Lake, LaPorte County consortium says state was hostile to Indiana Toll Road bid

IFM Investors announced Wednesday it was chosen as the successful bidder for the toll road lease. The IFA approved the deal hours after the $5.725 billion bid was presented in federal bankruptcy court.

Shaw Friedman, LaPorte County attorney, said in a statement it should be clear "that IFA has been hostile to the County Consortium bid from day one and it appears they'd rather have excess revenues from the Indiana Toll Road lease go to an offshore hedge fund than be reinvested in Northwest Indiana for the next 67 years."

He said county consortium members were treated in a fairer fashion in the bidding process by the UBS, the bank charged with administering the sale, and the New York-based Special Creditors' Committee than by the Indiana Finance Authority, "which has been unremittingly hostile to the notion of a public bid from the outset."

"The outrageous written questions IFA generated last week to the County Consortium were further evidence of that, and the fact the agency issued a press release rubber-stamping the IFM deal within hours of the announcement today without seeking to leverage their approval for any benefits to the state or our counties is further evidence of their bias, predisposition and hopeless incompetence," Friedman wrote in an email.

IFA spokeswoman Stephanie McFarland disputes that account. She said in statement Friday the U.S. Bankruptcy Court approved the process by which a new toll road operator would be selected.

McFarland said that as part of the court-approved selection process, IFA and its team of legal, financial and engineering experts provided input on all of the proposals presented and "prequalified" viable bids to move forward in the process.

"Mr. Friedman's bid was among those prequalified to move forward for consideration as a viable option," she said.

The special committee of creditors selected a preferred proposer from among the prequalified bidders and made a public announcement of the selection on Wednesday.

Despite the decision and announcement by the creditor's committee, the LaPorte County Council in a special meeting Wednesday approved the resolution allowing for the creation of the Northern Indiana Toll Road Authority Inc., the bidding entity for the bankrupt toll road's lease. NITRA would have used low-interest municipal non-recourse toll road revenue bonds to purchase the lease.

Lake County Commission President Roosevelt Allen Jr. said until the deal closes or misses the Sept. 1 closing deadline "nothing is final." Both counties are still working to have everything in place in case the IFM deal falls through and the project is open back up to other bidders

"Even though the IFA has accepted the bid, they now have to go over it and analyze it and see what it entails. They are probably going to try and determine how it will be financed. It could be very risky again," Allen said.

"Maybe the IFA will have a change of heart as they analyze the bid package and agreement that comes along with that bid package."

Officials were confident the county consortium deal, which included local control of the toll road and the avenues for retention of toll road revenues locally was a more responsive bid than those offered by IFM and two other consortiums.

As outlined in the county consortium bid, NITRA would have a 10-member board consisting of four representatives from each county, a governor's appointee and a representative from the toll road operator making decisions for the toll road. Both counties would have received a $5 million a year founder's payment for successfully acquiring the toll road. Another $300 million in immediate infrastructure improvements also was included in the consortium bid package.

Friedman said the IFA did nothing to leverage the new deal with IFM for the benefit of Hoosiers, which the county consortium deal had done.

"Questions need to be put to the agency's director Jim McGoff and its legal counsel Bob Grand as to why the state wouldn't attempt to require that part of the purchase price be paid to the State of Indiana as cash payment similar to what the Consortium planned for Northwest Indiana.

McGoff referred requests for comment to McFarland.

"Why not exact guarantees about investments in infrastructure or even demand new rest plazas, full infrastructure upgrades (like an immediate repair to the Toll Road to the I-94 bridge at Lake Station that has gone unrepaired for 18 months) or even insist on grants to nearby Toll Road counties?" Friedman said in the statement that was read to the LaPorte Council Wednesday.

"It is important to note that the transaction has not closed, our bid has not yet been formally rejected and so it is important to have a backup bid on file," he said.