Public-Private Partnership Makes Waves in California

A deal for a $520 million civic project is called the first of its kind in North America.

By Barbra Murray, Contributing Editor

Long Beach Civic Center | Plenary Properties Long Beach LLC (Developer), Edgemoor Infrastructure and Real Estate and Clark Construction (Contractor), Skidmore Owings & Merrill (Architect)
Long Beach Civic Center | Plenary Properties Long Beach LLC (Developer), Edgemoor Infrastructure and Real Estate and Clark Construction (Contractor), Skidmore Owings & Merrill (Architect)

Los Angeles—In downtown Long Beach, Calif., Arup has helped facilitate something quite unusual. The City of Long Beach and Port of Long Beach have achieved financial close for the Long Beach Civic Center project—a $520 million mixed-use, public-private partnership endeavor—with Arup having served as lead advisor to both entities as they embark on a one-of-a-kind, integrated design-build-finance-operate-maintain venture.

The LBCC project, for starters, will yield a new 270,000-square-foot City Hall building, a 240,000-square-foot Port headquarters building, a 92,000-square-foot Main Library and an approximately 3-acre public park. Ultimately, the development will include residential and commercial elements as well.

Design-Build-Finance-Operate-Maintain. LBCC is the first project in North America to utilize the hybrid concept. “This project, in our view, is unique in the sense that it has real estate risk for the master developer [Plenary Group], but it has a project finance structure, so the project agreement is a long-term, 40-year contract that provides not only for design-build-development of the project, but ongoing facility management for the team,” Orion Fulton, Arup project team leader, told Commercial Property Executive.

It’s quite an undertaking, and Arup deftly handled its responsibilities on behalf of Long Beach and the Port. A global interdisciplinary consulting and design services firm, Arup put together a team involving architectural firm HOK, BAE Urban Economics and MBI Media to provide the City and the Port with an all-inclusive advisory package consisting of financial, real estate, design, engineering, commercial and consulting services.

Plenary, an international infrastructure business, is leading the consortium that will take LBCC from concept to reality. Acting as Plenary Properties Long Beach LLC, the company is joined by Edgemoor Infrastructure & Real Estate on development, with Clark Construction and architectural firm Skidmore, Owings & Merrill taking on design-build responsibilities.

As for the financial close, Allianz is supplying $237 million in a private placement, and Sumitomo Mitsui Banking Corp. is coming through with an additional $213 million. The City of Long Beach will make a cash contribution of $11.8 million and throw in the land, which is valued at roughly $40 million. Finally, Plenary, the sole equity provider and financial arranger for the consortium, will provide $21 million in equity.

This unique P3 project, however, is about so much more than civil buildings and some green space. “It’s a catalyst for a lot more indirect development in Long Beach,” Fulton said, adding that the buzz among local agencies is the impact of the project will be an estimated $1 billion in subsequent development. “It’s buoying the market and showing that the City is making a big investment in downtown,” he continued. “So people who haven’t pulled the trigger on development projects for one reason or another will be inclined to move forward.”

LBCC’s new City Hall, Port headquarters and library buildings are on track to reach completion in 2019.