Saturday, October 02, 2010

A Closer Look At The MBE Component Of Indianapolis' Parking Meter Deal With ACS

It came as no surprise to most observers when Mayor Greg Ballard's administration chose ACS as the winner of a 50-year parking meter lease agreement with the City of Indianapolis. It came as no surprise that one of ACS's partners in the deal just happens to be Denison Parking, which already had the contract to provide parking meter enforcement for the city, and operates and/or owns most of the parking garages and lots in the downtown area. What surprised me was how Denison Parking was being represented as a minority business enterprise in the deal. A closer examination of the deal turns up some interesting information.

Denison Parking formed a partnership with minority business-owned Global Parking on December 15 of last year called Denison Global Parking for the sole purpose of bidding with ACS on this project and meeting the Ballard administration's requirement that any winning bidder meet certain MBE/WBE requirements. ACS chose to partner with Denison Global Parking and Evens Time, a local women-owned business enterprise about which very little is known. Much more, however, is known about Global Parking and its owner, Hal Darring. Global Parking won a lucrative parking deal with the Indianapolis Airport Authority a few years back thanks to Darring's good friend, Lacy Johnson, who served as President of the Indianapolis Airport Authority at the time as an appointee of former Mayor Bart Peterson. Johnson is a partner at Ice Miller, which coincidentally served as legal counsel for the airport authority at the same time Johnson served as its president. Johnson still serves on the airport authority as its vice president as the appointee of the county commissioners. Ice Miller also is serving as the city's legal counsel on the much-criticized 50-year lease agreement the city signed with ACS, which is extremely similar to the City of Chicago's 75-year lease agreement for its parking meter business with LAZ Parking.

To understand the background of this current MBE deal with Denison Global Parking under the ACS lease agreement, we have to travel back in time to 2004. Hal Darring then worked in a joint venture with Central Parking, the country's largest parking garage operator, which held the lease for the airport's Premier Business Class parking lot at the time, which previously had been operated by Denison Parking. Central Parking mentored Darring and gave him a 30% stake in its joint venture to operate the Premier lot at the airport. In 2004, Darring formed a new company, Global Parking, LLC and negotiated a parking deal for his newly-formed company behind his joint venture partner's back and cut out Central Parking entirely. Central Parking cried foul, saying it had offered the airport authority a deal on better terms and the opportunity for competitive bidding had been denied. It sued Darring and his Global Parking for breach of contract and breach of fiduciary duty.

At the time, the airport was still operated by BAA under a public-private agreement executed by the administration of Mayor Steve Goldsmith. After Johnson took charge of the airport authority's board, he constantly pressured BAA to award contracts to friends of his that operate MBEs and to provide jobs to other minority friends of his, one of whom was State Rep. Vanessa Summers. A former airport authority executive director David Roberts, claimed he was fired by BAA because of his refusal to acquiesce to Johnson's demands. The IBJ's Chris O'Malley explained what had happened in a story from January 17, 2005:

What might ordinarily be dismissed as sour grapes from a spurned contractor has a different flavor just six months after former airport director David Roberts accused Lacy Johnson, a prominent Democrat whom Mayor Bart Peterson named as airport board chairman, of engaging favored contractors for key assignments.

Roberts' intent-to-sue notice was filed in June with Attorney General Steve Carter and the Indiana Political Subdivision Risk Management Commission . . .

Airport management veteran Roberts . . .  said BAA in recent years has become focused on pleasing an airport board concerned with political payback.

Roberts, who filed his complaint with state officials as a required precursor to a potential lawsuit, claimed he was dismissed by BAA for voicing concerns about Johnson and other board members.

In 2000, Mayor Peterson appointed Johnson as the first black chairman of the airport board. Johnson is a friend of Peterson's and has opened his home to fund-raisers for the mayor.

"Johnson attempted to influence employment of minorities, unionization of employees, allocation of space to airlines and concessionaires ... engagement of favored contractors [and] suggested removal of BAA employees who were considered politically too Republican," Roberts charged in his complaint.

Among those Johnson sought to employ at the airport was an embalmer for whom there were no suitable job openings-a protege of Johnson's godmother, U.S. Rep. Julia Carson, Roberts said.

Records compiled by show Darring made three campaign contributions to Carson while he was negotiating with the airport to run Premier solo.

Darring gave Carson's campaign $1,950 between April, when talks began, and July, when negotiations concluded. Darring's firm gave $250 to Peterson's re-election campaign in 2003.

Darring did not return phone calls.

Johnson said he "didn't even know Hal Darring made a contribution" to Carson.

At Airport Authority board meetings, Johnson has frequently asked airport staff if they have earnestly sought minority and female contractors, as is the Airport Authority's stated goal. Minority groups in previous years criticized the board for not reaching out to disadvantaged businesses, such as during the construction of the United Airlines maintenance base in the early 1990s.

Johnson, an attorney at prominent Indianapolis law firm Ice Miller, disputed Roberts' allegations of political opportunism. He said he never encouraged Darring to make a proposal to run the Premier lot, nor did he suggest BAA consider him.

Johnson said he and other board members received a favorable report from BAA staff in August and concluded Darring's Global Parking operation was suitable for a long-term agreement. The board approved the deal Aug. 6.
Roberts' untimely death ended his litigation against the airport authority before he had the opportunity to prove his claims against Johnson and the airport authority. Johnson wound up cancelling BAA's contract to manage the airport authority before the end of Peterson's last term as mayor. He was later instrumental in getting the controversial John Clark installed as the new CEO of the airport authority after Mayor Greg Ballard appointed former Lilly CEO Randy Tobias as the board's new chief. Central Parking's lawsuit against the double-dealing Darring in a Hamilton Superior Court dragged on for nearly four years. After the court granted partial summary judgment in favor of Central Parking and against Darring and Global Parking for breach of fiduciary duty, the parties entered into a private settlement rather than take the case to trial in 2008.

I find it troubling Darring's quick marriage to Denison Parking landed their new partnership smack dab in the middle of this highly-controversial parking meter lease the Ballard administration entered into with ACS, particularly since Darring's good friend Lacy Johnson's law firm, Ice Miller, handled negotiations on behalf of the city. Ballard is already under fire because of ACS's ties to Barnes & Thornburg. Mayor Ballard's own personal legal advisor, former Deputy Mayor under Steve Goldsmith, Joe Loftus, personally lobbies for ACS as a partner at Barnes & Thornburg. Although city lobbying records show Loftus as the registered lobbyist for ACS, Loftus insists he has not participated in any discussions on behalf of his client concerning the parking meter lease. City-County Council President Ryan Vaughn, who was hired by Loftus to work as a lobbyist for Barnes & Thornburg, also insists he had no role in negotiating on behalf of ACS and insists he will participate in the council's debate and vote on the parking deal, notwithstanding his firm's attorney-client relationship with ACS. Vaughn lobbies for the firm at the state level, which has served as registered lobbyist for ACS. According to state lobbying records on file with the Indiana Lobbyist Registration Commission and the Indiana Department of Administration, Vaughn has lobbied the legislature and the Daniels' administration on behalf of ACS.

Interestingly, Deputy Mayor Mike Huber has also been asked about his ties to ACS. He acknowledged during a Rules & Public Policy Committee hearing on the proposed deal this past week he used to work for a company owned by Skip Stitt, who is now a top executive with ACS. He said Stitt, who formerly worked for Mayor Goldsmith like Loftus, took no part in the decision, and Huber says he recused himself from scoring the bids submitted because of his relationship with other bidders as well. He noted his friendship with Paul Okeson, Mayor Ballard's former Chief of Staff, who left the administration to join Keystone Construction, another MBE that has won many city contracts under the Ballard administration. Keystone partnered with LAZ Parking, the same company that was awarded the Chicago parking meter deal and the recently-announced parking meter deal in Pittsburgh. ACS won a contract with the City of Chicago in 2008 to handle parking enforcement through a system of cameras equipped on city street sweepers to issue automated tickets to parking violators. As I've previously noted, the opportunity for collusion among the few companies that bid for these parking meter deals is high.

What really concerns me about the way the Ballard administration has handled contracting since he took office in 2008 is the incredible emphasis on awarding contracts to MBEs, WBEs and VBEs. If you study Ballard's campaign finance reports, you quickly figure out that the beneficiaries of this greater emphasis on ensuring a fixed percentage of all contracts are awarded to minority contractors have been very generous in making contributions to his re-election campaign. It also bothers me because there is not transparency in many cases as to who all owns an interest in these MBEs. As with Denison Global, you have a big non-minority contractor lending its name and credibility to a lesser-experienced minority contractor to produce an MBE-qualified subcontractor for the ACS parking meter lease deal. In places like Chicago, prosecutors have discovered that minority contracting is rampant with fraud as what are truly white-owned companies parade as minority fronts. As far as I can tell, the Ballard administration's Minority Business Development office is nothing more than a racket to mine for campaign contributions and see to it that these minority contractors who are generously contributing to his re-election campaign are taken care of with plenty of subcontracts on city-awarded deals.

In the interest of transparency, I would like to see every beneficial owner of at least a 5% ownership of these certified MBEs, WBEs, and VBEs identified and made available online. I suspect that information would be quite hair-raising. I would also like to see Indiana, like other states, limit minority and women-owned status to businesses that are truly disadvantaged. It is nonsensical to provide special opportunities for large minority-owned firms, such as Mays Chemical. Minority companies with gross revenues exceeding a certain threshold, such as $15 million, should not be treated on more favorable terms than other contractors. I frankly have a problem, in general, with picking winners and losers in the government contracting business based on whether they are a minority, woman or veteran-owned business. Let them compete on the same playing field in the ideal free market; however, short of that, it should be limited to businesses that can demonstrate at some level they are disadvantaged.


Citizen Kane said...

It's all a big game for everyone without ethics to reward friends and punish enemies, while stealing money from the taxpayers, while pretending to work in the best interests of the citizens - and all the indoctrinated zombies fall for it every time.

Marycatherine Barton said...

For years. the word on the street is that Republicans and Democrats control parking lots and garages. Knowing about local corruption is why the majority do not bother to vote in local elections, feeling one party is as bad as the other.

Thanks for digging up these ugly truths, AI. I agree with your semi-solution.

kate said...

ENFORCEMENT PROCEEDINGS – SEC Charges Affiliated Computer Services, Inc. With Stock Options Backdating and False Disclosures:
“The SEC’s complaint, filed in federal district court in Washington, D.C., alleges that from 1995 to 2006, ACS engaged in a fraudulent and deceptive scheme to provide executives and other employees with undisclosed compensation.”
Above is a part of a recent into ACS.

Seriously folks let’s get real.
Public officials are supposed to be trustees of the commonweal, not political
buccaneers seeking their own private gain. But sometimes, in what economists call a
principal-agent problem, those trustees forsake that obligation and misuse the power
delegated to them in ways that advance their personal interests rather than those of the
Corruption distorts the allocation of resources toward projects that
can generate illicit payoffs. Besides the undesirable efficiency consequences arising
from this distortion, the effect is likely to aggravate social inequalities, because the poor and powerless suffer, by definition, a comparative disadvantage in securing special favors.
If the $500,000 has to be paid if the City-County Council will not vote for the ACS deal. Pay ACS’s political blackmail scheme and get them out of town. Like all the other commentaries together with articles I’ve been reading have showed, ACS is not the kind of corporation we want in our town. Political blackmail, special interests, conflict of interests, WHERES THE FBI? WHERES THE FEDS?
Has anyone ever read ACS Ethical Standards they try to impose on their employees at the welfare office. Their employees aren’t allowed to accept even a Christmas card. Yet the CEO’s and Directors of this company have done just that.
ACS is a shameful, unethical, disgraceful hypocrite, not to mention the so called “leaders” of Indianapolis for creating this mess.
What an embarrassment to our city.