Design-Build and Public Private Partnerships

In 2009, the California legislature amended Section 143 of the Streets and Highways Code and greatly expanded availability of the public-private partnership (“P3”) as a mechanism to finance transportation infrastructure projects. In early 2010, under the authority of the newly amended Section 143, the California Department of Transportation (“CalTrans”) began to implement part of the Presidio Parkway Project (“Project”) as a P3.
Continue Reading Public Private Partnership Upheld For Construction of Presidio Parkway

By Bram Hanono and Greg Woodard

California Labor Code sections 1720 et seq. (the Prevailing Wage Law) ("PWL") require employers (including developers and contractors) engaged in public works projects to pay the prevailing wage to their employees if the project is "paid for in whole or in part out of public funds." The Second Appellate District Court of Appeal recently ruled that private developers must pay prevailing wages for the construction of all public improvements in connection with a development project if public funds are used to finance any part of the public improvements, even if the remaining public improvements are paid for with private funds. The California Supreme Court declined to hear the developer’s appeal. Therefore, developers and contractors could face increased project costs as a result of this case.
 Continue Reading Developers Must Pay Prevailing Wages for Privately Financed Public Infrastructure

By Meredith A. Jones-McKeown

Most Local Governments Can Now Use Design-Build Methodology on Projects Over $1 Million

All cities can now use design-build project delivery systems for buildings with a value above $1 million. For solid waste management and wastewater treatment facilities, a pilot program also allows cities, counties, and special districts to use the design-build method on 20 such projects if valued above $2.5 million. Assembly Bill 642, codified at Public Contract Code §§ 20175.2 and 20193, took effect January 1, 2009. Existing law (Public Contract Code § 20133) already authorizes counties to use the design-build methodology for building and wastewater projects over $2.5 million.
 Continue Reading Two New Laws Create More Design-Build Opportunities for Local Governments and State Agencies

This article is part one of a series of three articles by the author regarding public-private partnerships.

By Edward B. Lozowicki

At an increasing rate, state and local governments are considering public-private partnerships, or "P3s," to finance, design and build public infrastructure projects. A P3 refers to a contractual agreement between a public agency and a private entity, whereby the private entity provides the financing, design, development, construction, operation, and/or maintenance of a public infrastructure project. It could be said that the trend in the U.S. toward P3 financing structures began in 1989, when California enacted Assembly Bill 680, authorizing P3s for several transportation projects and leading to the construction of two toll roads in Southern California. Today more than half the states have P3-enabling legislation, and P3s are being considered for an increasing number of projects. Canada has likewise seen the growth of P3s in recent years, with 27 such projects reaching financial closing between 2004 and 2007. Indeed, Canada now has a federal P3 office, and P3 agencies in Quebec, Alberta, Ontario and British Columbia.Continue Reading Public-Private Partnerships: A Growing Trend (Part I)

This article is part two of a series of three articles by the author regarding public-private partnerships.

By Edward B. Lozowicki 

The advent of public-private partnership agreements in turn gives rise to potential conflict with other statutes regulating procurement of public works projects. For example, is the P3 infrastructure project a "public work," and are "public funds" used to fund the project? If the answer to one or both of these questions is yes, then the private entity may incur liability if the design, construction and/or operation of the project would result in the violation of any local regulations pertaining to public works. For example, a "public work" could be subject to state prevailing wage laws, whereas a privately funded work would not.[1] Thus, the definition of "public work" and "public funds" as applied to P3s may lead to litigation if not addressed up front.Continue Reading Public-Private Partnerships: Potential Conflicts With Prevailing Wage Laws (Part II)

This article is part three of a series of three articles by the author regarding public-private partnerships.

By Edward B. Lozowicki 

In the United States, public contracts are generally subject to the competitive bidding process as a matter of public policy. This is considered the best way to serve the public interest, if for no other reason than to save the taxpayer money by securing construction services at the lowest possible cost. With the growth of P3s, however, local governments are more likely to apply alternative approaches for procurement, which in turn face criticism, and challenges in court.  Continue Reading Public-Private Partnerships: P3s and Competitive Bidding Laws (Part III)