Monday, July 13, 2015

Let's hope some questions are asked about Merced's proposed public-private partnership

Do they really know the answers?
As noted in our prior post, the Regents' website now has the attachments for the various agenda items to be discussed at the upcoming meeting.

One is a proposed plan at Merced to have a public-private partnership.* The documents is vague but it appears that Merced plans to have a private developer put up buildings which the university will then lease in some way. The lease terms apparently will include maintenance.

Note that the Regents, as a public entity, can borrow money cheaper than a private developer. So right away there are questions whether a private developer can, over the long run, deliver buildings and their services cheaper than the traditional public alternative. In fact, some readers may recall that when Gov. Schwarzenegger wanted to sell state buildings and then lease them back - to generate some short-term revenue - the Legislative Analyst's Office pointed out that such a public-private partnership was a very expensive way of borrowing money. Ultimately, when Gov. Brown came into office, he cancelled the deal, leading to lawsuits from developers which were only recently settled.

One can also imagine concerns being raised about the status of maintenance employees in these buildings. Will they be employees of the university or the developer? 

It would be better to ask tough questions upfront rather than years down the road when problems arise.

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