Privatization and Government Reform Newsletter (Issue 36, April 2019 Edition)
ID 65041450 © Katarzyna Bialasiewicz |

Privatization and Government Reform Newsletter

Privatization and Government Reform Newsletter (Issue 36, April 2019 Edition)

Eliminating private providers won’t improve prison health care services, Puerto Rico needs financial transparency before infrastructure rebuild, and more.

In this issue:

  • APR 2018: Education Privatization Section Released
  • INFRASTRUCTURE: Transparency Key to Puerto Rico’s Rebuild
  • CORRECTIONS: Poor Prison Health Services More Complex Than Public vs. Private
  • GOVERNMENT REFORM: CPA Senator Looks to Tame California’s Spending

» Annual Privatization Report 2018: Education Privatization

The education policy section of Reason Foundation’s Annual Privatization Report 2018, released this month, offers a comprehensive account of advancements in K-12 school choice over the past year. Reason Foundation’s Christian Barnard explores the various path states are taking through enabling legislation and the introduction of new student choice programs, as well as through changes to existing programs.


» Puerto Rico Needs Financial Transparency Before Infrastructure Rebuild

As Puerto Rico continues to recover and work its way through financial troubles, improving the commonwealth’s financial transparency would be of great benefit to financing new infrastructure. Some of the island’s cities provide good examples to follow, Reason’s Marc Joffe writes in a recent article.


» Eliminating Private Providers Won’t Improve Prison Health Care Services

A recent New Yorker article provided an eye-opening account of the poor state of health care services in America’s prisons. But instead of attempting to draw ethical lines between government and for-profit prison service providers, focusing on how providers, public or private, can be made accountable to deliver effective health care services in prisons provides a more fruitful venture to the end of improving prison health care and other services, Austill Stuart writes in a recent article.


» Innovators in Action: Interview with CA State Senator John Moorlach

A CPA by trade, John Moorlach first sought public office in 1994 to help save Orange County, California from poor financial management. Although initially unsuccessful, Moorlach would go on to serve Orange County as Treasurer-Tax Collector for over a decade, followed by time as a county supervisor, during which the county was able to emerge from bankruptcy.

In a recent interview with Austill Stuart, California State Senator Moorlach discusses how an accounting background helped make a successful reformer at the local government level, and his hopes to achieve similar results in state government.


» Alaska Psychiatric Institute Enters PPP After Decertification Threat

The state’s only public psychiatric hospital, the Alaska Psychiatric Institute (API) has faced numerous difficulties in recent years, including the threat of decertification by the federal Centers for Medicare and Medicaid. Recent reports from state officials and independent investigators have shown unlawfully violent and negligent behavior and treatment toward patients by staff, sharp decreases in rehabilitative programming, and costly employment practices contributing to a culture that API that continued to deteriorate, prompting Alaska Health and Human Services Commissioner Adam Crum to take over operation of API and enter a PPP for its continued operations. In a new article, Austill Stuart explains why API’s bold changes may be the best path to improve its performance.


News and Notes

Los Angeles Civic Building PPP RFQ Released: The city of Los Angeles released a request for quotation (RFQ) for its Civic Building Public-Private Partnership (PPP) in early April. The PPP calls for a private concessionaire to enter an availability payment design-build-finance-operate-maintain (DBFOM) lease of the new development, which would include office space for over 3,000 municipal employees, as well as child care and conference centers. Formally titled the LA Street Civic Building, Inframation News revealed in March that three teams have expressed interest in the Los Angeles Civic Center PPP. Fengate joins with Tutor Perini and BIG Architecture for one team; a second team combines Meridiam, Clark Construction, Edgemoor Infrastructure and Real Estate, SOM and ENGIE; and a third team will be led by Plenary, Johnson Controls and Webcor.

Alabama Mulls Prisons PPP: In February, Alabama Gov. Kay Ivey announced the state would pursue a $900 million deal to build three new state prisons via a potential public-private partnership, the Montgomery Advertiser reported. Two of the prisons would combine to house between 3,000-3,500 inmates, while a third facility would place a stronger emphasis on rehabilitative services.  Although the state may choose to issue bonds for the new prison, it could also have a private builder lease the facilities back to the state. Recently, Alabama has faced scrutiny for overcrowding and poor health care services for inmates, which U.S. District Judge Myron Thompson referred to as “’deliberately indifferent’ to isolated inmate mental health” in a ruling early this year, which also found the poor conditions violated the 8th Amendment’s protections against “cruel and unusual punishment.” Officials are seeking completion of the new prisons by 2022.

University of Iowa Announces Energy PPP: The University of Iowa announced in February that the school may pursue a public-private partnership agreement to lease the school’s electrical, steam, water, and water treatment systems. The school hopes to follow with an RFQ in April, and a request for proposal (RFP) by June.

PennDOT Truck Parking RFI Receives Responses, Wetlands PPP Shortlisted: In January, the Pennsylvania Department of Transportation (PennDOT) announced it had received 19 responses to a request for information (RFI) for a potential PPP for truck parking services. The state faces problems with parking availability for truck drivers along its highways as well as accurate information about available space, often very rare between midnight and 5 am.  State regulations for rest stops contribute, too, limiting parking to two hours, though enforcement can be inconsistent. PennDOT’s P3 Board will determine in a May 30 meeting whether the project will be pursued as a P3 or through an alternative procurement method.

PennDOT also shortlisted proponents for its Wetlands Mitigation PPP in March, which looks to create a 140-acre mitigation site on state-owned land in Bucks County. The partner would operate the site for 30 years, with the ability to sell excess credits in revenue-sharing agreements. PennDOT hopes to finalize a contract by next winter. In complying with federal and state environmental regulations, development projects that interfere with or build upon wetlands require preservation or creation of equivalent offsetting wetlands. While early iterations of the federal Clean Water Act required wetlands mitigation to be “onsite,” (i.e. where the development would occur), a 1993 Memorandum of Agreement clarified that offsite mitigation can be sufficient, including through credits created through the establishment of mitigation banks such as the proposed Bucks County site.

Metrolink Seeks First Long-Term O&M Contract: Southern California Regional Rail Authority (SCRRA) commuter rail service Metrolink announced in January that it would issue an RFP for its first combined operations and maintenance contract, Railway Age reported. A final RFP is expected later in the spring for what SCRRA intends to be a seven-year combined contract with two four-year optional renewal periods.

Pennsylvania County Extends Prison Contract: In December 2018, the Delaware County (Pennsylvania) Board of Prison Inspectors unanimously approved a five-year, $264 million contract with GEO Group to run the George W. Hill Correctional Facility. The contract will provide renewed commitments to recidivism reduction programs, includes a $3 million commitment from GEO to improve facilities, and could potentially include a $14.8 million interest-free loan to the county.

Privately-Owned and Operated Airport Opens Commercial Terminal: Paine Field, a privately-managed airport located roughly 25 miles north of Seattle in Snohomish County, opened its first commercial passenger terminal in March, the Seattle Times reported. Alaska Airlines and United will operate regional flights out of the two-gate terminal, which is owned by private equity firm Propeller Investments through subsidiary Propeller Airports.

Virginia Looks to Exit Elizabeth River Crossings Contract: A task force convened in February that looks to find a way for the Commonwealth of Virginia to exit its PPP agreement with Elizabeth River Crossings (ERC) in Chesapeake, Virginia WAVY reported. The agreement between ERC and Virginia dates back to 2011, with ERC obtaining the privilege to collect tolls on downtown and midtown crossings developed and operated by the private firm. The state would need to offset roughly $1 billion in revenues to exit the contract.

Idaho Prison Health Care Contract Extended: In December, the state of Idaho announced it would extend its inmate health care contract with Corizon for two years, with the intention of bidding out the contract again following the extension. Corizon’s contract, in place since 2005, totals over $46 million a year.

Veterans Affairs Launches PTSD PFS Program: The U.S. Department of Veterans Affairs announced a new pay-for-success (PFS) program in late 2018 that looks to help find jobs for veterans suffering from post-traumatic stress disorder (PTSD). Dubbed the Veterans Coordinated Approach to Recovery and Employment (Veterans CARE), the project has raised $5.1 million in funding, with a successful venture resulting in a $900,000 payback to investors.

Oklahoma PFS Bill Passes Senate: Pay-for-success enabling legislation passed the Oklahoma Senate in March. Senate Bill 210 would allow state agencies to enter PFS agreements, subject to certain conditions concerning financial backing, reporting, and the measurability of outcomes. As mentioned previously in Reason Foundation’s Annual Privatization Report 2017, Oklahoma entered its first pay-for-success venture in 2017, which looks to reduce recidivism amongst its female inmate population (the highest, per capita, of all U.S states) by allowing PFS investments in jail diversion and reentry programs. The program received an additional $500,000 in funding in Gov. Mary Falin’s 2018 budget.

Rhode Island Autonomous Transit Pilot: In December 2018, Rhode Island’s Department of Transportation announced it had chosen to enter a contract with the Ann Arbor, Michigan-based private firm May Mobility, following an RFP process, to provide limited, automated electric six-passenger vehicle transport services between downtown Providence and westward to Olenyville. RIDOT will provide $800,000 in operations funding for the first year, including $300,000 through a Federal Highway Administration program and a $500,000 grant awarded by the state’s attorney general’s office as part of a settlement with Volkswagen over vehicle emissions, and the agreement can be extended for two years.

NASA Seeks Private Moon Landers: In preparation for sending astronauts back to the moon by 2028, NASA is seeking proposals from private firms to build reusable vehicles capable of transporting astronauts to the lunar surface, reported in December.  NASA hopes to begin running test flights by 2024.

CA Bills Target Private Prisons, Divestment: The Board of the California State Teachers’ Retirement System (CalSTRS) voted to oppose a bill (Assembly Bill 33) that would require CalSTRS and CalPERS, the state’s public employee retiree system, to divest of all private corrections companies by July 2020, Pensions & Investments reported. AB 33, introduced last December, currently sits in committee. Another assembly bill in committee and awaiting its first hearing, AB 32, would prohibit all private prison contracting in California.

Quotable Quotes

Alabama truly does have a major problem with our overcrowding of our prisons, and it’s a challenge we Alabamians must solve, not the federal courts.”
–Alabama Governor Kay Ivey, quoted in “Alabama to solicit bids for three new prisons, cost estimates at $900 million,” Montgomery Advertiser, February 12, 2019.

“We don’t have any performance issues really in the last 12 months. We’ve really monitored it well and will continue to do so. (S)everal other entities that have approached us…would like to bid on the contract.”
Idaho Board of Corrections Chairwoman Debbie Field, quoted in “Idaho extends prison health contract for 2 years,” Associated Press, December 14, 2018.

“We’re honored that our vision and hard work to put together this project was recognized by the Council. What we’ve done with Snohomish County is a model that can be replicated nationwide and can bring tremendous benefits to local economies without burdening taxpayers. We’ve built an airport for the future by bringing back some of the glamour and service of the past, with tailored concessions, design and maintenance, and a higher level of convenience for local passengers.”
– Brett Smith, CEO of Propeller Airports, which owns the new Paine Field Passenger Terminal, quoted in “Paine Field Terminal Recognized by the National Council for Public-Private Partnerships.”