ILNews

$500M Marion County Justice Center relies on novel funding

Back to TopCommentsE-mailPrintBookmark and Share

A mainstay of the travel industry, all-inclusive packages are gaining traction with governments that want a simpler way to deliver new public facilities.

For an annual fee, a private-sector consortium will design, build, finance, maintain and operate a new road or building. The model is common around the world and in the U.S. transportation industry but still rare for buildings.

Indianapolis could become one of the first U.S. cities to ink such a deal with a new jail and courthouse on the former site of the GM stamping plant.

The project could cost as much as $500 million, but it won’t require a tax hike, and the annual fee won’t be any greater than the $122.6 million a year the city now pays to operate courts and correctional facilities.

At least, that’s the promise of Mayor Greg Ballard. Whether that promise is realistic is impossible to gauge because the mayor’s deputies won’t reveal details of their analysis.

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 the story went to press.

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.”

Several other cities are considering the all-inclusive model for justice facilities. Houston issued a request for information but pulled it back after Indianapolis entered the market, Rosenberg said. He presumes Houston officials are waiting to see how Indy’s deal works out.

“We certainly have a lot of eyes on us,” Rosenberg said. “If this model becomes successful, a lot of other cities in the country will start to adopt it.”

Proposals from the three bidders are due in October. Rosenberg anticipates working with the preferred bidder on 35-year contract, which would be presented for the City-County Council’s approval in early 2015.

Eliminating inefficiencies

The city and Marion County currently spend $122.6 million on jail operations, rent for offices, rent for disparate correctional facilities and inmate care at Eskenazi Health, the county charity hospital, Rosenberg said.

That figure reflects inefficiencies like transporting inmates, much of which would be eliminated with a new, modern jail sharing a campus with criminal courts, Rosenberg said. He declined to go into detail about the expected savings on operations.

Spalding said he wonders whether the assumed savings are too optimistic.

Current spending includes an $18 million-a-year contract with Corrections Corporation of America, which operates one of two county jails. That contract expires at the end of 2017, and it won’t be renewed.

“I don’t disagree that they’ll end the contracts, but all of the expense for the services delivered under those contracts will not disappear,” Spalding said.

The annual fee won’t be the city’s only expense once the justice center is built. The sheriff will continue to provide jail security, food and laundry service, and the city will have to pay the utility bills.

Performance requirements

The certainty of predetermined annual payments from a government entity is attractive to private-sector players because it helps them find investors or lenders, said Allan Marks, a partner in the Los Angeles office of law firm Milbank Tweed Hadley & McCloy, which has a large practice in global finance.

Carrying the debt and turning a profit are up to the consortium of finance, construction and architecture firms. “A lot of these deals don’t work,” Marks said. “There are some that do. The private sector thinks they can manage the risk.”

Marks said the deals don’t mean lower costs across the board, but construction, financing and long-term maintenance, taken together, should be less expensive than if handled separately.

All-in-one contracts are less common for public buildings, but Indianapolis found examples in Ontario and California.

A new courthouse in Long Beach, California, cost $346.7 million, and the state will pay an annual fee to a consortium called Long Beach Judicial Partners, according to the state Administrative Office of the Courts.

The service fee for the 2014-15 fiscal year is $51.8 million, a courts spokeswoman said. That includes a capital charge of $35.9 million for the design, construction and financing.

The operations and maintenance portion of the fee is subject to inflation-based increases, and it can be reduced if LBJP doesn’t meet certain performance requirements.

One of the attractions of “performance-based infrastructure,” Rosenberg said, is that it requires the private-sector partner to periodically replace or refurbish things like heating and cooling systems and roofing.

Because of those life-cycle upgrades, the justice center should be in good shape when it’s turned over to the county after 35 years, Rosenberg said.

“We don’t get back a building that’s 35 years old. We get back a building that’s seven, eight, nine years old. We can operate it again for an additional 20 to 30 years,” Rosenberg said.•
 

ADVERTISEMENT

Post a comment to this story

COMMENTS POLICY
We reserve the right to remove any post that we feel is obscene, profane, vulgar, racist, sexually explicit, abusive, or hateful.
 
You are legally responsible for what you post and your anonymity is not guaranteed.
 
Posts that insult, defame, threaten, harass or abuse other readers or people mentioned in Indiana Lawyer editorial content are also subject to removal. Please respect the privacy of individuals and refrain from posting personal information.
 
No solicitations, spamming or advertisements are allowed. Readers may post links to other informational websites that are relevant to the topic at hand, but please do not link to objectionable material.
 
We may remove messages that are unrelated to the topic, encourage illegal activity, use all capital letters or are unreadable.
 

Messages that are flagged by readers as objectionable will be reviewed and may or may not be removed. Please do not flag a post simply because you disagree with it.

Sponsored by

facebook - twitter on Facebook & Twitter

Indiana State Bar Association

Indianapolis Bar Association

Evansville Bar Association

Allen County Bar Association

Indiana Lawyer on Facebook

facebook
ADVERTISEMENT
Subscribe to Indiana Lawyer
  1. Oh my lordy Therapist Oniha of the winexbackspell@gmail.com I GOT Briggs BACK. Im so excited, It only took 2days for him to come home. bless divinity and bless god. i must be dreaming as i never thoughts he would be back to me after all this time. I am so much shock and just cant believe my eyes. thank you thank you thank you from the bottom of my heart,he always kiss and hug me now at all times,am so happy my heart is back to me with your help Therapist Oniha.

  2. Hail to our Constitutional Law Expert in the Executive Office! “What you’re not paying attention to is the fact that I just took an action to change the law,” Obama said.

  3. What is this, the Ind Supreme Court thinking that there is a separation of powers and limited enumerated powers as delegated by a dusty old document? Such eighteen century thinking, so rare and unwanted by the elites in this modern age. Dictate to us, dictate over us, the massess are chanting! George Soros agrees. Time to change with times Ind Supreme Court, says all President Snows. Rule by executive decree is the new black.

  4. I made the same argument before a commission of the Indiana Supreme Court and then to the fedeal district and federal appellate courts. Fell flat. So very glad to read that some judges still beleive that evidentiary foundations matter.

  5. KUDOS to the Indiana Supreme Court for realizing that some bureacracies need to go to the stake. Recall what RWR said: "No government ever voluntarily reduces itself in size. Government programs, once launched, never disappear. Actually, a government bureau is the nearest thing to eternal life we'll ever see on this earth!" NOW ... what next to this rare and inspiring chopping block? Well, the Commission on Gender and Race (but not religion!?!) is way overdue. And some other Board's could be cut with a positive for State and the reputation of the Indiana judiciary.

ADVERTISEMENT