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Will Los Angeles County Get Its Own P3 Enabling Law?

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(Editor’s note: As public private partnerships are debated here in Virginia, it is interesting to see that Los Angeles which has more people than Virginia wants to have the authority to negotiate such transportation agreements.)

California has long been seen as having the greatest need of all 50 states for large-scale investment in transportation facilities via long-term public-private partnerships (P3s). Although it enacted the nation’s first P3 law in 1989 (AB 680), that law authorized only a four-project pilot program, which led to only two tolled highway projects being developed. It was repealed in 2002. There was no serious effort to enact a large-scale transportation P3 measure until the governorship of Arnold Schwarzenegger. That effort eventually produced SB 4 in 2009, which allowed an unlimited number of projects but included a sunset date of Dec. 31, 2016. Thus far it has yielded only a single project, Phase 2 of the Presidio Parkway.

The problem is embedded in aspects of the law that give too much authority to micromanage P3 projects to Caltrans—which in practice means the unionized Caltrans engineers, members of Professional Engineers in California Government. PECG has opposed P3s from the early days of AB 680, has lobbied successfully to keep design-build from being a routinely used tool for transportation projects, and litigated against the P3 process used for Presidio Parkway. And when the Los Angeles County Metropolitan Transportation Authority embraced P3s in a big way several years ago, the assertion of Caltrans and PECG authority over numerous aspects of their first large project (ARTI) led to its being terminated—and has called into question LA Metro’s plans for even larger P3 projects.

While the P3 community has been lobbying hard to remove the sunset date from SB 4 (which is now Section 143 of the Streets & Highways Code), LA Metro has proposed a new law, Assembly Bill X 1-12, in the current special session of the legislature. It would delegate nearly all the authority for P3 projects in Los Angeles County to LA Metro, allowing it to use its own engineers and outside consultants for project design and development (rather than PECG members), let LA Metro establish its own performance measures for such projects, and “cooperate” via mutual agreement with Caltrans on questions dealing with “design, construction, maintenance, and operation of state highway facilities” in connection with a P3 project. Since these projects would be largely funded by toll revenues and local sales tax revenues, LA Metro would not have to seek approval of each one from the California Transportation Commission.

ABX 1-12 would also grant considerable tolling flexibility to LA Metro, ensuring that toll revenues from its P3 projects would go to it rather than to Caltrans, allowing tolling to continue past the end of a P3 concession agreement, and permitting excess toll revenues to be used for other highway (Title 23) projects in the county. And ABX 1-12 has no sunset date.
This effort at first glance looks like a real long-shot, except for a couple of key factors. First, LA County is solidly Democratic, in a state in which Democrats hold the governorship and large majorities in both houses of the legislature. So it’s conceivable that the legislature could make an exception for this powerful county, despite all-out opposition from PECG (which would still retain its current powers everywhere else in the state).

Second, in response to the idea that a mere county does not deserve to have its own P3 enabling law, consider that at 10.1 million people, LA County is the equivalent of America’s eighth largest state. It is bigger than Michigan (9.8 million), Georgia (9.7), North Carolina (9.5), New Jersey (8.8), and Virginia (8.0). A workable P3 law for LA County could unleash a sizeable pipeline of financeable transportation projects.

(This article first ran in the October 2015 issue of Surface Transportation Innovations)

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