Curtis Child, COO of the California Administrative Office of the Courts: "We don't anticipate doing any more P3 projects"

Cheryl Miller, of the California legal journal "The Recorder" has a follow up to our earlier posts on the Long Beach Courthouse.  It's not good news for proponents of PPP.

SACRAMENTO — State Senator Loni Hancock is not usually given to verbal fireworks. But the typically mild-mannered Berkeley Democrat did not hide her anger with judicial leaders Thursday as she publicly quizzed the Administrative Office of the Courts about the Long Beach courthouse financing fiasco. 

"My question is, to the AOC: How did you let this happen?" Hancock asked, her voice bubbling with exasperation. 

The Senate budget subcommittee hearing provided the first real legislative grilling the AOC has received over the controversial project. And it probably marked the final nail in the coffin for judicial hopes that lawmakers will change their minds and cough up state money for the Long Beach building.

The Legislative Analyst's Office recently concluded that the judicial branch may overpay by $160 million for the new courthouse because it relied on overly rosy projections when penciling out costs for the untested public-private financing deal.  "It turned out that the LAO's projections were correct," Hancock said at Thursday's hearing. 

Branch leaders assumed the state general fund would pick up the average $60 million annual payment for the building, even though a contract with the private construction consortium never specified what public entity would ultimately cover the tab. When lawmakers and the governor quashed those expectations last year, the Judicial Council was forced to shelve four other courthouse projects planned for Los Angeles, Fresno, Nevada and Sacramento counties to free up enough internal construction money for Long Beach.

"I frankly think that every [court with a] courthouse that is delayed because of this ought to raise some questions," Hancock said.

AOC officials, however, wouldn't concede that they made any mistakes with the Long Beach courthouse, which will ultimately cost $2.3 billion over the life of the contract. "I'm not sure this was letting anything happen," said Curtis Child, the AOC's chief operating officer. "We're still quite confident ... this is a bargain for the state."

Asked by Hancock if the branch had learned any lessons from the financial deal's shortcomings, Child said it was too early to say, that an evaluation of the building's quality after the life of the contract might be the best measure. Hancock pointedly noted that neither she nor Child is likely to be active in state government in 35 years.  "It's not going to be particularly helpful," she said.  Hancock instead said she'd push for language in this year's budget that would stop state entities from using "unsubstantiated assumptions" when trying to justify public-private partnership, or "P3" deals.

"We really can't be careless with one public dollar when we're closing courthouses," she said. Any such statutory restrictions may not affect the judiciary, which apparently has decided to stick to traditional construction financing methods in the future.

We don't anticipate doing any more P3 projects," Child told the subcommittee on Thursday.