Friday, November 05, 2010

Why Is A Libertarian Lobbying So Hard For Libertarian Ed Coleman's Vote In Favor Of Ballard's Bad Parking Meter Lease Deal With ACS?

That's a question on the minds of some following a forum held by Marion Co. Libertarians last night to discuss Mayor Greg Ballard's plan to lease Indianapolis' parking meter assets to ACS for the next 50 years for a relatively small upfront payment of $20 million and the immediate doubling of parking meter rates. A Libertarian's support of the proposal certainly couldn't be based on party principles, could it? Yet attendees at last night's forum describe Brad Klopfenstein as a vocal proponent of the deal who is urging Republican-turned Libertarian Councilor Ed Coleman to cast a vote in favor of the highly-contentious deal. [See update below with Klopfenstein's explanation.]

Klopfenstein is the former head of the Indiana Licensed Beverage Association and currently works as a private consultant who found himself in the middle of the bribery scandal that led to Republican Councilor Lincoln Plowman's resignation from the council and as a high-ranking IMPD officer after Plowman was ensnared in an FBI sting operation. Klopfenstein had served as a paid campaign consultant to Plowman, who engineered Klopfenstein's appointment to the Board of Zoning Appeals early in the administration of Greg Ballard.

During an FBI sting operation, Plowman was accused of accepting a $5,000 cash payment from an undercover FBI agent to aid in obtaining a zoning variance for a fictitious business seeking to open an upscale restaurant with a strip club in the downtown area. Klopfenstein told reporters at the time Plowman had contacted him to discuss the prospects of obtaining a zoning variance while he was sitting on the BZA but denied any wrongdoing. A federal grand jury indicted Plowman on attempted extortion and bribery charges in September. According to the indictment, Plowman planned to use his official actions and influence to facilitate the opening of a strip club in Indianapolis.

Indianapolis lobby records do not indicate Klopfenstein is registered to lobby Indianapolis city councilors. While he worked as executive director of the Indiana Licensed Beverage Association, he advocated issues on behalf of his organization that came before the Indiana General Assembly but was not registered to lobby with the Indiana Lobby Registration Commission. In the interest of full disclosure, Libertarians may wish to ask Klopfenstein to disclose to whom he provides consulting work as he seeks to influence the vote of their lone member of the city council on this contentious issue.

UPDATE: Brad Klopfenstein informs me he is not lobbying on behalf of any interest for the parking meter lease deal. He says he just believes it's a good idea. He also clarified the purpose of a payment Plowman's campaign made to him last year. He says the payment was reimbursement for radio ad buys he made on behalf of those opposing the smoking ban ordinance, which Plowman also opposed. He did serve as Plowman's campaign manager, but he was not compensated for that work he says.

UPDATE II: Urban planner Aaron Renn has some more thoughtful views on the parking meter proposal in a recent article discussing the "Privatization-Industrial Complex":

Consider Morgan Stanley. An arm of Morgan Stanley was the winning bidder on the Chicago parking meter lease. That deal is widely seen as a disaster, giving the idea privatizing meters a black eye, and engendering such headlines as “Morgan Stanley's $11 billion makes Chicago taxpayers cry (Bloomberg) and “Company [Morgan Stanley] Piles Up Profits from City's Parking Meter Deal” (NY Times).


Now Morgan Stanley is back, this time advising Pittsburgh and Indianapolis on potential parking meter privatizations. Morgan Stanley has a huge structural incentive to want those deals to go through. It would restart the market for parking meter privatization, and position the firm as the preferred advisor to cities. Even where they were not the city's advisor, a restarted parking meter market means they could potentially bid on many more assets.

If you make money on privatization transactions, then no deals means no money. So obviously these firms have every reason in the world to promote privatization and see deals go through regardless of whether any particular deal is good or not. This doesn't mean they are crooks, it's just the reality. These firms now form of the core of the “privatization-industrial complex” with an incentive to cheerlead for leading public assets because that's how they make their money. They need deal flow, the more transactions the better.

This was picked up on by Harrisburg, PA. Facing bankruptcy, the state offered an $850K grant to hire Scott Balice Strategies of Chicago, one of the nation's top privatization financial advisors. The city council turned it down. As one city councilor noted, “Their recommendation is always the same: 'sell assets'”.

Many of these investment banks, operators, financial advisers, and law firms also have tight links with each other, and participate on deals together, often as partners, other times as opponents. The Pittsburgh Post-Gazette noted how many of these firms have ties to Chicago’s earlier round of privatization. “When Pittsburgh proposed leasing its public parking facilities, the city became a magnet for a passel of firms – many of them connected to Chicago by blood, politics or business – that pursues similar deals around the country. The firms may be partners in one city, rivals or referees in the next.” The winning bidder on the Pittsburgh parking transaction is actually Morgan Stanley's partner in the Chicago deal, for example.

These potential conflicts make it very difficult for cities to know they are making a good deal, especially since they lack the experience necessary to independently judge it. Right now, they often are at the mercy of their advisors. And ask yourself this: when was the last time a city or state looked seriously at one of these deals and their advisors told them not to do it?

This is frequently combined with traditional clout driven contracting. Many of the Chicago parking meter firms had tight links to the Daley administration. Similarly, in Indianapolis a city-paid chief advisor to the office of the mayor is conveniently also a registered lobbyist for the winning bidder. This combination is a recipe for disaster, resulting in very long term deals that could be very bad for the public.

18 comments:

HOOSIERS FOR FAIR TAX said...

Good question.

Regardless I'm glad the L's are hosting forums now regarding the lone councilman's vote on important matters.

Marycatherine Barton said...

Thanks for putting this bulls-eye on Klopfenstein, AI. So, how about that question, Brad. For whom are you providing, 'consulting work', re your lobbying of registered Libertarian Ed Coleman to vote in favor of Ballard's BAD BAD BAD parking meter lease deal with ACS?

Sean Shepard said...

The parking deal as constructed should be a "no" vote for anyone with any sense.

The problem with the deal isn't the outsourcing of the parking management itself. The problem is that instead of setting up a competitive system with multiple providers who must constantly work to ensure their share of the business, the city wants a big up front "bribe" to circumvent free competition so it can use the money now.

It is selling off monopoly control. This fascinates me as everyone knows, regardless of political ideology, that monopolies are bad (although Democrats are less likely to think so if Government is the monopoly provider/option for something).

Wolfrham Hart said...

Having attended most of the meeting last night my impression was Mr. Klopfenstein asked a few questions, make a few good points, and in general supported the new reworked proposal.

It was my impression Mr. Klopfenstein wasn't lobbying for anything.

At first glance the new proposal addresses the issues that AI and The Urbanophile had problems with. I'm inclined to say this is overall a good idea that may need some tweaks to address specific issues people brought up such as a predominately residential neighborhood being classied as such in this plan.

I was wondering who the city-county counselor was. I don't recognize most of them by sight and he appearantly spoke a bit at the very beginning asking for input.

HOOSIERS FOR FAIR TAX said...

Well said, Sean.

Paul K. Ogden said...

SS, while you are exactly correct about competition being needed to do privatization right, not everything is better run by the private sector. The City has made no case, none whatsoever, that buying parking meters and future revenue should be somethign that is privatized. There are a 1000 things wrong with this deal besides the very valid one you pointed out.


Wolf, the revised proposal doesn't come close to addressing the problems pointed out by the Urbanophile as Aaron Renn has already pointed out.

1)The City has made no case that the City can't better do this themselves and keep 100% of the profits.

2) There is no answer for Loftus and Vaughn's confict of interest.

3) They still haven't put the 200 job promise into the contract. As a result it's not enforceable. Plus there are no salaries listed, no requirement that they are full-time.

4) The contract is still 50 years! Is it right to mortgage the future of the next three generations? No it isn't.

5) There is still not requirement that ACS even produce the numbers upon which the payments to the City are based. That's insane. We're not allowed to look at their books. We have to accept their calculations.

6) Why are we contracting with the company that screwed up the FSSA privatization. Isn't one million dollar screw up enough.

I bet you Klop is being paid. There is no reason for a Libertarian to support this measure.

Timothy Maguire said...

Hey Gary, someone forwarded your blog post to me. I wanted to respond to your question: "A Libertarian's support of the proposal certainly couldn't be based on party principles, could it?"

Unfortunately though, I'm not a great scholar, so I'll refer you to those much smarter than me; which in this case, some relevant articles written by the very libertarian REASON FOUNDATION.

http://reason.org/news/show/local-government-privatization-101

http://reason.org/news/show/setting-the-record-straight-on-1

http://reason.org/files/annual_privatization_report_2009.pdf

Granted, while these libertarian writers may favor just about any type of privatization, my jury is still out on whether THIS particular proposal is a good idea or not. I wish you had attended the forum, so I and everyone could have benefited from your critical questions.

Unigov said...

The problem with Klopfenstein is that his urge to privatize government services makes him blind to graft.

He is a useful idiot.

artfuggins said...

I am waiting to see what Councilor Jackie Nytes trades her yes vote on this deal It will either be something for the MFCDC or Printing Partners.

Indy Student said...

You nailed it, Unigov. I don't believe I've met Klopfenstein before, but that's exactly what his thoughts on the deal sounded like. Doesn't matter the terms, the gubment sucks, sell everything off.

As Paul said, there are some things the city should run. I personally think that there's less of a reason to privatize city functions that aren't meant to make a profit. A private, for-profit entity, doing a task (in this case, managing parking at city meters for relatively low rates) that yields little profit either means a huge cut in services, or a drastic increase in fines and rates.

Marycatherine Barton said...

Do continue with what you said, Unigov. Have a great weekend, all.

Paul K. Ogden said...

Tim, this isn't even close to being real privatization. Privatization is about using the forces of the marketplace to get cheaper and better services for the public. With a 50 year contract, ACS will not have any market competition. We're not even allowed to get rid of them and go with a new vendor unless we wait 2 years after cancelling the contract and paying off ACS. Oh, and we're not allowed to borrow money to pay ACS the termination fee and get rid of the company.

Of course the City hasn't come even close to making an argument that this is something that requires a public-private partnership. Instead of selling of a city assets, we could easily buy the meters ourselves and keep 100% of the profits.

I too am very suspicious of what has motivated Klop to push Coleman his deal that screws over the public in favor of a politically-connected contractor who has already participated in one billion dollar privatization screwup.

Oh, and what about the conflicts of interest surrounding this deal? How could this simply be ignored? Ethics is something near and dear to me. This deal is dripping with conflicts of interest.

Paul K. Ogden said...

No, Tim, the jury came in on this deal a long time ago. This deal is not even remotely close to beign a good one...as have been proved time and time again by Aaron Renn, Gary Welch, myself and Phineas Baxandall.

Lenore Hanick said...

Deal or no deal. Profit or no profit. Public or privatizing. At least do it with integrity. The premise of the world should not be greed, it should be humanity. When we begin to have companies that operate under an ethical umbrella, only then will they have respect that would be well deserved with the profits to follow. When you engage in unethical business practices and you employ unethical employee's, those type of unethical people begin to follow. It's been long known you are known by the company you keep. $$$$ speaks volumes in this deal. It doesn't benefit the city other than maybe a convenience, it will actually cost the city and its taxpayers. The people involved, Ballard, ACS, Barnes & Thornburg, Vaugn, and the others, all know this is a bad deal for the people. It's not however bad for their pockets. They depend on the ignorance of the people to get this deal pushed through. Since the local news and IndyStar so inadequately lack in giving the full details of all that is involved most will only find the injustice after the fact.
This deal reminds me of a song a good friend of mine listens to, Muse-Uprising. My friend reminded me this is a song all should listen to. Eventually the people will rise and the politicians will fall. Humanity should come first.

Cato said...

Sean said:

"It is selling off monopoly control."

Very good, Sean. I'm glad to see someone else complain that this tactic is not free-market competition, at all, but crony capitalism.

It's Mitch's favorite play.

Cato said...

"Of course the City hasn't come even close to making an argument that this is something that requires a public-private partnership. Instead of selling of a city assets, we could easily buy the meters ourselves and keep 100% of the profits."

Exactly, Paul. Someone wants to spend tomorrow's revenue, today.

Marycatherine Barton said...

"Muse-Uprising"? Will pull the song up at Rhapsody and listen. Thanks, Lenore.

Malachi said...

ACS, Where do I begin? Why Indianapolis should not allow this deal.
Absolutely the worst company I have ever worked for. "Butt Kissers" and "Liars". 95% retention rate. I can only laugh. They lost contracts with Nike, State of Texas Family Services, including many other contracts in other states and other countries.

Affiliated Computer Services have totally made a "Muck Up" of the Food Stamp offices in Indianapolis. That is a joke in itself. I took a tour of each welfare facility in Indianapolis with my buddy, "Steve". Steve is newly appointed director of a non-profit service for the aging and needed to see the chaos the aged faced at these offices. The dog pound looks better than some of the offices and I am more than positive the dogs are treated better than ACS treats their employees.

Joining ACS was an absolute mistake. I was promised everything under the moon as an inducement to work for them. Even if it is in writing - don't believe them unless you intend to sue to enforce your contractual rights. I was promised a raise to bump my salary to a reasonable and competitive rate. The employees are paid almost 40% below the regional average. They are an awful company to work for. They have no consideration for their employees. Their ethics are non-existent. If ever given an offer from ACS, run for the hills and do not look back.

List of Cons
- Salary freeze happens every year regardless of the $7,000,000,000 in yearly revenue.
- Management says the 2010 salary freeze will end soon, but does not know when.
- Typical answer by management to all questions, "I don't know".
- No opportunity for advancement, unless you BUTT KISS or are in the elite circle.
- No communication
- Managers that go off on tantrums, in office lobbys, in front of people applying for services.
- Paranoid management.
- Did I say no communication!
- Huge caseloads of 600+ that make daily working conditions highly stressful and
unmanageable.

There will be a mass exodus once the economy turns around. People will remember and resent this company. I cannot believe the Mayor would support Affiliated Computer Services considering their track record, not to mention their lack of structure and lack of ethics within the welfare department. Only goes to show that Ballard himself and those supporting this company, Coleman, lack ethics and values.