Governor wins limited approval to expand public-private partnerships

The consensus jobs bill signed into law Thursday gives the administration of Gov. Dannel P. Malloy the ability he sought to expand public-private partnerships on some types of state construction projects, a provision state employee unions fought to eliminate.

As a compromise, the final bill includes labor protections that unions sought in the measure enacted in special session Wednesday, then signed a day later with great fanfare. These include prevailing wage guarantees and oversight by legislative panels and  the State Contracting Standards Board.

With varying degrees of enthusiasm, the governor and unions professed Thursday to be pleased with the public-private partnership language, which officials say is necessary in an era of diminishing federal dollars to leverage private capital.

Malloy said the modified language both addressed concerns of labor and leaves the state positioned to launch important capital projects.

“Quite frankly we were looking for ways to capture the power of the free market, the investing market,” he said after signing the bill.

The legislation authorizes the executive branch, including quasi-public agencies, to enter into agreement with private entities to “finance, design, construct, develop, operate or maintain” certain facilities.

A private company or group of companies might be retained to perform some, or several of these functions. This raised red flags with unions, who noted that, depending on the type of project, state employees might perform design, construction, inspection or operation roles.

The types of projects that can follow the public-private-partnership model, commonly referred to as P-3, include: educational, health, early child care and housing facilities; transportation systems, ports and other transit-oriented developments; and any other facility specially designated by the legislature.

The statute permits the governor to approve up to five public-private partnerships between now and Jan. 1, 2015.

But the legislature also stipulated that any such partnerships are subject to review by their Appropriations and Finance, Revenue and Bonding committees, as well as by the contracting standards board, and these partnerships must demonstrate new job growth.

Administration officials have said the P-3 approach would complement ongoing efforts to expand state bonding for capital construction projects, boosting a hard-hit industry.

State agencies overseeing capital projects typically coordinate design, construction and inspection services separately, often relying on a variety of companies to perform those roles. They also, depending on the project, may employ state engineers, other designers and inspectors.

Under the P-3 concept, the administration would have more flexibility to deal with one private entity, such as a construction company that would either provide its own design and inspection services, or coordinate with other businesses to provide them.

Malloy said these partnerships are well-suited for financed initiatives that are repaid with revenues from that project. For example, if Connecticut wished to borrow funds to construct a new parking garage, it could hire a company or companies to design, construct and operate the garage — all under one contract. The company would then provide payments to cover the debt service with profits from the garage receipts.

But labor unions countered that unless government oversight of all aspects of a public project is carefully maintained, they typically ended in botched work and cost-overruns. Such partnerships don’t always guarantee fair wages, they said.

Labor was circumspect in discussing P-3, commenting only be email.

“We have argued for years that state government needs to be part of the solution to the sagging economy by helping to spur economic growth and rebuilding the critical public structures upon which our economy depends,” wrote Larry Dorman, a spokesman for a coalition of state-employee labor unions.

“By establishing legislative oversight and ensuring the participation of the state contracting standards board — both of which are critical to the success not just of public-private partnerships, but of the broader effort to create good middle class jobs — this legislation is an opportunity to do just that,” he wrote.

Senate President Pro Tem Donald E Williams Jr., D-Brooklyn, said legislators worked with the governor to recognize labor’s concerns while also acknowledging that these partnerships are a good way to leverage more private investments in job-creating capital projects.

“The language did narrow as the negotiations went on,” he said. “But we also have to get ready for reductions in federal aid. We want to be ahead of the curve and that means looking at innovative partnerships that bring private investments that may be critical to some government services in the future.

Sen. Edith G. Prague, D-Columbia, co-chairwoman of the Labor and Public Employees Committee, said unions “had very valid concerns” about the need to preserve state oversight of such partnerships, adding she expects this issue to continue to be studied closely by the General Assembly in the near future.

“We do need to protect our investments,” Prague said. “I will be watching these partnerships very closely.”