To date, because of the use of
design-build procurement, lack of public oversight
and unfavorable lease agreements, California has
experienced two major public-private partnership
(P3) disasters. State Route 91 in Orange
County required a $207 million taxpayer bailout and
is now a public toll road. San Diego County’s
State Route 125 is in bankruptcy and in default on
hundreds of millions of dollars in taxpayer loans.
The 2009 budget package
included expanded P3 authority for state highways.
The legislation required safeguards to ensure
public agency involvement and inspection to prevent
future P3 taxpayer rip-offs.
Regrettably, the Presidio Parkway replacement
project violates those basic public safeguards and
is shaping up as California’s next P3 disaster
through a no-bid contract that will waste one
billion taxpayer dollars.
Public-Private Partnerships: A Failure in California
To date, public-private
partnerships transportation projects in California
have been a failure for taxpayers and commuters.
Presidio Parkway
(Doyle Drive). The cost of San
Francisco’s Doyle Drive replacement more than
doubled when it was converted to a P3. Fully funded
and scheduled to be delivered using the traditional
design-bid-build method, the project was to cost
$473 million and likely would have been delivered
for far less thanks to a favorable bid environment.
As a P3, the project will now cost $1.1 billion and
will be funded not with “new money” but with
availability payments of $28 million to $43 million
a year for 30 years out of the State Highway
Account. Learn more about the Presidio Parkway
Taxpayer rip-off here.
SR 125 (San Diego Toll Road). The
private owners of San Diego’s P3 toll road filed for
bankruptcy protection in 2010. Among those who lost
hundreds of millions of dollars – the Federal
Governments’ TIFIA loan program. This P3 toll road
was supposed to cost $360 million and be complete in
2006. Instead, costs ballooned to $843 million and
the toll road did not open until November 2007.
Legislation in 2006 extended the tolls for an
additional ten years to pay for cost overruns,
requiring the public to pay the private owners
“hundreds of millions of dollars in additional
tolls,” according to the Department of Finance.
SR 91 (Express Lanes – Riverside Freeway).
In 2002, Orange County Transportation Authority had
to buy this public-private partnership tollway
because of a non-compete clause that prohibited
congestion - relieving improvements in the traffic
corridors. Taxpayers were forced to “assume the
turnpike’s debt of $135 million and pay the company
$72.5 million in cash,” in large part because
design-build increased the cost from $57 million to
$130 million. Tolls are currently $1.30-$9.75 per
mile, the highest in the nation.
Public-Private
Partnerships: Failures Around the World
To learn more about other P3 disasters from around
the world, please visit
http://www.ppp-disasters.com
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PECG Press Releases
Budget Deficit Requires End to Wasteful No-Bid Contracts
05/14/12 Press Release
PECG Launches Campaign
Opposing Wasteful, No-Bid P3 Project Conversion
05/10/10 Press Release
News Articles
More States Privatizing Their Infrastructure. Are they Making
a Mistake?, Washington Post, 03/31/12
New Golden Gate Bridge Approach Hits
Funding Snag, San Francisco Chronicle, 2/6/12
SBX is Still the Poster Child for Misguided
Public-Private Ventures, UT San Diego, 1/12/12
Toll-Road Woes Show Risk of U.S. Loans Lawmakers Aim to Expand,
Bloomberg, 1/11/12
SANDAG Officially Takes Over South Bay Toll Road, UT San
Diego, 12/21/11
91 Express Lanes - How it Helped
Change the US Toll Road Landscape, InfraAmericas, 10/28/11
Public Agency Could Take Over SR-125 Toll Road, 10 News San
Diego, 07/29/11
SANDAG Votes to Buy South Bay Expressway, LemonGrove Patch,
07/31/11
Toll Project Bankruptcies Demonstrate Risk Transfer,
Bacon’s Rebellion, 05/27/11
Lessons From Bankruptcy of South Bay Expressway,
San Diego Union Tribune, 05/27/11
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Reports & Documents
California Public Private Partnership
Transportation Projects
Information Sheet, August 2011
P3 Hospitals: The Wrong Direction
Report by Canadian Union of Public Employees, 04/2011
Public-Private Partnerships: Understanding the Challenge
Report by Centre for Civic Governance, 06/2009
Private Roads, Public Costs: The Facts About Toll Road
Privatization and How to Protect the Public
Report by US PIRG Education Fund, 03/31/2009
Evaluations of Public-Private Partnerships
Report by Ron Parks and Rosanne Terhart of Blair
Mackay Mynett Valuations Inc, 01/05/09
100 Flawed, Failed and Abandoned P3s
Report by Canadian Union of Public Employees, 03/2005
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