A social infrastructure public-private partnership (PPP; P3) that was meant to furnish Puerto Rico with a brand new juvenile detention centre has been scrapped.
Greenfield project Nuevo Comienzo, or ‘New Beginning’, was conceived as a 600-bed “treatment campus” to be located in Yauco, an inland municipality in south-west Puerto Rico.
The design, build, finance and maintain (DBFM) concession would have been the first-ever social infrastructure deal for Puerto Rico, an unincorporated US territory.
The Puerto Rico Public Private Partnerships Authority (PPPA or P3A) in August 2012 shortlisted four consortia for the tender, but never published a Request for Proposals (RFP).
The Puerto Rico Department of Corrections asked the Authority to abandon the project, arguing that juvenile institutions should not exceed 120 beds per facility.
The PPPA introduced Nuevo Comienzo under Luis Fortuno, a corporate lawyer who in 2009 became the 10th governor of Puerto Rico.
The Fortuno administration installed Act 29 – enabling legislation for private investment in public infrastructure – and established the PPPA to embark on a privatisation campaign.
The maiden P3 carried out by the Authority was a toll road concession of Puerto Rico Highway 22 (PR-22) to Abertis and Goldman Sachs Infrastructure Partners.
The deal, a 40-year lease that included Puerto Rico Highway (PR-5) in return for $1.4 billion, reached financial close in autumn 2011, marking the sole ‘brownfield’ toll road PPP for the US in five years.
The PPPA also completed the only airport PPP in the US with the 40-year lease of Luis Munoz Marin International Airport (LMM) to Highstar Capital and Grupo Aeroportuario del Sureste (ASUR) – a deal that reached financial close in February, after Fortuno was voted out of office.
His departure was followed by that of David Alvarez, erstwhile head of the PPPA. Current Governor Alejandro Garcia Padilla has said he would honour any existing business contracts.
The PPPA, meanwhile, maintained in a statement that the current administration is not abandoning P3s.
The shortlist for the Nuevo Comienzo P3 included:
-‘Alianza Ranacer,’ teaming AECOM Technology Corporation and Brookfield Infrastructure Partners (BIP);
-Balfour Beatty Investments;
-‘NBC Yauco,’ comprising Desarrollos Metropolitanos and Municipal Capital Markets Group, and;
-‘Plenary Properties Puerto Rico,’ made up of Plenary Group, RBC Capital Markets (RBCCM) and Walsh Group.