Strickland wins $25M 3C planning request as Republicans question process, legality of vote

COLUMBUS, Ohio - At Monday's meeting of the Ohio Controlling Board, the simple 4-3 majority vote on two agenda items to approve spending $25 million for a planning study associated with Gov. Strickland's controversial 3C rail project was a foregone conclusion.

The two 4-3 votes were to approve one contract for $23 million to Parsons Brinckerhoff (PB) Americas Inc. and the second was to CH2M Hill Inc. for $2 million.

But the absence of the state's transportation director was a surprise to some, given the leadership role Jolene Molitoris has played in cheerleading from the beginning a project her subordinates said would create jobs and help balance the state's budget over time but skeptics argue is a project that should slow down so more time and research can help determine if Ohio should commit its resources to a plan the board's three Republicans said violates the spirit of an agreement in the state's transportation budget that calls for a supermajority vote on capital improvement expenditures, and maybe even state law.  An authority that might weigh in on what the definition of a capital improvement is, according to one board member, could be the Ohio Supreme Court or even the state inspector general.

Discussions about a lawsuit being filed to stop the planning dollars would be the next practical step for critics of the 3C rail plan, especially in the wake of Monday's one-vote win for Strickland and 3C boosters.

ODOT Director Molitoris skips Controlling Board meeting, subordinate says she "wasn't invited"

Molitoris, a former administrator for the Federal Railroad Administration and the first woman to lead Ohio's $3.8 billion transportation agency, sent four subordinate staffers and the executive director of the Ohio Rail Development Commissioner in her place.

When Jennifer Farmer, ODOT's newest deputy director as of mid March who served as point person for the quartet of agency responders who fielded questions from board members, was asked why director Molitoris was not present, Farmer said "she wasn't invited." When Sens. John Carey (R-Wellston), David Goodman (R-Columbus) and Rep. Jay Hottinger (R-Newark), the Republican minority, were each asked if it was the practice of the board to extend invitations to agency directors to come stand before the board, their responses ranged from quizzical looks to surprise about Farmer's statement. According to these seasoned board members, the responsibility of who should appear before the board to best represent the agency and the agenda item falls to the agency itself.

As recently as last Friday, Goodman and Hottinger said they expected Molitoris to show up to defend a project that could vault from just being a debate about public policy into a major partisan issue that could affect whether voters in November choose to renew Gov. Strickland for another four years or replace him with GOP challenger John Kasich, who said money awarded to Ohio for the 3C rail project could be better spent on Ohio roads and highways. Republican senators said later that it was not uncommon for Attorney General Richard Cordray or Commerce Director Kimberly Zurz to show up for sums far less than $25 million. Over the years, covering the Controlling Board as a credentialed statehouse reporter, I have personally witness former AG Jim Petro or former SOS Ken Blackwell who stood to take questions on projects that were merely hundreds of thousands, not the size of ODOT's request today.

Last week, Senate President Bill Harris sent a letter to Gov. Strickland offering basic concerns that were reflected in the questions the GOP trio asked Farmer and company. A member of the House Minority Leadership, Rep. Louis Blessing of Cincinnati, was the political star of a short video mocking the 3C rail plan as "The Great Train Robbery."

Carey questions

Carey's first question to ODOT staff was to explain how Parsons Brinckerhoff, an American construction design and management firm recently acquired by Balfour Beatty of the UK, won the contract. Farmer responded that no bids were let for the project but letters of interest were used to evaluate those firms who offered their services. Among the approximately four letters of interest ODOT received, one came from URS, another top tier construction management company. An unflattering part of Parsons' history Carey focused on was whether agency officials were at all concerned about the fact that Parsons, and its Boston Big Dig joint venture partner Bechtel Corp, were complicit in a settlement of $415 million. Farmer said they were aware of the 2007 settlement - $47 million - but said Parsons was judged to be the best. We were "overwhelmingly impressed," she said of the decision to award Parsons first draw of $400 million in American Recovery and Reinvestment Act funds, ODOT Deputy Director Mandy Kisling Bishop said would be sufficient to do the project.

Public relations for the 3C, and whether ODOT thought it ethical for Parsons to both provide funding support for a statewide group advocating for the 3C and then benefit once the project was approved? Bishop, skirting the question, said Parsons was doing so outside of government. When Farmer was asked about how much money Parsons would spend on a category called "political outreach," Farmer redefined the term to mean gathering input from the public. She said about $1 million would be budgeted for "political outreach," a scope of service she said complied with federal regulations. Carey, saying the Parsons work should come after the decision to build a passenger rail system has been made not before it, referenced a proven but abandoned transportation system when he told those at the podium that they had the "cart before the horse."

Goodman questions

Sen. Goodman said he wanted to focus on basic questions, about "why", "how much" and whether it was a good opportunity or business decision. Repeating their mantra, ODOT said no answers could be given without Parsons doing the $25 million in work. Farmer, engaging in broad circular logic, said the 3C was about "increasing transportation capacity," a theme echoed later by Dietrich, who heads an agency that provides $15 million in funds to upgrade freight rail crossing for safety and sound who said the passenger rail project was never about high speed trains, only conventional trains that would be "balanced" with freight rail services he said will only intensify in the future.

Dietrich repeatedly said the Parsons funding would be all about "drilling down" to gain more details and answers. "Without the study," Dietrich said, "your questions remain unanswered."

Goodman, a lawyer and term-limited senator, quoted passages from state law and federal regulations that he said defined such expenditures as the contract to Parsons as a capital expenditure integral to capital improvement projects. "I've never seen, before this time,, anybody ever separate a capital expenditure from a capital improvement," Goodman noted forcefully.

Chairman Secrest, said it was his understanding that should the $25 million be spent and Ohio decides not to pursue the building of the 3C, those funds would not have to be repaid. Goodman took issue with an email he and other members received only an hour before the meeting from Bishop, who sent an email from a federal rail employee at U.S.DOT whose authority state officials relied upon today in repeatedly contending the money would not have to be paid back to the federal government should the project fail to move forward. Goodman said he has been looking for a federal authority to tell him that would be the case, but had not found one. He asked Farmer if ODOT had consulted with the Ohio Dept. of Taxation on the implications of allowing deductions to be taken immediately instead of over a schedule of 15 years. Farmer said no, ODOT had not contacted taxation chief Rich Levin on this issue, one Goodman called "dangerous stuff." Goodman said some "good lawyers" need to look at this issue, and produced his own federal documentation that according to his reading of it said the funds would have to be returned. Bishop said, with highway projects, such funds don't have to be returned because the project can be redone. But the 3C is a rail, not a highway project, Goodman said, and if it fails, Ohio won't be redoing it, so it would be compelled to return the funds.

Secrest, admitting a quandary might exist regarding definitions, said, nonetheless, that it was a chance to "move the ball down the court." Goodman, again drawing the distinction between a capital expenditure and capital improvement as central to the issue, asked for point of order, saying the committee in taking this vote was in violation of the law. Secrest moved forward.

Miller compliments staff

Ray Miller, a term-limited Columbus Democrat, congratulated the quartet on a thorough job of moving the project forward and on answering questions "as best you can." Miller ticked off the talking points Strickland and his rail leaders have offered on direct and spin off job creation, especially for the Ohio-based supply chain of manufacturers, many of whom are located in distressed Ohio counties, which during the days of the Great Recession are nearly all the state's 88 counties.

Miller also asked his Republican board members to remember that a 33-0 vote of the Ohio Senate, when Hottinger was in the Senate, occurred when Senate Concurrent Resolution 30, endorsing Ohio's HUG plan linked to development of the Midwest rail network, was proof enough that Republicans were for rail before they were against it.

ORDC's Dietrich say plan was always for conventional speed trains and "balancing all interests"

Dietrich, from ORDC, said of the plan, "it's all interlinked" and that the study was all about "drilling down" for details. Whether he knew it or not, Dietrich confirmed with one comment what other experts said was a problem at ODOT, namely rail experts were not abundant. "Back in June," Dietrich said of the collective staffs, "they didn't know much about railroads but now they do." Experts looking at federal and state transportation staffs, in the light of so much scrambling for $8 billion in federal funds for high speed rail plans, have said these staffs have been lacking in expertise and real understanding of high speed rail. Miller also said the plan was good because it was "part of a national plan" for railways.

Hottinger questions

Rep. Hottinger took up where Goodman left off on the separation ODOT staffers were making between planning funds and capital funds. Farmer said the literal reading of the provision in HB2, the state transportation budget, said the supermajority was only associated with capital improvements and planning, as she and her agency had come to define it to avoid a supermajority vote as not a capital improvement expenditure.

Although Hottinger told me before the meeting the he would not be involved in any lawsuit, should one arise challenging the legality of today's vote, he said in the meeting that the "court or the Inspector General" might weigh in on it one day.

Hottinger, whose nickname in the Senate was the "Deacon," based on his office in his Newark church, questioned Farmer about what the cost of the 3C might be. He said he'd heard figures that ranged for $250 million when discussion of the project first started in 2007, the year Strickland took office, to as high as $723 million. Farmer, who earlier had said the 3C project was not unlike other big ticket projects ODOT routinely manages, shifted the project to one that is not a typical ODOT project. Asked why the state asked for $564 million, Bishop said it could and may be smaller but because another consultant gave them final report information a short time before the deadline for submitting the state's application to the Federal Railroad Administration, they didn't have to review the number and went with the number their consultant gave them.

As capital watchers know, the next Ohio budget may be short by as few as $4 billion to as many as $9 billion, if State Auditor Mary Taylor, now running for Lt. Gov. on the GOP ticket this year, once said could be the figure legislators face this time next year. Hottinger asked Farmer if paying $340 million over the next 20 years - 20 x 17 - was a good deal. She responded that it would be good for the budget "in the long run." Farmer, when asked if the state had identified any specific line items to use to close the subsidy gap, she responded in the negative. "This is a start," she said. Dietrich chimed in again with the confession that the project was only conventional speed, and that going to high speed, which requires separate track structures, is for a future legislature to decide. He again emphasized that passenger rail wasn't the overriding goal, but upgrading freight rail tracks to "balance all interests" was. Bishop said the 3C would help reduce foreign oil consumption. "It makes the most sense for us now," Dietrich said.

Rep. Sykes supportive but cautious

Rep. Vernon Sykes (D-Akron) was the only Democrat who urged that Ohio "should not go into this lightly," saying doing so would send the wrong message to the public. He said the project needs a thorough review, and that the Parsons funding would do that. He also said Ohio had no commitment to pursue it if Parson's work shows going forward isn't appropriate. "We are not committed to build," Sykes said, "only to study." Sykes, who 25 years ago was a member of Ohio's original high speed train authority, said the state has been "studying this for a long time" and that the $25 million would produce "some additional information."

Carey offered a concluding remark that said he was not opposed to rail but needed answers to questions asked about the 3C project.

Goodman likenes 3C to "Tower of Babel"

Goodman, in his closing remarks, likened the 3C process to a "Tower of Babel" which he said also created a lot of jobs despite what was being built. He said the project needs some "economic drivers" and that a "case has not been made in my eyes" that the project should be pursued. He said he had a big problem with the process, and that the danger in getting the results is to step on the provision in HB 2 and in state law.

Luckie said to lead majority vote

Rep. Clayton R. Luckie of Dayton, a city on the 3C route, said he saw nothing illegal with the vote. In a media release, Luckie said, "This study will answer important questions before we decide whether to move ahead with the project. Frankly, I am disappointed in the Republicans on the Board who tried to block this important step. They have a number of questions about rail in Ohio, but then vote against the very study that would give them the answers. That smacks of being opposed just for the sake of being opposed, and I don’t believe Ohio wants the party of ‘no’ to stand in the way of our state’s future.”

He said an improved rail system in Ohio would also support increased capacity for freight rail, which is anticipated to grow 49 percent 2000 and 2020. He said the 3C project will allow more trains to move through Ohio, and allow them to operate more reliably and efficiently. "This will greatly help Ohio companies retain and add new employees," Luckie said in prepared remarks.

Chairman Secrest observed objections to the vote from the troika of Republicans but proceed with it nonetheless.

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