Farella Braun's Focus on P3's, Part II: Sales Lingo, War Stories from the Rialto, and "Best Practices" Too

Scott Douglas and Jeffrey Sykes of Farella Braun + Martel have their second installment on Public Private Partnership, published in the Fall edition of the California Public Law Journal, vol. 36, No. 4, p. 38 (2013) [the link is to a more user friendly site].  For Part I in this series see our earlier review here.

Part II  has three parts:  (1) Pros and Cons of P3's--although this is mostly pros; (2) a recent "success story", the City of Rialto's 30 year concession for a municipal water and wastewater treatment system; and (3) P3 "best practices."

Part one is a useful run down of all the buzzwords used in selling P3's.  Take a look at the footnotes for some good references on P3 data in the UK, Canada, and Australia.   The article raises some unanswered questions.  For example, one of the key selling points is speed of development;  however, three years is cited as the time it took to negotiate the $176 milllion municipal water and wastewater system in the City of Rialto. With traditional project delivery, the city can hire an engineering team immediately with standard agreements, and while the design is completed the city can arrange it's bond financing, and contractors can be selected with competitive bidding using standard form agreements.  It's not clear that a 3 year process to line up a P3 agreement would be particularly faster.  A P3 converts a pretty straightforward construction project into a very complicated financing deal.  Maybe it can save time and money, but it's unlikely that a smallish city will have the expertise to evaluate how good a deal they are getting, and it's not intuitively obvious that it will save time and money.    

Take a look at the "best practices" section, it's very good.