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Wednesday, April 01, 2015

Ind. Gov't. - "Report: Indy can build, maintain justice center for less"

Supplementing this January 15, 2015 post, titled "My view: Rethink plan for justice center in Marion County" (quoting a letter to the Star by Les Zwirn is a retired Methodist Hospital executive), today the IndyStar has a long story by Brian Eason that includes:

A new report commissioned by the City-County Council argues that Marion County can build and maintain the proposed criminal justice center for substantially less with traditional financing than under the public-private partnership advocated by Mayor Greg Ballard.

The report also challenges the administration’s claim that the contract would effectively pay for itself through savings and new revenue, raising new questions about whether the county can truly afford the $1.75 billion, 35-year deal without new taxes. * * *

Ballard’s proposal relies on a type of public-private partnership that’s common in road projects but rarely used to finance a building. The administration and its advisers argue that it would be cheaper over the long haul to hire private consortium WMB Heartland Justice Partners to design, build, operate and maintain the facility for an annual fee, rather than borrow money, hire a contractor to build it and pay the maintenance costs along the way.

The council’s report recommends a more traditional design-build model but also uses an uncommon financing tool — one that the administration writes off as a “Frankenstein model.” Rather than float a bond backed by property taxes, the county would borrow against the county option income tax, or COIT, which funds general government operations.

Neither mechanism calls for a tax increase, although the council’s version likely would be backstopped by property taxes as a contingency.

The report was co-authored by Bart Brown, the council’s chief financial officer, and H.J. Umbaugh and Associates. They said they relied heavily on studies out of California and Ontario, Canada, that questioned the use of this sort of public-private partnership. One found that taxpayers spent $160 million too much on a courthouse in Long Beach, Calif.

“My recommendation is it’s not the best model,” Bob Clifford, a financial consultant with Umbaugh, told The Indianapolis Star. “The city could’ve done it cheaper.”

Posted by Marcia Oddi on April 1, 2015 01:46 PM
Posted to Indiana Government