Travis County Commissioners Court

August 7, 2012 - Item 8
Agenda

Number 8, receive presentation from the Civil and Family Courthouse Recommendation Committee and take appropriate action.

>> Just to start this item, leslie brouder, county executive over planning and budget, wanted to give a little background on it and then turn it over to the key committee members to give you your report.
The members of the Travis County civil and family courthouse recommendation committee were appointed by the Commissioners court to assist with the selection of a delivery method for a new civil and family courthouse.
The two options that they examined throughout the months of may, June and July when they met on the topic were whether or not to proceed with a design build method or to perhaps pursue a public-private partnership approach.
There were 15 committee members and three of the members were closely involved in the drafting of the final report that you have before you related to this agenda item.
And each of the members really represented a key stakeholder organization or brought a particular type of expertise to the project as we worked with them through the summer months.
Betty dunkerley is chair of the committee and is the former Austin mayor pro tem.
Martha dickey is representing the Austin bar association.
And she is the committee's vice chair.
Charles houston hinesouth was not able to make it today and he is president of capital market research so he brought some good real estate expertise to the committee.
John horton represented the original Austin neighborhood association.
Shawn cranston, the greater Austin chamber of commerce.
Rodney gonzales represented the city of Austin.
Natalie cofield, president and c.e.o.
Of the capital city african-american chamber of commerce represented that organization.
Peter shin represented the Austin asian-american chamber of commerce.
We had three civil court judges on the committee, judges john dietz, laura living ton and eric shepherd.
And here we have charles hinesath, welcome, we introduced you already.
Again, charles is representing the downtown Austin alliance.
We also had bringing real estate expertise in addition to charles art corey, who was the former chief appraiser with the travis central aappraisal district.
Charles jennings, a former director at mcery capital usa, an underwriter.
And rebecca bray with brown gray engineering who represented the real estate council of Austin.
And with that I will turn it over to betty dunkerley, the chair of the committee, for her report.

>> Thank you very much, leslie, and I'm glad to see charles here.
He's the one that answers the really hard questions, so glad to have you here.
And I want to thank the court for giving the entire committee the opportunity to work on this project.
I can tell you that every one of us learned a lot about p3s and about the courthouse and we were very happy and hope we will be of service to you.
When the committee first started, let me tell you it was a very active committee.
Your staff had to run circles around all of us and that's really why we weren't able to get you the report on June the 13th or whenever it was due is because we had a lot of questions and we did work very hard to try to at least make something reasonable out of it.
From the very beginning the committee thought that there were a lot of benefits in doing a p 3.
A lot of benefits to the county.
However, we are stuck with this sheet that said there was a $200 million gap, so even though we thought that process was the best, we just couldn't recommend it with that large a gap and it was confusing for us because further in the report it would say the construction costs are very close.
I think about 378 million to, what, 400 and something million.

>> 339.

>> 340.
About $5 million.
Then it would say that the tax impact is very, very close.
For example, on a 20-year county bond financing, it was a difference in -- in year 20 of about $69 to $71.
Very close.
So we couldn't reconcile those two things with this sheet that was in front of us.
So we decided just to take it head on and try to analyze and see where the discrepancies were or where our misunderstanding was.
We found three -- three problems with the sheet as far as trying to make a good comparison between the two modelings.
Number 1, the cost of the county bonds, the debt service was not included.
On that sheet.
So when you add that in, that gets those numbers a little closer together.
We noticed also that in the two scenarios they had used different links, different terms for the bonds.
The county bonds were shown as 20 years; the contractors bonds were 30 years.
So we wanted to get those years more comparable so that it would make more sense to us.
And thirdly, we questioned the interest rate used.
So the staff had your financial advisers to go back and do an analysis of the actual county interest rates and so we had the staff and ernst and young substitute that and get it closer so that made sense to us.
As far as we know there was a little bit more expensive with the p3, but the committee found about seven different benefits that we think would more than erase that difference.
And you'll find it in your -- in the little report that we did.
In the first one, they couldn't emphasize enough the need tore this building.
Some of them who had not been in the civil courthouse for a while actually went on tour and when they came back they really thought this is one where you don't have a whole lot of discretion.
It needs to be replaced and quickly because they felt like it was not the type of building that you want your staff and your citizens there for very long.
It had passed its useful life.
One of the big benefits and one that was particularly appealing to me is that in the p3 you have one provider and one contractor to deal with.
One provider and one contractor.
In the design build with a separate maintenance contract, you are going to have two contractors.
And I know from experience it goes like this.
You know, you have an air conditioner go outton maintenance guy says, well, the contractor didn't put the right kind in.
Blah, blah you blah.
So you have this all the time, so that is a tremendous benefit to just have one contractor to deal with.
We felt like there was also greater flexibility in the process of a p3.
There have been some recent changes in the law dealing with the design build, and with the p3, you can actually -- when the proposals come in, you actually can get a concept of what the -- what this contractor was saying the building would be like and you would have more input earlier than you would on the -- on the other process.
Because of the nature of the p3, there's much more collaboration between the various vendors.
You've got your contractor, your architect, your maintenance folks all on board in one team and having input from the beginning.
So that you come out, I think, with a better building at the end.
The fifth thing -- the fifth thing, and the committee really emphasized this, was speed.
This -- they felt like that this building needed to be redone and rebuilt, built, rather, as quickly as possible.
And so they thought that the p3, because of the way all the contractors have to work together as a team, that you would get a faster turn-around on that process.
And probably the biggest benefit that we thought the county would get that would significantly help close whatever gap there might be left was the transfer of risk.
We felt like that with the p3 you could transform -- transfer more of your risk, your construction risk, your maintenance risk, everything that would relieve you of something of that responsibility as the building is used and ages in the future.
And then finally we felt like the p3 would offer better performance and more reliability as you went in the future.
And let me tell you when you get a group as active and as assertive as our group was, we're going to step over our bounds a little bit and come back and say, well, in addition to that, we think you ought to consider, and that's the reason -- that's the spirit in which these final -- final recommendations are made.
This process is complicated and the key to it is a good solid contract where you can hold that contractor to specific standards, and if they don't meet them, you don't pay them.
So we felt like it was really necessary to pull together a team that would be your owner's rep, more or less.
And that would include specifically the committee recommended a transaction attorney that had dealt with a p3 contract before.
And then secondly, of course your bond counsel and your financial adviser.
We thought that was really important to get them on board actually before you put the r.f.p.
Out for proposal.
So that they could -- and then have them work right through that whole process with you.
In addition to that, the committee made a recommendation that you put the entire block up for the development at the same time.
It does not mean that they would be done at the same time, but if you had your courthouse on half the block and you offered the other half for commercial development, either then or at a later date, you would have funds coming in that could either help fund the courthouse or could be used for other things, other county needs that you have down the road.
The other thing we talked about is that we wanted the courthouse to be a good neighbor.
And by being a good neighbor, we were -- we were concerned that they have some kind of retail activity on the first floor of the commercial building or the courthouse.
And actually the judges volunteered another idea that we thought was good.
Since there will be some meeting space, they were okay with opening up that space to downtown groups that needed a place to meet at night.
We were wanting more activity around the block across from the park.
We felt like being a good neighbor in that way would be very helpful.
And then the other thing that we did that made the headlines today was one that because of the speed we think that you need to address this issue with, we really recommended -- and we're not proposing to be the financier on this.
You will come in with a big financing plan later that may or may not include c.o., but we thought they would be a good time of instrument to use on this because of the speed you can issue the debt and you would not -- and you could get started on it much quicker.
Probably a year or so quicker than you could with other methodologies.
The committee really felt like this was not a discretionary project.
And so that was the reason that we as a group made that recommendation.
So I guess to summarize it, we think that -- we think the p3 model will give you more control, it will give you better performance on your building, and all of these other benefits that the committee recommended.
And so I would really like to just stop there and have you ask questions because I've got two, three people, four people here that know all the answers.
So -- and I hope this meets -- even though we didn't meet your deadline, we really worked hard to get you a good recommendation.
Thank you.

>>

>> [inaudible] of this back to the court and it has been a challenge for us also listening to and reviewing as much information as we possibly can and how really to get a how on this because this is a major league decision.
It's not no minor league stuff when we're talking about it by anybody's stretch of the imagination, it's not.
And I hear what you are saying the committee recommended.
I guess that's the majority of -- unanimously or was there a minority report?

>> Well, it was a consensus of the committee that this would give you better control.
And I think you all need to remember as I used to have to do is that you are really in control of the process.
And so we recommended this to you, but if you find you can't negotiate with the first one, you can always go to the next proposer.
And so I think you still have all of the authority in the world to get a good courthouse.
Our recommendation was for you to start with this process.
We thought it gave you the best return as far as speed and quality.

>> So I want to make sure I understand, every time something came up everybody raised their hand and -- because I need to get clarity of that if I want to -- everything you are saying is in cell phone stone ag to the committee.
I'd like to hear if there was any opposition within going through this process, concerns, bonds, per se, debt service an example.
A lot of other things.
What --

>> There was a lot of discussion and opposition early on because we didn't understand it.
But as we delved into it and saw the discrepancies in some of the schedules, I think the group came together as a consensus and I don't know that there were any negative positions.
I'm going to let --

>> If I can try to answer your question.

>> Okay.
Thank you.
I appreciate it.
I'm not knocking what you are saying, believe me, I'm not.
I hear you.

>> I wanted to thank the Commissioners court for providing a committee that had such a high level of expertise, first of all.
And particularly for appointing our chairman to the committee because she did such a great job of seeing us through this process.
I think the answer to your question directly is there was no minority report.
In terms of there was nobody that wanted to craft their own report.
What carl and betty and I did with the county staff, take all the discussions, we actually got a white board up with the full committee and I wrote on the white board these points of our concern that are in numbers 1 to 7 and numbers hinesath 1, 2 and3.
Charles is always great to have along because he will actually sit down and put pen to paper and wordsmith what's going on.
But what we did was take the ideas that the committee had discussed acknowledge the points of the agreement that we reached and just put it into this short report.
But if your direct question was there a minority report, was there someone that said I'm against this, the answer to that is no.
There was no minority report, there was no one against this.
Was there a lot was hard questions and discussions?
No one how many meetings we had, but I do want to tell you that the county staff worked really hard to answer our questions and we're appreciative that we had the resources from the folks from ernst and young, from hawkins stellfield to come back to us with the answers when we weren't satisfied with the first round.
The direct answer is there was no minority report.
When we say there's a consensus, it means that everybody was on board on what's in this report, and charles and betty and I along with lots of help from the staff put this together, sent it out to the committee and no one said, don't you dare get my anywhere near that, this is not my report.
We have the support of this full committee.
I hope that answers your question directly.

>> It does, but there are other specific portions.
I'm going to hold back on those.
Other court members may want to have something also to say and I don't want to hog up all the time.
I'm being very liberal this morning in my deliberations.
I say that jokingly, y'all.

>> [laughter] but anyway, I want to -- other court members have something to say and I have more questions later.
I'm really concerned about the long-term service as far as the debt service, for example.
30 years, maybe 20 years, what role the county will have to play later on in this particular scenario.
I hear what you are saying about the p3, but at what cost will it boil down to when you really take away all the fat and everything else and you melt it down, then what do you have left.
So I want to look at what do you have left aspect to see how much of an impact it's going to have on Travis County in future years.
I won't be here in 30 years, I promise you, but maybe 20.
But anyway, the bottom line is that -- but the bottom line is this, the taxpayers will have to live with whatever we're doing, so we're going the have to make sure that we boil this down to where it's, in my mind, there's a clear understanding for my vote, for my vote to go in the direction I think we should go.
But it's going to be based on what I hear and what I review.
And right now I'm not at a comfort level.
I'm not there.
Because of debt service obligation, how long will Travis County be tied into a situation.
There's a lot of little twisted ends that are really going to make me push back a little bit until I get some answers.
I don't want to hog up the time and I'm going to be liberal.

>> You reminded me of something, the committee didn't recommend a 20-year bond or a 30-year bond.
What we were trying to do was get some comparable numbers.
Ernst and young had used 20 and 30.
We were trying to get them all where we could make sense of them.
We think that this is a complex project, so when and if you get started on it, the -- your financial folks and your attorneys will really be crafting the specifics of a financing plan.
The one that ernst and young analyzed showed the county and design issuing all the bonds and in the p3 -- they may come back and say do a p3 and let them do all of the bonds.
You've got a the look of option.
We looked at that.
That was a bit more expensive.

>> But the point is --

>> You've got a lot of options and really the financing plan won't be put together until further down the road.

>> And thank you for that clarification.
And that's what I base my premise on my discussion on.
It wasn't nothing per se from you.
I want to make sure the public understands that.
If they call me, I wouldn't tell them no, she did it.
No, I won't do that.
But what I'm going to do and say is this, yes, it was a comparison made on a 30 year versus a 20 year.
Yes it was a comparison looking at the m and o and what Travis County may have to pay as far as debt service is concerned opposed to also the makings and operations of things and looked at by what's the -- what the p3 suggests.
So it is a discussion, I think, in my mind, that still needs to be flushed out a lot more because what -- in other words, at the end of the day, what will Travis County taxpayers have to deal with later on under some of these different scenarios.
So it's still, you know, the jury is still out as far as I'm concerned because there is something that the court is going to have to decide on one way or the other.
Sooner or later.
Maybe one of the options either maybe something totally different.

>> That's right.

>> Court members, any questions?

>> I don't have any questions.
I just wand to thank you all so much for the work and the time and effort that you put into this report.
And you can imagine how it's difficult for you to -- trying to figure all these things out.
It's been difficult here as well.
And so I'm sure -- Commissioner Davis is correct, there's still a lot of work to be done to make sure that we have the numbers correctly and we know where exactly the impact is going to be.
And for how long.
I just wanted to kind of say also that I think all of us are in agreement that a new civil courthouse is needed, and that's why when the opportunity came up for us to go ahead and purchase the lot, I think I was one of the first people who said yeah, we need to do that.
It's not I've been opposed to this project, it's been that I've been supportive from the very beginning, however, it's like they say the devil is in the details.
And -- and every time we make an assignment of somebody to look at the issue, it always comes bouncing back to us.
We're going to be the ones who are going to have to make the decision as to how this is going to get funded and how we're going to proceed with this.
And so we can't get around that no matter what we do.
And -- but I think one of the things that I've kind of been looking at and I have a little bit of an issue with and that's because I don't want to be hypocritical.
And that is the maintenance of the building.
We maintain -- Travis County maintains all of the county buildings that we operate, that we have purchased or built or whatever.
And -- and we are able to then hire people locally.
And -- and seems to me like we ought to be willing to do that.
You know, I don't know if you heard the discussion we had with apple.
We were insisting that they hire 50% of the folks from Austin.
We insisted that they pay a living wage.
We were insisting that they have benefits.
Well, I think that this is one opportunity for Travis County to have this project carried out in such a way that we fulfill those three things that we ask of our employers.
And so in that particular case, I don't want to be hypocritical at all.
I think what we demand of others I think we ought to demand of ourselves.
And so that's a real issue that I have with how we approach all of this.
And -- and the funding, obviously.
I've kind of grown up in public service believing that we're a democracy, that we involve all of the people of Travis County in any of the decisions that we make, especially when they pertain to taxes.
And so I can't turn away from that learning, that teaching that I got from other people in this county.
And they were democrats with a small d.
And so I still hang on to that -- that learning that I had very early in my career.
And so I can't get around that.
And I'm going to probably be prepared to say that we need to put this item on the ballot and let the voters -- let all of the people of Travis County know all of the details of this project, why it is needed, and I think we can explain why it is needed.
I think people have always understood the things that we have said to them.
Why we need things, buildings, facilities, those things that we're mandated to do.
And so that's where I'm at.
And that's where I have been and that's where I'm going to continue to be because I feel like I need to be true to the people who sent me here.
Thanks.

>> Any other comments?

>> Yes.
First I just want to say thank you too.
I really appreciate the time and effort that this committee went into.
This is actually the first vote I had in favor of something in this process and I want to say we do have a severe need for a civil and family courthouse.
My biggest concern has been transparency in the process.
I would have preferred to see your committee come along 18 months ago but I thank you now for being here.
I have -- and I think transparency is the key along with -- of the whole process, and that extends to the voters as well.
So that's driving my positions as we go through this.
I did have a couple of questions, and you mentioned the speed issue.
And I do believe that the timing is right with interest rates to try to take advantage of those.
If this is delayed too terribly long for one reason or another and interest rates start going up, that could make significant difference in the cost of this.
And related to that, I was just curious what your committee analyzed, if they got into it in looking at what a delay and a raise in interest rates would -- might be and how that might impact the cost of this facility.

>> It's hard to predict interest rates or we would all be probably not sitting here.
We would be --

>> Prediction isn't what I'm looking for.

>> We did look at that and the committee suggested that we -- that the sooner the better.
We know that we have low interest rates now.
We don't know how long they will be low.
We don't know whether another year they will be higher.
So that was one of the ones -- one of the reasons that we recommended that we go forward as quickly as we can.
I'm looking at my committee members.

>> I think we saw quickly would result in significant cost savings to the county and delay is going to make this project more expensive.
And fundamentally we can't afford to delay.
I appreciate Commissioner Gomez's concerns about that, but this project can't wait another three or four years.
We've got to have it now.
It's been delayed too long.
So -- but in direct answer to your question, we -- without having a crystal ball, we tried to crystal ball it and the answer is there's no scenario under which this doesn't get more expensive as we delay it.

>> Well, when I'm talking about what ifing, you had said there's still a lot of financial analyses that need to take place, that I know that when I was doing real estate development, we just did different scenarios to look at them.
And I think it would be helpful for us or at least for me to take a look, well, if the interest rate goes up three points, what's the difference going to be, five points, what's the difference going to be.
Because then we have actual numbers that we're looking at and considering direction as it relates to speed.
The other thing, did you look at the -- at whatever means of financing takes place, any kind of schedule for repayment?
Because I have some concerns -- I share Commissioner Davis' actually.
20 years, 30 years out, we're making decisions now that or will be making decisions that will obligate taxpayers, and the civil and family courthouse is not the only building that we may be looking -- this court may be looking at in the next 20 years.
We have a c.j.c.
That at some point will probably need to be -- have some -- dealt with in a major way.
So I'm concerned that we would be

>> [inaudible] on facilities 10, 15 years out.
Was there any consideration to that?

>> Yes.
As part of the analysis that the staff and the planning and budget office did, and I think we actually came and presented this and possibly back in June, but it was very, very summarized.
We did look at the impact of the cost of the courthouse on the tax bill, just attempting to estimate that.
But we also included in the analysis some of the larger projects that we saw, you know, coming into the future.
And -- and trying to take care of our customary needs.
For example, our roads and the recent bond election, things like that.
I don't have the list in front of me, but I believe we actually considered some other kind of central projects that were fairly significant that we -- that we had so we didn't just do it in isolation.

>> Can that information be made available?

>> Yes.

>> The other question was on your recommendation as an advisory team moving forward on this.
It included a transaction attorney and bond counsel and finance advisor.
Is that the recommendation limited to that?
Were there, I mean, other components of that team that -- because I see a missing piece here and I'm just curious the breadth what you are recommending there.

>> I can answer that.

>> [inaudible] that you are going to have, well, international interest in partnering with a county in developing this project.
And that the teams that would be submitting will be some of the best, most highly regarded construction contractors, architects, maintenance contractors, not just in the united states but in the world.
And so you are going to have people that are very sophisticated out there bidding for partnership with you.
And it seems to us that you need to have the best possible representation going forward in the real estate world, for example, as a tenant or buyer's rep would be somebody or a group of somebodys, a team, that has experience, a long history of experience in doing these types of projects, acting as your advocate both in the preparation of the r.f.p.
And of the evaluation of the responses when they come in.
I think this is maybe as important a recommendation as the process by which we're suggesting that you proceed because you really, in my opinion, really need a very strong advocate as you negotiate going forward.

>> So you are talking about a broad-based committee.
What I saw that wasn't mentioned in your list of components was real estate development, construction expertise on that team.

>> Absolutely.

>> Commissioner Eckhardt.

>> I had a couple of questions.
This is really good comprehensive work and laying on top of what we've already done with the ernst and young financial analysis as well as the broadous over the last couple of years I can't thank you enough for lending for expertise at no cost.
In terms of the financial gap, I just wanted to go back to what you said earlier, betty.
You said there were three factors explaining the initial build gap and it was the cost of the bond election was the first one --

>> No, no, no.
What I was trying to explain the first, you all remember the chart that got that showed the $198 million difference between with two processes.

>> Right.

>> That's the part we took apart because it didn't make sense there would be that much gap and further on in the report there's actual construction cost.
If you had the money to go out and construct it at one time it was only $5 million difference.
If you looked at the impact of the tax rate use a 20-year rate it was only

>> [inaudible].
When we looked at that first sheet, that's where we found those differences.
No county debt service.
Differences in the length of the terms of the bond and the interest rate they used.

>> Okay.
Then with regard to a bond, if we did -- let me just get it apples to apples comparison from y'all's second piece of backup.
I just wand to make sure that I fully understood what y'all were saying.
In terms of a apples to apples comparison, the debt that the county would have to go out for, at least the ballpark range is -- I'm pulling it up.
Sorry.
Bear with me for a moment.
Is the difference from going out for $343 million under a design build versus a roughly 205 million under a p3.

>> Those are the constructions costs.

>> That's for initial build.
That doesn't include long-term maintenance.

>> Right.

>> And operations.

>> And the problem with the numbers that betty was talking about, it was more of a apples to oranges.
For example, in the piece of -- the piece that the county would pick up, there were no interest costs in the debt service, but yet there were interest costs in the p3.
The part that they would capital finance.
So we tried to kind of get that to an apples to apples basis and that was the purpose of the additional backup.

>> So after scrubbing it apples to apples, the big take-away is that under a -- even though the initial construction costs are very close under either scenario, that the -- the financing the county would have to do under design build is 343 million, whereas under p3, because of the shifting risk and the ability of the private sector to use the airspace for some period of time is 205.

>> That is the piece, the 60% piece under the assumptions ernst and young made.

>> I just wanted to make that take-away as clear --

>> We did not, Commissioner, we did not assume that if you did decide to put that other half of the block out for commercial bids, we did not assume that it would go back into the project to help lower your costs, but it could.
See what I'm saying?

>> Yes.

>> The other thing --

>> And I don't want to play a shell game with the public, even though our initial outlay would be less under p3, over time we would buy back that capacity.

>> That's true.
The other thing we did really after the committee I guess stopped meeting, but we still had some questions, we looked a little deeper into the maintenance component.
And what we had the staff to do, you know when you've got your routine maintenance that goes along like this.
And then about every ten years you are going to have to replace an air conditioner or roof so it kind of is not a level straight line.
So we said those ups were comparable in both so let's pull those out and just look at the basic maintenance per year under each scenario.
The best we could come up with, the p3 was actually cheaper in the basic maintenance by about $400,000 a year.
And the beauty of the p3, to address Commissioner Gomez's concern, you could always require that they require locally, which they probably would do anyway, and you can also require that they have benefits.
And the difference in those two would also cover that.

>> You can also require minimum wage which we did not require in the apple agreement.

>> With the p3, you can negotiate almost anything you want.
You've got to remember the more -- the more have tos you put in there, the higher your price gets, but it's possible.
It's a very flexible type of arrangement.

>> One thing that I'm interested in with regard to this service model, I mean we've often heard that our state privatizes profits and socializes risks.
This is an opportunity to flip it.
The and not socialize profit, but at least socialize some of the risk of financing absolutely necessary as you point out nondiscretionary infrastructure costs.
One thing I'm concerned about with this delivery model, there -- I share the concern with regard to transparency that Margaret points out and that Ron points out.
The transparency in obligating ourselves to in the near term 205 million or so.
And I hear what you are saying about this is a nondiscretionary piece.
Talk to me some -- frankly, I am -- I'm on the fence on this point.
The fact that it's a nondiscretionary infrastructure, which I 100% agree with and I don't think any rational being could say it's discretionary, we have other nondiscretionary infrastructure that we also go out to bond for.
So don't really see the fact it's nondiscretionary as being the persuasive argument to going to c of o instead of bond speed is .speed is probably the better argument.
Roads are nondiscretionary, jails are nondiscretionary, we have to have them, but we go to bond for them.
But the speed element is what's different about this.

>> Well, I'm going to have these two guys chime in as well.
It really is the speed element.
You can -- you could probably get this project -- project started a year and a quarter ahead of when you could if you took it out for a vote even if it were approved.
You also have to deal with the issue if not approved what do I do.
Once the voters turn it down, it's very difficult to use a c.o.
You might be forced to using a p3 and let them finance it all which is not the most -- it's not the cheapest way of doing it.
But -- so that had some play, but the main -- the main reason I think we were pushing for this is the speed of getting started and the speed of getting it done.
Once you've got it all in place.
So I'm going to -- any additional comments?

>> We are so far behind where we need to be in terms of our judicial system that it is not just sad, it's embarrassing in this county.
I mean, I practice in this court and you can barely practice in those courts.
And the -- the support systems that need to be in place to provide the citizens of this county with an add quality judicial system are failing.
I mean, all of the county officials that are in that courthouse are struggling to make it work and they do make it work, but at any given month that whole system could shut down given the struggles they have on a daily basis to provide the information and systems to support our court system.
And so I understand that you -- that we have other priorities.
They are a little more pushed, frankly.
I was involved in the county jail suit for 15 years on behalf of this county which was incredibly expensive.
And had enormous contractor problems because I was also involved in that lawsuit.
That's something we don't need in this instance.
You don't need litigation.
You don't need delays.
And frankly, that's what would be inherent in the other process when you analyze this risk.
It is that -- I mean, this morning's paper quotes the cost overruns you've had on other projects and the delays and there's been references to having to go into some of these other buildings and do essential refits and dealing with problems that have been created.
You can move faster on need that is 20 years overdue, number one, and number two, you are, as you say, unlike most situations, you are really transferring a risk here, which I think also speeds things up.
Because that risk of cost overruns and delays and all that is transferred way over here and it is worth it.
Because we -- we cannot wait until five years.
I mean, I don't want to get on my soap box, but the reason this country is different is because of our judicial system.
Gave start and consultants a hard time, came to a unanimous consent census this is what we need to do and we all feel strongly enough about it that we're willing to stay involved.
I'm with Commissioner Davis.
I'm not going to be practicing law 20 years from now, but now I am going to be talking about our judicial system and what's going on wrong even if I'm not practicing law.
It's too important a function to dilly dally about any longer.

>> Martha, thanks for your candor.
I wanted to get under the narrative to the money.
Bear with me as I spin out a hypothetical here.
A scenario here.
If we go to bond -- first of all, is it possible to put this on the bond election for this coming November?

>>

>> [inaudible].

>> So while it's administratively feasible it's not politically feasible bought because we wouldn't have time to educate the public between now and the November bond election.
Let's assume we put it on the bond election for November, let's assume the best case scenario and we did have enough time for education.
If it didn't pass, our next gambit here, and I'm going to taco tall turkey, to go to c of os despite the fact it hadn't passed.
That's doable, correct?

>> Say that question really carefully again.
That's a pivotal question.

>> It's a pivotal question.
So the scenario is this.
We put $205 million on the bond election for either this November or next November and in this scenario and this hypothetical, it fails to pass.
Can this Commissioners court then issue c of os for 205 million to move forward with the project in any case?

>> That's not a real easy answer and for a lot of reasons I'd rather give that to you in executive session rather than in open court.

>> And that is a perfectly decent answer, john, and I would like that in executive session.
Let me turn to owner's recommendations because I think it's extremely important and with regard to the owner's rep recommendations, we don't have the in-house expertise to do this level of project.
And that's not a knock on our internal folks.
It's just that we don't do these kind of projects very often so it would be foolhardy, inefficient and expensive to taxpayers to have this kind of expertise in house.
You want to rent this expertise when you need it for a period of two or three years and not have to pay for it in the interim for the next 10 years when you don't build a $350 million building.
Hope you don't build them except for every 20 years.
In terms of this owner rep, one thing I'm very concerned about, and charles, you touched on it, this is stepping into-waters with very high-powered and sophisticated individuals.
It doesn't mean they are out to get you.
It doesn't mean they will inherently take advantage of you, but it does mean we are talking about risk trading and that does require a level of sophistication.
This also is not the kind of in-house expertise that we utilize every day so we would need to rent some hired guns.
What I see from a state level is that we are going more and more to -- well, p3 is new in Texas, it's going to happen more and more in major metropolitan, large infrastructure.
It's already happened on highway infrastructure.
And it will more and more be happening in nondiscretionary infrastructure such as courthouses.
Do you see an opportunity for us to partner, to put an owner's rep team together that could be shared with the city, with the school district, with other major metropolitan counties so that we can cost share and swap war stories in order to, a, prevent ourselves big dog from great britain or australia, you want to get into the Texas market, if you don't do right by us, you will have

>> [inaudible] with harris county, city of Austin, city of dallas.
Do you see an opportunity moving forward with that kind of energy and collaboration?

>> I really

>> [inaudible].
I don't know how you craft that in advance because collaboration among all cities and counties are major urban counties and cities throughout Texas, in advance of us --

>> [one moment, please, for change in captioners]

>> We have to find alternative revenue sources and means of spreading risk into the private sector.
What I'm looking at here is not just the opportunity -- I know there's a bunch of guys here who are very, very interested in working with us on this because the private sector opportunity is huge.
What I'm trying to do is make a huge opportunity in the public sector to establish a beach head that makes us more likely to be able to frankly push more risk into the private sector to get the infrastructure that we need.
Because we can't push more tax burden into the private sector.

>> Well, that's why, you know, as I said a while back, I think that hiring the right team, vetting the people that you would hire to represent you, on -- up front, they are going to -- they are going to negotiate on your behalf and get you the best deal.

>> Because I want the best deal, that also includes a fair wake under maintenance, I -- wage under maintenance, the best deal that also includes public spaces in a -- in a private retail world.
So that we don't end up locking out the public from the tony, pricey, retail space in the central business district.
I would love third street, but I can't afford those little boutiquey dresses.

>> [laughter] I love the look on of great street programs but the plate prices in the restaurants are cost prohibitive.
I want to be able to see daycare, gallery space, performance space, a real give and take, a publicness to our public buildings.
One things that scares me about p 3 is the privatization element and the -- the drive to the lowest cost, so that, yeah, we would have maintenance but you would have people with very low wages and bad benefit -- bad to know benefits and little job security.
So I see this as an opportunity to push risk into the public sector, but it does require that we have a very strong owner's representative that sees the potential for this for all urban counties and other urban taxing units.

>> If I might respond, I think this process will allow you to specify all of the things that you are alluding to.
In terms of accessibility from the public.
Addressing the street appropriately.
Not overpricing products.
Whatever parameters you would like to include are possible.
I believe, as long as they are legal.

>> But there's a cost associated with each.

>> Of course there's a cost.
But the thing that really kind of my -- the switch kind of for me in this whole thing, I will admit that I had some skepticism going in about p 3.
But the switch for me was your ability as an owner to write a contract that is performance based and if the lights don't go on, if the air conditioner doesn't work, if the floors aren't cleaned, if the wages are not being paid appropriately, you can turn off the switch and not pay.
It is a performance based contract that extends for however long you want to extend it in your negotiations.
Whether it's 10, 15, 20, 25, 30 years.
But it's performance based contract, if they don't perform, they don't get paid.
And I like that.

>> I do, too.
Thanks, I really appreciate y'all's help on this, I hope that you will -- I hope that you will consider helping us on it.
This is going to be a long dialogue and an important one for our community, if we do this right.
And it pays dividend, I see it as a model that we could repeat on other projects in order to get the necessary infrastructure that's frankly starving.

>> I move that we accept the committee's report.

>> Second.

>> Discussion on the motion?

>>

>> [indiscernible]

>> Not necessarily agreement.

>> Accept and receive it.
All in favor?

>> Judge

>> [indiscernible] I don't know exactly where we're going to end up going in this and as far as having maybe, you probably heard it come up with -- with a possible bond election.
I do know that we have had a chance to look at some of the comparisons.
Your report, also ernst & young, we looked at their comparison between and also the p 3.
But as far as the elections are concerned, I recall early on in this situation I thought with this amount of money, I thought it was appropriate to go before the voters early in this discussion with the situation.
I mean a long time ago.
But I'm saying that to say this: is that with this amount of money, that is a lot -- we're talking about millions and millions of dollars.
I cannot recall us ever issuing co's, not since I've been here, for this amount of money.
I just can't recall that.
Maybe somebody can refresh my memory.
I haven't been here all my life, but I've been here a little while.
But that's a lot of money.
And so I'm just hinging on that and looking at the differences and comparisons of what we need to do going forward.
I want to make everyone mindful of what we're doing here and stay on course.
I appreciate your report and thank y'all.

>> All in favor?
Paseo encinal.
That passes by unanimous vote thank you all very much for your hard work, dedication, et cetera.

The Closed Caption log for this Commissioners Court agenda item is provided by Travis County Internet Services. Since this file is derived from the Closed Captions created during live cablecasts, there are occasional spelling and grammatical errors. This Closed Caption log is not an official record the Commissioners Court Meeting and cannot be relied on for official purposes. For official records please contact the County Clerk at (512) 854-4722.

July 3, 2012: Travis County Launches New Video Playback System

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