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$500M Marion County Justice Center relies on novel funding

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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.•
 

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  1. From back in the day before secularism got a stranglehold on Hoosier jurists comes this great excerpt via Indiana federal court judge Allan Sharp, dedicated to those many Indiana government attorneys (with whom I have dealt) who count the law as a mere tool, an optional tool that is not to be used when political correctness compels a more acceptable result than merely following the path that the law directs: ALLEN SHARP, District Judge. I. In a scene following a visit by Henry VIII to the home of Sir Thomas More, playwriter Robert Bolt puts the following words into the mouths of his characters: Margaret: Father, that man's bad. MORE: There is no law against that. ROPER: There is! God's law! MORE: Then God can arrest him. ROPER: Sophistication upon sophistication! MORE: No, sheer simplicity. The law, Roper, the law. I know what's legal not what's right. And I'll stick to what's legal. ROPER: Then you set man's law above God's! MORE: No, far below; but let me draw your attention to a fact I'm not God. The currents and eddies of right and wrong, which you find such plain sailing, I can't navigate. I'm no voyager. But in the thickets of law, oh, there I'm a forester. I doubt if there's a man alive who could follow me there, thank God... ALICE: (Exasperated, pointing after Rich) While you talk, he's gone! MORE: And go he should, if he was the Devil himself, until he broke the law! ROPER: So now you'd give the Devil benefit of law! MORE: Yes. What would you do? Cut a great road through the law to get after the Devil? ROPER: I'd cut down every law in England to do that! MORE: (Roused and excited) Oh? (Advances on Roper) And when the last law was down, and the Devil turned round on you where would you hide, Roper, the laws being flat? (He leaves *1257 him) This country's planted thick with laws from coast to coast man's laws, not God's and if you cut them down and you're just the man to do it d'you really think you would stand upright in the winds that would blow then? (Quietly) Yes, I'd give the Devil benefit of law, for my own safety's sake. ROPER: I have long suspected this; this is the golden calf; the law's your god. MORE: (Wearily) Oh, Roper, you're a fool, God's my god... (Rather bitterly) But I find him rather too (Very bitterly) subtle... I don't know where he is nor what he wants. ROPER: My God wants service, to the end and unremitting; nothing else! MORE: (Dryly) Are you sure that's God! He sounds like Moloch. But indeed it may be God And whoever hunts for me, Roper, God or Devil, will find me hiding in the thickets of the law! And I'll hide my daughter with me! Not hoist her up the mainmast of your seagoing principles! They put about too nimbly! (Exit More. They all look after him). Pgs. 65-67, A MAN FOR ALL SEASONS A Play in Two Acts, Robert Bolt, Random House, New York, 1960. Linley E. Pearson, Atty. Gen. of Indiana, Indianapolis, for defendants. Childs v. Duckworth, 509 F. Supp. 1254, 1256 (N.D. Ind. 1981) aff'd, 705 F.2d 915 (7th Cir. 1983)

  2. "Meanwhile small- and mid-size firms are getting squeezed and likely will not survive unless they become a boutique firm." I've been a business attorney in small, and now mid-size firm for over 30 years, and for over 30 years legal consultants have been preaching this exact same mantra of impending doom for small and mid-sized firms -- verbatim. This claim apparently helps them gin up merger opportunities from smaller firms who become convinced that they need to become larger overnight. The claim that large corporations are interested in cost-saving and efficiency has likewise been preached for decades, and is likewise bunk. If large corporations had any real interest in saving money they wouldn't use large law firms whose rates are substantially higher than those of high-quality mid-sized firms.

  3. The family is the foundation of all human government. That is the Grand Design. Modern governments throw off this Design and make bureaucratic war against the family, as does Hollywood and cultural elitists such as third wave feminists. Since WWII we have been on a ship of fools that way, with both the elite and government and their social engineering hacks relentlessly attacking the very foundation of social order. And their success? See it in the streets of Fergusson, on the food stamp doles (mostly broken families)and in the above article. Reject the Grand Design for true social function, enter the Glorious State to manage social dysfunction. Our Brave New World will be a prison camp, and we will welcome it as the only way to manage given the anarchy without it.

  4. When I hear 'Juvenile Lawyer' I think of an attorney helping a high school aged kid through the court system for a poor decision; like smashing mailboxes. Thank you for opening up my eyes to the bigger picture of the need for juvenile attorneys. It made me sad, but also fascinated, when it was explained, in the sixth paragraph, that parents making poor decisions (such as drug abuse) can cause situations where children need legal representation and aid from a lawyer.

  5. Some in the Hoosier legal elite consider this prayer recommended by the AG seditious, not to mention the Saint who pledged loyalty to God over King and went to the axe for so doing: "Thomas More, counselor of law and statesman of integrity, merry martyr and most human of saints: Pray that, for the glory of God and in the pursuit of His justice, I may be trustworthy with confidences, keen in study, accurate in analysis, correct in conclusion, able in argument, loyal to clients, honest with all, courteous to adversaries, ever attentive to conscience. Sit with me at my desk and listen with me to my clients' tales. Read with me in my library and stand always beside me so that today I shall not, to win a point, lose my soul. Pray that my family may find in me what yours found in you: friendship and courage, cheerfulness and charity, diligence in duties, counsel in adversity, patience in pain—their good servant, and God's first. Amen."

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