Saturday, November 10, 2012

LAO Estimates LB Courthouse Will Cost $160 Million More than It Could Have If Private-Public Partnership Not Used

The Legislative Analyst's Office in Sacramento has issued a scathing report about the model used to finance and build the Long Beach Courthouse. The courthouse project entails using a private developer to finance, design, build, operate, and maintain the Long Beach courthouse over a 35–year period in exchange for payments from the state totaling $2.3 billion. 

The LAO found that had the courts not used the private-public partnership that it: 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 LAO reports also provides a chart listing the problems with the LB Courthouse project:

See the entire report: Maximizing State Benefits From Public–Private Partnerships

But the bad news doesn't end here

An article on the Judicialcouncilwatcher has more bad news about the LB Courthouse: “This whole story of the Long Beach Courthouse and the spending of SB1407 bond funds by the AOC has legs” the note concludes, “as bad as you think it is now, it is far worse than anyone can possibly imagine” 

First payment is due on LB Courthouse -- Who Will Pay

Also on Judicialcouncilwatcher is an article by Capitol Accounts reporter Cheryl Miller pointing out the current financial problems related to the LB Courthouse that will not open for another year:
The bells and whistles reflect the hype over the judiciary’s first attempt at a public-private financed courthouse project on the site. Private investors provided the capital to build the 31-courtroom downtown facility in a scheme that promised a cheaper building delivered faster. The public will cover the costs over a 35-year lease-to-own plan.

Problem is, that first bill is coming due soon and nobody seems sure who is going to pay it. That could spell trouble for other courthouse projects planned around the state.

In an Aug. 20 letter to Interim Administrative Director of the Courts Jody Patel, state Senate Budget Chairman Mark Leno warned judiciary leaders not to look to the state for help when the first service fee for the Long Beach courthouse must be paid in the next fiscal year.

Lessons Long Beach Should Take Away From This

The spin on the streets and backrooms in Long Beach is that the City should enter into a similar private-public partnership with a developer who would demolish City Hall and the current courthouse and build a grand, new Civic Center which the City would lease to own. (Let's leave the argument aside about why we can ill afford to build a new city hall when we can't pay for enough police...)

Well, if the LAO is correct, and government has a long ways to go before it knows fully what it is doing in entering a public-private partnership -- then don't you think the City should wait before we jump on this band wagon any time soon?

A Tunnel Not Built -- But a Million Dollars Spent

The news about the overall courthouse project is sobering. I am still trying to get the official answer from City Management to, why if a tunnel was needed to transport prisoners between the Long Beach jail and the new courthouse, the tunnel was not included in the current plans (and now certainly should be included with the $160 million dollars extra this project is costing).

The other questions not yet answered are:
1) who did the City pay $1 million dollars in oil monies to do a feasibility study about building the tunnel (a study that was supposedly done a considerable time after construction on the courthouse had been underway);

2) why did it cost $1 million to find out that a tunnel was not feasible;

3) what did the City receive for the $1 million dollars (that could have been better spent on police, fire, recreation, libraries, streets, sidewalks....); and

4) where is the $ 1million dollar study/report that apparently concluded the tunnel wasn't feasible?

Just as the entire courthouse project was found not to be "transparent" -- it appears that the issue of a City of Long Beach financed tunnel connecting the courthouse is lacking in transparency as well. Taxpayers deserve to know how the City of Long Beach spent $1 million dollars and more importantly, why it spent the money.

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