After failing in court to stop the California Dept. of Transportation from using a public-private partnership contract on the Park Presidio replacement project in San Francisco, the Professional Engineers in California Government union plans to appeal that decision as it prepares for months of political sparring over the state’s budget deficit and the role of public unions.
On Feb. 18, Alameda County Superior Court Judge Wynne Carvill shot down PECG’s lawsuit, which sought to halt Caltrans’ P3 plan and replace it with a conventional competitive design-bid-build process involving state engineers.
The union successfully got a temporary restraining order in late November, which the judge dissolved on Dec. 22. Caltrans then selected one of its P3 bidders for the design, construction, finance, operation and 30 years’ maintenance 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 a HOCHTIEF subsidiary, Longmont, Colo.-based Flatiron Construction Corp.
Judge Carvill’s ruling rejected PECG’s arguments, including the union’s main contention that the P3 agreement violates the California Streets and Highway Code’s Section 143. In the ruling, Carvill says PECG “alleges” that Section 143 requires all P3 projects to be financed by tolls and user fees rather than by existing state and federal transportation revenues. However, in this case, the P3 is financed by fuel tax revenues, the judge says.
After thoroughly examining the section, the judge ruled that although “toll and user-fee language” is found in Section 143, none of the mentions specifically bar 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 infrastructure and bad for P3s in general.”
Meyer adds in an ACEC press release that, 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.”
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 (R), authorizes Caltrans and regional transportation agencies to enter into P3 contracts without further legislative action.
PECG’s next action will be an appeal to a three-judge panel at the Court of Appeals, says Bruce Blanning, PECG’s executive director. PECG’s position on this P3 project is that it will become a taxpayer liability because of the no-bid contract.
Meanwhile, Blanning says that while public employee unions are facing heat in a number of states because of perceived bloated benefits and pensions, California union entities, including the 13,000-member PECG, have been adjusting to a number of cuts for several years.
“Obviously, government cannot cheat employees by just cutting retirement and health care for current employees—the courts would not let that happen,” Blanning says. “Last year, Gov. Schwarzenegger pushed through changes in contributions for new hires, but real savings on that end will take decades to take effect.”
Last week, the bipartisan Little Hoover Commission recommended that state and local governments roll back pensions for existing employees, dump guaranteed retirement payouts and put more of the pension burden on workers.
Another group echoing a similar plan is the conservative California Foundation for Fiscal Responsibility. Blanning says that whatever happens next will depend on negotiations with the public unions, the Legislature and Gov. Jerry Brown (D), who draws support from public unions, especially the teachers union.
PECG is currently one of six public unions that are not covered by a new contract with the Brown administration. The unions are still subject to furloughs that were introduced by Gov. Schwarzenegger more than two years ago. Unless they agree to alternate savings, employees will continue to face three furlough days per month through June.