Developments, Schools, Garages, Transit, Housing, Facilities & More
While Public Private Partnerships (P-3s) have occurred throughout our nation’s history, a new and legislatively-blessed imperative exists for their use. Virginia has taken the lead in the use of P-3s, with Maryland and several other states following suit. Not to be left behind, the District of Columbia is poised to pursue this “new” approach for delivering public works projects faster and more economically. So with such expanding building opportunities, WBC interest was high to get in on the action leading to the February 27 WBC Program and Education Committee event at the Mayflower Hotel.
The P-3 Panel consisted of Chris Lloyd, McGuire Woods Consulting; Jamie Kendrick, Maryland Department of Transportation; and Jamie Martin, Edmore Real Estate/Clark Construction, with Dirk Haire, Fox Rothschild, as moderator.
Chris Lloyd began the panel presentations. Prior to consulting for McGuire Woods, he served for nearly five years in the Office of the Secretary of Commerce and Trade under Virginia Governors Allen and Wilder. Mr. Lloyd was instrumental in the development and passage of Virginia’s Public-Private Partnership laws, which is the model now being copied in other states. Recent P-3 legislation provides little in the way of new authority; its importance is as a legislative tool to articulate policy and a procedural framework for predictable, transparent, and accountable public-private partnerships. As the bellwether state, Mr. Lloyd stated the P-3 process still took time, some 19 years since the passage of the first law with required changes to take advantage of new processes and financing tools to make these projects work better. A major improvement of Virginia’s P-3 legislation involves the ability to directly pursue unsolicited proposals rather than having all P-3 contracts result from traditional procurement solicitations. Also, the Virginia’s P-3 legislation significantly expands public involvement. Thus, private partners failing to adequately engage the public do so at serious peril to their projects.
Jamie Kendrick is Deputy Executive Director for Transit Development and Delivery, Mass Transit Administration, under the Maryland Department of Transportation. Mr. Kendrick stated that the Maryland P-3 legislation, passed in 2013, after going through two previous attempts, guaranteed many protections for public involvement and oversight during the legislative process. Never-the-less, the Maryland P-3 legislation represents a huge change in mind set that goes far beyond design-build state procurement processes and required letting go of control. In return, the state anticipates greater innovation, a shorter development period, less cost, and risk sharing. Two of the P-3 Maryland DOT projects are the 16-mile Purple Line in Suburban Maryland connecting Montgomery County and Prince Georges County to run between Bethesda and New Carrollton, and in Baltimore, the Red Line to run 14-miles from Woodlawn in the west through downtown to Johns Hopkins Bayview Medical Campus in the east. In addition to developing the new public facilities, both these transit projects will involve long term operation concessions. The Purple Line is proceeding first and Maryland DOT is currently evaluating private developer team proposals. Construction could begin as early as 2015. MTA PRESENTATION – 2.2 MB
Jamie Martin, Vice President/Managing Director for Edgemoor Infrastructure & Real Estate, an affiliate of the Clark Construction Group, represented the developer side of P-3s on the panel. His P-3 experience includes the $490 million George Deukmejian Courthouse in Long Beach, CA, the University of California San Francisco Sandler Neuroscience building, and locally the Arlington Mill mixed-use project. While starting his comments with the statement that all P-3s are truly unique, Mr. Martin went on to astutely discuss factors leading to successful P-3 and challenges to success include:
• Strong-willed public face to the enterprise
• Ability of pay for the project
• Clarity of the scope and process
• Risk and its allocation understood
• Assembling the right team with experience working together
• Strong commitment to innovation and speed
• Confidence and trust among all parties
Mr. Martin explained the cost involved with preparing P-3 proposals can run into the millions of dollars. Governments tend to pile on financial burdens such as bonding, retainage, and liquidation damage guarantees. Add to that, winning proposals are becoming increasingly harder as new experienced players from abroad are entering the market and government stipend for proposal preparation fails to provide any meaningful compensation. The two-step solicitation process of first qualifying teams prior to invitation to submit proposal does help to reduce the risk burden to responding to requests-for-proposals.
Following these presentations, Dirk Haire moderated questions and panel responses. Two questions seemed to be of prime importance to the WBC audience: likely future P-3 projects?; and opportunities for sub consultants? Mr. Kendrick said beyond the suburban Maryland Purple Line and the Baltimore Red Line, a new Baltimore jail, a Baltimore City/State Court House, and a new Prince Georges County hospital are likely candidates for P-3 procurements. In the longer run, school renovation programs are areas for P-3 opportunities similar to the recently with the Maryland Stadium Authority to renovate schools in Baltimore. Within the District of Columbia, the proposed streetcar lines were cited as potentials for P-3 projects. As to sub consultant opportunities, Mr. Kendrick made clear such opportunities will develop, but not in the early phases when projects are being contracted. As projects proceed, sub consultant work will be an essential component of all major P-3 projects. Governmental incentives will clearly encourage the use of minority, small and disadvantaged businesses in P-3 projects.
About the Author
With over 30 years experience in project management, Klein Consulting facilitates redevelopment and entitlements through analysis and outreach. 240-848-4951