hotfudgedetroit.com

Wayne County is working on a deal with the state to bail itself out of its wildly over-budget new jail project and instead take over and renovate a state prison in Detroit.

The jail construction on the northeast side of downtown is already well under way, with parts of five floors built and five new cells being completed every day. The county has spent well over $100 million to this point.

But cost overruns threaten to add $65 million to $100 million to the approved price tag of $200 million, and Wayne County doesn't have that money. The county has asked its architects for a new design that would reduce capacity to 2,000 beds from 2,192 to shave costs.

"They're in way over their heads," a high-ranking source in the Snyder administration told me Sunday. Wayne County Executive Robert Ficano declined to comment.

So the state is offering up its abandoned Mound Road prison in northeast Detroit, where the city of Detroit is also building a new detention center for prisoners.

The hope is that Mound Road could be renovated and built out for an amount that would allow the county to stay within the $200 million bond issue it sold to fund a new jail. The county commission authorized up to $300 million in bonds for the project, but the state has no confidence that the county, with a $125 million budget deficit, can repay that much.
http://www.detroitnews.com/article/20130603/OPINION03/306030325#ixzz2VAQNcAmC

The Suburban Avenger wrote:Um, about that:

Wayne County is working on a deal with the state to bail itself out of its wildly over-budget new jail project and instead take over and renovate a state prison in Detroit.

The jail construction on the northeast side of downtown is already well under way, with parts of five floors built and five new cells being completed every day. The county has spent well over $100 million to this point.

But cost overruns threaten to add $65 million to $100 million to the approved price tag of $200 million, and Wayne County doesn't have that money. The county has asked its architects for a new design that would reduce capacity to 2,000 beds from 2,192 to shave costs.

"They're in way over their heads," a high-ranking source in the Snyder administration told me Sunday. Wayne County Executive Robert Ficano declined to comment.

So the state is offering up its abandoned Mound Road prison in northeast Detroit, where the city of Detroit is also building a new detention center for prisoners.

The hope is that Mound Road could be renovated and built out for an amount that would allow the county to stay within the $200 million bond issue it sold to fund a new jail. The county commission authorized up to $300 million in bonds for the project, but the state has no confidence that the county, with a $125 million budget deficit, can repay that much.
http://www.detroitnews.com/article/20130603/OPINION03/306030325#ixzz2VAQNcAmC

Wayne County officials are outraged and plotting legal options after learning Monday that an ongoing jail construction project could be scrapped, costing the county millions of dollars.

The Detroit News reported Monday that aides to Executive Robert Ficano have had secret talks for weeks to sell the unfinished jail downtown, two nearby jails and a juvenile justice facility to Quicken Loans founder Dan Gilbert. In return, the county would sign a 99-year, $1-a-year lease with the state for the Mound Road Correctional Facility and build a criminal justice complex there.

Abandoning the jail less than two years into construction had been rumored for weeks, but denied by Ficano officials. They acknowledged negotiations were ongoing Monday, prompting county commissioners to meet with staff lawyers to determine if they could order a halt to construction.

Commissioner Laura Cox, R-Livonia, said county officials are throwing away "millions of taxpayers' dollars because of mismanagement." Cox could introduce a resolution as soon as today to stop work at the facility on Gratiot and Madison.

The controversy is the latest in a project that Cox and Sheriff Benny Napoleon call a boondoggle, and it comes amid budget overruns so severe that Ficano wants to shrink the jail to 2,000 beds from the planned 2,192. He originally promised the project would cost $220 million and open in September 2014.

Neither goal is realistic now. Ficano staffers are expected to address the commission about the jail Thursday.

Napoleon said what has happened with the current project was unacceptable.

"If terminating the construction of the new jail project will eliminate cost overruns and moving to Mound or any other location is in the taxpayers' best interests I will support that — as long as the facility has critical technology and security systems and does not compromise public safety."

"This thing got into a hole very early on and it's never been dug out," said Commission Chairman Gary Woronchak, D-Dearborn.

He said he's uncertain the commission has the power to issue a stop-work order— and Cox's proposal could increase costs if it eventually resumes.

June West, spokeswoman for Ficano, said work continues because Quicken hasn't made an offer on the land and there's no deal yet with the state.

"It would be a great proposal, but for anything to work, the financials would have to be right and we're not there yet," West said. "Bottom line: The cost of renovating the building on Mound Road and the potential sale of a property all would have to be cost-neutral or better."

That's unlikely, Woronchak said. The county has spent $100 million on the jail and it's unlikely selling the jail and other buildings would mitigate losses. And if the jail project continues, it likely will cost another $65 million to $100 million.

The county has spent millions on fees for architects and attorneys and site preparation, said James Saros, a member of the Wayne County Building Authority. "I can't imagine that money is going to be recouped," he said. "I don't imagine those companies will do the work again for free."

Among other questions: If the county ditches the project, can it use bonds issued to build the jail for improvements at Mound Road? Would doing so invite a lawsuit from firms with contracts to build the jail, including construction manager at risk Walbridge Aldinger Co. of Detroit.

"We could be in some serious legal consequences," said Cox, who opposed the deal in 2010.

"This is unbelievable. It could be a huge travesty for taxpayers."

Problems mount for project

Ficano has searched for an alternative for months, after commissioners last fall privately told his aides they wouldn't spend more money on the jail.

In April, Napoleon went public with complaints that Ficano's staff never budgeted money for furniture, technology or fixtures. That forced the county to shrink the size of the jail, change plans to keep open a Hamtramck jail expected to close and negate $20 million in anticipated savings.

The Mound facility sits on a 39-acre site off Davison. It housed 1,000 inmates and was less than 20 years old when the state closed it last year.

Retrofitting it won't be cheap or easy, Napoleon said. Prisons house inmates for years, while jails keep them for short terms because they must be moved frequently for court dates, he said.

"There is no polite word to describe this," Napoleon said. "It's just getting crazier every day."

A few years ago, the state offered Wayne County the Mound prison for $1.5 million. Ficano's staff declined, saying the project wouldn't work.

Napoleon is running for Detroit mayor and said he expects to receive criticism for the project. But he said Ficano's staff excluded him from the planning.

"I said from the beginning the process was messed up," he said. "I don't know how they remotely will hang it on my doorstep."

West said Napoleon's staff is invited to meetings and the sheriff "signed off on the 2,000-bed plan."

Ficano's staff has blamed some cost overruns on change orders from Napoleon's staff.

County commissioners transferred oversight of the project to the Building Authority with a 2010 resolution. As problems mounted this year, the authority canceled its last two monthly meetings and has met only a few times this year.

"We've never been given information to say the project is over-budget," said Frank Vaslo, an authority member and former mayor of Lincoln Park.

"We're just a part-time body. I don't get paid for this. … I am not concerned about it. I believe in the end, the bondholders will be made whole, the most dangerous criminals in Wayne County will be held in a secure facility and things will work out as they should."

County officials approached aides to Gilbert — who has bought numerous buildings downtown as well as the nearby Greektown Casino — a few weeks ago to gauge interest in the jails, court and juvenile center.

The plan would have Gilbert clear the land for reuse as part of a potential entertainment district.

"It's a good solution for two neighborhoods," said Matt Cullen, president and CEO of Gilbert's Rock Ventures. "Consolidating everything at Mound would be better for the city and county, and better for the public. There would be more parking and easier access."

He said businesses objected when the jail was proposed.

Greektown wouldn't necessarily buy the property from the county, but is eager to facilitate anything to get "the guys in the orange jumpsuits" out of the neighborhood," Cullen said.

Officials who led effort gone

Cullen said selling the land "would present an unprecedented development opportunity," since downtown office and residential space is at a premium.

Doing so could allow the county to get out of a project Cox said was ill-conceived from the start.

"All they thought about was building a new jail with someone's name on it and having a fancy groundbreaking with big plaques," Cox said. "They never thought about fiscal responsibility. Everyone called it a no-brainer. "

The project was led by officials who are no longer with the county but have been cited as the focus of the FBI investigation — former economic development director Turkia Mullin and Azzam Elder.

County commissioners have said they were pressured to approve bonds in late 2010 to take advantage of a federal program that offered low interest rates on bonds. They approved the jail over warnings from their staff.

"It is still unclear how this project would benefit Wayne County from a financial perspective," a commission analyst wrote in a 2011 report.

The county bought the jail site in 2011 for $14 million from Greektown Casino. Ficano's former deputy executive, Charlie J. Williams, made $420,000 in brokerage fees on the deal.

Walbridge Aldinger was selected over objections from contractors who complained the process favored the company. Its CEO, John Rakolta, served on a board of a nonprofit led by Mullin that was paying her a $75,000 bonus atop her $200,000 salary.

Mullin's former aide, Anthony Parlovecchio, left the county in February 2011 and was hired to ensure the jail project was on time and budget. The job was to pay him as much as $1.9 million; he was fired at Ficano's behest over concerns about a conflict of interest. He has sued the county.



From The Detroit News: http://www.detroitnews.com/article/2013 ... z2VEpi9P9U

The Suburban Avenger wrote:I've always been willing to give Ficano the benefit the of the doubt, especially when it came to the whole airport thing with Turkia Mullin (He took a lot of Dearborn money over the years and you've got to dance with them what brung you), but his ox might be in a ditch now. This is a colossal fuck-up.

Wayne County officials could suspend construction of a troubled jail project as soon as today after learning it is more than $170 million over budget.

Three days after The Detroit News reported that Executive Robert Ficano is in talks to abandon the project and sell the site, his aides said Wednesday they've received new estimates showing the project may be too expensive to continue. They'll recommend to county commissioners that work be stopped for 60 days while they re-evaluate the project.

The jail, on Gratiot at Madison, was initially expected to cost $220 million. Ficano aides learned Friday it could cost $391 million, nearly $100 million more than the $300 million maximum price set by commissioners in 2010.

"We've been working with all the principals for the last few months to bring the cost estimates back down much closer to the original projection," said June West, a spokeswoman for Ficano.

"We aren't comfortable with what we saw and want a full review."

West said the decision came after meeting with representatives for jail program manager AECOM and architect Ghafari. The county has spent at least $100 million on the project since work began in late 2011. It was supposed to be completed by September 2014, but that timetable has been delayed indefinitely.

It's uncertain how much halting the construction would cost the county — or how it could impact negotiations to sell the site, two nearby jails, Third Circuit Court and a juvenile justice facility to Quicken Loans founder Dan Gilbert or affiliated companies.

Under that plan, the county would then sign a 99-year, $1-a-year lease with the state to renovate the Mound Correctional Facility and build a criminal justice complex on the 39-acre site.

That proposal, though, also appears in limbo, even as construction of the new jail could stop.

West said Gilbert companies have never made the county an offer on the land and talks have stalled.

"There are no scheduled negotiations with Dan Gilbert's people," she said. "They are free to make us an offer, but there is no offer on the table."

AECOM and Ghafari representatives didn't return phone calls seeking comment Wednesday.

Matt Cullen, president and CEO of Gilbert's Rock Ventures, said the work stoppage gives Gilbert and other potential buyers time to research the properties and determine "are we a buyer, and at what price?"

"We think it's terrific," Cullen said of the delays. "If there is time to take a look at this, we should do it."

Gilbert recently bought Greektown Casino, and Cullen has said that having a criminal justice center downtown makes little sense. Cullen said Quicken doesn't have a specific use in mind for the site.

"We are more enthusiastic than ever," Cullen said. "We certainly are interested in understanding the opportunity the site represents."

The commission has scheduled a special meeting for 3 p.m. today to discuss the jail.

The stoppage at the jail is the latest in a series of controversies over the project that was sold as a money-saver that would consolidate the county's three jails. But the project has been dogged by accusations of nepotism and mismanagement for months.

Costs soared when Detroit officials backed away from a verbal commitment to house some of its inmates there. The project took another hit when Wayne County Sheriff Benny Napoleon accused Ficano aides of forgetting to borrow money for promised technology, furniture and fixtures.

Last fall, Ficano aides privately approached commissioners and asked if they'd be willing to spend another $65 million to $100 million. When they refused, the county shrank the size of the jail from 2,192 beds to 2,000 and abandoned plans to close the Hamtramck jail.

"The jail project has obviously been troubled for some time," said commission chairman Gary Woronchak, D-Dearborn. "It's reached the point now where we need a solution."

There will be time to find out what — and when — occurred to cause the projected cost overruns on the project, Woronchak added.

"I can promise you we will know every step that went wrong once this is done," he said.

Meanwhile, commissioners need to find answers "that are in the best short, medium and long-term interests to the taxpayers," said Commissioner Joseph Palamara, D-Grosse Ile.

"Everything is on the table," Palamara said. "We need to make the best out of this, somehow some way. It makes sense to take a two-month timeout and figure this thing out."

Still, he admitted the possibility of abandoning the jail is a tough decision to consider.

"It's awfully hard to walk away from $100 million you've already invested," he said.



From The Detroit News: http://www.detroitnews.com/article/2013 ... z2VQXOCLyp

Andy wrote:I think we've hit the plateau. And check out the Channel 4 news cruisers down there.

Wayne County officials today could initiate a study to determine what went so spectacularly wrong that construction of a $300 million jail had to be halted this month — and whether the project can be salvaged.

Two weeks after issuing a 60-day work stoppage, the county’s Building Authority today is set to consider hiring a consultant for $150,000 to determine how the project went $91 million over budget and recommend ways to cut costs. Separately, the county’s auditor general plans to launch an investigation about all money spent on the project so far.

The meeting comes as officials swap blame and alternatives dwindle. Several county officials told The Detroit News they may have no choice but to proceed with the jail because negotiations have stalled with Quicken Loans to buy the half-finished site and surrounding county buildings.

The best option is to complete the jail, even if it means building fewer than the planned 2,000 beds at the facility on Gratiot and Madison, said Frank Vaslo, a member of the building authority.

“We hired these contractors to do a job. They agreed to do the job. So do it,” Vaslo said. “If they bid it for this much, you don’t get to be halfway through and say, ‘Well, I’m going to need some more money.’”

The project’s construction manager, Walbridge, isn’t commenting, citing a clause in its contract that bars speaking to the media. County officials acknowledge they’re choosing words carefully because they fear lawsuits from contractors if they publicly criticize them.

The News has learned that county officials can’t account for several design changes that contributed to about $70 million in cost overruns. Records also indicate that aides to Wayne County Executive Robert Ficano waited one year to hire someone to ensure the project stayed within budget, despite repeated pleas from building authority members.

“There are a set of design changes that we’ve come to understand but there are others that we need a better explanation for, and we trust the independent review will get us those answers,” said June Lee, Ficano’s chief of staff.

Even if the project is salvaged, it likely will be a far cry from what Ficano promised when ground was broken in September 2011 for the jail. He said then it would save $20 million per year in technology and transportation costs and close two lockups downtown and one in Hamtramck.

Instead, the Hamtramck facility likely would remain open, because the size of the project has shrunk from the planned 2,192 beds and may have to shrink even more.

Commissioner Laura Cox, R-Livonia, said the project was plagued with mismanagement and poor planning from the start.

“There was never any real setup of who was going to oversee the building,” said Cox, who voted against building the jail. “They never told us who is representing the county and, more importantly, the taxpayers.”

Three county officials said hopes are fading for what one described as the “Hail Mary” option — selling the site, Frank Murphy Hall of Justice, two old jails and a juvenile lockup to Quicken Loans and using leftover bond money to convert the state’s closed Mound Road Correctional Facility into a criminal justice center.

Eric Larson, managing partner of Bedrock Real Estate Services, a Quicken affiliate, said Quicken is still interested in a deal because a growing downtown isn’t the best place for a jail, but the “county needs to come up with the option that makes sense for them.”

And on Tuesday, Quicken founder Dan Gilbert told The Detroit News editorial board: “It’s just another example of a short-term, very destructive thing. ... I don’t know how you can put a jail of that size at the foot of your urban core.”

Officials share blame

Ficano aides acknowledge some blame, but other county officials said it’s not their fault costs escalated.

Lee said county officials believed the project was on track until late May, when costs jumped sharply. The jail was supposed to cost $220 million, while another $80 million was planned for training, computers and furniture.

After Detroit backed out of a plan to house prisoners at the site last year, Walbridge warned construction costs would climb to $265 million, Lee said. By May 28, county officials were confident changes — including shrinking the facility to 2,000 beds — decreased costs to less than $246 million, Lee said.

Three days later, Walbridge estimated construction costs at $267 million. The final cost of the project is now estimated at $391 million, prompting the work shutdown that is costing the county upwards of $4 million a month.

“In any project of this complexity, everyone has shared responsibility and shared blame,” Lee said. “Whatever the cause of the overruns, the only way to make sure the project is a success is for everyone to pull together.”

County commissioners gave up oversight of the project in 2010 when they overruled their staff’s advice and passed a resolution transferring oversight to the building authority. The group is basically a “thumbs-up, thumbs-down body,” said James Saros, a building authority board member .

“I’m not embarrassed to say we don’t have much power,” said Saros, a real estate broker. “The decisions are already made when they come to us.”

The building authority’s five members are unpaid and appointed by Ficano. Several have deep ties to him.

Saros and employees of his Grosse Pointe real estate agency gave Ficano’s campaign at least $7,500 from 2009 to 2011, records show. Vaslo is married to Joan Brophy, a county economic development worker, who retired in 2009 when she was 48 with a $48,000 pension and returned to the county on a contract that pays her $82,500 per year.

The authority, which is supposed to receive monthly briefings on the jail, hasn’t met since February. That session lasted eight minutes, records show.

Vaslo and Saros said the authority was never told the project was in trouble.

“If we’re $91 million over budget, it’s a real simple question: Where is it?” Saros said. “I don’t think any of us want to leave the room (at today’s meeting) without knowing the answer. … I’d be shocked if this was a scandal where someone was overpaid. It sounds like incompetency.”

Wayne County Sheriff Benny Napoleon said he and his staff were shut out of much of the planning, even though the jail contract added $1.8 million for four of his staffers and three contractors to oversee planning and the transition from old facilities.

One member of that team, Lewis Yokum, was awarded a two-year, $185,000 contract to consult on the project on Dec. 1, the same day he retired from the sheriff’s department with a $54,000 pension, county records show.

“I was briefed about decisions that were already made,” said Napoleon, who is running for Detroit mayor. “I wasn’t a participant.”

Authority members upset

For much of last year, meeting minutes show building authority members had one big question: Who is watching our interests?

“For 14 months, we’ve been sitting here, saying: ‘We want someone on the job on site every day,’” Saros complained in November to county attorney Steve Collins, according to meeting minutes. “And it hasn’t been done.”

Authority members were upset the county delayed hiring a successor to Anthony Parlovechhio, a former county aide who served as the project’s owner’s representative, a position that is supposed to ensure it is on time and on budget.

The authority fired him in December 2011 at Ficano’s behest because he worked on the jail while he was a county employee, quit and was hired for a job that could have paid him $1.9 million if it was completed under budget. Parlovecchio has since sued for breach of contract.

The authority repeatedly pressed Ficano aides about hiring another owner’s representative, with member John Hindo complaining in September that “we have nobody working for us.”

Instead, the county for months had project manager AECOM Ghafari — which designed the jail and is making $25 million on the project — perform the duties. In October, the county hired a contractor, Robert Newton, for $16,000 a month to watch its interests.

By then, the project was already $45 million over budget, county records show.



From The Detroit News: http://www.detroitnews.com/article/2013 ... z2WeX976T7

Rock Ventures LLC, a unit of Dan Gilbert’s business empire, will offer today to buy the unfinished Wayne County Jail at Gratiot and Madison, as well the Frank Murphy Hall of Justice, two nearby jails and a juvenile detention facility.

“We are making an offer on the overall site,” Matthew Cullen, president of Rock Ventures, said in an interview. “The clarity around the offer will take a little bit of time working with the county. It will include a financial proposal without great specificity about what the use would be.”



From The Detroit News: http://www.detroitnews.com/article/2013 ... z2ZOHWpySh

The Wayne County Building Authority voted Wednesday to demolish $1 million in precast jail cells constructed for the failed jail project, essentially shelving the option of building at the site if a sale to Dan Gilbert’s Rock Ventures group falls through.

After paying for months of close-out work, including tearing down part of the downtown structure and removing materials and equipment from the site, it would cost millions to pick up where the county left off in June should Rock Ventures take a pass on the property.

The county halted construction last summer after being alerted the project was running nearly $100 million over budget. The county also has canceled contracts and filed a lawsuit against its project manager and construction managers with hopes of recouping some of the losses.

“Unless you produce the exact same design, you can’t use them,” Wayne County Building Authority member Jim Saros said Wednesday about the 111 precast cells. “Nobody wants to crush the cells, but it appears — from a business standpoint — it’s the best decision. Even if they could be used, you’re better off starting fresh than trying to work around already constructed cells.”

http://www.freep.com/article/20140220/N ... jail-cells

Andy wrote:

The Wayne County Building Authority voted Wednesday to demolish $1 million in precast jail cells constructed for the failed jail project, essentially shelving the option of building at the site if a sale to Dan Gilbert’s Rock Ventures group falls through.

After paying for months of close-out work, including tearing down part of the downtown structure and removing materials and equipment from the site, it would cost millions to pick up where the county left off in June should Rock Ventures take a pass on the property.

The county halted construction last summer after being alerted the project was running nearly $100 million over budget. The county also has canceled contracts and filed a lawsuit against its project manager and construction managers with hopes of recouping some of the losses.

“Unless you produce the exact same design, you can’t use them,” Wayne County Building Authority member Jim Saros said Wednesday about the 111 precast cells. “Nobody wants to crush the cells, but it appears — from a business standpoint — it’s the best decision. Even if they could be used, you’re better off starting fresh than trying to work around already constructed cells.”

http://www.freep.com/article/20140220/N ... jail-cells