P3 Partnerships: Janna Sidley on Little Hoover Commission’s Study to Clear Development Hurdles

Janna, VerdeXchange in recent years has focused on alternative finance models to align public and private partnerships at all levels to maximize funding and accelerate the deployment of critical infrastructure for the clean energy transition. You participated in a May VX2024 Roundtable on this subject. Share with readers Little Hoover Commission's interest in studying this challenge.

Certainly! First of all, thank you for inviting me to the VerdeXchange Roundtable. Candidly, I came not knowing what to expect. I quickly found the conversation both timely and inspiring. I apologize that I don’t remember everyone’s names, but present were California State Treasurer Fiona Ma, several high-level members from the Biden administration in the energy sector, and representatives from various foundations. The discussion clearly evidenced everyone’s willingness to both address the challenge and identify what roadblocks are impeding the progress everyone seeks.

David, you suggested at the start that we go around the room and have everyone share something. When I was called on, I offered my perspective as a member of California’s Little Hoover Commission, which examines policy issues impacting the state, primarily economic issues. I quickly felt the roundtable’s topic was a perfect fit for our Commission.

There are 13 members, including elected officials and public members, like myself on the California Little Hoover Commission. We continuously gather various ideas for potential studies, and, following  the VX2024 Roundtable,  I proposed this one.

After some discussion, the Commissioners voted to take a look at it. Currently, we plan to split the study into two parts. The first hearing will be in October, in person in Sacramento, and we'll also stream it on Zoom.

In shorthand, we intend to look at public-private partnerships, examining how we can lessen hurdles. If certain legal hurdles must exist, we might create a checklist or a path forward so that anyone interested in partnering with the state knows what to do. We also want to examine the money going out, particularly regarding grant funding. The Little Hoover Commission will investigate how to issue grants, the application process, and potential conflicts—whether anyone is getting a better deal. There are numerous regulations in place to govern these activities since funding is always a concern.

While I can’t guarantee a streamlined process that allows millions of dollars to be invested quickly, we hope to clarify the path forward so that people know what to do, even if it takes time. I’ve continued discussions with several members from the roundtable, particularly Matt Horton from the Milken Foundation, who has followed up with me twice since then. I assured him I would push this agenda, and I have.

The Little Hoover Commission meets monthly, and we postponed the September meeting for more research. Our first hearing is set for October, where we will provide briefing papers to inform the board about current experiences. We want to explore big foundations, major infrastructure projects, as well as smaller commitments of funding and nonprofit organizations. All of this was really triggered by the public-private financing for significant energy projects discussed at your roundtable.

Everyone there expressed a desire to help, but they weren't sure how. I hope the Little Hoover Commission can help clarify that path.

 You are also both a member of the LACERS board, and the former general counsel for the Port of Los Angeles. With such experience, how might public-private partnerships both expedite and lessen development and project finance hurdles?

Particularly in my previous role as General Counsel at the Port of Los Angeles, we conduct thorough due diligence when evaluating public-private partnerships. These partnerships are desired but can be quite complex. We need to ensure that funds are flowing ethically and that there are no conflicts or special deals involved.

Government lawyers, including myself, tend to be conservative. Nobody wants to end up on the front page of the LA Times or the New York Times, and certainly, you don’t want your client there either.

 I think many people reading this might think, “Wow, I’ve dealt with a million government lawyers, and they always say no.” While we don't intend to say no, our default position often leans that way. The real challenge is figuring out how to get to yes, which is where good government attorneys come in. It takes more time and effort, but the best attorneys will help you reach a yes.

Assume the Ford Foundation, nationally, or California Community Foundation, locally, wished to co-invest in P3 partnership with the Port or another public institution. Would such financial assistance from foundations be well received? 

Nonprofits are viewed differently than for-profits, but they still attract scrutiny. Take, for example, the current situation with homelessness and housing. Miguel Santana is working diligently to put funding into building housing, yet he encounters obstacles. Foundations often face challenges complying with government bid requirements. An organization that doesn’t typically deal with government bidding suddenly must navigate processes like selecting the lowest responsible bidder and ensuring prevailing wages are met. These regulations can be overwhelming for outsiders, leading some to consider avoiding government funds altogether.

However, if you invest any government money, you trigger those requirements. Sometimes, foundations may choose to act independently to bypass some of these regulations.

Pivoting to another subject now before the Little Hoover Commission—the insurance crisis facing California. Elaborate on the letter issued in July 2024 in support of Governor Newsom’s pending legislation. What can the Little Hoover Commission’s process add to dealing with this crisis?

 First and foremost, I think the Little Hoover Commission adds something every time we decide to do a study, because we shine a light on an issue. This particular study has been unique for us and a little personal because my insurance was canceled, and I live in the middle of Los Angeles—not in a flood zone, not in a fire zone, just urban LA. And I’m one of those people who had a drone or satellite over my roof, and they said, "You have a tree overhanging, and you have a flat roof, and there’s water on it, so we’re going to cancel you."

I had the tree trimmed and showed them the water was there because it had recently rained, but it didn’t matter—they weren’t going to renew my insurance. It was a little personal to me. And then, as we started looking into it, we found that other members on the commission had also had serious insurance problems. We’re not unique. It’s happening to so many Californians. It’s deeply concerning because it creates an obstacle to homeownership and is a detriment for people on fixed incomes. Suddenly, their insurance is either canceled or goes up 20-30%, and they can’t pay those bills.

Through this study, it became clear to me that sometimes it's better to have increased rates than no insurance at all. That’s not a popular stance, but one person who testified said, "Let’s call the bluff of the insurance companies and say, ‘You can’t raise rates.’" But we don’t need to call their bluff—they’re already leaving. We’ve already seen the outcome of that.

We’re talking about people's most valuable asset at stake. So, there has to be a path forward. We had several hearings. I’ll tell you, the Consumer Watchdog group and the Insurance Commissioner are nowhere near close to an agreement, and sadly, their relationship has broken down. They don’t hear each other, and I’ll stop there. But it is a very challenging relationship.

Congressman John Garamendi did institute a novel way of dealing with that insurance crisis decades ago. California’s first elected Insurance commissioner reduced the reserve requirement for insurance companies in return for expanded coverage and lower rates. Unfortunately, that solution has been advanced to the current insurance commissioner without any results. Will the Little Hoover Commission be open to such a policy solution?

It’s interesting because I did hear about that. I spoke to Jules Radcliffe before this, and he helped educate me on the matter. But that specific issue didn’t come up in our hearings. However, it’s clear that climate change is creating new problems, and we need to look forward, not just backward.

The commission was dumbfounded by how some people were only looking at past models. We have to modernize, but it’s going to be a challenge, especially as we watch fires burning right now. It’s expensive, but I’ll tell you, California isn’t the only state facing this problem. Our insurance rates are lower than those in many other states. Florida’s situation is far worse, but that’s not much comfort to Californians who can’t get insurance or are paying significantly more. This is a federal problem, not just a California issue.

I’ve heard that Adam Schiff, who’s running for Senate, is looking at this issue, so maybe there’s hope for some federal intervention. And to your point about different reserves, maybe there’s room for change on the federal level, where there’s a bigger pool of resources. The way the business is segmented is complicated. Like, why cancel me? I’m the person paying for the other homes burning down. But they explained that if they’re going to cover people in fire zones, they have to cancel policies elsewhere because of the restrictions on rate increases.

We need to take a wholesale look at this issue on a broader scale than just California. The Little Hoover Commission has sent a letter supporting Governor Newsom’s initiative. I will add that unfortunately, Commissioner Lara refused to testify in front of the Little Hoover Commission. That was very distressing for us. I’ve been on the commission for years, and I’ve never seen a government official refuse to speak to us about such an important issue. We even had one commissioner suggest looking into our ability to subpoena witnesses, which shows how serious the situation is.

Pivoting to yet another area that the Little Hoover Commission has been involved with- CEQA reform. You’ve in fact have moderated a VX panel addressing CEQA reform. It’s been a three-decade-long effort, or more, to fix what’s wrong with it. Can you update us on the recommendations, research, and work the Little Hoover Commission has done on CEQA reform?

So, with CEQA modernization—reform, if you will—we usually do a study with two hearings per study. But there was so much interest in CEQA that we ended up having five hearings. As you can imagine, opinions on CEQA are very divided. And many people, including some on the commission, aren’t practitioners, so they don’t fully understand the rules. For example, after a study that’s taken a year, with multiple hearings, someone can come in right before a vote and do a document dump. While some court cases reject such tactics, in most cases, a project applicant still has to respond. People on the commission felt that was fundamentally unfair – there should be real time limits.

We came out with a report recommending more education for judges, the appointment of more judges, and stronger timelines. We made seven recommendations, but as I’m sitting here with you, I don’t think any of them have been adopted yet. There’s a lot of work around the edges of CEQA, with several bills tweaking things here and there. But the most telling piece of information that highlights the need for CEQA reform is that the legislature exempted themselves from it. That, to me, speaks volumes.

It’s offensive to me, because justice is supposed to be blind—everyone should play by the same rules. But CEQA doesn’t work that way; it’s all about exemptions. We also recommended exempting infill housing because it’s such a critical need here in California, and the commission unanimously supported that. But the various parties are deeply entrenched in their positions, so it’s challenging to find common ground.

Before concluding, let me ask a broader question. As someone with significant experience in the public-private arena, today’s civic conversation seems much less civically informed now than it was a decade ago. How do you recommend addressing the public’s lack understanding of how government works—the collaboration and compromise needed to get stuff done?

First, let me say that the people appointed to the Little Hoover Commission are extraordinary—on both the private and public sides. We have former legislators like Pedro Nava and government experts like David Beier, just to name a couple. So I’m sitting among some of the best and brightest in the state.

That being said, your question is a much broader one. We’re seeing a general decline in civic understanding. For instance, AI is affecting how people receive information, and this is apparent in the current election. Americans are fortunate to live in a secure country with stable borders, and as a result, we tend to be complacent. That complacency feeds into the lack of education about how things work. It really comes down to what we teach in schools and the role of journalism. We need a robust journalistic infrastructure, but right now, we’re facing major challenges.

Just look at the internet and social media—who monitors or doesn’t monitor the information people are consuming? Someone like Elon Musk, with his own proclivities, decides what people hear or don’t hear is disgusting. If it were a broadcast station licensed by the FCC, it wouldn’t be allowed. So, a lot is changing, and we need to get a handle on it.

I’m not totally pessimistic, but I think we’re not where we need to be. To your point, most people don’t understand how government works. Beyond that little Schoolhouse Rock song, “I’m Just a Bill,” I think that’s the extent of many people's knowledge. But California is far more complicated than that. It requires deeper engagement, and we need to rethink what we teach and whether people are doing the homework they need to understand these processes.