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Use of public-private partnerships for real estate projects getting closer look 

Demonstrating the proven success of public-private partnerships (P3s) throughout the United States and the world, Hunt Companies Inc. executive Sinclair Cooper (pictured) made a strong case for the use of P3s for real estate projects during a roundtable discussion before the U.S. House Committee on Transportation and Infrastructure on Tuesday. The presentation by Cooper, co-president of the Public-Private Partnership Division of Hunt Companies Inc., told members of the Subcommittee on Economic Development, Public Buildings and Emergency Management that public-private partnerships with federal agencies are already working.

The roundtable discussion was aimed at highlighting the benefits and challenges of P3s in federal real estate. In addition to private-sector representatives such as Cooper, the subcommittee also heard from representatives of the General Services Administration (GSA) and received information on case studies regarding P3s.  

Most P3s in recent years that involved the federal government have been transportation projects. They have, on the other hand, been used on a much lesser scale for federal building projects. Now that federal buildings are aging, maintenance and capital expenditures are underfunded, construction costs are increasing and federal budget cuts are taking their toll, public-private partnerships involving real estate are becoming more attractive options.

Cooper pointed out that there are several challenges to overcome "to allow for the broader application" of a real estate delivery and sustainment model for P3s.

The Hunt executive said it is important to first define what is, and is not, a P3. "A P3 project is a contractual business relationship between a public-sector entity and a private-sector company to provide a public service in exchange for performance-based compensation," said Cooper.

On the other hand, he noted, a P3 is not just about alternative financing. "It is about using financing as a catalyst to optimize 'whole life project costs,' enable risk transfer to the private sector and focus on performance-based returns."

And to reach those goals, there are a variety of P3 relationships, each with varying degrees of risk transfer. That can include everything from design-build to design, build, finance, operate and maintain, said Cooper. He stated that whatever method is chosen depends on the desired outcome and a third-party determination that the "value for money" is suitable for a P3.

Cooper pointed to more than three-dozen successful P3s that Hunt Companies Inc. has entered into, many with federal agencies. GSA already has a number of statutory authorities that allow it to enter into P3s involving real estate, such as being able to enter into leases, ground leases, exchanges, out-leases and lease-back arrangements. If the challenges can be overcome, the options P3s can offer for federal real estate projects can become a welcomed financial tool for the federal government.

Urges improving efficiency, performance of nation's transportation system

Newly sworn U.S. Department of Transportation Secretary Anthony Foxx (pictured) says transportation needs are "no small challenge" and in taking office has urged improved efficiency and performance of the nation's current transportation system. However, he also acknowledged recently that the country must do that while "working harder than ever to stretch our transportation dollar."

Foxx has urged the use of public-private partnerships to make the transportation system better, citing the Historic Millwork District in Dubuque, Iowa, and the M-1 Rail Project in Detroit as two examples of successful public-private partnerships.

Foxx cited a number of money-saving initiatives already in place and other ways USDOT is seeking to improve delivery of transportation projects across the country. That includes the Federal Highway Administration's Every Day Counts initiative that promotes innovation and saving money on projects across the country. Among its initiatives is the use of Warm Mix Asphalt, a new paving technology that he says is saving millions of dollars every year - $100 million so far.

Foxx also said the Federal Transit Administration is working to ensure new rail and bus projects get started quicker by cutting through the red tape to which these projects have been previously subjected. "This means shovels in the ground sooner, workers on the job quicker, a shorter wait for improved transit and savings for taxpayers," says the new transportation head.

The Federal Aviation Administration, too, is taking a hard look at its policies and procedures, and is modernizing airspace with a move toward NextGen satellite technology. The use of this technology, said Foxx, will save $2.3 million in fuel each year and reduce greenhouse gas emissions by 7,300 metric tons.

Feasibility study shows $1.3 billion to be needed for construction, equipment         

Officials say a public-private partnership is one financial tool that could be utilized to help bring a proposed high-speed rail service between Chicago and Columbus, Ohio, to fruition. A recent study by the Northeast Indiana Passenger Rail Association notes that $1.3 billion is needed to complete the project, making it years away.

The 300-mile system would create more than 26,000 jobs, according to a recent feasibility study, and $700 million in household income along its corridor. Travelers would be on a rail line that travels 110 to 130 miles per hour, making a trip from Columbus to Chicago in less than four hours. Expectations are that once the line is completed, it will be taken over by a private firm for its operation.

"This actually could be profitable," said Columbus Planning Administrator Vince Papsidero (pictured). Officials say Columbus would be the eastern rail stop with other stops in downtown and near Port Columbus. Other proposed stops would be in Marysville, Kenton and Lima. The anticipated completion date is 2020.

In addition to the possibility of public-private partnerships becoming one of the project's financial tools, officials also say the project lends itself to federal as well as state funding. Proponents are looking to the high-speed rail project as an alternative form of travel that could mean a decline in the need for additional highway construction.

Officials of the Northeast Indiana Passenger Rail Association say backers are attempting to raise $2 million for the environmental study that would be necessary for the project and then will seek federal assistance for as much as $10 million needed for an engineering plan.

Maryland schools to get $9 million in security upgrades

Officials with the Montgomery County (Maryland) Public Schools will commit approximately $9 million to new security measures in the schools. The funding will provide additional cameras at its buildings. Of the funding, some $4 million will come from a state school security initiative, that funding matched by the county. The funds will be for both inside and outside cameras and for physical improvements that make visitor check-ins safer. Security gateways also will be installed for administrative offices that are deeper into the building than at the original check-in area. The cameras will be installed at elementary, middle and high schools. For most elementary schools, these will be the first security cameras installed.

Santa Barbara School District approves bond sale for $55M in projects

Sale of an additional $20 million in bonds for elementary schools and $35 million for high schools was recently approved by the Santa Barbara School District. The board also voted to continue a relationship with TELACU Construction Management to plan and prioritize capital projects.

TWDB approves $96 million in water project assistance

More than $96 million in financial assistance has been approved by the Texas Water Development Board for the following Texas entities:

• City of Rio Grande City - $1.93 million from the Clean Water State Revolving Fund to rehabilitate seven lift stations within its collection system;
• San Antonio River Authority - $4.3 million from the Clean Water State Revolving Fund to finance planning costs to develop a watershed master plan for Karnes and Goliad Counties and to conduct a nutrient study in Bexar County;
• San Antonio Water System - $60.1 million from the Clean Water State Revolving Fund to finance the rehabilitation of sanitary sewer and interceptor lines within its system and also to replace a portion of the sanitary sewer main;
• City of Hico - $3,035,893, including a $1.52 million loan and $1,515,893 in loan forgiveness from the Drinking Water State Revolving Fund to address issues with its water distribution system;
• San Antonio Water System on behalf of the city of San Antonio - $26.37 million from the Drinking Water State Revolving Fund to rehabilitate the Nacogdoches and Basin Pump Stations. The funds will also be used for a new 7.5-MG storage tank at the Nacogdoches Pump Station; and
• Greater Texoma Utility Authority on behalf of the city of Ector - $340,000 from the Texas Water Development Fund funds to address issues with the city's elevated and ground storage tanks.

Washington city prepares to issue bonds for city hall, police station

The city of Sequim, Washington, is preparing to issue its first general obligation bonds in its 100-year history to build a new City Hall and police station. City officials plan to issue up to $11 million in bonds. Administrative Service Director Elray Konkel (pictured) said the bonds would cost more than originally thought, but that the city would likely still be able to afford the $15 million facility in spite of higher interest rates. The current City Hall will be used as storage space for the new municipal building. Building a new City Hall will save the city $200,000 per year by eliminating rent payments for some facilities. Some of the amenities that were sought for the police station, such as a firing range, had to be cut. Konkel said that revenue streams such as a public safety sales tax approved last year by voters and real estate excise taxes will be used for the city hall, along with $1 million set aside in 2007 for the new municipal building. Another $1 million from cash reserves will also be used.

Portales looking to build new wastewater plant

Officials in the city of Portales, New Mexico, are applying for a $27 million loan from the New Mexico Environmental Department to build a new wastewater plant. The new plant is needed to meet state standards while also serving the burgeoning population of the city. The current plant is described as outdated and was not designed to handle both residential and industrial waste.

Colorado awards 21 wastewater treatment facilities $14.7M in grants

State grants totaling $14.7 million have been awarded to municipalities throughout Colorado for wastewater treatment facilities. The grants are aimed at helping the plants comply with nutrient standards. Legislation was passed this year to provide the grants, and although a one-time source of funds, officials are hoping the state can continue to provide grants. Although the grants are helpful, there are some concerns about the eventual costs over time to local ratepayers.

Housing grant in Illinois to result in 53 new affordable homes being built

The West Cook Housing Collaborative (WCHC) in West Cook County, Illinois, has been named recipient of $3 million it will dedicate to construction of 53 affordable homes. The funds are part of a $70 million housing grant for communities that have been devastated by the country's foreclosure crisis. According to Attorney General Lisa Madigan (pictured), the funding is part of the $25 billion settlement with the country's five largest bank mortgage services. "We are making a down payment on a better future for families in communities hardest hit by the foreclosure crisis," Madigan said in a statement, saying it will "move us forward on the road to recovery." The WCHC 's five-town redevelopment strategy will benefit from the funding by redeveloping properties affected by the foreclosure crisis near public transportation. That funding will nearly double the work that is already under way, allowing for the addition of 53 affordable homes.

Bids to be sought in fall for Pennsylvania wastewater treatment plant

Bids are expected to be sought this fall for a $34 million new wastewater treatment plant in Clearfield, Pennsylvania. The Clearfield Municipal Authority (CMA) recently accepted $20 million in financing from the Pennsylvania Infrastructure Investment Authority toward the construction. The $20 million includes $16,128,455 in the form of a low-interest loan and a $3,871,545 grant. CMA plans to replace its old wastewater treatment plant that will meet nutrient standards as well as handle storm water overflow in the area. The project is currently in the design state and will take about two years to complete. Construction could begin as early as the spring. In addition to the $20 million in funding, the CMA also has $3.3 million left it its H20 grant and will finance the remainder through a bond issue.

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(To view these stories, click here and look under "Around the Nation.")

Tarleton State University using P3 to build 500-student residence hall

Construction has begun on a new 500-bed student housing project at Tarleton State University in Stephenville, Texas, that is the product of a public-private partnership. The new four-story building (as seen in accompanying artist's rendering) will serve first-year students at the university in an innovative "Living and Learning Community."

Students will be assigned to the 16 communities in the facility. The $25 million project features a modified suite configuration that also includes community spaces, kitchens and study areas on each floor. Balfour Beatty was selected from the five national firms that responded to a Request for Qualifications and was charged with planning, designing and building the new student housing project. This public-private partnership is financed with proceeds of tax-exempt bonds issued by an affiliate of Collegiate Housing Foundation, a national nonprofit organization, under a 32-year ground lease with the university.  

Spaceport America to take out loans to build two visitor centers

Seeking to draw visitors to Spaceport America, the spaceport will take out a $21 million loan to build two new visitor centers in New Mexico. The governor and the state's Board of Finance have approved letting the Spaceport Authority seek private loans for these facilities. The two new visitor centers are expected to be built in Truth or Consequences and at the spaceport site just north of the Dona Ana County line.

The spaceport budget two years ago included funding for the visitor centers, but that $15 million was eaten up in cost overruns for other projects.

Several banks are reportedly interested in financing the projects. "This was critical for the success of our business model," said Chris Anderson (pictured), Spaceport executive director. Officials say the loan could be secured within a month and construction could begin soon after that. She added that the loan will be paid back from revenue from visitor fees and an annual licensing fee from a third-party vendor that will operate the centers. Although the Spaceport initially used a bid process for finding a developer and financier and then entering into a long-term lease for the facility, but none of the bids were accepted.

Colorado company makes $500M investment in Port of Chicago

Chicago officials are touting a partnership with a Colorado company that will result in a $500 million investment in the Port of Chicago. The investment is the result of a more than 60-year lease that officials say will both modernize the port and upgrade its infrastructure. Chicago Mayor Rahm Emanuel said the lease to The Broe Group not only will mean hundreds of jobs, but will also be a much-needed investment that the city has not been able to afford. It has been three decades since the last major upgrade at the port.

The facility has been in need of a major economic boost for years. Operated by the Illinois International Port District, it operated in the black last year for the first time in 10 years. Additionally, according to Emanuel, many of the businesses that previously used the country's largest inland general cargo port have turned to other cities because of the condition of the port. The Broe Group also will partner with Olive Harvey College, providing internships for students studying transportation, distribution and logistics courses.

Minneapolis bringing mixed-use plan to east area of downtown

With fall approval expected on a public-private land deal to support it, a project is in the works by the city of Minneapolis that will bring offices, residential and retail space to the east side of downtown. Mayor R.T. Rybak (pictured) said the vote by the City Council to approve the plan shows they support the idea and are saying, "Come back to us with the details."

The $400 million development will be near the Minnesota Vikings stadium, which will be the site of the Metrodome. The original project includes mixed-use facilities, parking and a public park near the stadium.

The city will borrow $65 million to help build a parking ramp and two-block park and must also find funding through development and naming rights to finance the $10 million to $15 million in park amenities. A special concessions arrangement is being considered to pay for operating the park.

Public-private partnerships among considerations to fund library

The Wichita, Kansas, library board has proposed a new $29 million downtown library. And while the Wichita City Council has moved forward to solicit proposals for limited architectural services regarding the design, the Council also has told the library board it will be built only if they find money to finance it. One of the possible funding mechanisms could be a public-private partnership.

The schematics that the architect will draw will be used to assist with fundraising. The city is not prepared to fund the facility with bonds, as it has pretty much maxed out its general obligation bonding authority on much-needed water, sewer and road projects. The new library would replace the current nearly 50-year-old library. That facility currently is experiencing climate control and electrical problems.

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 Are you a government official who has moved into a new position or to a new agency? Did you recently retire? Were you recently named to an executive-level position at a state-supported college, university or community college? Have you secured a new job as superintendent of a public school? If so, we'd like to hear from you - and so would your friends and colleagues - for our "Where Are They Now" column. Just drop us a line at editor@spartnerships.com and let us know about your previous job and where you are now. This week we feature Rick Cole.

Rick Cole (pictured) earned his undergraduate degree from Occidental College and his master's from Columbia University's Graduate School of Journalism. He began his public service career in 1986 as a senior deputy to a member of the City of Los Angeles City Council. He held elective office in Pasadena, California, including two years as deputy mayor and then two years as mayor. He was also co-founder of the Pasadena Weekly newspaper. After leaving the top job in Pasadena, he became Southern California Director of the Local Government Commission, serving for three years. Cole was named city manager for the city of Azusa in June 1998, holding that position until April 2004. He subsequently was named Ventura city manager, serving in that capacity for more than eight years. In November 2012, Cole took over the job as parish administrator in San Buenaventura Mission and in April of this year also served as transition manager for the Local Government Commission, stepping in to assist with the leadership transition when the founding executive director retired. Cole was recently tapped by Los Angeles Mayor Eric Garcetti as deputy mayor for budget and innovation.

Colorado Parks and Wildlife director Rick Cables (top left) is leaving that job to join Vail Resorts, the country's largest resort operator, where he will serve as vice president of natural resources and conservation for the company, managing the resort operator's navigation of federal regulatory issues surrounding its operations on public lands. Robert O'Neill (top middle), head of the California State Lottery for almost two years, has announced he is leaving that position to pursue other personal and professional interests, marking the third lottery head to leave during Gov. Jerry Brown's third term in office. Roy Roberts is being replaced as emergency manager of the Detroit school district by Jack Martin (top right), Detroit's chief financial officer and former emergency manager of Highland Parks Schools. Gary Cook, chief information officer for the Sacramento Information Technology Department, has resigned, with Maria MacGunigal named interim director. Officials in the city of Boise, Idaho, are beginning to look for a new community ombudsman following the resignation of Pierce Murphy, who has left office for a similar position in Seattle. Erick Cheung, former finance manager for the Contra Costa Transportation Authority, has been hired by the city of Piedmont, California, as its new finance and human resources director. Joliet, Illinois, Assistant City Manager Ben Benson (middle right), who has been with the city for nine years, the last year in his current post, is leaving to take the city manager job in Lockport, replacing former City Manager Thomas Thanas, who resigned in May. Sid Salazar (middle center), assistant superintendent for Quality Neighborhood Schools in San Diego Unified School District, has been chosen as the new superintendent of the Alvord Unified School District, replacing Nicolas Ferguson, who retired at the end of last month. Bennett College in Greensboro, North Carolina, has promoted Senior Associate Provost Joyce Blackwell (middle left) to the position of provost and vice president for academic and student affairs, succeeding retiring Provost Millicent Rainey. The Pitt County (North Carolina) School Board has chosen Dr. Ethan Lenker, superintendent of Sampson County since 2008 with 25 years of education experience, as its new superintendent. Sudbury, Massachusetts, Police Lieutenant Scott Nix has been named the town department's new chief, replacing former Chief Richard Glavin, who resigned in May. The Lubbock, Texas, City Council has appointed Lubbock Preston Smith International Airport Executive Director James Loomis as interim city manager, replacing City Manager Lee Ann Dumbauld, whose employment was terminated by the Council. Nathan (Nate) S. Davis (bottom left), who joined Decatur Township Schools in 2006 and is the current assistant superintendent, has been named superintendent, succeeding Dr. Debbie Sullivan, who is retiring after her 28-year career serving the schools. Ann Cudd (bottom center), College of Liberal Arts and Sciences associate dean for humanities at the University of Kansas, has been chosen to be the new vice provost and dean of undergraduate studies. Peter Arno (bottom right), a 25-year member of the Bangor Police Department who took the deputy police chief position in 2002, will be the new commander of the Maine Drug Enforcement Agency. Matt Fulton, a former north-metro city manager with 25 years of experience and former city manager of Coon Rapids, has been chosen city manager in West St. Paul. Gaudenz Panholzer, who started his fire career in 1977 with the Carmel Highlands Fire District and has risen from firefighter to deputy chief of field operations with the San Jose Fire Department, has been named fire chief of the city of Monterey, succeeding Andrew Miller, who recently retired. Keith Warner, deputy director of the North Carolina Department of Environment and Natural Resources since last year, has been named chief information officer for the department.