UTW: How Good An Ol' Boy Are You?

An edited version of this piece was published in the October 19, 2005, issue of Urban Tulsa Weekly. The archived version is no longer online.

How Good An Ol' Boy Are You?
Tulsa County's aversion to competitive bidding might very well be shortchanging taxpayers
by Michael Bates

Smokey Robinson's mama told him, "You better shop around," and that's good advice, especially when a big commitment is involved. Tulsa County's Commissioners seem to avoid shopping around as much as possible, and their reluctance to put contracts up for competitive bid is one of the central issues in the controversy over the proposed toll bridge in south Tulsa County.

Tulsa County's long-range street and highway master plan shows a bridge crossing the Arkansas River from 121st and Yale in Tulsa south to the undeveloped western fringes of Bixby. Transportation planners say the bridge won't be needed for another 10 years, but a private company, Infrastructure Ventures, Inc. (IVI), has made a deal with Tulsa County to build it as a toll bridge now and give it to Tulsa County.

In return, IVI would receive 100% of tolls for the first 10 years and 85% for the next 65 years. IVI would operate and maintain the bridge, but Tulsa County would handle law enforcement, ice removal, and traffic signals. Although it's been described as a private toll bridge, IVI needs Tulsa County to use its power of eminent domain to acquire the land, and the bridge will be owned by Tulsa County.

That may sound like a good deal, but the Tulsa City Council passed a resolution expressing their opposition, and more than 5,000 citizens--including Mayor Bill LaFortune and every councilor except Tom Baker and Susan Neal--have signed a petition against the bridge deal. Last Thursday, the executive committee of the Tulsa County Republican Party took the unusual step of passing a resolution opposing the bridge deal.

Over the years, far south Tulsa voters have provided a reliable base of support for tax renewals and bond issues, but there are rumblings that they'll oppose the County's attempt to renew its '4 to Fix the County' sales tax in December because of the County/IVI bridge deal. Concern about the traffic impact of the bridge on two-lane Yale Ave. initially mobilized opposition among south Tulsa residents, who proposed realigning the bridge to connect to Riverside Drive--thus the name of the opposition website, movethatbridge.com.

What ought to concern all Tulsa County taxpayers is that the IVI bridge deal is the latest in a long series of high-dollar county contracts that were negotiated with a sole source, rather than put out for competitive bid. Here are just a few examples:

In 1997, the Tulsa County Public Facilities Authority (TCPFA) made a deal allowing Ralph W. Jones to build a hotel on the Tulsa County Fairgrounds, and giving him exclusive rights there for 25 years. The TCPFA board is made up of the three County Commissioners plus two appointees, Jim Orbison and Bob Parmele. Jones had been campaign manager and a major contributor for County Commissioner Bob Dick's 1994 campaign for Mayor of Tulsa. The opportunity was not put out for competitive bids, and no other proposals were considered.

In August 2000, the TCPFA entered into a three-year, $540,000 contract with Public Affairs Group LLC to lobby for state funding for the Fairgrounds. Public Affairs Group LLC was a partnership between Claudia Tarrington, Bill LaFortune, and John Nicks. The opportunity was not put out for competitive bids, and no other proposals were considered.

From 2002 through 2005, Cinnabar Service Co. was the sole source for appraisals and other services for the County's expansion of O'Brien Park. Cinnabar's owners are Bob Parmele and Bill Bacon, who, along with builder Howard Kelsey, are also the principals in IVI.

In October 2003, following the passage of Vision 2025, the Tulsa County Industrial Authority (TCIA) took steps to borrow money against future Vision 2025 sales tax revenues so that projects could be built faster than a pay-as-you-go approach would allow.

The TCIA, whose board consists of the three County Commissioners, voted to enter into negotiations with Leo Oppenheim and Co. and Wells Nelson and Associates to handle bond underwriting for the half-billion in revenue bonds that would be issued, and with the law firm of Hilborne and Weidman to serve as bond counsel and with Riggs, Abney, Neal, Turpen, Orbison, and Lewis to serve as special contracts counsel. Fees for the entire investment team on the initial bond issue of around $250 million were estimated to be between $687,500 and $3.4 million.

Leo Oppenheim and Co. was affiliated with Bank of Oklahoma, and their lead bond advisor was John Piercey, who has been the sole source on many county bond issues over the last 20 years. County Commissioner Dick described Piercey to the Tulsa World as a "dear friend."

Orbison is Jim Orbison, mentioned above as a member of the TCPFA. Wells Nelson and Associates is affiliated with F & M Bank and Trust Co. Although school districts and local governments routinely use competitive bidding for bond underwriting contracts, advertising opportunities nationwide via publications like The Bond Buyer, Tulsa County and its related authorities rarely put bond services up for competitive bids.

The TCPFA is currently in the process of negotiating a five-year extension of their contract with Murphy Brothers for the Tulsa State Fair midway. Murphy Brothers has had the contract since 1971; it has never been competitively bid.

The proposed IVI bridge is the latest example of Tulsa County's aversion to competitive bidding. After 2 1/2 years of private discussions between individual County Commissioners and IVI principals, the Commission discussed the bridge deal for the first time at a public meeting in February 2005. On June 14, the Commission unanimously approved the contract. Two of the commissioners, Randi Miller and Wilbert Collins, have testified that they reviewed no documents other than the executed agreement prior to voting to approve the contract.

Effectively the deal provides that IVI will receive $658 million, according to an independent financial analysis, as compensation for building and operating a publicly-owned bridge over the life of the contract. The same financial analysis, conducted by George K. Baum and Co., shows that the County or the City could build the bridge itself, financing the bridge with revenue bonds. Under that scenario, the toll could be lifted after 30 years or the excess revenue could be used to fund other public infrastructure.

To cite this list of sole-source contracts is not to say that any laws were broken (although that has been alleged in the South Tulsa Citizens Coalition lawsuit against the County Commissioners), or that the people who were awarded the contracts were incapable of doing the work. But sole-source contracts rarely serve the best interests of the public. Competitive bidding opens opportunities up to all businesses, not just to those with political connections. Competitive bidding means the public gets better services, better rates, or a better return on their investment in public facilities.

Take the midway, for example. The Tulsa State Fair attracts nearly a million people each year, and there are dozens of companies in the outdoor amusements business who would be interested in reaching that market. Competitive bidding could mean more rides, a better variety of rides, better reliability, and a lower price per ride, all of which would serve the fair-going public. It could also mean a better share of the revenues for the TCPFA, money that could be used instead of sales tax funds to pay for Expo Square improvements, and that would serve every Tulsa County taxpayer.

In the past, Commissioner Bob Dick has defended sole-source contracts on two grounds. Regarding the Vision 2025 bonds, Dick told the Tulsa World that there was a "great deal of value with having a team that understands the government they are serving." On the exclusive deal for the fairgrounds motel, Dick said that because a businessman came to them with the idea, it would have been unfair to solicit bids from other businesses, "to use entrepreneurs' ideas against them." The same rationale has been used for not soliciting other proposals for a south Tulsa bridge.

If a contractor approached me with a proposal to add a room to my home, would I have a moral obligation to use that contractor? Of course not. Any reasonable person would see if there were other contractors who could provide better value. Even if Commissioner Dick feels obliged to the company who came forward with the idea, he and his fellow commissioners should feel a greater obligation to the taxpayers who elected them, who have entrusted to them hundreds of millions of dollars in tax revenues and public assets.

The County Commissioners are asking the voters to renew the "4 to Fix the County" sales tax in December to generate $62 million. Why should we, when the County Commissioners have blithely left 10 times that much money on the table in this controversial toll bridge deal?

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