[News] Lawsuit challenging public-private partnership in California
A piece in today's Wall Street Journal (Ianthe Jeanne Dugan, In California, a Road to Recovery Stirs Unrest) describes the legal challenge against the new highway to the Golden Gate Bridge from San Francisco. This $1 billion project is a public-private partnership with foreign investors under a new law that allows private firms to build public roads in California. California is to give the foreign investors a lump sum when the project is completed, scheduled for 2014, and pay off the rest over 30 years, saving the cost of selling bonds for the already cash-strapped state.
According to the article, a union representing 9,000 public workers brought the suit in State Superior Court in November claiming that state and county transportation agencies are "illegally proceeding with a public-private partnership." The suit is asking the court to force the state to put the project up for bid and stop work in the meantime. While the case awaits a hearing, construction is proceeding. Professor Michael Likosky, quoted in the article, explains that this case holds ramifications for similar projects around the country.
At a time when cities and states struggle financially, public-private partnerships (instead of traditional public procurement processes) might offer a solution to financing very costly infrastructure projects. However, this case brings to the fore the question of the limits of this approach.