Wednesday, October 08, 2014

Bond Buyer Calls Indianapolis' P3 Criminal Justice Center "Precedent-Setting"

The Bond Buyer is calling Indianapolis' secretive P3 criminal justice center project the "largest P3 deal in the U.S." with a price tag of at least $500 million. The Pillsbury Doughboy, also known as Mayor Greg Ballard's Deputy Mayor for Economic Development Adam Collins, tells the Bond Buyer that Indianapolis won't have to dip into general funds or raise taxes to make ginormous annual availability payments to the P3 operator over the next 35 years. "This is a project we expect to be revenue neutral and won't require any additional funding source or tax for the city at all," Collins said. "That was the promise and the allure for the city." And pigs can fly.
The size of the payments is yet to be determined, but will come largely from savings the city expects to achieve by terminating existing contracts, and saving on rent and management of the facilities, he said. The payments will include operations and maintenance and debt service, among other things . . .
We think obviously we're on the leading edge of this particular type of delivery model, but being there provides us with opportunities that we wouldn't have had otherwise," Collins said. "We have a market hungry for participation and three bidding teams that we believe are interested in seeing this done, and sharpening their pencils to give the city the best deal."
John Gilmour, a professor of government and public policy at William and Mary College is skeptical of some of Collins' claims. He quickly disabuses us of the notion that availability payments made to the P3 operator are any different than debt. "What's good about it is a new asset is being built," Gilmour said about the new complex. "But the question is, how does it compare to a conventional financing deal?" Gilmour doesn't believe the P3 operator will be eligible for tax-exempt debt, which means the interest costs and profit margin demanded by the P3 operator will push the costs higher than if the city relies on traditional 30-year bonds to finance the project on its own.

Barney Allison, a partner at Nossaman LLP, the Los Angeles law firm with whom the City illegally entered into a contract costing city taxpayers several million dollars to provide legal advice on the project, tells the Bond Buyer that lobbying of Congress is underway to make these P3 deals tax-exempt as if it was the governmental entity borrowing the money to construct the building rather than the P3 operator. "It would be wonderful to have that," said Allison. "All the big P3s are being done in transport, because you've got [departments of transportation] with huge budgets and huge funding sources," said Allison. "Here we've got a city and a county that's looking to operate an essential government function for the next 35 years and they're very concerned about what it's going to cost them," said Allison. "The city is looking at this particular project from a policy standpoint, a way of getting new infrastructure and new jails and a new courthouse, and hopefully through the efficiencies of the P3, they'll come up with a way to achieve at least neutrality of running that jail and courthouse."

Allison noticeably omitted concerns that the P3 courthouse project he also worked on in Long Beach, California has been heavily criticized by state officials as costing much more than if traditional public financing had been utilized for the project. Allison told the Bond Buyer that the developer relied on traditional bank borrowing originally, which was later refinanced with taxable bonds. The Bond Buyer briefly touched on the controversy surrounding the project. "The city has refused to release financing details of the project, citing the ongoing bidding process," the report said. "The secrecy has sparked criticism in local media, as well as from the state's Public Access Counselor under Gov. Mike Pence."


Anonymous said...

Perfectly stated regarding the lies and delusion that underpin the criminal “criminal justice center”.

These lies on the local level are not so different from the lies that so easily spew from politicians’ lips when ramming a pig in a poke through on a national level. It was not that far back when tools like Nancy Pelosi, Harry Reid, Chuck Schumer, et al., swore to anyone who would listen that the new big Obamacare monster they were forcing on taxpayers would bring down budget deficits by covering more people, offering more health care services, refusing none for pre-existing health issues, all the while purporting a $2,500 SAVINGS in taxpayers’ medical insurance costs. That worked out really well, didn’t it?

For me to say that Alan Collins’ logic reminds me of The Three Stooges impugns the intellect and deliberative abilities of the original Moe, Larry, and Curley.

So we have a mayor- at the beck and call of his puppet masters in just about any crony deal- who non-stop flaunts state law in his refusal to release this “justice” center RFP information, we have a Council ready and willing to abet a scheme which is most likely based in the desire to grant yet another bonanza to insider pay-to-play insiders to the detriment of the Marion County taxpayer, and we even have City public access (!) counselor Samantha DeWester churlishly chiming in with the see no evil group.

Is there no illegal or questionably immoral and unethical deal this mayor and this City County Council will not let pass by? These people break laws that we “ordinary” citizens would swiftly be imprisoned for breaking.

Perhaps instead of hiring more police Indianapolis would be better off with the hiring of effective federal prosecutors... unlike a most recent former US attorney now looking to cash in at the next election as the Democrat mayor of the political pot of goal waiting for the next occupant of the 25th floor.

The answer to that dream? “When pigs fly.”

Anonymous said...

The issuance of bonds by Indiana municipalities and schools is a racket involving the same group of insiders dealing behind closed doors. The free market forces are not allowed to work. The Feds do not have jurisdiction over muni bonds. The Indiana Securities Division does not have the expertise. The insiders with political connections control the process. No wants at the state level wants to investigate.