- How Bad Are California Courthouses? Statewide Video Tour Including Long Beach
- Superior Court of Los Angeles County
Performance-Based Infrastructure Delivery Method
Initial Funding Year: FY 2007-2008
Architect's rendering: Governor George Deukmejian Courthouse
Awards and Recognition
Because of recent redevelopment in the city's Civic Center near the current court location, the state intends to benefit from a Performance-Based Infrastructure (PBI) project that will involve engaging a private team to finance, design, build, operate and maintain the court building.
More information about PBI
The site is six acres located northwest of the existing courthouse, bounded by West Broadway, Maine Avenue, West 3rd Street, and Magnolia Avenue.
Map of project site
The project includes renovation of an adjacent existing parking structure, office space within the court building for related justice agencies of the County of Los Angeles as well as opportunities to build commercial office and retail space compatible with the 31-courtroom, building.
California Environmental Quality Act (CEQA) Compliance
The AOC is the lead agency for preparation of an environmental report to comply with CEQA.
May 22, 2009, to June 22, 2009: Draft Initial Study and Mitigated Negative Declaration circulated. The draft study evaluated the potential environmental impacts of the proposed project and recommended mitigation measures.
June 10, 2009: Public meeting held.
In response to public comments, the AOC completed a Final Initial Study and Mitigated Negative Declaration (4.6 MB)
Appendices Part 1 (3.2 MB)
Appendices Part 2 (2.9 MB)
The Final Initial Study includes refinements of the project description, stakeholder comments, the AOC's responses to comments, and other information.
On August 10, 2009, the AOC filed a Notice of Determination, thereby completing the CEQA process.
A private consortium, Long Beach Judicial Partners, will finance, design, build, operate and maintain the building.
Long Beach Judicial Partners, Meridiam Infrastructure's project company, leads a consortium of companies consisting of:
Clark Design/Build of California, Inc
Edgemoor Real Estate Services
Johnson Controls Inc
Why was the Long Beach courthouse selected to be developed using performance-based infrastructure?
The existing Long Beach courthouse is among the most heavily used court buildings in California, but is among the worst in the state in terms of security and overcrowding. A replacement courthouse was prioritized by the Judicial Council as an “immediate need” in 2007. A 2007 feasibility report concluded that a public-private partnership would provide greater benefits to the state than other state-financed options. These benefits included delivering an urgently needed replacement building sooner than could be done using traditional public sector delivery methods, with no financial obligation to the state until the building was occupied. The Legislature granted authority to the state judicial branch to investigate use of this delivery method, in part so that the state could gain experience with it in public building projects, and later granted authority to the Judicial Council to use it specifically for the Long Beach court building.
Will the judicial branch use PBI for other court construction projects?
Experience gained on the Long Beach project will provide a basis for evaluating the PBI delivery method. While experience to date has been positive – construction is on schedule, on budget, and at very high quality -- it’s premature to draw conclusions about the overall cost-effectiveness of this delivery method. At this time, the judicial branch has no plans to expand use of PBI to other courthouse projects.
THE DEAL STRUCTURE
What is the nature of the project agreement? Is it a lease-buyback?
It is an agreement to finance, design, build, operate, and maintain the new court building. It is not a lease-buyback or lease-to-own arrangement, because the state owns the land and the building throughout. Once the building is occupied by the court, the state will pay an annual service fee based on building performance, meaning that deductions can be made when court space or functionality are unavailable or other predetermined performance criteria are not met.
What is the length of the service agreement?
The agreement extends for 35 years, starting when deal was signed (December 2010).
How much will the annual fee be?
The annual fee will start at approximately $50 million, which includes the costs to design and construct the new building, the cost to finance the project, and the cost of operations, utilities, maintenance, and life-cycle renewal of building elements as they reach the end of their useful service life. The operating and maintenance cost component of the annual fee is subject to annual increases based on the Consumer Price Index, should they occur. However as noted above, the amount of the fee depends on building performance, so the fee could be less depending on the amount of any deductions.
How was the project agreement finalized and approved?
From 2008 to 2010, the Administrative Office of the Courts (AOC) worked with the state Department of Finance (DOF) and the state Legislature’s Joint Legislative Budget Committee (JLBC) at several stages of project development. DOF approved terms and conditions at several stages, and the AOC took several further validation steps in response to concerns raised by JLBC. DOF ultimately approved project agreements in December 2010 allowing them to be signed by the AOC and the project company.
What are the anticipated benefits to the state of this arrangement?
There are numerous benefits in PBI delivery of the new courthouse:
THE VALUE FOR MONEY ANALYSIS
What is the purpose of the Value for Money analysis?
According to the State Legislative Analyst’s Office, “The purpose of a VFM analysis is to determine whether a particular proposal submitted by a private sector developer would be cheaper to build and operate than a public sector project. Such an analysis takes into account the nominal cost of a project, which is then “discounted” over time to determine the project’s cost in net present value terms. In other words, because the expenditures take place over several decades and the timing of the expenditures differ between the PBI approach and the public sector approach, the comparisons are adjusted to account for the fact that money available at the present time is worth more than money available in the future.” This is a standard methodology used to analyze PBI projects. The VfM analysis considers capital costs, financing costs, operations, maintenance, and the benefits of transferring risks like cost overruns to the private sector.
What did the VfM analysis conclude?
When all costs and risks were compared, PBI delivery of this project compared favorably with the public sector comparator, yielding a modest savings of $26 million, or 3.5 percent. The net present value cost of PBI delivery of this project was $725 million, vs. $751 million for the public sector comparator.
What’s the benefit of having done this analysis?
The value for money analysis assisted in the decision process leading up to project approval, establishing that this particular project was a suitable candidate for PBI and that this delivery method had the potential to create value for the state’s money. During procurement, the VfM analysis provided a benchmark against which the various private sector proposals received were measured. During finalization of the project agreement, the VfM analysis provided a negotiating tool with the selected project company, in committing to a price that would deliver value for the state.
Who performed the analysis?
The AOC worked with external financial advisors Ernst & Young and Davis Langdon for elements of the VfM. The analysis was thoroughly reviewed by the Department of Finance at several points.
The VfM attaches a dollar value to various risk categories in comparing the two procurement methods. Why?
This type of risk analysis is standard methodology for major infrastructure projects and for VfM comparisons. Risk analysis is necessary to identify the whole cost of the project and to capture how the private sector accounts for risk.
How were those risk values arrived at?
Risks were identified, allocated, and assigned probabilities and impacts by expert teams during a series of risk workshops. Values were determined through computer modeling using industry-standard modeling software.
How was it determined that the private sector could complete the building 14 months faster than the typical public-sector process?
The private-sector project company has used a fast-track process that overlaps certain aspects of design with construction. This type of fast-tracking is typically impossible with traditional public sector building delivery methods, because each phase must receive approvals from a variety of state agencies before the next phase can begin, adding many months to the process. Construction is also proceeding on a fast schedule. For example, steel erection began within a year of the notice to proceed. For a public building of this size and complexity, it would have typically taken at least two years to reach this milestone using traditional delivery methods.
The VfM analysis states the comparative cost of this project as $725 million. Is that the estimated total the state will pay over 35 years?
No, it is a figure used for comparison purposes in the value for money analysis that assigns a net present cost to the project’s total life-cycle costs.
How did the AOC select the final team?
The AOC selected three teams through a request for qualifications, then issued a request for proposals to the three teams. The AOC evaluated the three teams' proposals based not only on compliance with the Judicial Council's construction requirements, but also on their financial value, quality of architectural and urban design, environmental consciousness, and operational efficiency.
How will the AOC ensure that local businesses benefit from the project?
The project team will implement an outreach plan to ensure that local contractors, subcontractors, and materials suppliers are aware of how to qualify for subcontractor bidding on the project.
What kind of relevant experience does the selected architect have?
The architect who is part of the project team, AECOM, has a distinguished portfolio of public buildings that have enriched the Southern California communities in which they were built. Sample projects include:
Los Angeles Police Department, New Headquarters, Los Angeles
RAND Corporation, Santa Monica
William Hannon Library, Loyola Marymount University
Korea Development Bank, Los Angeles
How much will this project cost?
The project team's total funding requirement is $490 million.
How soon will the architectural design be available for review?
Renderings and a video fly-through are available on the California Courts website.
How will the AOC ensure that the new courthouse is built on time and within budget?
The AOC's PBI contract includes incentives and penalties that drive performance by the project developers. Additionally, benchmarks that allow for ongoing monitoring of contract performance are built into the agreement.
Who will own the new building when it is finished?
The state owns the land and the building throughout the agreement’s term, and at the end of 35 years, will continue to retain title. The PBI project company is expected to maintain the building throughout the 35-year agreement and then turn over the court building and parking structure to the AOC at the end of the term.
The site for the new courthouse is closer to residences and a school. How will the new courthouse affect the neighborhood?
We expect the new courthouse will make a positive contribution to the Civic Center's redevelopment. The site is essentially one city block northwest of the existing courthouse. The building's design is consistent with contemporary courthouse design and environmental standards, and its scale will be compatible and consistent with nearby office buildings. To manage pedestrian traffic and security, the only public entrance will be oriented to the corner of Magnolia and West Broadway, essentially two blocks from the school. Community safety will be among the highest priorities for the architects, engineers, and project managers working on the building. Security features will include a secured below-ground sallyport (which enables sheriffs to drive prisoner buses into a secured area to transfer in-custody detainees into and out of the courthouse); separate hallways and elevators for the public, staff, and in-custody detainees; and courtroom holding cells, which minimize movement of in-custody detainees within the court building.
What happens to Daisy Avenue on that block?
The project will require the closure of Daisy Avenue between West Broadway and Third Street to public traffic.
Will relocating the courthouse change how prisoners are transported to and from the courthouse?
The sheriff's department currently transports detainees by bus between the county jail and the existing courthouse. This will not change with the new building. The new building will have a more efficient bus entry and exit scheme, eliminating some current traffic problems caused by buses exiting the existing court building. The sheriff's buses will use West Broadway to enter the new building's secured area and West Third Street to exit the new courthouse.
The current site is used for parking. Where will people park during and after construction?
According to the AOC's survey of parking areas nearby, existing parking lots have unused capacity. The AOC presumes that, after construction begins, vehicle operators will use the World Trade Center lot, the Broadway Garage, or other parking facilities near Pacific Street or Pine Street during business hours.
The project involves renovation of the Magnolia Street Garage, which will add approximately 225 parking spaces. The project will include some on-site parking for commercial and retail tenants. For security and access reasons, on-street parking will be prohibited at the street curbs directly adjacent to the new building during business hours on weekdays.
How big will the building be? Will it take up the whole site?
In keeping with the cityscape, the design features a low-rise scheme in an L shape, one section of 4 stories, the other of 5 stories, surrounding a large secure courtyard, a spacious lobby, and courtrooms with access to natural light. It will extend along West Broadway, and the greatest height and bulk of the building will be along West Broadway where it intersects with Magnolia Avenue. The AOC expects that the development will have a lower scale and larger setbacks along Maine Avenue and Third Street.
What happens to the old courthouse after the court moves into the new courthouse
The AOC has acquired the project site from the Long Beach Redevelopment Agency in exchange for the existing courthouse and its land. The redevelopment agency has informed the AOC that the city has no intention of occupying the old courthouse building. The redevelopment agency will announce plans for the building at a later date.
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