By on December 24, 2010

The California legislature’s Legislative Analyst’s Office (LAO) blasted a public-private partnership deal between the California Department of Transportation (Caltrans) and investors for the development of Doyle Drive. The plan was to give a private company, Golden Link, a 30-year lease on this vital southern route to the Golden Gate Bridge to perform needed renovation to the route. The state would pay the consortium $173 million for finishing the road, followed by $28.5 million in “availability payments” each year the road is open.

“Overall, our analysis finds that the Golden Link agreement does not meet all the goals Caltrans intended and is not likely to be a good fiscal deal for the state,” Legislative Analyst Mac Taylor wrote. “In light of these findings, we think that the state should consider not signing the contract with Golden Link, and instead build the project with a more traditional approach.”

The total cost of the project is estimated at $594 million on the partnership model, while traditional methods would cost around $490 million — not counting a number of potential cost overruns on the riskier partnership model. In terms of bearing risks, the deal put state taxpayers on the hook if any discoveries of endangered species threatens roadside construction. It offered no guarantee that the companies undertaking the project would finish on time. Because the interest rates that will apply are not yet known, the analyst was unable to estimate the final cost with more certainty.

“Based upon our own analysis, we disagree with Caltrans’ conclusion that the agreement results in a lower lifecycle cost,” Taylor wrote. “As described in detail in another section below, we have concluded that a traditional design-bid-build procurement would be less expensive in this particular case than under the Golden Link agreement.”

The analyst recommended dropping the public-private partnership contract. A copy of the letter is available as a 450k PDF at the source link below.

Source: PDF File Public Private Partnership letter (Office of the Legislative Analyst, 12/22/2010)

[Courtesy:Thenewspaper.com]

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9 Comments on “California Legislative Analyst Blasts Public Private Partnership...”


  • avatar
    John Horner

    Privatized roads are almost always a bad deal for the users and taxpayers. The private company side of these deals always manages to manipulate the system to their advantage.
     

  • avatar
    Gardiner Westbound

    Why would anybody be surprised?

    Politicians are “greased,” make inappropriate promises and concessions, and hand the mess to the civil servants to sort out.

    Most civil servants lack the business experience to negotiate a contract. There’s no downside for them. The state will never really go bankrupt and shut down. It just borrows more and increases taxes. The next generation and the one after that will pay the freight. Regardless, civil servants are rarely held accountable for the things they mess up.

  • avatar
    obbop

    Over the decades when government intrudes or intermingles with the private sector or vice versa or however the entanglement occurs it seems that pert-near always it is the taxpayer who pays the financial penalty while a few folks scurry away with pockets full of cash.
    And local, state and federal governments never seem to learn.
    Hereabouts, in hillbilly heaven/haven, I have witnessed numerous fiascoes over the past three years along with culminations of prior events that rear their ugly heads to bite the taxpayer.
    Ozark, Missouri just HAD to have a city-based owned and operated multi-million dollar “recreation center” with an indoor water park, gym, and other accouterments akin to the offerings provided by private firms in areas where research and past experiences offers hints to private investors that investment in such an attraction can result in a profit.
    But, the local politicos, for whatever reason, decided THEY could concoct such an offering and the local voting idiots believed the contrived propaganda and bleating merrily informed the local elites to proceed.
    Now, a little over a year after completion, as memberships do not meet expectations, local taxpayers are being told to expect higher property taxes to meet the multi-million dollar shortfall.
    I have seen the same or similar event across the USA for many decades.
    What a travesty!!!!!!!!!
    But, obey your leaders/masters and accept the propaganda/brainwashing the “better class” inundates you with.
    Rant and rave mode off.
    Merry Xmas herd.
    Santa shuns the shanty but that’s okay!!!!!
    I didn’t buy a present for anybody this year… not even an orphan!!!!
    Hum Bahbug.
    Will grab a few of the saved bucks after Xmas when donations decline and buy a batch of those Ramen noodle packs on sale and toss them at the local food pantry so that a few waifs won’t have to rummage through dumpster for grub(s).
    Fifty bucks will buy a lot of on-sale ramen and it does sate appetites and provides some basic nutrients and is amenable to dumping in of various add-ons such as hunks of cheap hot dogs, various veggies, etc.
    oh yeah!!!!!!!!!!
    Even an Old Coot can share a little wealth. How about you?
     

  • avatar
    Toad

    Remember, the bureaucrats and public employee unions in California want to kill any public/private partnership in the crib, including the unionized engineers at Caltrans.  No government employee wants to work under the expectations that private employers have.  If California outsources road engineering to the private sector, who will pay state employees to sit in their idling state issue cars all day to watch other people work?

    Caltrans officials estimate that the traditional method of construction would cost $635 million while the public-private partnership would run about $488 million.  A legislative analyst says the private company bid will end up costing more, but remember that the California legislature is bought and paid for by public sector unions.  There is more to this story than “The Newspaper” has reported.

    Read more: http://www.sfgate.com/cgi-bin/article.cgi?f=/c/a/2010/12/22/BABC1GUE6R.DTL#ixzz193vGx0RW

    • 0 avatar

      Sorry, Toad, but I feel The Newspaper has a lot more respectability than the sort of thieves in CalTrans and the bought and paid-for media that continuously support illegal Red Light Camera schemes, even when they are PROVEN to INCREASE accidents and injuries more often than not.  Private companies wanna build and maintain the roads at a cheaper cost than the state? FINE. Let them, but their estimates better come in lower than the State cost, and they should be contractually obligated to stick to them, and pay ALL “cost overruns” out of their own goddamned salaries. Let’s see if they still want to play in the state infrastructure sandbox with THOSE rules.


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