June 4, 2013 at 1:00 am

Costs, outrage grow in Wayne County jail project

Construction work continues at the Wayne County jail site Monday as officials explore a possible sale. (David Guralnick / The Detroit News)

Detroit — Wayne County officials are outraged and plotting legal options after learning Monday that an ongoing jail construction project could be scrapped, costing the county millions of dollars.

The Detroit News reported Monday that aides to Executive Robert Ficano have had secret talks for weeks to sell the unfinished jail downtown, two nearby jails and a juvenile justice facility to Quicken Loans founder Dan Gilbert. In return, the county would sign a 99-year, $1-a-year lease with the state for the Mound Road Correctional Facility and build a criminal justice complex there.

Abandoning the jail less than two years into construction had been rumored for weeks, but denied by Ficano officials. They acknowledged negotiations were ongoing Monday, prompting county commissioners to meet with staff lawyers to determine if they could order a halt to construction.

Commissioner Laura Cox, R-Livonia, said county officials are throwing away "millions of taxpayers' dollars because of mismanagement." Cox could introduce a resolution as soon as today to stop work at the facility on Gratiot and Madison.

The controversy is the latest in a project that Cox and Sheriff Benny Napoleon call a boondoggle, and it comes amid budget overruns so severe that Ficano wants to shrink the jail to 2,000 beds from the planned 2,192. He originally promised the project would cost $220 million and open in September 2014.

Neither goal is realistic now. Ficano staffers are expected to address the commission about the jail Thursday.

Napoleon said what has happened with the current project was unacceptable.

"If terminating the construction of the new jail project will eliminate cost overruns and moving to Mound or any other location is in the taxpayers' best interests I will support that — as long as the facility has critical technology and security systems and does not compromise public safety."

"This thing got into a hole very early on and it's never been dug out," said Commission Chairman Gary Woronchak, D-Dearborn.

He said he's uncertain the commission has the power to issue a stop-work order— and Cox's proposal could increase costs if it eventually resumes.

June West, spokeswoman for Ficano, said work continues because Quicken hasn't made an offer on the land and there's no deal yet with the state.

"It would be a great proposal, but for anything to work, the financials would have to be right and we're not there yet," West said. "Bottom line: The cost of renovating the building on Mound Road and the potential sale of a property all would have to be cost-neutral or better."

That's unlikely, Woronchak said. The county has spent $100 million on the jail and it's unlikely selling the jail and other buildings would mitigate losses. And if the jail project continues, it likely will cost another $65 million to $100 million.

The county has spent millions on fees for architects and attorneys and site preparation, said James Saros, a member of the Wayne County Building Authority. "I can't imagine that money is going to be recouped," he said. "I don't imagine those companies will do the work again for free."

Among other questions: If the county ditches the project, can it use bonds issued to build the jail for improvements at Mound Road? Would doing so invite a lawsuit from firms with contracts to build the jail, including construction manager at risk Walbridge Aldinger Co. of Detroit.

"We could be in some serious legal consequences," said Cox, who opposed the deal in 2010.

"This is unbelievable. It could be a huge travesty for taxpayers."

Problems mount for project

Ficano has searched for an alternative for months, after commissioners last fall privately told his aides they wouldn't spend more money on the jail.

In April, Napoleon went public with complaints that Ficano's staff never budgeted money for furniture, technology or fixtures. That forced the county to shrink the size of the jail, change plans to keep open a Hamtramck jail expected to close and negate $20 million in anticipated savings.

The Mound facility sits on a 39-acre site off Davison. It housed 1,000 inmates and was less than 20 years old when the state closed it last year.

Retrofitting it won't be cheap or easy, Napoleon said. Prisons house inmates for years, while jails keep them for short terms because they must be moved frequently for court dates, he said.

"There is no polite word to describe this," Napoleon said. "It's just getting crazier every day."

A few years ago, the state offered Wayne County the Mound prison for $1.5 million. Ficano's staff declined, saying the project wouldn't work.

Napoleon is running for Detroit mayor and said he expects to receive criticism for the project. But he said Ficano's staff excluded him from the planning.

"I said from the beginning the process was messed up," he said. "I don't know how they remotely will hang it on my doorstep."

West said Napoleon's staff is invited to meetings and the sheriff "signed off on the 2,000-bed plan."

Ficano's staff has blamed some cost overruns on change orders from Napoleon's staff.

County commissioners transferred oversight of the project to the Building Authority with a 2010 resolution. As problems mounted this year, the authority canceled its last two monthly meetings and has met only a few times this year.

"We've never been given information to say the project is over-budget," said Frank Vaslo, an authority member and former mayor of Lincoln Park.

"We're just a part-time body. I don't get paid for this. … I am not concerned about it. I believe in the end, the bondholders will be made whole, the most dangerous criminals in Wayne County will be held in a secure facility and things will work out as they should."

County officials approached aides to Gilbert — who has bought numerous buildings downtown as well as the nearby Greektown Casino — a few weeks ago to gauge interest in the jails, court and juvenile center.

The plan would have Gilbert clear the land for reuse as part of a potential entertainment district.

"It's a good solution for two neighborhoods," said Matt Cullen, president and CEO of Gilbert's Rock Ventures. "Consolidating everything at Mound would be better for the city and county, and better for the public. There would be more parking and easier access."

He said businesses objected when the jail was proposed.

Greektown wouldn't necessarily buy the property from the county, but is eager to facilitate anything to get "the guys in the orange jumpsuits" out of the neighborhood," Cullen said.

Officials who led effort gone

Cullen said selling the land "would present an unprecedented development opportunity," since downtown office and residential space is at a premium.

Doing so could allow the county to get out of a project Cox said was ill-conceived from the start.

"All they thought about was building a new jail with someone's name on it and having a fancy groundbreaking with big plaques," Cox said. "They never thought about fiscal responsibility. Everyone called it a no-brainer. "

The project was led by officials who are no longer with the county but have been cited as the focus of the FBI investigation — former economic development director Turkia Mullin and Azzam Elder.

County commissioners have said they were pressured to approve bonds in late 2010 to take advantage of a federal program that offered low interest rates on bonds. They approved the jail over warnings from their staff.

"It is still unclear how this project would benefit Wayne County from a financial perspective," a commission analyst wrote in a 2011 report.

The county bought the jail site in 2011 for $14 million from Greektown Casino. Ficano's former deputy executive, Charlie J. Williams, made $420,000 in brokerage fees on the deal.

Walbridge Aldinger was selected over objections from contractors who complained the process favored the company. Its CEO, John Rakolta, served on a board of a nonprofit led by Mullin that was paying her a $75,000 bonus atop her $200,000 salary.

Mullin's former aide, Anthony Parlovecchio, left the county in February 2011 and was hired to ensure the jail project was on time and budget. The job was to pay him as much as $1.9 million; he was fired at Ficano's behest over concerns about a conflict of interest. He has sued the county.

jkurth@detroitnews.com

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