Made in the USA
The facilities push has crossed the border. Now under way in Long Beach, Calif., is the first non-transport P3 in the U.S., a $492-million courthouse that, totaling 540,000 sq ft, will be the state's largest when completed in 2013.
While the project start was slow due to legislative roadblocks, its "performance-based" approach allows the courts to deduct a portion of debt if there are building problems. The consortium—led by Meridiam Infrastructure North America, with Clark Construction and AECOM—can also evict the state and convert the building for private use if rent isn't paid.
Funded by about $45 million in equity and additional bank debt financing, costs will be repaid once courts take occupancy. P3 boosters see a heartening trend: The consortium is an all-U.S. team. The 35-year lease-leaseback contract is off the state's balance sheet, notes Public Works Financing, a popular P3 newsletter. Gary Brennen, co-president of MEP engineer Syska & Hennessy, calls it a groundbreaking approach and credits Meridiam for finding lenders as credit markets tightened.
California won't commit to P3 on up to 500 backlogged courthouse projects, and the U.K. may reduce private finance on social infrastructure (see story, next page), but others see potential. Austin, Texas, is weighing P3 on a $300-million courthouse, as is Maryland for schools, pending legislative passage of new state funding, says Sallye Perrin, Parsons Brinckerhoff vice president and P3 practice leader. The Port Authority of New York & New Jersey is reportedly exploring P3 for facilities as well as for transportation projects
