Long Beach Civic Center at night; Long Beach Civic Center at night;

Long Beach Civic Center, Long Beach, California

How can a city save money at the start of a project to invest in a better building for the community?

A new city hall and port headquarters anchored by a 73,000 square foot civic plaza. A revitalised public park and spacious public library. Reconnected streets and a pedestrian path connecting to regional transit. Long Beach is getting a major makeover – and it’s all been made possible by a public-private-procurement (P3) deal acquired with our help.

Built in 1972, the building was outdated, energy-inefficient and had a backlog of maintenance jobs. When a 2013 study found it would be very expensive to retrofit the seismically unsafe facilities, the city sought our advice on structuring a potential partnership with a developer to create a new complex that would deliver new facilities for the same US$12.6m the city was spending annually to maintain the existing complex.

Project Summary

580,000 square feet of public buildings

496parking spaces

4,000new jobs

The site was made ready in March 2016

The proposed $530 million Civic Center project would comprise of a city hall, public library, a revitalised Lincoln Park and port headquarters. It is sited at the location of the old courthouse that was recently rebuilt nearby by the State of Califirnia using a P3 model (we were the Lender’s technical advisor on that project). The old courthouse was demolished and the site was made ready in March 2016.

Long Beach Civic Center in use - render Long Beach Civic Center in use - render

What does a public-private-procurement mean for the project?

Unlike more traditional means for building a public project, a public-private partnership, or P3, places the responsibility of designing, building, financing, operating and maintaining a project on the developer. In return, the public agency make performance-based payments to the developer over a set term, after which the facility O&M is handed back to the public in a state of good repair. We helped Long Beach shift construction cost and schedule risk, financing risk and long-term facility performance risk onto a private conglomerate, speeding up delivery, improving management and increasing innovation.

A P3 partnership offers major financial benefits

The City was able to transfer all this risk through the use of private financing—the “F” in DBFOM—that was secured and taken out by the private developer, Plenary Edgemoor Civic Partners. While the financing was non-recourse to the City, meaning it was not contractually obligated to pay the debt, the interest rate on the private placement notes was no more than the rates on municipal revenue bonds or certificates of participation—the two public financing options being considered that would have required a debt repayment covenant by the City to the lenders.

As well as transferring risk away from the city, no new taxes or fees need to be paid by Long Beach residents or businesses to create the complex. Further, the sale of land for private development created significant additional source of funds for the public facilities. Once developed, the private development will generate tax revenues for the city while also creating a mixed use, vibrant, 18-hr district.

Our P3 specialists were up to the challenge

Despite the complexity of the deal, we were able to carry out the selection process of the winning bidder in under a year, and carry out financial and design negotiations and reach close within two years. All in all, we were able to reduce the planning, entitlement, and procurement process to two years, down from the traditional three-to-five years. This has resulted in big savings for all stakeholders – and more money to invest in transforming downtown Long Beach.

Long Beach Civic Center skyscape render Long Beach Civic Center skyscape render

The overwhelming support for this project indicates that this is just 
the start of the story for Long Beach and its residents.

Building a better Long Beach

The overwhelming support for this project indicates that the new Civic Center is just the start of the story for Long Beach. The successful P3 deal is likely to lead to more public-private partnerships in California and beyond, demonstrating how municipalities and other public agencies all over the region can replace outmoded public buildings and infrastructure with vibrant community spaces.