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Council Dems: Outsourcing Justice Center construction could cost millions

INDIANAPOLIS (WISH) Indianapolis has not employed “the most cost effective way to finance, build, operate and maintain” a proposed new criminal justice center, a financial analysis by the City-County Council’s Chief Financial Officer concluded Tuesday.

The 49-page analysis, requested by Council Democrats and prepared by the Democratically controlled Council’s Chief Financial Officer Bart Brown and Fiscal Policy Analyst Ryan Kramer, was developed over the last two months. It includes input and information provided by Marion County law enforcement agencies, courts, Mayor Greg Ballard’s office and outside financial consulting firms.

Brown and Kramer, at the direction of Council President Maggie Lewis, were tasked with “assessing the financial arguments that have been made in favor of approving a proposed public-private agreement” for the new justice center. Debate over whether such a public-private partnership is the most fiscally prudent use of funding for the project has grown in recent months, with Ballard’s administration arguing that such a partnership is the “optimal cost effective procurement method available to the City over the life of the new facility,” according to Brown’s analysis.

Ballard has also previously cited outside consulting studies showing the project can be fully funded without additional tax revenues, and without affecting the budgets of other city and county agencies.

Brown’s analysis, however, found that “it is not possible to achieve 100 percent coverage of availability of payments to WMB (Heartland Partners, the current “preferred private vendor” to build the new complex) without risking cuts to budget obligations unrelated to the project and/or needing an increase in new tax revenue.”

The analysis lists the shortfall in funding for such payments at $37.7 million between 2018 and 2026.

In addition, Brown’s review found public-private partnerships are “very rare” in the U.S. in the construction of public buildings. His study cites just one other similar infrastructure project, the Long Beach, California Courthouse, as using such a financing mechanism.

The analysis concludes that the proposed public-private partnership funding method “is not the most cost effective way” to finance the proposed project. Instead, it suggests a “city financed, design-build project that finances life-cycle costs and uses a favorable operating and maintenance agreement.”

Using such a public-only model where the city builds, maintains and operates the justice center would save the city $516 million when compared with the public-private model over the 35 year life of the project, Brown’s analysis suggests.

Construction on the project was originally slated to begin by June, but could be delayed amid questions over the project’s funding and other details on its expected completion.

The Council’s Justice Complex Board, tasked with evaluating financing for the proposed project, is scheduled to meet again to discuss the analysis on Thursday.

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