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California Judge Dismisses Engineer Unionís Lawsuit on P3 Project

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An Alameda County Superior Court judge dismissed a lawsuit brought on by the Professional Engineers in California Government (PECG) to halt the Dept. of Transportationís plan to use a public-private partnership for the second phase of the $1-billion Presidio Parkway project in San Francisco.

Presidio Parkway, P3, PECG
Latest ruling on San Francisco project, valued at $1 billion, pleases ACEC California chapter.
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After the union successfully got the court’s approval for a temporary restraining order in late November, which the judge dissolved Dec. 22, Caltrans selected one of its P3 bidders for the design, construction, finance, operation and maintenance for 30 years of the new parkway. The $488-million contract was awarded to Golden Link Concessionaire LLC, whose partners include Essen, Germany-based HOCHTIEF Concessions and Meridiam Infrastructure, Luxemburg. The consortium’s construction team is led by HOCHTIEF subsidiary, Longmont, Colo.-based Flatiron Construction Corp.

Meanwhile, the lawsuit, which sought a permanent injunction and writ of mandate to stop the P3 and instead use a conventional design-competitive bid-build process, continued to be reviewed. Judge Wynne Carvill’s ruling rejected all of the PECG’s arguments, including the union’s main contention that the P3 agreement violates the California Streets and Highway Code’s section 143. Judge Carvill says in the ruling that PECG “alleges” section 143 requires all P3 projects must rely on tolls and user fees rather than existing state and federal transportation revenues, but that the P3 in this case is financed by fuel tax revenues. After thorough examination of the section, the judge ruled that although “toll and user-fee language” is found in section 143, none of the mentions specifically bars the use of other funding sources.

“Judge Carvill really did his homework on the ruling and we are obviously very pleased at the outcome,” says Paul Meyer, executive director of the American Council of Engineering Cos. of California. “If PECG had won, it would have been a real negative for investors in California and bad for P3s in general.”

In a statement, PECG’s spokeswoman Lisa Marie Burcar says the union will file an appeal. Burcar says that if Judge Carvill’s decision is not overturned, “private contractors will inspect the work of other private contractors thru no-bid contracts, wasting up to $1 billion and eliminating thousands of jobs.”

“Our critical transportation infrastructure in California is desperately in need of modernization and without the flexibility offered by alternative delivery mechanisms—such as P3s—major projects will not get off the drawing board, crucial jobs will be lost, and we will be left in the dust by our economic competitors,” says Meyer in a press release following the decision. ACEC has been actively fighting on Caltrans behalf since the state’s P3 law was enacted in February 2009. The legislation, pushed by former Gov. Arnold Schwarzenegger, authorizes Caltrans and regional transportation agencies to enter into P3 contracts without the need for further legislative action.

In a statement, Caltrans says it is “pleased with the judge’s ruling and is ready to build upon the progress already made on this innovative project. Under this public-private partnership, California taxpayers are getting a 30-year guarantee that the project will not only be built on time, but also maintained at the highest levels during the life of the agreement. Furthermore, the agreement provides taxpayers with good value for their money by transferring some financial risk from the state to the private developer. Caltrans will continue to work toward getting the next phase of the project underway as quickly as possible for the maximum benefit of the public.”

 

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