ...................................... 18 TJPA Transbay Program ....................................... 30 Presidio Parkway .................................................. 20 SR-37 .................................................................... 31 Carlsbad Desalination Plant ................................ 22 High-Speed Rail ................................................... 32 University of California, San Francisco Dumbarton Corridor Transit ................................ 32 Neurosciences Building ....................................... 24 Second Trans-Bay Tube ....................................... 33 Chapter 2 Water Reuse Projects ........................................... 33 California Pipeline: California WaterFix .............................................. 33 The Next Five Years and Beyond.............................25 Stormwater Projects ............................................ 34 Projects in Development, Planned, or Under Consideration ............................................... 25 Sustainable Groundwater Management Act Implementation ...................... 34 LAX Automated People Mover (APM) and Consolidated Rent-A-Car Center ........................ 25 Watershed Protection & Restoration ................... 35 Climate Adaptation Projects ............................... 36 Contents, continued Chapter 3 Building a Stronger California P3 Market ...............37 State-Level Authorizing Legislation ..................... 42 Procurement Innovations ......................................... 37 State-Level CEQA Reform ................................... 43 P3 Offices and Programs ..................................... 37 State-Level Public-Sector Resources ................... 43 Unsolicited Proposals .......................................... 38 Federal-Level Tax-Exempt Financing .................. 44 Progressive P3 ..................................................... 38 Federal-Level Flexibility and Incentives for P3 Projects .................................... 45 Public Staffing and P3 Team Interaction ............. 39 Conclusion ...............................................................46 Stakeholder Engagement .................................... 40 Annotated Bibliography on Value for Money Analysis..................................... 40 Procurement Performance ......................................47 Procurement and Contract Best Practices .......... 41 Notes .......................................................................49 Enhanced Infrastructure Finance Districts .......... 41 Policy Reforms .......................................................... 42 About the Institute Photo Acknowledgments Since 1990, the Bay Area Council Economic Institute has The Economic Institute wishes to thank the sponsors been the leading think tank focused on the economic and contributors who provided the P3 project and policy issues facing the San Francisco/Silicon Valley architectural images and photos used in this report. Bay Area, one of the most dynamic regions in the United Presidio Parkway: Meridiam States and the world’s leading center for technology and innovation. A valued forum for stakeholder engagement Long Beach Civic Center: Plenary Group and a respected source of information and fact-based UC Merced: UC Merced analysis, the Institute is a trusted partner and adviser to both business leaders and government officials. Through Rialto Water and Wastewater Partnership: its economic and policy research and its many partnerships, Veolia North America the Institute addresses major factors impacting the Long Beach Courthouse: Meridiam competitiveness, economic development, and quality of life of the region and the state, including infrastructure, Carlsbad Desalination Plant: Poseidon Water globalization, science and technology, and health policy. LAX Automated People Mover: It is guided by a Board