Changes afoot for public-private partnerships
Many lawmakers oppose public-private partnerships for Capitol complex projects.
The Texas Legislature is attempting a do-over of its false start on public-private partnerships, including rewriting rules and proposing to build the first state office building in the Capitol complex since 2000 — but without a private partner.
The Texas Legislature is attempting a do-over of its false start on public-private partnerships, including rewriting rules and proposing to build the first state office building in the Capitol complex since 2000 — but without a private partner.
The action is occurring on several fronts as lawmakers address how to plan for the Capitol complex but also keep public-private partnerships as a tool to develop state lands outside the complex.
“The bill we passed last session created all sorts of problems,” said Sen. Kevin Eltife, a Tyler Republican chairing a key subcommittee on the 2011 public-private partnerships law. “There was no oversight. The Texas Facilities Commission was on the path with no real guidance from the Legislature.”
The facilities commission has been criticized because it was studying a 47-story residential tower as part of a proposed planetarium project at the north entrance of the Capitol complex. The facilities commission was also receiving a developer’s proposal to develop state land along Bull Creek Road in north Austin.
This time there is no shortage of legislative guidance, which reflects both second-guessing of the details
of the 2011 law and also rosier state revenues that might make partnerships with the private sector less appealing.
Senate Finance has approved language barring the facilities commission from spending money on public-private partnerships in the Capitol complex, which echoes legislation offered by Sen. John Whitmire, D-Houston, and 27 other senators.
The committee also has included $325 million in its version of the appropriations bill for two new office buildings, one at the Capitol complex and another at the state’s health services compound in North Austin.
Eltife said the state can save $15 million a year by housing state employees in its own buildings as opposed to leased space around Austin.
“We’re not growing state government,” he said. “We’re housing it. You can either rent or own.”
On the House side, Rep. John Davis, R-Houston and co-author of the original legislation, wants to increase state oversight. House Bill 2096 would funnel all state publicprivate partnership proposals — whether from the facilities commission or another state agency or university — through a new division in the comptroller’s office.
The comptroller’s staff would keep a new legislative oversight committee apprised of the partnerships.
As for problems with the original law, experts in the industry that testified Thursday before Eltife’s subcommittee said the state process was confusing and allowed unsolicited proposals from the private sector without state government having a plan for what it wanted to accomplish.
Gregory Weaver with Catellus Development Corporation, which re-developed Austin’s Mueller airport into a community, said his company passed on the state’s process because it was confusing.
“We could never get clarity,” Weaver testified.
“A P3 is not inherently evil, but what could make it evil is a lack of planning,” said Sen. Kirk Watson, D-Austin, whose Senate Bill 507 tries to improve state oversight while protecting local interests.
Tim Merriweather, a public-private partnerships expert with Longbow Partners, said there is interest in the partnerships at the local level, but he advises clients not to accept unsolicited proposals until they have a plan and the expertise to evaluate the proposals.
Merriweather likened the north Capitol complex as a “diamond in the rough” that could become the equivalent of Wash- ington D.C.’s National Mall.
“We can’t cut this diamond using unsolicited proposals,” Merriweather said.
But he told Sen. Whitmire that public-private partnerships could play a role in developing the Capitol complex once state leaders have agreed on a plan.
Whitmire said he remained unconvinced.
Whitmire also grilled Terry Keel, the facilities commission’s executive director, about that agency’s role in studying a 47story tower overlooking the Capitol and the University of Texas.
“I’m a little concerned you didn’t say, ‘Boy, that’s a non-starter,’ ” Whitmire said.
Keel said the agency would never have approved the tower without “specific approval” from state leaders.
He confirmed that the agency suggested that planetarium officials, who originally offered a threestory concept, needed to create a revenue stream to support its construction. That prompted the 47-story tower that would have included offices and residences.
Keel said the Legislature, hard-pressed for revenue in 2011, required the facilities commission to find a way to address the state’s building needs without raising taxes or increasing debt.
“The message we got: ‘We’re not giving you any more. Go find a way to do it,” Keel said.