# Public-Private Partnership Policy Casebook/Long Beach
## Summary

In 2007 the Judicial Council of California (Judicial Council) published a project feasibility report for the replacement of the existing Long Beach Courthouse utilizing a first of its kind public-private partnership (P3) procurement in which the state would have the private sector finance, design, construct, operate and maintain the facility. The State Legislature in that same year approved enabling legislation authorizing the Judicial Council to proceed with the development of a new courthouse utilizing this alternative Performance-Based Infrastructure (PBI) procurement and delivery methodology. This would begin a dynamic six-year process which would result in successfully delivering for the citizens of California a state-of-the-art 500,000-square-foot courthouse complex utilizing this first of its kind social infrastructure P3 project delivery. The Judicial Council would develop a request for proposal (RFP) outlining a performance-based delivery requiring the private sector proposers to finance, design, construct the new courthouse complex to stringent design, operating, and performance standards prior to receipt of payment. The state would compensate the successful proposer on an annual basis after acceptance and occupancy of the courthouse. The payments would be variable in which deficient building performance would result in a lower annual payment (service fee). The 35-year operating agreement created unique dynamics within the delivery phase of the project in which life cycle costs for building designs and systems were evaluated to optimize the long term operations and maintenance cost of the courthouse which has been calculated to show superior value to the state over traditional design – bid – build public project delivery.
The performance-based delivery provided additional benefits in allowing the Judicial Council to take advantage of innovative private sector financing of the project without using state bonding capacity during the height of the financial crises in 2010. The Judicial Council closed on the agreement with Long Beach Judicial Partners LLC (LBJP) in December 2010 utilizing unique short-term financing arrangement allowing the project to move forward. The cost of the project was US$490.57 million, for which financing was arranged with a debt to equity ratio of 90:10. Meridiam the equity partner within LBJP contributed US$49.06 million as an equity investment, and US$441.5 million was raised as a seven-year Mini Perm financing on a club loan basis. After the completion of construction, this loan was successfully refinanced with a US$518.5 million 34-year bond in November 2013.
After the deal was signed, the project remained a source of political turmoil. The source for the service fee payments had to be addressed in the 2012 budget, and the state Legislative Analyst’s Office criticized the Value for Money assumptions and use of the PBI approach for procurement. While an evaluation of the cost-effectiveness of the PBI approach with the Long Beach Courthouse done in 2014 indicates that it saved taxpayers money compared to a traditional procurement approach, the Judicial Council indicates it will not be pursuing any more PBI projects. As the project is just into its second operating year it is too early to evaluate how well the 35-year operating agreement is performing and if the state will realize the long term operating and maintenance benefits the performance-based P3 delivery was created to provide. However, other local and state governments are evaluating the PBI delivery model as developed by the Judicial Council as an alternative means of developing their social infrastructure indicating the importance of this first of kind Performance Based P3 courthouse project.

## Annotated List of Actors
### Public Figures

Judicial Council of California The Judicial Council of California is the policymaking body for the California Judicial Branch (Judicial Council of California, 2006). As a Principal Architect with the Judicial Council, Clifford Ham served as project manager of the Long Beach Courthouse project. He is a licensed Architect in the State of California and joined the Judicial Council in 2002. Ham holds a Masters of Architecture from Washington University in St. Louis and a Bachelor of Philosophy, Political Science, from Grand Valley State University, Michigan (Public-Private Partnership Alliance, 2014).
Governor Arnold Schwarzenegger The Long Beach Courthouse P3 was developed and approved under the tenure of Governor Arnold Schwarzenegger, who served as Governor of the State of California from 2003-2010. As a centrist Republican, Schwarzenegger favored opportunities to bring market solutions to public problems and promoted P3s for infrastructure, which he termed Performance-Based Infrastructure (PBI) (“PBI: California teaming,” 2008). He also launched P3 initiatives in the arenas of climate change, emergency management, and nursing training.

### DBFOM Team

Long Beach Judicial Partners/Meridiam Infrastructure Long Beach Judicial Partners is the project company of Meridiam Infrastructure that holds the DBFOM contract with Judicial Council. Long Beach Judicial Partners contracted with the other members of the consortium (Clark, AECOM, Johnson Controls) for other aspects of the project. Meridiam provided 100% of the financing for the project. Meridiam received was recognized with Project Finance magazine’s 2009 North American PPP Deal of the Year for the Port of Miami Tunnel P3 Project (“Long Beach Judicial Partners Fact Sheet,” 2013).
Clark Design/Build of California, Inc. Clark Design/Build of California managed the project’s design and construction under contract to Long Beach Judicial Partners. It is a wholly owned subsidiary of Clark Construction Group, LLC. Clark Design/Build of California’s portfolio includes San Francisco Civic Center Complex, the Capitol Area East End Complex in Sacramento, and the Caltrans District Center Headquarters in Los Angeles (“Long Beach Judicial Partners Fact Sheet,” 2013).
AECOM AECOM served as the design leader for the Long Beach Courthouse project as subcontractor to Clark Design/Build of California. They are a multi-service firm established in 1990, with a portfolio of architecture projects in a range of sectors including civic, corporate, sports, and U.S. federal buildings. AECOM was ranked #1 overall in Engineering News-Record’s 2013 Top 500 Design Firms. (AECOM, 2014a)
Johnson Controls Johnson Controls has a direct contract with Long Beach Judicial Partners to provide the operations and maintenance services for Long Beach Courthouse during its 35-year term with the Judicial Council. The company has an entire line of business centered on P3s, with a focus on delivering energy efficient buildings for public agencies (Johnson Controls Inc., 2014; “Long Beach Judicial Partners Fact Sheet,” 2013).

### Judicial Council Advisory Team

Ernst & Young Advisory Inc. Ernst & Young Advisory Inc. served as financial, real estate, and procurement advisors for the Judicial Council. They participated in the drafting of the procurement documents; developing the risk allocation between the Judicial Council and the private party; developing the performance expectations; developing a highest and best use valuation of the existing site, for example, developing the procurement process, the risk allocation, and the performance expectations. Ernst & Young Advisory Inc. had experience providing similar services on social infrastructure P3 deals in Canada such as hospitals before they started advising on the Long Beach Courthouse project (Clifford Ham, 2014).
Hawkins, Delafield and Wood Hawkins, Delafield and Wood served as legal counsel on the Judicial Council advisory team. They authored the Project Agreement, interfaced with the California Legislature and executive branch staff, advised the Judicial Council during the evaluation of proposals, and negotiated with the winning bidder on the final Project Agreement (Administrative Office of the Court, 2012).
Figure 1. Project Parties and Structure

## Timeline of Events

The approval of the California Department of Finance and the Joint Legislative Budget Committee in September 2008 provided an official authorization to the Judicial Council to proceed with the competitive selection process for the development of a new courthouse located in downtown Long Beach on a Design Building Finance Operate and Maintain (DBFOM) delivery.
In 2008 the Judicial Council issued a solicitation Request for Qualification (RFQ) which attracted great interests from potential bidders. A total of 11 Consortiums submitted qualifications, out of which 5 teams were shortlisted for interviews. Three proposers were selected to provide the Judicial Council with a comprehensive proposal to finance, design, construct, operate, and maintain the proposed new Long Beach Courthouse. In June 2009 the Judicial Council Office of Court Construction and Management issued a Request for Proposal (RFP) naming Balfour Beatty Capital Inc.; Long Beach Judicial Partners LLC; Lankford-Phelps Long Beach Developers LLC as the three qualified proposers to provide innovative performance based approach in the development and operation of the new court building. After a six-month competition period with multiple proprietary meetings, Long Beach Judicial Partners LLC (LBJP) was finally selected as the preferred bidder in June 28, 2010. The financial and commercial closing took place on December 20, 2010. The project was designed and constructed in 32 months and occupied in September 2013. The operations contract period runs for 35 years. Timeline of the key events are listed below.
* Jun 28, 2007: Project Feasibility Report published by Judicial Council
* Aug 24, 2007: Special Legislation, CA Budget Act 2007
* Nov 26, 2008: Transaction launch and RFQ issued
* May 12, 2009: 3 bidders shortlisted
* Jun, 2009: RFP issued
* Dec 9, 2009: RFP bids submitted
* Jun 28, 2010: Long Beach Judicial Partners selected Preferred bidder
* Nov 26, 2010: Project Agreement finalized and approved by the Department of Finance (DOF)
* Early Dec, 2010: Final Value for Money analysis submitted to DOF
* Mid Dec, 2010: DOF approval of VfM
* Dec 20, 2010: Financial and commercial Close
* Aug 31, 2013: Occupancy Date
* Nov 26, 2013: Refinancing and New issuance of bond
The Judicial Council’s evaluation report (Menard, 2014) compared the proposed timeline in the original VfM with the actual timeline. According to the report signing of the project agreement and commencement of construction was delayed by about a year after receipt of the three RFP Proposal responses. It was because a unique contract structure necessitated a protracted review and approval of the selected proposal. The difference between the timeline proposed in the VfM and the actual timeline can be seen in Figure 2. In evaluating overall achievement of the project timeline, however, the report noted that:
“Once the project agreement was signed, no delays ensued, and construction ended 11 days ahead of schedule. This achievement was the result of the overlapping of design, code review by agencies, and construction; procurement of structural steel and the elevator before completing the design and receiving all approvals; and selection of a building enclosure system that was rapidly erected and therefore minimized the risk of weather-related delay in completing interior construction.”
Figure 2: Timeline of the Project: Proposed vs. Actual

## Maps of Locations

The Long Beach Courthouse site is located at 275 Magnolia Avenue, Long Beach, California. The six-acre site is one block northwest of the previous courthouse. The project site was acquired under a property exchange agreement with the City of Long Beach Redevelopment Agency and the Judicial Council (Administrative Office of the Court, 2014). Governor George Deukmejian Courthouse Map

## Policy Issues
### Judicial Council lack of experience with PBIs/The importance of the advisory team

This was the Judicial Council’s first attempt at a PBI, so there were sunk costs with figuring out how to do it correctly. Ernst and Young was involved in many of the critical pieces of developing the P3, including drafting the procurement documents, developing the structured risk analysis, developing performance expectations, and doing the VfM analysis. This was not an inappropriate role for them since state government contracts out specialty services all the time, but it highlights the need for the state to have knowledgeable staff in-house who can competently evaluate the work of their contractors.

### VfM is a “black box”

Doing a VfM analysis is a complex process that involves making assumptions, which is inherently opens it to political controversy. Compounding that, few states have experience with performing VfM analyses and there isn’t a clear best practices framework. The difficulty in establishing a reliable and generally acceptable values for the discount rate continues to plague the P3 delivery analysis. One criticism from the Legislative Analyst’s Office (LAO) 2012 report was that the State needs to establish a central resource developing best practices standards in support of state agencies and local governments on how to structure PBI delivery and to manage a central data base to track and evaluate what the true discount rates and ranges are based on data.

### Appropriations risk

Unlike toll roads which have a clear revenue stream, social infrastructure P3 projects often have to rely on annual appropriations for service fee payments. This means the project can be raised as a political issue every year at budget time, and probably adds to the cost of private financing as an additional risk.

### O&M as an obligatory expense

Committing to annual service fees changes O&M costs from a discretionary expense to an obligatory expense. Normally, O&M can be deferred or minimized, even if it’s a short-sighted decision. The long term benefit to PBI delivery would be in extending the useful life of our public facilities but it has a premium cost associated within it which gets locked in for the term of the contract. In cases where P3 projects do not have a dedicated revenue stream for operations and maintenance, this can exacerbate budget pressures.

### Transfer of financial risks to the private sector

It is a common practice that the financial risk is transferred to the private sector in a PPP project. The typical financial risk allocated to the private sector is considered to be commercial risk, and usually associated with, inter alia, the financing arrangement, costs of funds, and repayment of the debts. However, in this project, the financial risks that LBJP was facing were related not only to the commercial risk, but also to the State government’s credit risks, especially when it comes to the future refinancing. In this context, LBJP strongly requested that Judicial Council also assume part of the potential future refinancing losses, which would have affected the State’s credit rating. The government adamantly adhered to the principle of full transfer of the financial risk to the private sector, which LBJP finally agreed to.

## Narrative of the Case
### Conceptualization

In 2007, the existing courthouse in Long Beach, California was in a state of disrepair, including issues with mold, leaks, and termite infestation (Long Beach Judicial Partners LLC, 2014). It was also too small for the volume of cases and clients it processed each year as a primary space for the Superior Court of Los Angeles County. At the behest of Governor Arnold Schwarzenegger, the Judicial Council and the Administrative Office of the Courts (AOC) began to explore Performance Based Infrastructure (PBI, the California state government term for public-private partnerships) as an approach to the design, build, finance, operations, and maintenance of a new building (Clifford Ham, 2014). They held discussions to build support from the state legislature, the Department of Finance (DOF), and the construction industry, which was very receptive to the PBI concept (Clifford Ham, 2014).

### Project Description

The Request for Proposals (RFP) as developed and issued by the Judicial Council on May 15, 2009, was the first true performance-based, availability-payment social infrastructure P3 project in the United States. The RFP invited each proposer to submit competitive “performance-based” proposals for the design, construction, financing, commissioning, operating and maintenance of a new courthouse and renovation of an existing off- site parking garage facilities in Long Beach. The new building is 531,000 gross square foot housing: 416,000 square feet of courthouse space consisting of 31 civil and criminal courtrooms, detention center and holding cells, sally port; 105,000 square feet of offices for Los Angeles County under a separate lease and 5,500 square feet of retail and commercial support spaces. The facility will accommodate 800 workers and 3,500 – 4,500 visitors daily. The project also required the structural reinforcement, renovation and expansion of an existing adjacent 900 car parking garage. Within RFP Section 2.3 it was stated that the Judicial Council would lease the Court Building Site to the Project Company under a 35-year Ground Lease, which could be extended to 50 years in the event the State would default, to ensure performance of the Project Agreement. The Project Company would lease back to the Judicial Council portions of the Court Building to be used for the Superior Court. It was noted by Mr. Clifford Ham, the Principal Architect with the Judicial Council; that it was determined that to ensure that comparable design and management solutions were received, that a single site be selected and procured on which all three proposers would then base their designs. This was done to simplify the financial proposals by not needing to evaluate individual land valuations or site characteristics when comparing each of the proposer’s designs and facility management proposals. The Judicial Council secured a courthouse site by exchanging the existing courthouse property for nearby site owned by the City of Long Beach Redevelopment Agency. This also eliminated a potential risks associated with alternate site selection and acquisition before the project agreement was signed (Menard, P. R. 2014).

### Service Fee Payment and Reduction

The Judicial Council RFP stipulated that the annual service fee payments (lease payments) would be the sole reimbursement to the Project Company for the financing, design, construction, operations and maintenance of the new facility. Mr. Ham characterized the service payment not as compensation for the purchase of a building but rather as compensation for providing the Judicial Council with a comprehensive set of performance based facility management services (Clifford Ham, 2014). Payments to the Project Company would not occur until after occupancy of the facility. The value of the service fee payments would be determined by the amortized cost of the fixed price proposal to design and construct the facility and the ability of the Project Company to meet prescribed minimum service (performance) levels during each payment period.
Approximately 40% of the annual service payments would be attributable to the operating & maintenance of the facility (Clifford Ham, 2014). Figure 3 illustrates how the service fee would be reduced in the event of an elevator failure which would impact court operations for two 2-hour periods. In this example the annual service fee would be reduced by $21,128 due to the service interruption of the building elevator. The value of the array of availability services was developed by the Judicial Council prior to the release of the RFP and provided to the three proposers.
The Judicial Council RFP provided detailed minimum program and design - performance standards that the proposers’ building designs would be required to meet. Provisions were made for the Judicial Council to confer with each of the proposer during prescribed times within the RFP development phase. This one-on-one proposal review process was adopted from the procedures utilized in Canadian P3 (Reinhardt, 2010). Forums were held to allow proposers to present and obtain input from Judicial Council financial, design, construction, and facilities operating groups. Information which would benefit all of the proposers and not compromise an individual proposer were shared (Clifford Ham, 2014). The RFP stated that this process would establish a positive working relationship which would be the foundation for the 35-year operating term of the project agreement (RFP, 2009). Mr. Ham stated that the forums were very time consuming but effective in ensuring that the three proposals met the Judicial Council architectural, facility operating program, and legal requirements; the forums facilitated making the courthouse stakeholders comfortable with the process and outcome.
Figure 3: Example of Service Fee Reduction

### Performance Base Infrastructure Delivery Influence on Operations & Maintenance

The Performance Based Infrastructure RFP structure created an economic necessity for the development teams to address long term operating and maintenance costs within the design and programming of the building design to level’s not typically seen in traditional public sector design – bid – build – operate project deliveries. This is because the contract with the Judicial Council requires the Project Company to maintain and operate the facility for a fixed fee with limited inflation adjustments for the life of the 35 year contract (RFP, 2009). The Project Company is required by the contract to integrate the Operations and Maintenance costs within the Service Fee. The RFP process appears to have shown a much greater awareness of the need to provide long term life cycle cost benefits within the choices of building systems to minimize long term operating and maintenance and replacements costs within the facilities design solution. This can be seen in the one on one interaction between the Judicial Council and LBJP LLC (The Project Company) within their RFP response where alternate design solutions were evaluated to determine their full life cycle costs which resulted in providing terrazzo flooring within courthouse corridors to reduce on-going maintenance costs and multiple air handlers to provide redundant systems and mitigate downtime which would impact the service payments. The proposers went through significant effort to evaluate each building systems to come up with the right balance of initial cost and long term maintainability. It also was used to evaluate design alternative where the Judicial Council could understand the impact of design alternative on lowering or increasing the annual service fee payment (LBJP LLC, Package B Technical Proposal, 2010). It remains to be seen if the innovative analysis will provide the long term value that was the impetus for utilizing a Performance Based delivery.

### Transfer of Risk from Public to Private Sector

One of the primary benefits of the Performance Based Infrastructure (PBI) project delivery is the transferring of risk from the public to the private sector. In the Long Beach Courthouse RFP the risk transfer was established within the RFP requirements and was reflected within the financial proposals within each of the proposers. The risk factors were also calculated within the Value for Money (VfM) and Public Sector Comparator (PSC) calculations prepared by the Judicial Council to evaluate the proposals. The following is a summary of the transferred and retained public sector risks: Transferred Risks to Private Sector:
* Payment Risk: The RFP prescribed that the availability payments (Service Fee) are the sole means of reimbursement for the Project Company. No Service Fee payments will occur before the Occupancy Date. (RFP, 2009)
* Financing Risk: Project Company has exclusive responsibility for financing the entire project including design, construction, operations and long term maintenance for an agreed to fixed fee. Project Company will be exclusively responsible for interest rate and credit risk. (RFP, 2009)
* Default Risk by the State: The Project Company sole means of compensation in the event of Judicial Council default was the 50-year ground lease (RFP, 2009). The Project Company had no other means of compensation from the State in the event of default. The cost of the project would not be considered State debt (Clifford Ham, 2014).
* Design and Construction Risks / Liability which include completion risk due delays in design and construction of the building; construction cost overruns; and any additional costs incurred from disputes between the designer, builder and operator (Menard, 2014).
* Entitlements Risks: The Project Company will be responsible for all costs and expense for obtaining all Governmental Approvals necessary for the Project with the exception of the Environmental Impact Report (EIR) required by the California Environmental Quality Act. The Project Company is solely responsible for ensuring that the design of the Court Building complies with all Applicable Laws (RFP, 2009).
* Underground site conditions: The Project Company will be responsible for all geotechnical and underground utility conditions present at the court building site and will not be entitled to any adjustment to the Service Fee or Occupancy Schedule by reason of the discovery of any differing site conditions (RFP, 20009). The only exception is for un-identified hazardous material conditions, this risk was held by the Judicial Council.
* Landlord Risks: Project Company responsible for all Operation and Maintenance costs which is included within the fixed price service fee. Project Company will be responsible from any O&M Cost Overruns; Capital Maintenance Overruns, Technological Obsolescence, Excess Energy Consumption. Rental Income Shortfalls as a result of vacancies or tenant default with the County, retail, and commercial leases is solely a Project Company responsibility (RFP, 2009).
Retained Risks by Judicial Council:
* Owner’s Risk which are inherent under any delivery method
* Changes In Law
* Uninsurable Force Majeure Events such as earthquakes, wildfires, climate change, or terrorist attacks.
* Pre-existing Site Environmental Conditions such as underground toxic waste not identified within the EIR.
* Inflation (30% of the Service Fee is linked to an annual inflation adjustment)

### Value for Money Analysis

The importance of the Value for Money (VfM) analysis cannot be understated as it is the sole basis for determining if the Public Private Partnership - PBI delivery - can deliver improved project performance and value over the life of the facility verses the traditional public sector design – bid – build – operate delivery. For the VfM analysis the Judicial Council made multiple independent cost estimates throughout the procurement process and prior to issuing the RFP (Clifford Ham, 2014). The estimates were developed using the building program and operating requirements as if developed utilizing traditional public sector design – bid – build – operate delivery referred to as the Public Sector Comparator (PSC). In combination with the PSC estimates, alternative estimates are made which anticipates what the proposers would be submitting under a PBI procurement. This alternative estimate is referred to as the Shadow Bid in the VfM analysis.
Ernst & Young was retained by the Judicial Council to provide financial and technical expertise in preparing the RFP proposal structure; to assist in the preparation of the Judicial Council Value for Money PSC and Shadow Bid analysis as required by the legislation authorization; and to assist in the evaluation of the three PBI Bid Proposals. In January 24, 2011, Ernst & Young issued a report on behalf of the Judicial Council on the Value for Money Report: New Long Beach Court Building. The report reviewed the Public Sector Comparator and the Shadow Bid estimates that were prepared prior to issuance of the RFP and then comparing the pre proposal analysis with the Meridian LBJP LLC proposal as reflected in the final Project Agreement. The majority of data within this section is based on the data and analysis of the January 2011 VfM report. It should be noted that an independent analysis of the Legislative Analyst’s Office, 2013; takes exceptions to a number of critical points within the Ernst & Young January 2011 report.
1. PSC and Shadow Bid Price
The PSC was calculated using the Base costs of the Project as submitted and updated by Judicial Council and its cost advisors (Davis Langdon) to include capital, operations & maintenance, and financing costs. The PSC quantified costs of retained public sector risks utilizing the traditional public sector delivery. Risks included the environmental condition of site, scope changes, construction delays, unanticipated operating costs and labor disputes. Other costs included within the PSC included external leased space for future court expansion, tenant improvement, and security staff costs. In order to normalize the PSC with LBJP Performance Based Proposal a competitive neutrality adjustment was made which adjusts the net amount for costs such as insurance and taxes that, would not otherwise be included in payments under the PSC approach. These are costs that the PBI approach would incur but would either be paid to the State, such as taxes or avoided by the State due to its position, such as insurance.
The cost of the PBI in the February 2008 VfM report was based on an annual service payment calculated in a Shadow Bid which is an estimate of the likely cost that a private partner would require from the Judicial Council to provide the project under a PBI approach based on the assumptions at the time of the original VfM report (February 2008). The original VfM showed a benefit under the PBI delivery of approximately $52 million Net Present Cost (NPC) terms or 10.6% based on a discount rate assumption of 7.94%. The discount rate of 7.94% used in that report was the Project IRR calculated in the Shadow Bid. The Ernst & Young, 2011 analysis stated that LBJP PBI proposal provided the State with a net $56 million of additional value over a standard PSC delivery.
2. Discount Rate
The discount rate assumption represents the combination of current market available interest rates and the relative risk that the project is considered to have and has generated much controversy (Legislative Analyst’s Office, 2013). The assumed discount rate of 6.06% was used as it reflected the then current State rate for the cost of funds. It was the rate at which the State was able to raise funds for the Court of Appeal, Third Appellate District renovation of the Library and Courts Building in Sacramento in 2009 (Ernst and Young, 2011). The VfM analysis based on this discount rate was the basis on which DOF issued its approval benchmarks for the evaluation of the LBJP financial package; as such this VfM analysis assumes a discount rate of 6.06% was used for all Net Present Cost (NPC) calculations. The discount rate assumption is a pivotal assumption as small changes to this rate will result in significant swings in the value comparatives between the PSC and PBI. The sensitivity matrix included within the Ernst & Young VfM report illustrates this point. Within the Sensitivity of Value for Money to the Discount Rate Assumption chart, discount rates from 5% to 12% were shown with the resulting values for the NPC for both PSC and PBI, and the percentage difference between the VfM analysis between PSC and PBI deliveries. Using a 5% discount rate resulted in the two deliveries having less than 1% differential. At 12% the PBI had a net cost benefit of $76.77 million dollars over the life of the contract or 18% less expensive than the traditional PSC delivery. The take away is that the more risk intensive a project the better value a Performance Based Delivery will provide over a traditional Public Sector delivery. In the Ernst & Young, 2011 final report reflects the transaction as agreed to between the Judicial Council and LBJP and reflects the outcome of the open dialogue that took place between the Judicial Council and LBJP in the period from June 2010 through to December 2010 with the specific purpose of reducing the PBI costs to be, on a NPC basis, at a minimum comparable in value to the Public Sector Comparator. Following this dialogue, LBJP prepared a final Proposal on December 20, 2010 with the base interest rate fixed on that day. The established benchmark for evaluating the delivery methods for this project is on a net present cost basis using a discount rate of 6.06%. The first year nominal service fee (annualized) was approximately $51.671 million with a total cumulative Service Fee paid over the 35-year project term of $2.05 billion which equates to a NPC of $725.40 million. The estimated PSC total nominal costs over the 35-year operational period amounts calculated to cost $2.08 billion with a Net Present Cost of $751.37 million. On that basis, the Ernst & Young report established that the PBI option, as reflected in the LBJP proposal, was $25.97 million less expensive than the PSC. This was half of what was originally projected within the initial 2009 estimates.
3. Project Schedule Comparison
Project delivery Schedule comparison between PSC and PBI shows a substantial acceleration of the project by the private sector over the public sector design-bid-build delivery. The Menard, July 2014 Cost Effectiveness Report compared the Long Beach and San Bernardino projects, similar sized court buildings developed by the AOC during the same 2008-2013 period. The Long Beach courthouse was designed and constructed two years more quickly than the San Bernardino project. The PSC comparative does not adequately monetize the value of the improved speed of delivering critical needed public infrastructure than traditional public sector delivery (Clifford Ham, 2014).
4. Economic Assumption
Section 6 of the Ernst & Young 2011 VfM report included interest rate assumptions for both the PSC and PBI deliveries. The cost of construction was escalated 3.66% within the PSC analysis and no interest rate factor was used in the PBI analysis as the Judicial Council had a guaranteed fixed price proposal from LBJP LLC. An inflation factor of 3.28% was used to escalate the O & M costs within the PSC and 2.00% within the PBI. The difference is reflected in the reduced portion of the service fee that would be adjusted for inflation within the finalized agreement with LBJP LLC. Energy Costs were projected to escalate 2% in both PSC and the PBI analysis.
5. Summary of Value for Money Analysis - Business Case
The report closed with a comparative summary of the Value for Money analysis between the PSC normalized estimate and PBI delivery as negotiated with LBJP LLC in which the PBI was found to provide better value over the entire 35 year life of the project. The Net Present Cost for the 35 year agreement of the PSC delivery was estimated to cost $751 million vs. $725 million for the PBI delivery. This would equate to the PBI delivery costing $26 million less over 35 years or 3.5% less expensive in Present Value terms.
The true cost of the total life cycle cost of the project will not be known for many years as the building has been open only 1 year. In real terms the projected cost savings achieved utilizing a performance based delivery is still only a projection but the process may result in a better operating and performing facility over the life of the project agreement which may have other more profound savings such as not having to rebuild another facility in the future.

### Financing Structure

The Project was structured on a DBFOM basis, under which the private company would resume full responsibilities regarding the financing and repayment of debts. This principle is clearly stated in Section 6.1 (A) of the Project Agreement:
“PROJECT COMPANY RIGHT AND RESPONSIBILITY TO FINANCE PROJECT: The project company is solely responsible for obtaining and repaying all financing necessary for the Project at its own cost and risk and without recourse to AOC, and exclusively bears the risk of any changes in the interest rate, repayment provisions or the other terms and conditions of its financing”
1. Financial market during the project tendering (2008 – 2010)
In the period when the project was procured (2008 through 2010), the Global Financial Crisis, caused by the subprime mortgage crisis in the United State, hit credit markets, which led to material changes and significant downturn in the US economy. The financial market became technically frozen and the credit market remained without liquidity for a long period of time. The RFP (released on May 15, 2009) said that a bidder must use an assumed date of September 30, 2009 as the basis for developing their financial proposal. One can imagine how difficult it must have been to find long-term financing sources for the Project in the middle of the financial turmoil. It significantly impacted availability of liquidity in the market, let alone the costs and length of financing.
This dire situation of the financial market and level of difficulties in obtaining finance are clearly shown in the trends of the TED spread around the time of RFP release. The TED spread is difference between the interest rate on interbank lending (as represented by the three-month LIBOR), and the interest rate on three-month U.S. Treasury bills (“TED Spread,” 2014). The TED spread represents a good indicator of level of credit risks perceived in the market. This is because U.S. T-bills are considered risk free while the rate associated with the interbank Eurodollar borrowing is thought to reflect the credit ratings of corporate borrowers. As the TED spread increases, default risk of commercial borrowing is considered to be increasing; therefore investors will have a preference for safe investments.
TED Spread during the Global Financial Crisis (2008-2010) shows how much the TED spread skyrocketed with a high degree of fluctuation during the Global Financial Crisis (shaded in gray) from an average of around 0.3 – 0.4% before July 1, 2007, reaching its peak at 4.6% on Oct 10, 2008, before slowly turning back to the normal level after July 1, 2009.
Figure 4: TED Spread during the Global Financial Crisis
Given this market situation, the commercial banks, especially the banks in the U.S.A., were not in a position to provide long-term lending. The bond market was by no means better than the loan market. Key institutional investors such as pension fund and insurance companies also were not able to build up their long-term assets due to the credit risks of the issuers. Neither LBJP nor Judicial Council was of an opinion that the financing must be locked up for the entire concession period. Instead, they prudently approached the financial market with different phases by first obtaining a short/mid-term financing, then afterwards refinancing it with better terms when the market improves.
2. MINI-PERM Loan
‘Mini-Perm Financing’ was the alternative solution to the long-term financing. It is usually used until a project reaches a certain milestone, for example, completion of construction, and/or until a project can start generating revenues from the project. A project developer can use this type of financing prior to being able to access long-term financing or permanent financing solutions. (“MiniPerm,” 2014). Section 6.7 of the Project Agreement recognized the use of Mini-Perm Refinancing as an interim solution to the future long-term financing by stipulating: “REFINANCING OF MINI-PERM LOAN (A) Mini-Perm Refinancing. The parties acknowledge that the Project Company's plan of financing, as reflected in the Financial Model, is based upon a refinancing of a bank loan for the Project having a term of approximately 7 years following the Financial Close date (the Mini-Perm Refinancing)”
As per the Project Agreement, in principle, LBJP’s refinancing is subject to Judicial Council’s consent. However, when it comes to the refinancing of Mini-Perm Loan, it was treated as an Exempt-Financing, which does not require the consent of the Judicial Council.
3. Details of Mini-Perm financing
Amounts and Participating Banks
The cost of the Project was US$490.57 million, for which financing was arranged with a Debt to Equity ratio of 90:10. Meridiam contributed US$49.06 million as an equity investment, and US$441.5 million was raised as a 7-year Mini Perm financing on a club loan basis. BBVA, BNP Paribas, Credit Agricole, Deutsche Bank, Royal Bank of Canada and Scotiabank, all non-US banks, worked together as joint lead arrangers. Because the financing arrangement was being undertaken in the middle of Global Financial Crisis, the participating banks paid extra caution in making assessment of possible risks involved in the project. Given that the source of loan repayment will be annual appropriation, some banks raised a concern about a possible risk of falling short of the budget to pay the Service Fee in the future. At the time, Judicial Council responded by illustrating how the new Long Beach Court building would become an essential court facility, which because of its functional importance within the Superior Court of Los Angeles County would compel the Judicial Council to meet its financial obligations regardless of future appropriation actions by the State Legislature. This “essentiality” argument helped Long Beach Judicial Partners to secure bank financing commitments. (Clifford Ham, 2014) The financing was successfully closed on December 21, 2010. The amounts of contributions by each bank are outlined in Table 1.
Table 1: Amounts Contributed by Banks
| Name | Amount (million) | Percentage | Role |
| Royal Bank of Canada | US$92.0 | 20.8 | Joint Lead Arranger |
| BBVA Bankomer | US$82.0 | 18.6 | Joint Lead Arranger |
| Deutsche Bank | US$78.8 | 17.8 | Joint Lead Arranger |
| BNP Paribas | US$78.8 | 17.8 | Joint Lead Arranger |
| Credit Agricole | US$60.0 | 13.6 | Joint Lead Arranger |
| Scotiabank | US$50.0 | 11.3 | Joint Lead Arranger |
| Total | US$441.5 | 100.0 | |
Pricing of the Loan and Swap
The loan was priced at 2.75% over 6-month Libor during the construction period, after which the interest was scheduled to step-up. The interest rates were structured in a way that initial interest started at the lower level during the construction period when there would be no revenues generated from the project. In order to hedge the risks of the interest fluctuation in the future, LBJP fixed the future interest rate by signing on a swap transaction. At this point, the Project Agreement was already signed with the fixed amount of service fees to be paid during the concession period. Taking into account of the loan and swap, all-in debt interest rate ranged from 7.42 to 8.42% as shown in Table 2.
Table 2: Loan, Swap and All-in Debt Interest Rate
4. Concerns on the future refinancing
LBJP’s concern was possible downgrade of the California State’s credit rating at the time of refinancing. It was because one of the important factors attributing to LBJP’s successful refinancing after the expiration of the Mini Perm loan would depend on whether the State could possibly maintain its credit rating at the same level, if not improved. During the contract negotiation, LBJP requested that the Judicial Council would bear the risks of possible increase in refinancing cost, if it is caused by the downgrade of the State’s credit rating. However, the Judicial Council rejected this request on the ground that one of the core principles of the project was to fully transfer the financing risks to the private sector, therefore the project company assuming all responsibilities at its own cost and risk with regard to all financing-related matter. In the end, LBJP agreed to take all the responsibilities of risks associated with the downside of refinancing. (Administrative Office of the Courts, 2014)
An interesting aspect of the refinancing is that Judicial Council/AOC is still entitled to receive a share of Refinancing Gain. This ability of the Judicial Council to receive refinancing gain is a unique feature in this case, given the fact that Judicial Council does not bear any risks of financing. Section 6.5 of the Project Agreement states that:
“REFINANCING (B) AOC’s Share of Refinancing Gain. The AOC shall be entitled to receive a 50 percent share of any Refinancing Gain arising from a Qualifying Refinancing.”
5. Refinancing
The 32-month design and construction period reached completion and the 35-year operations period began in September 2013. Concurrently with the beginning of this second phase of the project, Meridiam initiated the refinancing of the Mini-perm loan. Following a 10-week period of structuring and marketing to investors, a US$518.5 million 34-year bond was issued in the private placement market by LBJP on November 26, 2013. With JPMorgan and Deutsche Bank being as co-placement agents that assumed US$259.25 million placement each, it was successfully subscribed by ten investors including insurance companies and pension funds.
The bond has a coupon of 6.88 per cent with a maturity date of December 31, 2047. The refinancing provided long-term funding with a lower all-in debt interest rate through a private placement bond. That resulting gain to the project company and the Judicial Council was calculated at approximately US$200,000, and as per Section 6.5 of the Project Agreement, the Judicial Council’s share was applied to reduce the annual service payment.

### Public Opinion Post-Closing

1. The Source of Service Fees
Even before the building was completed, though, public leaders began questioning the value of the deal for the State. The first rumble of contention came in August 2012, when the state Senate Budget Chairman wrote a letter to the Interim Administrative Director of the Courts indicating that the Judicial Council should not expect to receive general funds when the first annual service fee became due in 2013 (Miller, 2012a). The source of revenue for the service fees had not been specified in earlier legislation or contract documents (Miller, 2013), and at the time of closing, the DOF had warned the Judicial Council that "funding for the annual service contract payment is subject to Legislative review and appropriation” (Miller, 2012a). The Judicial Council repeatedly requested that the annual service fee be paid from state general funds as a supplemental appropriation to their annual funding, since the construction and operations and maintenance of the Long Beach Court building was a new obligation – outside of its immediate and critical needs capital program – that was adopted at the Governor’s behest (Clifford Ham, 2014). While a general fund appropriation might have been feasible in 2007 when the project was conceived, in 2012 the state was dealing with severe budget issues and a different political context.
2. LAO Report
A few months later, in November 2012, the California Legislative Analyst’s Office released a report critical of the way California agencies were handling P3 projects, specifically the Presidio Parkway and the Long Beach Courthouse. They determined that the Long Beach Courthouse project did not qualify as a good candidate for P3 procurement and that the VfM assessment overestimated the value of the P3 approach by as much as US$160 million NPV, far outweighing the Judicial Council’s estimate of their savings from a P3 approach, at US$26 million (Digiambattista Peters, 2012; Miller, 2013). Their particular areas of concern for the Long Beach Courthouse project centered on the following:
* The Judicial Council lacked a transparent framework for selecting P3 projects and conducting a VfM analysis, either before the Long Beach Courthouse project commenced or in the two years since.
* The Judicial Council did not use selective criteria in determining if P3 was a good approach for the Courthouse.
* The VfM analysis was biased towards the P3 approach:
o Miscounting taxes that would be paid to the federal government as a revenue for the state in the Shadow Bid; o Overestimating cost overruns in the Public Sector Comparator, despite the Judicial Council having control mechanisms in place to prevent overruns and no recent history of overruns; o The Public Sector Comparator providing inadequate space for future court needs, necessitating the lease of additional space outside the building at a future date (the cost of which would be compounded by NPV calculations); and o Estimating a 14 month difference in the project completion date between using traditional procurement and a P3 approach.
* The state legislature did not get to provide feedback on the VfM analysis.
* California state bureaucrats have limited expertise in managing P3 procurement processes and no procedure for analyzing past P3 experiences in order to develop lessons learned.
* Finally, the report suggested some ways that the state could correct these deficiencies and mistakes going forward, such as strengthening the P3 project selection criteria, the VfM analysis, and the P3 approval process, and enhancing the Public Infrastructure Advisory Commission to be an independent P3 advisory body for the state (much like the Office of Transportation Public-Private Partnerships is for Virginia).
3. Response from the Judicial Council
The Judicial Council quickly responded to the LAO report with a letter from the Director of Judicial Branch Capital Program Office (Willoughby, 2012). The five page letter defends the decision to use PBI, referencing many times the planning that the Judicial Council did with the DOF and the Executive Office before the agreements were finalized and the Judicial Council’s responsiveness to questions from the Joint Legislative Budget Committee and the LAO, as well as the legislative authorization for the PBI approach in Senate Bill 77, the Budget Act of 2007. It explains that the Long Beach Courthouse is a large building with interdependent systems, making it worthy of procurement as a PBI project. Regarding the LAO’s specific concerns about the Value for Money analysis:
* Taxes: The Judicial Council explained that these taxes were not counted as revenue in the VfM but excluded as a cost under competitive neutrality (citing the Australian government’s definition of competitive neutrality).
* Cost overruns: The Judicial Council explained that the US$128 million of cost overruns the LAO found in the VfM is actually the difference in NPC of all risks retained by the Judicial Council under a PBI approach versus the traditional approach, so this is not overstating the VfM. (Given that a significant benefit of the PBI approach is that much of the construction and operations risk is held by the private party, this is not surprisingly a big factor in the VfM.) Furthermore, the Judicial Council notes that a structured risk analysis, “an accepted best practice in comparative analysis of infrastructure procurement methods…was performed at three points prior to completing the VfM [and], at the request of the LAO, the Judicial Council engaged two independent experts in risk analysis to review and validate the process for Long Beach Courthouse” (Willoughby, 2012).
* Inadequate space in the PSC: The Judicial Council explained that estimates of the need for additional space was advised by the Superior Court of Los Angeles.
* Difference in project completion date: The Judicial Council explained that the time advantage under PBI is due to “an overlap of CEQA environmental clearance performance by the Judicial Council concurrent with conceptual design activities during the Long Beach P3 proposal stage” and pointed out that “simultaneous design, working drawings, bidding, procurement, and construction is a proven method used in private sector real estate development to avoid cost escalation and to expedite building completion; however, it is not allowed under the current procedures for building projects using the state capital outlay traditional approach” (Willoughby, 2012). They pointed out that this assumption appears on track to be validated already because construction began sooner than they predict it would have under a design-bid-build approach.
Despite the Judicial Council’s swift response, the LAO report garnered some negative press for the Long Beach Courthouse project and for the Judicial Council, which already being criticized as a “bloated bureaucracy” (Miller, 2011). News then came in December 2012 that the Court Facilities Working Group of the Judicial Council, the policymaking body of the California courts, would be placing four planned court construction projects on hold indefinitely to free up funding for the Long Beach Courthouse project (“California Could See Courthouse Construction Delays,” 2012; Miller, 2012b, 2013). This decision, combined with the LAO report, led to some heated questions for the Judicial Council at a Senate budget subcommittee hearing in March 2013. Administrative Office of the Courts Chief Operating Officer Curtis Child held firm on the decision, stating the Judicial Council was "still quite confident ... this is a bargain for the state" but that they “don’t anticipate doing any more P3 projects" (Miller, 2013).
Questions about if and how the annual service fees would be paid were resolved when US$35 million of the Judicial Council’s court construction funds were finally included in the 2013 Budget Act (“Dreyfus AMT Free Municipal Bond Fund - Class Y - Part 4,” 2013). The LAO supported this decision, rather than further burdening the General Fund (Legislative Analyst’s Office, 2013). Similarly, the Governor's 2014-15 Budget includes US$54.2 million in court construction funds for an annual service fee payment for the courthouse (“Dreyfus High Yield Municipal Bond Fund - Class Z - Part 4,” 2014). So service fee payments began on time, and in the first six months of occupancy, the Judicial Council assessed less than US$50k of penalties, many of which were for elevators being out of commission (Clifford Ham, 2014).
Interestingly, at the same time as California public officials were debating the merits of the P3 project, the California State Teachers' Retirement System (CalSTRS) was taking advantage of the opportunity to invest in the private concessionaires: in October 2012 it made a US$43 million commitment to four California investments, including the Presidio Parkway and the Long Beach Courthouse. CalSTRS’s infrastructure portfolio also has US$100 million invested in the Meridiam Infrastructure North America Fund II (“CalSTRS Announces California Infrastructure Investments,” 2012).
4. Other Judicial Council reports
Throughout the construction phase, the Judicial Council published three reports written by an independent building expert (IBE), describing the progress of the Project Agreement. The IBE rated various aspects of the project (construction schedule, quality of materials and workmanship, design-build governmental approvals and governmental agencies, coordination between parties) and nearly always judged these objectives to be satisfied or with minor issues encountered (Administrative Office of the Courts, 2012a, 2012b, 2013).
In 2013, the California state legislature passed Senate Bill 75 requiring the Judicial Council to do an analysis comparing the Long Beach Courthouse project to three non-PBI courthouse projects to determine if PBI was a cost-effective approach (Menard, 2014). The Judicial Council delivered that report in June 2014. They justified the value of the PBI approach on the factors of:
* Schedule: Long Beach Courthouse was constructed more quickly than the comparison projects because private delivery allowed for overlap of the design and construction phases, used fast-tracked construction, and was not subject to the timeline of state bond sales.
* Construction Cost: While the Long Beach Courthouse was slightly (US$0.15 per square foot) more expensive than the comparison, its design was superior in some aspects and allows for expansion.
* Project Delivery Method: Both approaches allowed for competitive bidding.
* Application of Trial Court Facilities Standards: Both approaches allowed these standards to be met.
* Project Management Costs: Judicial Council project management costs for the development phase were comparable under both approaches.
* Implementation of the Project Agreement: The private entities involved carried out the Project Agreement effectively.
* Value for Money Assumptions: The assumptions about site, timing, capital costs, and project risks in the VfM analysis had proven valid.
* Operation and Maintenance: The project company had assumed the risk of operating and maintaining the facility for the first 35 years at a specified standard of quality (Menard, 2014).
Despite this result, Clifford Ham, Principal Architect with the Judicial Council’s Administrative Office of the Courts and project manager of the Long Beach Courthouse project, states that it is unlikely that the Judicial Council or even the state of California will pursue another PBI project in the near future (Clifford Ham, 2014). He cites many factors, including that the annual service fees are still being paid for the Long Beach Courthouse project and that California’s credit rating is on the mend, reducing the cost of borrowing for a traditional infrastructure procurement approach. Also, the state has not invested in deepening its capacity to manage PBI projects.
The City of Long Beach clearly believes there is merit in the P3 approach after its front-seat view of the Courthouse negotiations: in February 2014, the City released a Request for Proposals for a DBFOM P3 contract for a new civic center. Two proposals were received. The initial Request for Qualifications capped the annual availability payments at US$12.6 million in 2013 dollars, which is the amount of money the City spends annually to maintain City Hall and lease additional workspace. This fall the City is holding a series of meetings for the public to learn about the bidder’s options (“City of Long Beach Announces Community Review Process for the Civic Center Request for Proposals,” 2014)

### Awards Received

The Long Beach Courthouse building project has received numerous awards including:
* Americans for the Arts: 2014 Public Art Network Year in Review, Best in Public Art Projects
* American Institute of Architects Academy of Architecture for Justice: 2012 Citation Award, Justice Facilities Review
* Construction Management Association of America, Southern California: 2014 Contractor Quality Partner Award
* Bond Buyer Magazine: 2011 Deal of the Year Awards; Nontraditional Financing
* Project Finance magazine's "North American PPP Deal of the Year 2010
* Engineering News Record, 2014 Global Best Project Award, Government Building
* Euromoney/Project Finance: 2011 North America PPP Deal of the Year
* Los Angeles Business Journal: Commercial Real Estate Award, 2014 Best Public Project
* Partnerships Awards: 2012 Highly Commended, Best Accommodation Project

## Discussion Questions

1. How did the Global Financial Crisis impact the project, in terms of project scope, financing arrangement, project timeline and others? If it had been a conventional government procurement project, would the Judicial Council have been able to proceed with the project in the same way that LBJP did? What do you think are the critical roles that LBJP played in this project, especially during the period of Global Financial Crisis?
2. Despite the fact that Judicial Council refuse to bear any risks associated with the financing, it was still entitled to receive a share of Refinancing Gain. What do you think about this unique arrangement?
3. Were the criticisms in the LAO report fair?
4. The LAO report explains that there are different approval mechanisms for vertical versus horizontal infrastructure P3 projects in the state of California. Court facilities and state office buildings must be approved and appropriated by Legislature, while transportation projects are handled by California Transportation Commission. Is it justified to have different approval processes for different types of P3 projects? What are the pros and cons of each?
5. What is the value to the State for having a facility designed, constructed, and occupied prior to making any capital payments? What is the value of having a new facility vs. having to make do with the existing failing infrastructure?

## References

Administrative Office of the Courts. (2012a). An Evaluation Of Project Agreement Development, Procurement Process & Performance During Design & Construction. Retrieved from http://www.courts.ca.gov/documents/Long-Beach-PBI-evaluation-report-9-14-12.pdf
Administrative Office of the Courts. (2012b). Governor George Deukmejian Courthouse: An Evaluation of Project Agreement Development, Procurement Process & Performance During Design & Construction (April 1, 2012 - August 31, 2012). Retrieved from http://www.courts.ca.gov/documents/Long-Beach-PBI-evaluation-report-12-13-12.pdf
Administrative Office of the Courts. (2013). Governor George Deukmejian Courthouse: An Evaluation of Project Agreement Development, Procurement Process & Performance During Design & Construction (September 1, 2012 - December 31, 2012). Retrieved from http://www.courts.ca.gov/documents/Long-Beach-PBI-evaluation-report-06-28-13.pdf
AECOM. (2014a). Architecture. Retrieved from http://www.aecom.com/What+We+Do/Architecture
AECOM. (2014b, February 21). New Long Beach Courthouse Building Project. Retrieved from https://www.metroplanning.org/uploads/cms/documents/long_beach_courthouse_case_study_mayors_caucus_feb_21st.pdf
AOC Office of Court Construction and Management. (2009). Request for Proposals, New Long Beach Court Building. Issued on May 15, 2009.
California Could See Courthouse Construction Delays. (2012, December 18). Correctional News. Retrieved from http://www.correctionalnews.com/articles/2012/12/18/california-could-see-courthouse-construction-delays
California’s Long Beach Courthouse P3. (2011, March 30.) IJ Global. Retrieved from http://www.ijonline.com/articles/68632/californias-long-beach-courthouse-p3 CalSTRS Announces California Infrastructure Investments. (2012, October 4). Business Wire. Retrieved from http://global.factiva.com/redir/default.aspx?P=sa&an=BWR0000020121004e8a4000f3&cat=a&ep=ASE
Carlsen, R. (2008, June 1). Los Angeles/Long Beach Market Report; Long Beach Courthouse project may open the way for more state public-private partnership programs. California Construction Link, p. 47.
City of Long Beach Announces Community Review Process for the Civic Center Request for Proposals. (2014, September 8). US Fed News. Retrieved from http://global.factiva.com/redir/default.aspx?P=sa&an=INDFED0020140910ea98000h1&cat=a&ep=ASE
Clifford Ham. (2014, October 3). Interview on the Long Beach Courthouse Project.
Digiambattista Peters, J. (2012). Maximizing State Benefits From Public–Private Partnerships. Legislative Analyst’s Office. Retrieved from http://www.lao.ca.gov/reports/2012/trns/partnerships/P3_110712.aspx
Dreyfus AMT Free Municipal Bond Fund - Class Y - Part 4. (2013, December 26). Mutual Fund Prospectus Express. Retrieved from http://global.factiva.com/redir/default.aspx?P=sa&an=MFPE000020140103e9cq001gu&cat=a&ep=ASE
Ernst & Young Advisory Inc. (2011). Value for Money Report, New Long Beach Court Building. Prepared for the Administrative Offices of the Courts.
Johnson Controls Inc. (2014). Public Private Partnership Model – Energy Savings Solutions. Retrieved from http://www.johnsoncontrols.com/content/us/en/products/building_efficiency/service-and-solutions/performance_contracting/p3.html
Judicial Council of California. (2006). Profile: Judicial Council of California, Administrative Office of the Courts. Retrieved from http://www.courts.ca.gov/documents/profilejc.pdf
Legislative Analyst’s Office. (2013). The 2013-14 Budget: Governor’s Criminal Justice Proposals. Retrieved from http://www.lao.ca.gov/analysis/2013/crim_justice/criminal-justice-proposals/criminal-justice-proposals-021513.aspx
Long Beach Judicial Partners Fact Sheet. (2013, August). Administrative Office of the Courts. Retrieved from http://www.courts.ca.gov/documents/fact_sheet_lbjp.pdf
Long Beach Judicial Partners LLC. (2009). New Long Beach Court Building - Package B Technical Proposal, December 9, 2009.
Menard, P. R. (2014). Governor George Deukmejian Courthouse: Evaluation of Cost Effectiveness. Administrative Office of the Courts, Office of Court Construction and Management. Retrieved from http://www.courts.ca.gov/documents/lr_gov_deukmejian_courthouse-SB-75.pdf
Meridiam nears close on Long Beach Courthouse refinance. (2013, November 27.) IJ Global. Retrieved from http://www.ijonline.com/articles/90139/meridiam-nears-close-on-long-beach-courthouse-refi
Miller, C. (2011, April 4). Committee To Examine Aoc For Bloat. The Recorder, p. 33.
Miller, C. (2012a, September 17). Bill comes due for hyped-up courthouse. The Recorder, p. 1.
Miller, C. (2012b, December 11). More bad fiscal news on horizon for California court system; FROM THE COURTS. Miami Daily Business Review, p. A3.
Miller, C. (2013, March 18). AOC in woodshed over Long Beach. The Recorder, p. 1.
Mini Perm. (2014). Retrieved from http://www.investopedia.com/terms/m/miniperm.asp
PBI: California teaming. (2008, March 1). Project Finance. Retrieved from http://global.factiva.com/redir/default.aspx?P=sa&an=PTF0000020080325e4310001l&cat=a&ep=ASE
Project Agreement between Judicial Council of California, Administration Office of the Court and Long Beach Judicial Partners LLC. (2012.) Retrieved from http://judicialcouncilwatcher.files.wordpress.com/2012/12/pra990-1.pdf
Public-Private Partnership Alliance. (2014). Clifford Ham - P3C 2015 Biography. Retrieved from http://thep3conference.com/speakers/clifford-ham/
Rayes, Hastie, Maher, & Ham, (2014, July). Governor George Deukmejian Courthouse Performance Based Infrastructure. Power Point presented at the National Institute of Building Sciences Conference, Washington, DC. Used with permission Clifford Ham.
Reinhardt, W. (2010 December). $492 Million Long Beach Courthouse P3 Opens the Door for Social Infrastructure. Public Works Financing. www.pwfinance.net, p. 3.
TED Spread. (2014.) Retrieved from http://www.investopedia.com/terms/t/tedspread.asp
Willoughby, L. (2012, November 30). Re: Maximizing State Benefits from Public-Private Partnerships, November 8, 2012. Retrieved from http://www.courts.ca.gov/documents/AOC-response-to-LAO-ppp-report-11-30-12.pdf

## Additional Readings

* LAO report (20 pages) - http://www.lao.ca.gov/Publications/Detail/2666
* AOC response to LAO report (5 pages) - http://www.courts.ca.gov/documents/AOC-response-to-LAO-ppp-report-11-30-12.pdf