Outer Loop loopiness

The Perdue administration's plan for financing completion of the Interstate 485 Outer Loop may be the ticket to getting that project underway and finishing it years ahead of time, but two state agencies say their reaction is a little bit different from initial reports. I asked the Department of Justice, headed by Attorney General Roy Cooper, for copies of any documents they had approving the design-build-finance plan that would have contractors fronting some $50 million of the $340 million that would be required to built the project. Julia White, Cooper's senior policy advisor, said it was inaccurate to say that the department had approved the financing plan. "We have not seen a specific proposal," she said. The department had discussed the concept of design-build-finance projects as contemplated under state law and how that would work. But she as to approval of a specific plan, she said, "We haven't said any such thing. There isn't any such thing." And she said, "We haven't been asked for an opinion."
Ted Vaden, spokesman for the Department of Transportation, said the department was confident it has authority under the statute, G.S. 136-18(39) and that Beth McKay of the Justice Department had assured DOT of that. But I also spoke with Deputy Attorney General Grayson Kelly, who said, "We have been put in an awkward position" because it had not seen a detailed proposal that might allow the department to consider all facets of the plan and render an opinion. DOT, he noted, was still in the process of getting information from contractors and others in developing a proposal. But at this stage, he said, "There is no 'it'."

Meanwhile, State Treasurer Janet Cowell's office released a thick stack of e-mails reflecting her department's internal debate about the plan, which one department official called "wild" when he first heard of it. The department began considering the plan on Oct. 12 and apparently had questions from the outset. On Oct. 30, the Treasurer's Department asked Steve Cordell, a lawyer at the law firm of McGuire Woods, whether the statute allowed the department to use the design-build-finance statute to help pay for the Outer Loop. The department did not release a document directly from Cordell, but on Nov. 4, Deputy Treasurer Vance Holloman e-mailed the treasurer that "We spoke with Steve Cordell this morning. He does not believe that G.S. 136-18 (39) gives DOT the authority to enter into a financing contract with a contractor. He believes that Statute would give a partnership that is a legally separate entity from the state the authority to enter into a financing as permitted by law. So DOT's idea of paying interest and principal over 10 years is not permitted by GS."

But the department had trouble lining up a time to talk with DOT official Mark Foster about its Nov. 4 determination until the last minute. It had sought a phone call with the department on Nov. 5 but Foster was out of town until Nov. 6, and a meeting was scheduled for Monday Nov. 9. But the department learned ("Yikes," one official said in an e-mail) in a brief news item on Nov. 9 that Perdue was holding a press conference in Mecklenburg County that morning, and Holloman finally spoke with Foster that same morning.

In an e-mail late that morning, Holloman wrote that the Perdue administration could get the $50 million it needs from toll road projects that would be delayed over a two-year period. "If they will take that money during the 2 years and pay the contractor as the work is being done they could avoid the financing issue. However, they do not want to say this publically (sic) since that makes it appear that funds are being taken from toll road projects when these projects are just delays."

The e-mails show that Mecklenburg Democratic Sen. Dan Clodfelter was working on the Outer Loop solution. Anthony Solari, director of government affairs for the Treasurer's Office, wrote Holloman that same morning that Clodfelter, "based on the conversation he had with Janet (Treasurer Janet Cowell), went ahead and told the Gov. it could be worked out. We were careful to tell him that the best option was to use the turnpike money that was not going to be used during the next couple of years. We also mentioned, if I can recall correctly, that the idea that they could go ahead and contract with the private company outside of the debt study was unacceptable to us."

"My feeling is that if they can finance this within the guidelines you set out for them, o.k. But if they try to do it under questionable authority or outside of the manner you think best, we should jump on it right away."