Charlotte's I-485 Project Is Dead! Did Perdue Lie To Charlotte Voters??

Charlotte Lawyer: DOT can't borrow for I-485


A Charlotte-based lawyer hired by State Treasurer Janet Cowell's office concluded that the state Department of Transportation does not have authority to go into debt under its plan to complete I-485 around Charlotte.

Cowell's office released the opinion today as part of a public records request by the Charlotte Observer and The News & Observer. The opinion is part of a disagreement between Cowell's office, which authorizes the state's debt, and the transportation department under Gov. Bev Perdue, which is trying to build the final segment of the long-unfinished highway loop.

Perdue last month announced plans to finish the road using a new financing mechanism that included the agency guaranteeing $50 million in debt by a private contractor and paying it back over ten years.

Steve Cordell, a lawyer with McGuire Woods' Charlotte office who specializes in public financing, said state law authorizes the transportation department to enter into partnerships with private companies but doesn't grant the agency or the partnership an independent authority to borrow money.






Charlotte Lawyer's views on I-485 Loop Financing Plan


State Treasurer Janet Cowell's office relied in part on an opinion by Charlotte bond attorney Steve Cordell of the firm McGuire Woods that a statute allowing for design-build-finance projects such as Gov. Bev Perdue wants to use to complete the Outer Loop can't be done the way her administration plans. The state would have to contract for the program, which involves having contractors front $50 million of the $340 million cost of the project, though a public private partnership, Cordell said.

In a document released by the treasurer's office this afternoon, Cordell wrote Nov. 24 that:

"... we think that (39) authorizes the NC Department of Transportation (“DOT”) to enter into partnership agreements with the NC Turnpike Authority, private entities and authorized political subdivisions, pursuant to which the partners agree as to how they will collectively undertake to finance the various costs delineated in (39). The statutory language only expressly authorizes DOT to enter into and act through a partnership agreement with one or more of the referenced partners with regard to the financing of the referenced costs. We note that the statutory language of the related provision (12a) only expressly authorizes DOT’s Board to approve such partnership agreements. Accordingly, we do not think the statute authorizes DOT to unilaterally finance the referenced costs."

The Nov. 24 memo is dated weeks after Cordell briefed treasury department officials about problems he saw with the proposal, unveiled by Perdue in Charlotte on Nov. 9. The treasurer's office tried to reach DOT officials for about a week before her announcement, but did not e-mail DOT with its specific concerns, perhaps because the treasurer's office did not know until the morning of Nov. 9 that Perdue would announce her proposal that day.

Cordell also said in his memo that he did not believe the statute granted DOT the power to borrow money. DOT has said the program should not be interpreted as increasing the state's debt because there are no bonds involved and the arrangement does not pledge the state to repay the money. But the deal does contemplate that the state would repay the $50 million over 10 years.

Cordell wrote, "...if the repayment arrangement between DOT and a contractor entered into pursuant to DOT’s “Design/Build/Finance” program was ultimately determined to constitute a borrowing of money by DOT, we do not think that (39) can be relied on as the source of that borrowing authority. "

If the courts found an unauthorized exercise of borrowing power, he noted, they likely would find the arrangement void.

Perdue said earlier this week she wanted to move ahead on the design-build-finance plan and was confident that DOT has authority to proceed under the statutes. In proposing the financing plan, her administration told the treasurer's office it didn't have to have the treasurer's approval but would prefer to have it. But unless the governor and the treasurer and attorney general put their heads together to figure a way out of this disagreement, it appears the state would be proceeding without the support of an important constitutional officer.





Bev Perdue's stock picks


State Sen. Tony Rand was accused of sharing inside information about a company with other state politicians, an allegation he vehemently denies.

A review of ethics disclosure forms for a handful of notable political figures shows that former Gov. Mike Easley and current Gov. Bev Perdue have owned stock in the company, Law Enforcement Associates.

Easley is pretty hard to get on the phone these days, but Perdue's office wanted to end any speculation.

Perdue purchased a little more than $1,000 worth of LEA stock in 2002 when she was lieutenant governor, said her spokeswoman, Chrissy Pearson.

The stock was listed only on her 2006 ethics disclosure form because that year its value exceeded the $10,000 minimum threshold for reporting it. Perdue still owns every share of the stock she purchased in 2002, Pearson said.

"The governor absolutely never took part in any insider trading of this stock or any other, and any assertions that she did are not only untrue but insulting and outrageous," Pearson said.





View Larger Map


Sources: McClatchy Newspapers, Charlotte Observer, Under The Dome, Indy Week, Google Maps