Public-Private Partnerships and the Proposed Indianapolis Justice Center

Interesting article in yesterday’s Indy Star about the $1.75B justice complex being proposed for Marion County: Weighing the scales: $1.75B justice center could be a bargain or a boondoggle.

The article in the Indy Star is less about the justice center itself (which nearly everyone seems to agree is needed) than about the procurement method being selected to build and operate it — so-called performance-based infrastructure. This is a form of public-private partnership (often called P3) that will be familiar to Monroe County residents, because it is being used for construction and operation of I-69 Section 5 (I have written about P3 used for Section 5 here). It has already been used as well for the Ohio River Bridges project near Louisville (and note that this method is NOT what was used with the Indiana Toll Road).

Per the studies cited in this article, the results of performance-based infrastructure (PBI) have been mixed. However, the most interesting aspect to me from a public policy perspective is how dependent these cost-benefit analyses (comparing the performance-based infrastructure procurement method against the traditional method, where the government bids out the construction, bonds for the funding, and then operates the facilities) are on the assessment of risk. Depending on how much risk you build into your cost-benefit model, the savings from performance-based infrastructure can be made to appear much larger or much smaller. This is because one of the primary benefits from PBI is that the contractor absorbs cost and schedule overruns (along with other risks), not the government. However, how much actual risk is avoided can often (always?) be a matter of disagreement and dispute.

This also leads to another question: how do you fairly assess the success of such a project after the fact? Once the project is completed, the risk that was avoided is obviously no longer a factor. But did the government still get the benefit of avoiding a risk of an event that wound up not happening anyway? Did you get the benefit of having car insurance last year even though you didn’t have any accidents or making any claims?

In any case, the article is worth reading. We will undoubtedly be seeing more, not less, of these P3/PBI deals, as local and state governments continue to try to build and operate infrastructure with flat or diminishing tax revenues.

Preview of Monroe County Council Meeting 2015-03-10

Karst Farm GreenwayThe packet and agenda for this Tuesday’s regular meeting of the Monroe County Council is now available: 2015-03-10 Council Meeting Packet

Here are some of the highlights:

  • The Parks and Recreation department is requesting funding so that they can maintain the County’s active transportation/greenway system. This year has seen the completion of the Karst Farm Greenway Phase 1 and the beginnings of Phase 2A. More will be done by the end of the year. The Parks request is for an additional park maintenance technician position along with some maintenance supplies, in order to maintain the trail network (mowing, snow and ice removal for the paved trails, trash removal, cleanup, etc.).  These maintenance costs are expected to be an ongoing expense.
  • The Commissioners are requesting the appropriation of the remaining balance on the 2013 General Obligation bond (initially approved in 2013, and paid off in 2014). I have written about this bond before here. This appropriation will be to complete several of the projects that the bond was originally approved for, including a jail remodel and new control panel, county archives, solar panels for the justice building, and survey work/land acquisition for the Karst Farm Greenway.
  • The Prosecutor is asking for the appropriation of a grant provided by the Indiana Criminal Justice Institute for victim assistance staff.
  • The Airport is asking for the appropriation of $70K for a local match for a project to install wildlife skirting to our airport’s perimeter fence. The entire project is estimated to cost $1,209,000, and would be reimbursed 90% by the Federal Government and 5% by the state. The airport is also requesting an additional appropriation of $10K for the air traffic control tower operation contract, due to a calculation error during the 2015 budget process.
  • The county legal department is requesting funding to pay the county’s portion of the software maintenance costs for the new Spillman software used in the Unified 911 Dispatch Center.
    • The appropriation has been advertised at $484,000, which would essentially prepay the County’s half of the annual software maintenance fees for 10 years.
    • The vendor (Spillman) is offering a significant discount if the city and county pre-pay for the maintenance.
    • However, at the last work session, many council members, including myself, expressed concern with locking ourselves into a 10-year software agreement with the vendor. It is likely, therefore, that the council will reduce the appropriation before approving it on Tuesday.
    • In addition, because of the magnitude of the request ($484K), the council advertised the appropriation out of both the Rainy Day and the General Fund, in order to give the council maximum flexibility. However, with a potentially reduced appropriation (say, for only one year, rather than the full 10 years), it is unlikely that the council will support appropriating out of the Rainy Day fund.

This meeting will begin at 5:30PM on Tuesday in the Nat U Hill Room of the Monroe County Courthouse, and public comment will be taken. The meeting will also be broadcast live on CATSTV (County Channel).