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Indianapolis P3 project victim of local politics

The fate of the Marion County Justice Complex, which the city awarded to a private consortium last December, remains uncertain as a political tug of war continues.

The Marion County Justice Complex is a campus-style project that would have modernised Indianapolis’ court and prison facilities which are antiquated, unable to meet current and future needs and pose safety issues given their disparate locations.

However, the Marion County City-County Council has refused to green-light the project since raising objections in April that traditional financing would be more cost effective than the public-private partnership (PPP;P3) model the office of Indianapolis Mayor Greg Ballard decided on.

“We’ve needed this for at least 30 years,” Ballard said during a recent interview with indypolitics.org. “The jail is in terrible shape, it’s unsafe to transport prisoners the way we do it […]. We have 34 courts in a space designed for 16. It’s inherently unsafe how we’re doing it; it’s completely inefficient,” he said.

Because of these inefficiencies, city authorities including the Mayor’s office, the City-County Council, the Sheriff’s office and other stakeholders worked together to develop a long-term solution.

“In December 2013, [City-County Council President] Maggie Lewis, the sheriff, the judges – all of us collectively said we need a justice centre. Everyone at that time was on board,” Ballard said.

The City-County Council, however, has raised objections to the project, particularly its method of procurement.

“The City-County Council never officially approved anything related to the justice centre in 2013,” Bart Brown, the City-County Council’s chief financial officer told Infrastructure Investor on Thursday. “A few councilors gave their individual support to looking into a new justice facility but the Council as a whole did not approve it,” Brown said.

According to the Mayor, Lewis signed off on the project and Brown was part of the team that selected the preferred bidder.

“President Lewis only signed an MOU [Memorandum of Understanding] that stated the city and county should look into a new facility and also explore responsible ways to finance it. She never gave her approval to finance via P3. The administration made that decision unilaterally,” Brown commented.

As for his participation in selecting the winning team, Brown responded: “I was part of the financial review team but was not privy to the RFP [Request for Proposals] until a week prior to submission.”

Still it seems that the City-County Council was late in voicing its concerns. The entire process took at least 18 months from the time the city’s leadership agreed that a new justice centre was needed to issuing the RFP in December 2013 to announcing three shortlisted teams last November and selecting WMB Heartland Partners – a consortium teaming Paris-based fund manager Meridiam Infrastructure with Walsh Investors and Balfour Beatty Investments – as the preferred bidder in December 2014.

The decision to deliver the project as a PPP was made after the city compared that option to traditional delivery (design-bid-build) and lease delivery.

However, in April the City-County Council stated that it had conducted its own Value for Money (VfM) Assessment, which concluded that traditional financing was the better option and would save the city $516 million.

In an effort to find a compromise, WMB Heartland Partners submitted a scaled-back proposal to the City-County Council in the first week of June.

“After further review of the WMB Original Proposal, the City and WMB have worked to generate value engineering improvements that provide benefit to the City,” WMB wrote in its modified proposal. The changes also result in a “more economical solution,” according to the document.

The City-County Council had to vote on the proposal by June 8, otherwise WMB would have to adjust its bid to reflect an increase in costs “resulting from continuing construction price escalation”.

“Officially the Council never took action on the proposal,” Brown explained. “The proposal never made it out of committee so it was placed in the pending proposals category. There was an attempt to add it to the agenda on June 8th but failed due to lack of a majority vote.”

The next step according to Brown, is for stipends to be issued to WMB and the two other shortlisted bidders – Indy Justice Partners and Plenary Edgemoor Justice Partners. Each team would be entitled to $750,000.

According to one source, the Mayor's office and the City-County Council are still in talks about the project. Meridiam declined to comment, while the Mayor's office had not responded to a request for comment by press time.

“This puts Indianapolis in a bit of a bad light because twice we told them [the business community] we’re going forward with this and now what kind of partner are we going to be in future P3s?” Ballard said in the interview.

According to the Mayor, it’s when politics came into play that things became complicated. “If this was being voted on in May or June of last year, it would’ve passed. I don’t think there’s any question about that,” Ballard said. “But we’re just in the political season right now.”

Brown disagreed, stating that “many councilors on both sides of the aisle had problems with the way the administration handled the project”.