Ludington's Use of Foth Continuum

[XLFD]

A growing trend has been to go beyond the government role as a regulator in certain projects that indirectly have a public interest and to use public resources to interest a private company to invest in a project which would normally be a money-loser.  These are public-private-partnerships (PPP), and they may seem at first the proper way to go.  

"That would never pay for itself but it obviously has value, thus, we need some government help. Let's not make it an honest government function, let's make it a Public-Private partnership and get the best of all possible outcomes!!"   

When people want something which nobody seems to be providing in a free market system, businesses crop up to supply that something.  Through competition, the least efficient fail, the remainder must figure out ways to keep the consumers happy in order to sustain themselves by investing their earnings into the business to clear the bottom line and make profits.

In most cases, however, PPPs are simply a means of using tax breaks, regulatory easing, taxpayer support and so forth to subsidize some private activity.  Such activity can be rife with inefficiency, unfairness, and corruption (see here for several problems with PPP).  Despite these problems, PPPs seem to be popular among politicians and communities since the businesses and governments involved market it as development and progress, and their voice typically drowns off the voices of the companies and people negatively affected.

Ludington's Lake Michigan Carferry (LMC) was up in arms back when the Lake Express started up, benefitting from millions in government-backed loans, yet nowadays it has those same arms extended with a palm upward in order to get grants in order to replace their docks, which are not a public facility in Ludington.  As noted earlier this year in the LT, the City applied for a FASTLANE grant on behalf of LMC and got word it would receive millions to repair the dock, yet kept the award quiet; I mused at the time:  "Why exactly does $5 million of public monies need to be earmarked to a private company that is the sole user of the facilities that they are repairing?

The FASTLANE grant comes to the City of Ludington (COL) after the City spends the money on contractors and/or materials and then sends their receipts to the grantor.  This can actually present a problem to the COL if they spend more than what they have in their savings, which happens to be less than $2 million, some of it of limited liquidity.  This grant therefore has some costs to the locals that may not ever be recouped, due to large amounts of interest-earning money being removed from their accounts, and the likelihood they will have to make their own short-term-loans and pay some interest that may be significant as the COL's credit rating may decrease. 

With that understood, enter Foth Engineering and Infrastructure LLC, a Wisconsin-based group already working on that side of the lake on improvements at that port.  In Manitowoc, the dock is not owned by LMC, but is instead public land, and so both the City of Manitowoc and State of Wisconsin are footing the bill, their Harbor Assistance Program donating $4 million.  In June, they began with the normal repairs on that site, with Foth appearing at the Manitowoc groundbreaking ceremonies, albeit they had been busy spending about $1 million earlier in emergency repairs due to the seiche that hit both ports.  

At the special meeting to interview two interim city manager candidates held on June 28th, the only other item on the agenda was to do a first reading of an ordinance to enter into a contract with Foth for engineering services.  This piqued my interest due to the unnatural secrecy they showed in receiving the $5 million grant, the reading was noted in the minutes:

The minutes were rather incomplete in that the council discussed the potential costs concerning loans the City may have to make before they get repaid many months later.  The contract is substantial ($360,000), and nearly six times the amount our local engineering company, Nordlund & Associates, bid for their services for a $5 million bridge project in 2012. 

Before Nordlund was overlooked then so that a GR firm could do it for nearly four times as much.  One might think a bridge construction might involve more engineering skill than a dock repair project that costs the same (less when you factor in inflation), so I wondered why there was no indication that any competitive bidding took place in this case, and that the City, with skin in the game, went headlong into this repair using a Wisconsin-based contractor, who will have a lot of extra costs that a local company wouldn't have.

 

To find out more, I made a FOIA request on June 29 after this meeting looking for:

"Competitive bids received from Foth Infrastructure & Environment LLC and from any other similar engineering consultation and construction businesses to do engineering-related work for the $5 million FASTLANE grant project(s) for the LMC. If no other businesses submitted bids for engineering work, include any public records that describe why the competitive bidding process wasn't used in this case."

The publicly-unattended July 5th Finance Committee notes reveals more of the wrangling over how to handle the City's part as a fiduciary in the dock project to minimize the costs.

However, I did not receive this reply until after the July 9th meeting, likely to prevent me from saying anything about it at that meeting.  In the July 9 LCC agenda packet, the Foth contract was hidden amongst 8 other items in the Finance Committee reports.  Beginning on page 40, they have Shay's memo, the ordinance, and the Foth contract.  Whereas Foth will be conducting its own bids to contract out work, there is no evidence, even in the ordinance, that their services were gained through competitive bidding or any other fair process that may have saved money.  

 

So there is a fair chance that Foth will get contractors stationed outside Michigan to bid on these contracts to repair the Ludington docks, it is likely they may consider bids that may not be the lowest, due to their own contractor preferences and proximities and the fact that they are not compelled to choose the lowest, nor do they have to justify them to the public, even though it's public money they are using.  The COL is paying for it and then the federal government is repaying them with public funds, with additional administrative costs taken out along the way.  Very inefficient.  

The response came back as I thought it might look:

Please find enclosed FOIA #352 Response. Your request below has been denied as there is no existence of a public record under the name given or by another name reasonably known by the FOIA Coordinator.  FOIA Response #352.pdf

For hiring Foth for over a third of a million dollars, the City of Ludington has had no competitive bids, there are no records saying exactly why there wasn't a competitive bid used in this case.  The city code (Section 2.4) says:  "Sealed bids shall be asked for in all transactions involving the expenditure of $10,000.00 or more and the transaction evidenced by written contract submitted to and approved by the city council. However, when it is clearly to the city's advantage to contract without competitive bidding, the city council, by affirmative vote and upon recommendation of the city manager, may so authorize."

Never has the public been told that this is clearly to the City's advantage, not even in a standing committee meeting, it's clearly not to anybody's advantage other than Foth and their contractors they can supply on a whim.

[Willy]

It just never ends. Sneaky politicians and their cronies take advantage of the taxpayers whenever they can. I've lost all respect for LMC. FIrst of all why are taxpayers funds being used for this project. I thought LMC was a company with integrity. I guess not. If LMC is going to take charity from hard working taxpayers then the money used for this project should go to local contractors and businesses. For LMC to turn it's back on locals  this way shows a complete lack of concern  for the citizens of Ludington.

Thanks for the information X.

[XLFD]

Your welcome.  We can hope that the eventual city manager picked will be able to go against the current culture that is secretive and not interested in doing things by law in order to save money on contracts. 

Another piece of John Shay's legacy is right here.  Former Mayor Henderson told us all that Shay was the arms and legs of the council, and the five legacy items I brought to the table at the last meeting were not entirely his fault.  Now, I doubt that the city council told Shay to lie in a sworn affidavit or to bypass pump millions of gallons of raw sewage into recreational waters, dire criminal acts mind you, that Shay did without his conscience prompting him to do otherwise. 

But I would say that the city council and Mayor Henderson were complicit in the Jack Byers fiasco, the Workplace Safety Policy fubar, and the unnecessary water tower expenses.  Not to mention all those FOIA appeals they upheld without discussion.   There's been a leadership vacuum at city hall for at least the last ten years where they have went from serving the public, to teaming up against the public.  And I just happen to be the manifestation of the general public at a lot of these meetings.

You may recall that at Henderson's final meeting, that LMC CEO Bob Manglitz made it a point to restrict my words (which was critical of general city policy that night), criticize me, and bend the rules during his public comments, just like Henderson did at the last meeting.  That was disappointing, since I had written numerous articles that supported and defended the SS Badger from their critics when the EPA was going after them and my points were well supported at the meeting.

Manglitz could have respected my rights to be offended by various charter violations that night, but took the podium a second time instead to chide me like a typical elitist.  Manglitz lost my respect that night and now that multimillionaire is going to take $9 million from the State of Wisconsin and the Federal Government, and use a fair amount of City resources in the process to do work on infrastructure that either belongs to him, or only benefits him.  He's not Charles Conrad, he's turned into nothing more than a hypocritical hound jumping through hoops for government entities and begging in order to get treats. 

The least he could do is let the COL conduct a transparent competitive bidding process for an engineering firm to do the Michigan improvements, and actually hire the lowest bid made by a competent firm.

[shinblind]

I have much less an issue with the Lake Michigan Carferry [LMC] appearing with there hat in hand to beg for funding from the taxpayers of Ludington than I have with the city council not having open bidding on a projects or giving local contractors an advantage when bidding for work.

Since the rebuilding of the dock in Ludington initiated with the rebuilding of the dock in Manitowoc, a Manitowoc Engineering firm cannot be slighted wanting to use home team players for the work on both sides of the Lake anymore than if the work began in Ludington and local contractors were used in Wisconsin.

LMC has made many errors in how they operate their business but this one isn't on them.  Their biggest error was letting Muskegon get a foothold in the market place. Rather than as they did, try to stop the funding for the Lake Express,  they chose to grease the skids of Pete Hoestra in hopes that a lowly Congressmen could somehow stop the Lake Express from being built. Instead the LMC should have bought their own vessel, albeit used, and started cross lake service years before Muskegon's. They could have also offered a run to Milwaukee the distance being only about 15 miles longer than the run from Muskegon. They could have leveraged the vessel for dock space in Milwaukee, indeed they could have made the sale contingent upon having dock space available.   They could have promoted taking one vessel across and returning on another. Hell the marketing potential was unlimited.  And at the time there was a used high speed ferry for sale in Canada and many others over seas. But no, that opportunity was lost lone ago. That ship has sailed. That water has flowed under the 4th Ward bridge and is half was down Lake Erie by now.

One other thing while it is on my mind, I don't want to hear the downtown merchants chant about how a dollar spent locally downtown circulates locally 7 times while at the same time they tolerate the unfair business practices of the Ludington city council awarding bids. That same dollar earned locally must also circulate the same 7 times.

[Willy]

Very good points X and Shinblind. However I am not slighting Foth engineering. The problem as I see it is that Ludington is LMC's home base, owned by them and presented as the main staging area for the Badger.  I consider Manitowac to be rental property and to shower the money and prophets on rental property with all the benefits given to contractors working on that property while ignoring the owner occuppied property that has been supported all of these years by locals is just stupid. If anything, to be fair, each property should have been handled separately. Being fair is referring to the use of taxpayers money going to support local taxpayers, businesses and contractors.