PWF Blog

PWF Blog (8/5/15)

How Politics Sank The Indy Justice Center P3 Project

by William G. Reinhardt, editor, Public Works Financing newsletter

At least one of the three bid teams that participated in the failed Marion County Justice Center procurement in Indianapolis is raising alarms about the City Council’s failure so far to appropriate the $750,000 stipend that was promised to compliant bidders.

A $408-million design-build contract and long-term O&M agreement was negotiated with the mayor’s office last December by WMB Heartland Justice Partners, led by Walsh Investors and Meridiam Infrastructure. Substantial changes were made to address concerns raised by City/County Council members. To no avail—by a 16-13 vote on June 8, the Democrat-controlled council refused to consider a final private offer to modernize the courts and jail system under a 35-year DBFOM contract strongly supported by Republican Mayor Greg Ballard.

The mayor’s office ran the procurement, advised by KPMG, Nossaman, and HOK.  Under the terms of the RFP, the city agreed to pay bidders for the right to use their design submissions in any future attempt to revive the jail project.

Only WMB Partners submitted a proposal that was under the city’s affordability ceiling in the RFP. To avoid a sole-source procurement, all three proposals were deemed compliant by the mayor’s office months ago. None of the teams had been paid a stipend at Public Works Financing’s press time. WMB Partners, which spent far more than its competitors to try to close the deal, has not expressed concern about payment of the stipend.

The stipend issue is indicative of the rancorous politics that undermined the attempt by lame-duck Mayor Ballard to address chronic problems with the county jail and courts complex.  The mayor, a conservative Republican, defended his project by claiming that the efficiency savings in the P3 approach would be enough to fund the availability payments to WMB Partners.

Council members, who were jaded by years of aggressive politics from the mayor’s office, didn’t buy it. After years of “starving the beast,” Republican control has left the city with large structural deficits that leave the council with “no margin for error for failed assumptions that would adversely affect current budget obligations,” a Council analysis concluded.

It might have been more effective for the Mayor’s office to focus on the accommodations made to win support from community groups, including a key, faith-based group that favors criminal justice reforms and alternatives to building more jail cells for minorities.  For instance, the existing county jail has five special-purpose cells to separate nonviolent offenders from criminals; the revised design by WMB Partners called for 125.

The bitter politics in Indianapolis are not likely to change soon. Ironically, Ballard’s replacement as mayor will very likely be a Democrat who will have to contend with a new Republican majority in the incoming Council after elections this fall.  Fixing the chronic problems in the criminal justice system and building a new jail will be on the priority list.

. . . Wasted Time And Taxpayer Money

Mayor Greg Ballard announced before the P3 procurement began that he would not seek a third term. Some of his advisors hoped that would reduce the hostility between the Mayor and Council, allowing Ballard to sponsor a legacy project of national significance.

It didn’t work out that way. Jen Pittman, a spokesperson for Mayor Greg Ballard, issued the following statement after the  16-13 Council vote that killed the P3 project on June 8:

“For two years, Council leadership led the Justice Center stakeholders to believe they were interested in moving forward with a project that would improve the quality, safety and efficiency of our criminal justice agencies.  Twice, they expressed their commitment to developers.  Unfortunately, when these councilors saw political advantage in reversing course, they did so at great cost to taxpayers.  During the last six months, we have heard a lot of criticism from Council leadership, but nothing in the way of ideas.  Their intentional lack of engagement and unwillingness to think beyond their next political move carries a price tag. The cost of putting together a project of this scope is something this group has known of all along, and it is something for which they need to be held accountable now.”

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