Uh, folks it settles exactly nothing. If you bothered to read it, that is.
As I tried to quickly point out over on Jack Betts’ blog, the key issue of state guarantees for contractor debt is not dealt with by the opinion. The opinion only addresses NC DOT’s initial stab at request for proposal language. In that, sure enough, there are no mentions of state guarantees. But the opinion notes — as we’ve been pointing out for months now — that banks and contractors will almost certainly come back to NC DOT with the idea of state guarantees as a way to “save money.”
In fact, it is my belief that given the current lending environment, it will be impossible for contractors to secure the $50m. without explicit state guarantees, but let’s leave that aside. The AG’s office is clearly saying that if such a funding mechanism is needed, then another look at the legality of the funding specifics may be needed. Follow along:
We are aware, however, that interested contractors, bonding companies and financial institutions have suggested to NCDOT that the Request for Proposals can be modified in ways which they contend will result in additional cost savings. Some of these recommendations involve authorization to assign payments and financing guarantees by NCDOT. We understand that the first draft Request for Proposals will allow prospective contractors to submit these types of suggestions and that NCDOT will consider whether the second draft Request for Proposals should be modified. Our opinion that NCDOT has legal authority to move forward as proposed with the expedited completion of I-485 is based solely on the draft Request for Proposals provided to us prior to the issuance of this opinion. Should future drafts, or the final contract, include new substantive provisions, reconsideration of this opinion may be required.
So basically all this opinion did was slap down the state Treasurer’s contention that NC DOT needed to go back to the General Assembly and/or the Debt Affordability Advisory Commission if and when it starts writing up the specifics of these contracts. The AG’s office is saying, no, we got them covered, don’t you worry about it.
To boil it down yet further, what was a two-way power struggle between NC DOT and the Treasurer’s office is now a three-way cage match with the AG’s office stepping into the fight. For that reason, do not be remotely surprised by further delays in getting dirt-turned for the final leg of 485.
Bev Perdue will try to duck further questions, and no doubt the AG’s office will try to hew to that impulse, but if the final financing mechanism includes state guarantees of private debt, we will be right back where we started on this thing.
