New Long Beach Courthouse, Built w/ "Public Private Partnership" Praised By Local Pols, May Cost As Much As $160 Million More Than Using Traditional Procurement, State Legislative Analyst Office Says
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(Nov. 11, 2012, 11:55 a.m.) -- The new L.A. County courthouse being built in Long Beach, cited by various Long Beach political figures and state judicial officials as an example of the benefits of a "public-private" development arrangement, may cost as much as $160 million more than under a traditional procurement approach, says a report by state Legislative Analyst's office (LAO).
The report by the LAO (an office that anlayzes legislation and makes recommendations to the legislature) states that in applying state legislation, the Administrative Office of the Courts [as well as Caltrans on a separate project] "did not use clear P3 [public-private partnership] processes and appear to have selected projects not well suited for a P3 procurement. In addition, we find that the analyses done to compare project costs under different procurement options were based on several assumptions that are subject to significant uncertainty and interpretation, and tended to favor the selection of a P3 approach." It concludes, "Our analysis indicates that utilizing a different set of assumptions than those discussed [details below] (such as excluding the assumed federal tax adjustment and leasing costs) would result in the cost of the Long Beach courthouse project being less -- by as much as $160 million in net present value terms -- in the long run under a traditional procurement approach than the chosen P3 approach." The The LAO report states in pertinent part: Long Beach Courthouse Selection Was Problematic. According to AOC [Administrative Office of the Courts] staff, the Long Beach courthouse project was selected as a P3 candidate based primarily on two criteria: (1) it was one of the largest court construction projects considered at that time and (2) the Long Beach area has a competitive market for the type of property management staff needed to operate a P3...[T]he selection process for the Long Beach courthouse project did not include much of the recommended best practice criteria. For example, the selection process did not evaluate whether the project is technically complex. While the ideal level of complexity for a P3 is difficult to define in specific terms, the Long Beach courthouse project lacks unique or complex features that would likely benefit from innovative design and construction techniques. Accordingly, our analysis indicates that if AOC utilized best practice criteria in its selection process, the Long Beach courthouse project would have been found to be inappropriate for P3 procurement... A video (below) touting the project on its groundbreaking, embedded on the Judicial Council of CA's website and uploaded onto YouTube.com, states: "The project's unique financing arrangement is attracting attention from all over the country." April 7, 2011 photo on MayorBobFoster.com The use of "P3" type public-private partnerships has also been suggested as a funding mechanism by some advocates of building a new Long Beach Civic Center (government complex). As previously detailed by LBReport.com, the new courthouse has previously drawn local attention for its failure to include a replacement tunnel (which exists in the current courthouse) to convey prisoners from Long Beach's jail, leaving this sizable cost item to Long Beach taxpayers. After Councilwoman Schipske spotted the item in an otherwise routine budget document and inquired about it, city management acknowledged that city staff had been aware of this, repeatedly asked to have the cost item included...but the Administrative Office of the Courts refused. In public Council colloquy on the item, City Manager West added that the decision on whether to put the new courthouse in Long Beach, or elsewhere, came right down to the wire. On October 4, 2011, after being told the tunnel's construction cost was estimated to be at least $5 million (with a feasibility study still to be completed), the City Council approved (6-3, Schipske, Neal, Gabelich dissenting) allocating $1 million in oil revenue for initial work on the tunnel. In late June 2012, city management told the Council [non-agendized memo] said it would be less costly to tranfer prisoners one block from the LB jail to the courthouse by van-vehicles at an annual continuing cost estimated to be roughly $240,000 (plus $270,000 to buy the needed vehicles). Roughly six weeks later in mid-August 2012, LBReport.com spotted a line item near the end of a five page spradsheet given to the Council's Budget Oversight Committee on how FY12 oil revenue had been used. The line item indicated that of the $1 million allocated by the Council for initial tunnel expenses, roughly $942,000 has been spent...for a tunnel that now isn't scheduled to be built. Developing. Further to follow.
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