Tuesday, December 7, 2021

The Question of a Public-Private Partnership

Bob Olson addresses the Marco Island City Council during the June 21st  reading of the Marriott’s PUD amendment. Olson spoke frequently against the Marriott PUD amendment in the months leading up to its final approval on June 16. SUBMITTED PHOTO

Bob Olson addresses the Marco Island City Council during the June 21st reading of the Marriott’s PUD amendment. Olson spoke frequently against the Marriott PUD amendment in the months leading up to its final approval on June 16. SUBMITTED PHOTO

By Noelle H. Lowery

During its June 16 regular meeting, the Marco Island City Council put to rest the debate over the Marco Island Marriott Beach Resort’s $150 million renovation project, approving the PUD amendments by a vote of 6-1.

Even so, new questions rose about the Marriott’s offer to give the city $1 million to expedite the renovation of the Smokehouse Bay Bridge. Marriott General Manager Rick Medwedeff made the offer during the project first appearance before City Council on June 2. The $1 million contribution to will cut the construction schedule by eight months, eliminate any potential overlap between the bridge work and construction at the Marriott and also remove the potential need for Marriott construction traffic to use San Marco Road (U.S. 92).

The new questions came from Andrew Dickman, attorney for homeowner Bob Olson, who is a major detractor of the Marriott project. Dickman suggested the deal should be moved back to the city’s Planning Advisory Board and challenged the Marriott’s offer and the city’s acceptance of it.

According to Marco Island City Manager Roger Hernstadt, though, the Marriott’s involvement with the Smokehouse Bay Bridge project amounts to a public-private partnership (PPP), and is truly a sign of the times. “Joint-use, multipurpose facilities and expediting the construction of infrastructure via public-private partnerships to accomplish projects of mutual benefit are common in large cities,” explains Hernstadt.

“Some of these projects are cases where the government contributes money or an abatement of taxes or fees in consideration for the public improvement that is built by the private partner,” he adds. “The most common application is access roads, expressway or turnpike exits or ramps associated with building new stadiums or arenas.”

To be sure, the state of Florida has been at the forefront of the public-private partnership trend for some time, especially when it comes to projects procured through the Florida Department of Transportation. Since 2007, more than $1.1 billion in roadwork has been completed by the FDOT through PPPs, including a 30-mile stretch of I-75 in Lee and Collier counties extending from Golden Gate Parkway to Colonial Boulevard.

Currently, FDOT has nine PPP road projects under construction totaling nearly $3.4 billion, and is currently procuring a project to improve I-4 through Orange and Seminole counties in Central Florida. The price tag on that project: $2.3 billion.

Additionally, the state bolstered its support of pubic-private partnerships further in 2013. First, Gov. Rick Scott signed a law opening up additional PPP opportunities for governments and businesses. The law allows businesses to submit unsolicited proposals to local governments and agencies. Qualifying projects include any serving a public purpose, such as airports, seaports, pipelines, mass transit infrastructure, nursing homes, educational buildings, and cultural centers or sports stadiums.

Second, the state created the Partnership for Public Facilities & Infrastructure Act Guidelines Task Force. Managed through the Florida Department of Management Services, this task force is creating recommendation for the Florida Legislature to consider for the purposes of creating a uniform process to establish public-private partnerships on the local level.

According to research by The Pew Charitable Trusts, the reasons for all the love for PPPs in Florida is simple. In the aftermath of the recession, state governments remain strapped for cash, bonding authority and other public revenue-raising methods, and they need help to build and maintain their infrastructure, roadways, utilities and water facilities, prisons, tunnels, hospitals and schools.

PPPs, which allow private companies to cover the upfront costs of projects in exchange for the right to operate and collect payments the completed facilities, fit the bill. In fact, according to the National Conference of State Legislatures, roughly two-thirds of states now have laws authorizing PPPs.

Still, there are nay-sayers who believe PPPs corrupt governments, putting them at the whim of the private interests funding the projects at the expense of the taxpayers. Governments sacrifice the public service generally provided by whatever public project is being funded for the profits of the private companies forking over the money for the projects.

In the end, Hernstadt believes the Smokehouse Bay Bridge project is a strong example of the state’s emphasis on public-private partnerships, and indeed, it appears city councilors are okay with it as well with their approval of resolution 14-19 also during the June 16 meeting. The resolution created the required change order for the city’s contract with Quality Enterprises USA for Smokehouse Bay Bridge, reflecting the addition of the Marriott’s $1 million contribution and amending the construction schedule.

The new not-to-exceed price for the bridge work is roughly $8.625 million with a substantial completion date of July 1, 2015, and a final completion date of Aug. 1, 2015. The resolution also provides extended working hours for the project of 6 AM-10 PM, six days a week, with pile driving limited to daylight hours. Finally, liquidated damages to be assessed if the construction exceeds the proposed contract schedule, without any delays, would be valued at twice the rate indicated in the bid documents, or $6,114 per day.

The change order has been forwarded to Quality Enterprises for review and acceptance. According to Marco Island Public Works Director Tim Pinter, the contractor has until close of business on Wednesday, July 30, to deliver the signed contract to the city, so Marco Islanders will have to wait another month to see if its first public-private partnership will come to fruition.

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