National P3 Update

We posted our first installment of the National P3 Update, focusing on higher education and social infrastructure P3s in May. Here is the latest on those projects, and new P3s that have emerged since then.

State of Hawaii Entertainment District: The State of Hawaii has announced that it will be issuing an RFQ at the end of the year for a P3 that will redevelop Aloha Stadium and build an entertainment district around it.

Prince George County Public Schools: Prince George County shortlisted four proponents after issuing an RFQ for the design, build, finance, and maintenance for six new public schools in the County. The shortlisted proponents were Engie/ Meridiam/Hensel Phelps, Edgmoor/Clark/Star America/Johnson Controls, Fengate/Stantec/Gilbane/ABM Facilities, and Preston Hollow Capital. The RFP will be issued in October.

Blaisdell Center P3: The City of Honolulu received 13 responses to its Request Expressions of Interest for the redevelopment of its civic center. The project would include a concert hall, arena, and exhibition hall. The city has issued an RFQ and responses to the RFQ are due at the end of October.

Miami-Dade County Courthouse P3: Miami-Dade County selected its preferred proposer for its Civil and Probate Courthouse P3—the team led by Plenary. The County expects to get County Commission approval of the project agreement in November.

City of Los Angeles Civic Center P3: The City of Los Angeles shortlisted proponents that responded to its RFQ in August: DTLA Civic Partners, Plenary Collaborative Los Angeles, and LAC Partners. The project is a design, build, finance, operate, and maintain that will include a government office facility, childcare center, and conference center. The city expects to issue a RFP at the end of 2019, with responses due in the beginning of 2020 and award and execution of a project agreement at the end of 2020.

Alabama Department of Corrections P3: The Alabama Department of Corrections is analyzing five responses to its Request for Qualifications for the construction of three new prison facilities. The respondents were tasked with identifying the scope of the agreement. A RFQ was issued and five teams responded in August: The Geo Group, Corvias, Corrections Consultants, Core Civic, and Alabama Prison Transformation Partners.

Dartmouth Heating P3: Dartmouth College shortlisted four teams for its Heating Plant and Distribution System project in July:.ENGIE (Meridiam), Enwave District Energy (Kiewit/Enwave), John Laing (Laing/Acciona), and Blackstone Group The project is to design, build, finance, operate and maintain a thermal generation facility that will be powered by a renewable fuel source, as well as a new hot water distribution system.

California State University, Fresno Central Heating and Cooling Plant Modernization P3: Fresno State shortlisted four respondents for its Central Heating and Cooling Plant Modernization P3 in April 2019. The shortlisted teams include Bulldog Energy Alliance, Bulldog Infrastructure Group, Plenary Utilities Fresno, and Victor E. Energy Partners. The project is for the design, build, finance, and maintenance of a central utility plant, ancillary infrastructure, and implementation of energy efficiency upgrades all over campus. A RFP is to be issued in November.

Travis County Civil and Family Courts Facility P3: The Travis County Courthouse P3 reached financial close on May 9, 2019. The facility, located in Austin, Texas, is a 430,000 square foot civil and family court facility that is set to be complete in 2022.

Santa Rosa Junior College Student Housing P3: Santa Rosa Junior College selected Servitas as its preferred bidder for its student housing P3. The project is to design, build, finance, operate, and maintain a 360-student housing facility. The other shortlisted developers were Greystar and the Michaels Organization.

Vanderbilt University Student Housing: Vanderbilt selected Lendlease as its preferred bidder to design, built, operate, and maintain a graduate and professional student housing village.

Untangling Tolls and P3s

The Alabama Department of Transportation recently released a “Myth Busters” communication in response to recent criticism of the agency’s plans to deliver a new bridge and byway project as a public-private partnership. ALDOT’s response focuses on common misconceptions about how the tolls will be imposed and why tolls are necessary for this particular project (which is, in fact, being delivered as a toll-revenue P3). However, in light of the recent pushback against tolls in a variety of jurisdictions, including South Florida, it is worth clarifying the relationship between tolls and public/private partnerships.

In brief, tolls and P3s are independent concepts. In fact, most toll roads are not public-private partnerships—in such situations, the government sets and collects tolls itself as a means to pay for the asset. In addition, most recent P3s do not involve tolls—the private developer of an asset is often repaid by the government directly, through annual availability payments, with no tolls imposed on users of the asset. The recent PortMiami Tunnel is an example of a recent P3 that does not involve tolling. It is also worth considering that even if a P3 asset has tolls, the private developer is not necessarily the party receiving the toll revenue–the government may choose to collect tolls on a P3, but keep the toll revenue itself and instead pay the developer an established annual availability payment. A P3 may also be structured in a manner where the private partner bears the type of risks associate with tolls, but no tolls are actually collected from the public—instead, the government will pay the developer a “shadow toll” for each user. The bottom line is that there are many ways to structure a P3 to accomplish the government’s objectives, and that tolls need not be part of the equation.

Public-Private Partnerships and Dispute Resolution

We have extensively written about how public-private partnerships (“P3s”) offer better, more efficient solutions to public infrastructure needs, and about how, given their effectiveness, they’ve become a preferred method for funding and managing infrastructure projects in and outside of the U.S. P3s, in short, effectively leverage private funding and expertise with government resources to more efficiently address public needs—often yielding extraordinary results. Yet, while P3s deliver more than just better results than traditional procurement methods tend to, they also incentivize more efficient dispute resolution, too. That is, while ordinary litigation options are typically still on the table, given the long-term arrangements between the parties involved, they tend to seek out faster dispute-resolution options like arbitration, for instance, instead of diving into years of costly, public litigation.

To be sure, P3 teaming arrangements are intricate and complex. A P3 proposer usually consists of a consortium of private entities who, through a special purpose vehicle, submit a proposal to the public entity and, if selected, enter into an agreement with that entity on the one hand, and numerous subcontractors on the other, to address a specific need—such as providing social infrastructure, transportation, or a new utility. From there, the P3 entity would then design, build, finance, operate, and maintain the asset for years to come. Essentially, they remain partners on a single, long-running project, as opposed to typical design-build arrangements where the private-party’s interests are short term. So, given the long-term nature of and goals for any given P3 project, the proposer’s and public entity’s interests tend to be more aligned as both sides have an interest in the project’s ongoing success given long-term operations and maintenance contracts are typically part of the deal.

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Insourcing for P3s

We have previously discussed how leveraging private-sector expertise and financing through a P3 can bring many benefits to the public, including faster delivery of new infrastructure, higher-quality maintenance and operations, and lower lifecycle costs.  However, in order to take full advantage of the P3 model, a government must ensure that it has the right internal resources to design and manage the project.  A P3 is not a substitute for poor planning, and the best P3s are the product of thoughtful and thorough preparation with the right combination of subject-matter experts.  Typically, a government will engage three types of consultants to plan and execute a P3 project: a legal advisor (to navigate regulatory hurdles and negotiate the critical project documents, which require a different risk allocation than typical public construction contracts), a technical advisor (to determine the technical criteria and design requirements for the project based on the particular asset class), and a financial advisor (to help negotiate business terms and ensure that the project yields the best value to the public).  Due to the unique legal, technical, and financial challenges of a P3 (which, by its nature, will include novel approaches in each category), outside expertise in each of these areas is critical to achieve success.   In fact, in all of the major local P3 projects throughout the nation that have successfully moved forward (including the UC Merced campus expansion, the Los Angeles APM, and the Long Beach Courthouse) the local government utilized experienced P3 consultants in all three areas.

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2019 South Florida Opportunity Zone Report

Bilzin Sumberg is pleased to share the results of the 2019 South Florida Opportunity Zone Survey and subsequent Forum that we co-hosted with Urban Land Institute Southeast Florida/Caribbean (ULI SE FL/Caribbean)  on June 5, 2019. The Report captures the perspectives of developers, investors, and other professionals who specialize in real estate and finance in Florida, to delve into how the industry is thinking about the Opportunity Zone program and where the opportunities lie. Specifically, the report aimed to examine issues including:

  • strategies with transformative economic potential to create lasting change in South Florida’s blighted neighborhoods
  • legislation pertaining to the governance of Opportunity Zones and related investment issues
  • the greatest benefits and obstacles for investing in Opportunity Zones
  • asset classes most ripe for development in South Florida

Click here to view the report

Miami-Dade County Zoning Law: Mandatory Minimum Electric Vehicle Parking Ordinance Passed

electric vehicleThe Miami-Dade County Board of County Commissioners recently adopted an ordinance establishing off-street parking requirements for electric vehicles (EVs) which mandates minimum EV parking spaces in all new uses with limited exceptions provided below. The ordinance defines the terms pertaining to EV infrastructure, such as EV Supply Equipment (EVSE), EVSE Space, and EVSE-Ready Space and establishes penalties for misuse of parking spaces designated for EV charging.

The ordinance establishes two sets of criteria. One set to be used prior to January 1, 2022, and another to be used after January 1, 2022, when it is anticipated that most automakers will have switched to predominantly EV production lines thus the number of EVs is expected to increase considerably. In particular, the ordinance recognizes that automakers are investing over $90 billion in the development of electric and hybrid models and that General Motors specifically announced an all-electric path to zero emissions with the introduction of at least 20 new EVs to launch by 2023. Continue Reading

Coral Gables Zoning Law: Modified Open Space Zoning Code Creates New Design Challenges

Coral Gables Zoning Law

The City of Coral Gables’ zoning code landscape and open space requirements were recently amended as of May 14, 2019. The Coral Gables’ zoning code now requires landscape open space to be provided at the ground level and to be “open to the sky.” This update will have a significant impact on real estate development proposals in areas such as the Coral Gables Central Business District (CBD), downtown Coral Gables in general, and North Ponce de Leon corridor.

Of critical importance, the ordinance provides that any submittals which have not received final Board of Architects approval must comply with these amendments; thus, potentially delaying approvals. This will create a new challenge to developers who may be required to redesign projects already proposed in order to comply with the new requirements. Continue Reading

Energy, Power, and the P3 Delivery Model

energy infrastructureWe previously wrote about whether and how public-private partnerships (P3s) could be the answer to U.S. infrastructure issues and the many ways in which the P3 delivery model provides unique value. While P3s are used in a variety of sectors of infrastructure development, energy and power projects particularly lend themselves to the P3 delivery model. Technology is the main driver in any energy project, whether it is power plants and natural gas facilities, implementation of wind and solar power, or the overhaul of entire utility systems. Furthermore, because of the importance of renewable, efficient, and sustainable energy, this technology is constantly changing and improving. Continue Reading

Florida Zoning Appeals Law: Miami-Dade County Special Exception Denial Quashed

PublixIn the recent decision of Publix Supermarkets, Inc., v. Miami-Dade County, Case No. 17-082 AP, the 11th Judicial Circuit Court in and for Miami-Dade County held: (i) the applicant successfully carried its burden in a quasi-judicial hearing before the zoning appeals board of Miami-Dade County (the “County”); and, (ii) that the opposition failed to establish the required “competent, substantial evidence” to deny the application. Thus, the circuit court granted the applicant’s Petition for Writ of Certiorari, quashed the resolution that denied the application, and remanded the case to the zoning appeals board. Continue Reading

National P3 Update: Water and Sewer Infrastructure

Water and Sewer P3We recently provided an update on the status of higher-education and social-infrastructure projects being delivered under the P3 model. This update focuses on water and sewer projects—although water and sewer infrastructure is rarely given much attention, its proper operation is obviously critical to our well being. Unfortunately, many of our nation’s water and sewer systems are the victims of deferred maintenance (a problem that P3s can address), and the current situation is dire. As discussed at last week’s USP3 conference in New York, public water systems in the United States require $335 billion in upgrades over the next 20 years, and the public sewer systems require another $298 billion in upgrades. Fortunately, several jurisdictions are considering P3s to address these needed projects. Water-and-sewer P3s currently in the procurement pipeline include: Continue Reading

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