New Property Taxes to Pay for Criminal Justice Center????

At last night's Public Safety & Criminal Justice Committee meeting, Council CFO, Bart Brown, presented part of the analysis the Council commissioned to analyze the Ballard Administration's estimates of the cost for their proposed Criminal Justice Center.

The completed report, "Marion County Justice Center Fiscal Feasibility Analysis", which also compares the cost to the taxpayer for the City to build and operate such a facility without the elaborate public-private partnership Ballard favors, can be found on the Council's website.  I have read it once, and have a number of questions to follow up with before I say anything here about it.

Brown's presentation last night, however, was more tailored to where the Administration says there are present funds that can be turned to pay for the construction and operation contract it hopes to ink down with WMB Heartland Justice Partners and how reliable the Fiscal Feasibility Analysis finds each of these sources to be. 

Below is the clip from WCTY's broadcast of Brown's presentation, along with a very pertinent follow-up question from Councillor Leroy Robinson, where Brown suggests new property taxes just might have to be raised should the Council approve the CJC plans now on the table.

Brown's last PowerPoint slide kind of says it all:
"There exist[s] a high probability that the next Mayor & Council must raise revenue to meet an obligation to WMB"

Referendum is Required for Any Criminal Justice Center

I've come to the conclusion that the proposed Criminal Justice Center, should it get any further, be put to a vote of the public in the form of a referendum.

Project details are being withheld from the public by the Ballard administration - even details they have seen fit to divulge to the project bidders. 

The price tag noted in the press began as $200 M, but has hemmed and hawed its way to over $600 M.  For our purposes here, any of these price tags works.

The CJC would be built and run by an outside, private concern.  The City would lease-to-own the building over 35 years.

The administration keeps saying it will not result in a tax increase. They toss around an annual lease payment of less than $122 M. Taxes might go up or stay the same.  Either case works here.

Nonetheless, some of the payments would come from money normally appropriated to the Sheriff's Office and the Superior Courts, among others.  The Public Defender and Prosecutor won't actually be part of the CJC, despite its huge size.  Any accommodations for them nearby would have to be part of a separate public-private-partnership and add to the already huge price tag being hung on the CJC.

Between just the Sheriff and Courts budgets, nearly $100 M comes from the Consolidated County Fund.   This year, this Fund got about $165 M in revenues, 25 M, or 15%, of which came from property taxes.  It is impossible to imagine a repayment scheme that did not include a significant portion from property taxes.

By state law, any project costing $12 M or more in property taxes - whether it be through bond or lease payments - requires the consent of the voters through a referendum.

The little information so far let out by the project handlers in the administration clearly demonstrates that the CJC project qualifies as a project that meets the threshold for a referendum.

The public has deserved far greater transparency on the proposed CJC than it has received.  It also deserves a referendum, so that it has a real say in whether or not it wants to commit hundreds of billions of dollars over 35 years to a Criminal Justice Center.

Criminal Justice Center Contracts - Do They Violate the Law?

The beginning of August has been interesting in view of the massive amounts of money the City has contracted to pay for  work on the proposed criminal justice center - not the center itself, mind you - but just to gather proposals for it.

Now IBJ reporter Kathleen McLaughlin has an article where the City-County Council's CFO, Bart Brown, is saying the contracts may have been signed in violation of the law.

The contracts in question were brought to the attention of the public by the media over the last two weeks.

John Tuohy, IndyStar reporter, broke the news that the  Mayor contracted with the new employer of his former campaign manager / former counsel, John Cochran; Bose Public Affairs Group.  That was to the tune of $750,000 for PR work.

Then Mary Milz, WTHR reporter, had a blockbuster last night.  She reported that there are even more contracts, adding up to $9,945,376, were also let to a variety of legal and financial advisor firms.  One thing that caught my attention last night - as we happened to be watching Milz news broadcast - was the closing comments attributed to Marc Lotter, the Mayor's spokesman.

Milz had inquired as to how the nearly $10 M in newly revealed contracts would be paid.

Mayoral spokesman Marc Lotter said not all contracts need to be paid immediately.  He said some contracts are being phased in.

He also said the controller has "the ability to shift funds around or seek appropriations if necessary, so there are a lot of tools we can use."

Well, the Controller actually has limited ability to shift funds around.  The City-County Council is the fiscal body that sets the budget and appropriates the expenditure of funds.  No money can be spent beyond what the Council appropriated for any of 5 types of expenses in any one department or agency.  Service contracts fall in one of those types.

So, the Controller can spend money earmarked for contracts on any contract they desire, up to the limit set by the Council through the appropriation for that department. 

McLaughlin quotes Brown today

Brown contends that the contracts were signed in violation of state procurement law, which requires council approval for multi-year obligations that aren't already funded. He said the administration has only $2 million available for the contracts, and that money wasn't expressly appropriated for consultants' fees.

Brown called it a "bait-and-switch." Ballard spokesman Marc Lotter couldn't speak to the legality of the contracts, but he said the city won't be on the hook for the full amount. Lotter said the city's consultant fees will be reimbursed by whichever development team is chosen to build the justice center. That's assuming the deal goes forward.

The contracts in question are posted online.

There are 6 contracts in all.  The contract numbers are sequential; running from #12449 through #12454.  The start dates of the contracts, however, are not sequential.

Here are the highlights of the contracts in order of contract number.  Links to each contract are embedded in the number for those wishing to review them.  All are assigned to the Executive and Legislative department budgets (Mayor's Office and Council Office, among others).

#12449 -- Bickmore -- $50,000 -- start date 3/10/14 -- end date 1/1/15

#12450 -- John Klipsh Consulting -- $100,000 -- start date 11/15/13 -- end date 12/15/14

#12451 -- KPMG Corporate Finance -- $3,000,000 -- start date 12/10/13 -- end date 3/31/15

#12452 -- Bose Public Affairs Group -- $750,000 -- start date 12/20/13 -- end date 12/31/14

#12453 -- Hellmuth, Obata and Kassabaum -- $4,695,376 -- start date 2/26/14 -- end date 6/1/15

#12454 -- Nossaman / Bingham, Greenbaum Doll -- $4,000,000 -- start date 10/14/13 -- end date 6/30/15

The last contract is actually a contract with Bingham for $1.5 M and a subcontract through them to Nossaman for $2.5 M plus expenses.

The grand total comes to $12,595,376.

That is a goodly sum of money.  Jason Dudich, City Controller, signed off on every contract as "acknowledged and approved for funding purpose" or "approved as to availability of funding".

The type of expense under which service contracts, like these, are allowed is termed Character 3.  Other expenses also come from this Character.  But, it is the maximum appropriated.  The 2014 budget appropriated the following total Character 3 for each of these executive and legislative groups:

Office of the Mayor -- $968,488

Office of Minority 7 Women Business Development -- $105,040

Office of Audit and Performance -- $132,276

City County Council -- $470,885

Office of Corporation Counsel -- $816,722

Office of Finance and Management -- $3,847,576

Telecom and Video Services Agency -- $116,599

So, back to Brown's point.  Where did and will the money come from to pay these contracts?  The total appropriated funds, which bear in mind are needed for other things beyond service contracts, is $6,457,586 for all of 2014.  Brown says the administration delayed paying its December rent on the City-County building by a month, freeing up $2 M for calendar year 2013. 

McLaughlin's article drops more bombs.

Lotter said the size of the contracts shouldn't come as a surprise to council members, because Council President Maggie Lewis signed a memorandum of understanding in December which states that the city may incur costs up to 2 percent of the total project. 

With fees of $12.65 million, the construction cost could be as much as $632.5 million.

Now we are topping $600 Million for the cost?  Are they nuts?

The Ballard Administration has been particularly opaque on everything surrounding their proposed criminal justice center.  The fact that the contracts are sequential in number but not in start date demonstrate the administration had all this laid out before October 14, 2013.  Yet we are just hearing about this jaw-dropping amount of taxpayer money being spent on something that may not get built.  Now we hear from the Council's CFO, that the contracts may not be legal because the money to pay them has not been appropriated.

The public deserves full disclosure - and full disclosure now.


[edited to add - as I was typing this up, Gary Welsh posted about the same thing over at Advance Indiana - click here]

Slow Down the Criminal Justice Center Bullet Train

The Ballard Administration no longer pretends that it is transparent.

The behind closed doors decisions being made regarding the proposed criminal justice center is a prime example.

The administration is even blocking press access to the request for proposals it put out.  This comes AFTER the State's Public Access Counselor's opined against the City's position.

IBJ reporter, Kathleen McLaughlin wrote last Saturday in an article about funding the center

Director of Enterprise Development David Rosenberg declined to state the maximum annual fee, which the city already has shared with three pre-qualified bidders. The mayor’s office also refused to release the request for proposals, a type of document typically considered a public record.

Indiana Public Access Counselor Luke Britt said he couldn’t think of an exemption to open-records law that would apply to the RFP. The city still had not cited an exemption as IBJ went to press.

So, behind closed doors, Mayor Ballard's people are happy to share details with bidders, but not with the public who would pay for the deal.

While I'm on paying for the deal, McLaughlin's article extensively quotes past City Controller, Jeff Spaulding, and his skepticism that costs will really be confined to current budget expenditure levels for the services that would move into a justice center.

Former city controller Jeff Spalding said the administration’s unwillingness to walk through the math behind its conclusions makes him skeptical the new facility won’t end up requiring more public dollars.

“I want the criminal justice center to happen,” said Spalding, who left the Ballard administration in April 2013 to become director of fiscal policy and analysis at the Friedman Foundation. “There’s more potential downside if you don’t do it the right way.”

 Ballard is already spending significant amounts of cash that the City can't afford on the proposal.

It was revealed last week, to the shock of most, that a $750,000 no-bid contract had been awarded to the new employer of former campaign manager and special counsel to the Mayor, John Cochran.  Bose Public Affairs Group is in charge of public relations for the justice center by this contract.  John Tuohy, IndyStar reporter who broke the story, quoted Republican City-County Councillor Jeff Miller as saying

Miller said he was not aware of the $750,000 contract Cochran signed.

"That is a big number. Now I know why he's so easy to get a hold of," Miller said. "I knew he was not doing it for free, but I did not know (his firm) was getting that much."

Fellow blogger, Gary Welsh, has written extensively on the justice center and the money being thrown at it over at Advance Indiana.  About the $750,000 contract with Bose, Welsh writes

Does anyone else see the irony in Ballard throwing away $750,000 of our taxpayer dollars on a politically-connected firm which has just hired his likely Democratic opponent next year, Joe Hogsett, and which will in turn invest that money in doing all within its power to ensure that Hogsett defeats Ballard in next year's election?

As I recall, Ballard did the same thing when Melina Kennedy ran against him - awarded her law firm a fat contract on the deal that sold the water and sewer utilities to Citizens Energy.   That may have been one reason she never really had an opinion against it - in public at least.  So, with this one $750,000 contract, Ballard is sweetening his old pal's value to his new employer and potentially tying Hogsett's hands as far as being too vocal and too against a justice center.  Of course, who knows if Kennedy personally liked the Citizens deal and if Hogsett will really like or dislike the justice center proposal.

The latest stunner was broken by Mary Milz of WTHR.  Welsh summarized the nearly $10 Million of of additional no-bid contracts uncovered by Milz this way:

WTHR's Mary Milz has now uncovered millions more spent by Mayor Ballard on no-bid contracts. Those include:

• $1.5 million to Bingham, Greenebaum Doll for legal services, the former law firm of Ballard's likely Democratic opponent in next year's mayoral election, Joe Hogsett;
• $4.7 million to Hellmuth, Obata & Kassabaum, Inc. ("HOK") for project development services; and
• $3 million to KPMG Corporate Finance for financial services

Keep in mind that this boondoggle of a project still requires the approval of the City-County Council. If for some reason the council decides against the project, that $10 million is just flushed down the drain. Imagine how many new cops could have been hired with the money Ballard has blown on these no-bid contracts.

Exactly.  This is serious money that we need for other things right now.  But Ballard and his people are going to push this through if its the last thing they do.  And it very well might be.

The public is on the hook for the excessive contracts already let on this deal.  They are being kept in the dark about any details, made all the worse by the Ballard Administration's violation of the Open Records laws in order to keep secret from the public, what it is happy to share with bidders.

Today's IBJ has another article by McLaughlin.  This one deals with the potential impact moving all of the Prosecutor, Sheriff, and Court offices out of the heart of downtown.  Office vacancy rates still have not recovered from the Great Recession.  McLaughlin writes

At a time some large downtown law firms are cutting back on space, the proposed criminal justice center will gut the downtown office market.

Moving the Marion County prosecutor and public defender to the new center at the former GM Stamping Plant southwest of downtown will alone shift 130,000 square feet.

Add in the 590,000 square feet occupied by jails, traffic court and arrestee processing center and the downtown core is on track to empty a total of 720,000 square feet—roughly equivalent to the entire OneAmerica tower.

and

City officials claim the moves to the new justice center will add only about 1 percentage point to the existing 20-percent downtown vacancy rate. But Jon Owens, an office broker at Cassidy Turley, isn’t buying it. He said the vacancies could account for three times the amount city officials predict.

With a total of 10.5 million square feet of downtown office space, the removal of the prosecutor and public defender offices alone will move the needle 1 percentage point, Owens said.

“It has the potential to take a big chunk of that southeast quadrant, kind of like what the state government center did in the early 1990s,” he said. “It took forever to backfill that space.”

While the proposed justice center is being sold as a complete consolidation of criminal justice services, it is not.  Back in April, McLaughlin reported

Fullbeck [Ballard's senior policy advisor for economic development] said the request for proposals from developers, due out this month, will not include office space for the Marion County prosecutor and public defender. That space will be built under a separate procurement process, which he said will allow the developer to decide whether to build additional leasable space for other users, such as jail-service providers.

The price tag just keeps getting bigger and bigger.

The public deserves details and time for discussion.  The current trajectory is for the bids to be back just as the budget for 2015 is being finalized.  If they follow former practices, they'll put out information around the holiday season when most of the public's attention is elsewhere.

But complete transparency is feasible at this point in time.  There is no excuse to keep from the public what the Ballard administration is willing to tell bidders.  There is no excuse to put $10 M of taxpayer money at risk through no-bid contracts for a justice center that may not happen.

There is no excuse.  Then again, I don't think Mayor Ballard and his Chief of Staff, Ryan Vaughn, care one wit, what you or I or the Council or the press thinks.  They see our money as their money.  They see our City as their City.  They have their goals and they don't care how much of our money it takes to reach them, nor how badly it could go for future taxpayers of Indianapolis.