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When former Indiana Gov. Mike Pence changed course and went with a public-private partnership for the I-69 construction, problems set in for the private company that won the bid. Stephen J. Beard / IndyStar

Construction continues on Interstate 69/Indiana 37 along a stretch of road looking north from N Kinser Pike on the Northwest side of Bloomington. (Photo: Matt Kryger/IndyStar)Buy Photo

At first, it sounded like a good idea: Indiana would use a public-private partnership to extendI-69 from Bloomington to Martinsville, relying on private sector ingenuity to bring it in on time and under budget.

But the project is two years behind schedule.The prolonged construction has increased traffic accidents and lengthened commute times. And, now, as the state isdissolvingthe partnership which some argue could end up costing Hoosiers millions of dollars a difficult question needs to be asked:

How did this once-touted project pitched and promoted by then-Gov.Mike Pence as a model for smart infrastructure planning become such an embarrassing mess?

An IndyStar investigation reveals that much of the trouble can be traced to the states inability to heed several warning signs about the projects most prominent player, Isolux Corsan. The European company had more thanan 80 percent stake inI-69 Development Partners, the company building the road.

But IndyStar found numerous reasons why the state should have been wary of signing off on a plan that relied so heavily on this particular company for the success of the project:

And then theres this: A mere three weeks after the contract was finalized, before bonds were floated to finance the work, nine company and public officials in Spain were arrested on embezzlement charges. The allegation? They had profited illegallyfrom a bribery scheme related to a high-speed rail project built by Isolux, a scandal that's still unfolding in Spain.

State officials did not respond when asked by IndyStar if they were aware of the arrests. The Indiana Finance Authority said the state followed industry best practices as it chose the consortium to design and build the highway, and maintain it for 35 years.

The financial health of Isolux deteriorated quickly after the consortium was formed. By November 2015, it was "the riskiest company in the world," based on a Bloomberg analysis.

Still, in the following year, as Pence was running for vice president, the state clung to the contract despite a litany of performance issues in Indiana and elsewhere.

Within the past two years, Isolux has been replaced on jobs in Brazil, Bolivia and Chile. The company is near insolvency. The bonds it used to finance I-69 construction,to use the industry's term, are"junk."

Constructions delays on the Bloomington to Martinsville section of I-69 are not only frustrating to motorists, they're costly and dangerous to Indiana residents because of an increase in related crashes. Dwight Adams/IndyStar

Even a supporter of public-private partnerships, Robert Poole of the libertarian Reason Foundation, had a harsh assessment: "This is one of the worst failures that I've seen in the state-level P3s."

The IFA defended its due diligence. It said the U.S. Department of Transportation, as well as technical and legal experts and internal state experts were involved in the decision to choose I-69 Development Partners, and that the analysis took into account the "significant difference in bid amounts."

But state Sen. Luke Kenley, R-Noblesville, questioned the IFA's vetting. Kenley, who chaired the committee that approved the project, said he realizes now that Isolux wasnt "really as substantial as somebody evaluated them."He said the company "was not as financially strong as they needed to be or as managerially well-equipped."

Said Poole, "Given what turned out to be the financial condition of Isolux, I suspect that the Indiana Finance Authority didnt do the due diligence they should have with that."

When Pence took over as governor in 2013, he had pledged to finish I-69, whose construction had begun years earlier. Four prior sections of I-69 relied on funds from the lease of the Indiana Toll Road. But that money was either spent or allocated to other projects.

"We were having trouble even back then coming up with enough road-funding money," Kenley said.

In such situations, P3s can be politically appealingbecause they offera way to financeprojectswithout affecting the state's credit rating.

For I-69 Section 5, Indiana initially did not borrow money. Instead, it helped I-69 Development Partners borrow the money, and agreed to make regular payments to the company to build and maintain the road.

AU.S. DOT publication, however,warned state governments to be cautious: "There have been many examples of poorly structured P3 and privately financed projects that were used to circumvent fiscal limitations."

Still, Kenley and others thought the P3 would offer advantages by transferring risk tothe private sector and providing better value for taxpayer money. "But," Kenley added,"you've got to select good contractors to start with."

How well the Pence administration did that remains questionable.

Isolux's only U.S. projects involved the installation of power linesin Texas and solar panels in California, while competing bidders had extensive experience. Walsh, for example,builtIndiana's successful Ohio River bridgeand 20other U.S. road and bridgeprojects.

IFA spokeswoman Stephanie McFarlandhas repeatedly emphasized that the state has no contractual relationship with Isolux, which is true. But as a majorowner of the company that won the bid, and full owner of the lead construction contractor, Isolux was deeply entangled in the project.

The IFA said itsdue diligence included an independent party assessingthe companies'"technical capability and fiscal viability to undertake the project."

To ensure the highway is completed in the event of acompany default, the IFA required a performance bond covering 25 percent of the cost. Fitch analysts said that wason the low end for what's acceptable. For non-P3 projects, the state requires 100 percent performance bonds.

Indianas troubles began before the state even had a signedcontract in April 2014.

After winning the bid, Isolux asked one major subcontractor, Gradex of Carmel,to lower its negotiated price to remain part of the consortium. The company refused, and had to be replaced.

Construction started four months behind schedule because of design and permit issues.

By then, I-69 Development Partners made a hire that might surprise proponents of P3s who extol the virtues of private sector expertise. Gary Vandegriff moved from highway maintenance director at the Indiana Department of Transportation to project manager for I-69 Development Partners.

State law requires a one-year cooling-off period before a state employee can move to a private position related to his or her state employment. Vandegriff made the move within a weekof leaving INDOT. But both state officials and Vandegriff, who has since moved to another company, declined to say whether he sought an ethics opinion before the move.

A source with directknowledge of the project told IndyStar that Isolux didnt really know what they were getting into.IndyStar agreed not to name the source because of business interests with the state.

Just four months after construction finally started, one of the subcontractors, Aztec Engineering Group, issued a Notice of Default to Isolux for not paying for work on time, according to a court record.

Isolux made the payment but was the target of two more notices in March and June 2016, due to an outstanding balance of more than $4million.

Atvarious times that summer and into fall, as Pence campaigned for vice president, unpaid subcontractors walked off the job site. In June, Aztec suspended its work altogether and was replaced. In September, Crider & Crider of Bloomington stopped work.

Acrimony between IFA and I-69 Partners that summer showed in correspondence obtained by IndyStar.

In a formal failure to perform notice, the IFA accused I-69 Partners of using misleading and inaccurate information in its June 2016 Project Status Schedule. At one point, Vandegriffaccused the IFA of operating under an astonishing misunderstanding" of the public-private contract.

IFA said it has consistently observed actual progress well below planned levels. The company had paved 20,000 tons of asphalt by July 2016, when the plan was for 273,000 tons.

I-69 Partners said the IFA violated its obligation of good faith and fair dealing.

This conduct is going to have to change immediately if we expect to complete the Construction Work in a timely fashion, said the letter from the states private partner.

But it would be nine months before Indiana announced its intentionto end its contract.

Rep. Matt Pierce, D-Bloomington, a frequent critic of I-69, blamedPence's campaigns for governor and vice president for the state not terminating its contract sooner.

"Clearly the project started to go south under his administration," Pierce said. "They weren't interested in admitting there were any problems."

Micah Vincent, director of the Office of Management and Budget, said that until recently it would have been too expensive for the state to get out of the deal, because it needed a "willing partner" to negotiate.

A spokesman for Pencedidn't answer specific questions about the project, butissued a statement saying Pence is proud of his record as governor on infrastructure, jobs, educationand tax cuts.

The state also says taxpayers are protected. Financial analysts from both Fitch and Standard & Poor's said the project cost will be higher than the original bid, with Fitch estimating the overrun at$162 million, for a total cost of $497 million.

But state officials said Friday that, while construction costs will be higher with the takeover, the entire project cost including financing and 35 years of maintenance will actually come in lower.

One caveat: the state will now assume the risk of any unforeseen maintenance costs over that 35-year-period.

As the project deteriorated it's about 60 percent done, S&P estimated Bloomington, a liberal college town and no friend of Pence, suffered the brunt of the problems. Mayor John Hamilton complains about added travel time, safety issues and general frustration.

Small towns south of Bloomington have yet to see economic development as they wait for I-69 to finally be connected with Indianapolis.

A lack of transparencyalso became an issue. Bloomington politicians and the media generally have reported problems getting information from the IFA or its partners.

For example, the U.S. DOT's best practices for doing a P3 include a "value for money" analysis comparing P3 financing to traditional financing. According to the DOT, making the report public "fosters transparency and explains the value of the procurement approach."

But the IFA initially refused to provide IndyStar with the records, then referred IndyStar to INDOT, whichhas yet to provide the documents.

In 2014, the Bloomington Herald-Times wrote this about the IFA:

Repeated attempts over the course of the past month to interview someone from the finance authority about how the agency operates, concerns about transparency and its willingness to consider input from the public were met with email responses and attempts to screen questions in advance.

Kendra York, director of the IFA when the project was launched until leaving in early 2015, declined comment.

McFarlandof the IFA issued this statement: The IFA has been consistently responsive to news media on inquiries related to I-69 Section 5, and have good relationships with the media in general regarding those inquiries. They have worked fairly with IFA, and been appreciative of the efforts to provide information to their questions."

Asked if the state made mistakes with I-69, IFA director Dan Huge, in a written statement, characterized the I-69 experience as something of a teaching moment.

"As we have with previous P3 projects, we will learn and evolve how we approach future projects,"Huge wrote. "I-69 is one of the most significant road projects currently in progress in the United States. We look forward to the day it is completed, and the contribution it will make to Indiana and beyond."

Because Indiana has been something of a leader in P3 projects, and former Gov. Pence is now vice president, the Indiana experience appears relevant on a national level.

Said Michael D. LaFaive of the Mackinac Center for Public Policy: I wonder if his opponents may not use this story as a cudgel against the changes and perhaps agree to the spending but not to the manner in which assets are redeployed,

President Donald Trump is launching his own infrastructure plan with emphasis on private sector funding.

Trump campaigned on the promise of a $1 trillion investment in infrastructure. Instead, his proposed budget only included $200 billion in tax credits to private investors, which he said would encourage $800 million in private funds.

Earlier this month, Gov. Eric Holcomb, who inherited the I-69 project from Pence, flew to Washington, D.C.,to take part in a meeting with Pence and Trump, as they promoted public-private partnerships as a way to rebuild Americas roads and bridges.

Not every state is expected to jumpon the P3 bandwagon. Many don't even allow it.

At the event, Pence said: Were going to restore accountability to infrastructure and forge new partnerships with your states and your cities, but also with businesses, to leverage private sector expertise and tap into the bottomless well of American innovation.

That statement echoed the words he used to launch the I-69 project in 2014: The private sector can harness a different character of innovation to find greater efficiencies, and this project will continue Indianas strong track record of partnering to deliver quality products on budget and ahead of schedule.

Some question how the I-69 experience will be influence policy in Indiana and beyond.

Said Fitch analyst Eric Kim: "From our perspective, it would likely lead Indiana to think a little harder about when it really makes sense to enter into P3 agreements. They're not, by any means, the answer to every situation, but it's also untrue that it's not ever the answer."

State officials said it was too early to speculate whether a public-private partnership would be used to build the last stretch of I-69, connecting it to Indianapolis. The state now is exploring a P3 to widen a portion ofI-70.

IFA officials on Friday said they saw no reason to change anything about the way Indiana analyzes such projects.

"The vetting process, we believe, was appropriate," Huge said.

Like Kenley, they arefar from ready to discard the P3 concept, saying I-69 should be viewed in the context of other P3 successes, including a toll bridge over the Ohio River near Louisville, Ky.

Still, Kenley does see an important lesson in I-69.

Since Indiana is a pioneer," he said, "it just tells us you need to manage the bid process a little differently."

Call IndyStar reporter Mark Alesia at (317) 444-6311. Follow him on Twitter: @markalesia.

Call IndyStar reporter Kaitlin L. Lange at (812) 549-1429. Follow her on Twitter: @kaitlin_lange.

Indiana's P3 projects

Other states have had successful public-private partnerships, and Indiana has used them as well, with mixed results:

Read or Share this story: http://indy.st/2sGibSm

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Mike Pence's infrastructure mess: What went wrong with I-69? - Indianapolis Star

The controversies engulfing President Trump's White House haven't dented Vice President Pence's popularity on Capitol Hill.

Republican lawmakers, GOP aides and conservative activists have pointed to Pence as the linchpin of the White House's policy operation, even when they've criticized the rest of the administration for its lack of guidance. They say his hands-on approach to building relationships with lawmakers has made him one of the most valuable figures in the Trump administration. "He seems to be constantly taking and hosting meetings in his office in the Capitol with different members," said one House Republican aide.

"It's not unusual to see him walking around, making his way from the House side over to the Senate side for meetings," said another. "He's...willing to do the kind of shuttle diplomacy that it takes to get these things done."

Although the vice president tapped an outside lawyer last week to shepherd his office through the Russia probe, Pence has never been mentioned among the handful of Trump associates who have fallen under the special counsel's scrutiny. That has allowed him to maintain his clout on Capitol Hill, as members need no time fear getting dragged into the scandal by association.

Pence has made extensive use of his office on the Senate side of Capitol Hill, where vice presidents have maintained working quarters since the 1800's. But he has also conducted business out of space on the House side of the Capitol, congressional staffers noted. And he has hosted outside conservative groups at the White House for at least one "listening session" designed to collect input on policy proposals.

"He is all class performing his duty as a steward of the president's agenda, not just publicly, but also privately where it really counts," said David Bozell, president of ForAmerica. Bozell joined Pence at the White House for a healthcare listening session in March.

"What speaks to Pence's clout on Capitol Hill is that Trump's base will take Pence's word over any congressional leader anytime, every time," Bozell added.

Indeed, Pence has emerged as a powerful and credible spokesman for the Trump administration on matters ranging from Obamacare reform to national security.

For example, when tensions with North Korea simmered to a boil in early April, the White House dispatched Pence on a tour of Asian allies to reassure jittery leaders of the U.S.' commitment to their security.

The vice president has traveled the country selling the president's policies to key constituencies often on weekends, while the president himself spends time golfing at one of his personal properties.

Although Pence has taken on such a public-facing role for the administration, he has remained untainted by the scandals that have ensnared everyone from Attorney General Jeff Sessions to Jared Kushner, Trump's son-in-law and senior adviser. He is so far untouched by the Russia intrigue, for example.

Jason Pye, director of public policy and legislative affairs for FreedomWorks, suggested Pence's experience on Capitol Hill has likely helped him navigate a spate of controversies that have caused trouble for other White House officials.

"Vice President Pence has been at this for a long time, and he's seen controversies come up in the media and go away. He's a pro, and he's focused on the administration's legislative agenda," Pye said. "Honestly, I can't think of someone better to lead this charge on the Hill. He can connect with conservatives in both chambers largely because he has been in their shoes through good times and stressful moments."

Pence spent more than a decade in the House before becoming governor of Indiana in 2013, and many of those in Congress who have sung his praises cite that time as one of the main reasons he has been such an effective legislative liaison.

In addition to his work facilitating discussions among the rank and file, Pence has fostered a particularly close relationship with House and Senate leaders.

A GOP aide said Pence once called House Speaker Paul Ryan's office out of the blue to say he was on his way over, and the two were enjoying a friendly, impromptu lunch within an hour.

Pence has not only hosted congressional leaders for dinner at the vice presidential residence, the aide said, but has also gone a step further by inviting senior members of their staffs to dine in his home on a separate occasion.

The dinners in his residence, which several aides mentioned as proof of Pence's personal touch, have included one evening dedicated solely to members of the Indiana congressional delegation, a Senate aide said. That aide described the Indiana dinner as a "very genuine example of outreach."

"I think he probably feels more comfortable and just is more familiar with working the Hill than a lot of the other folks in the administration," a House aide said. "That's not to criticize other folks in the administration, i just think he was in Congress for so long, and he was even in leadership here, so he just kind of knows the way things work here and he knows the personalities."

Pence chaired the House Republican Conference between 2009 and 2011.

The vice president is expected to figure prominently in Republican discussions about tax reform, which the administration hopes to pass by the end of the year.

His direct involvement in healthcare talks, during which he moderated negotiations between the conservative House Freedom Caucus and the centrist Tuesday Group, helped solidify his image as the White House's congressional ambassador.

At the height of the healthcare battle in the House this spring, a Freedom Caucus aide noted Pence "gave out his direct email to our full group and made clear he has an open door policy' to members of Congress."

The vice president's conservative credentials and work ethic have motivated some conservative leaders to remain dedicated to the Trump agenda, even as the fate of some legislative priorities looks dim amid wavering Republican support. Bozell said Pence has commanded the loyalty of conservative groups like his.

"What's positive about Pence and his team is that the effort is there. He keeps plowing ahead. His team is readily available and committed," he said. "You leave a session with him and/or his team wanting to match their effort."

When dozens of students walked out of a speech Pence delivered to the University of Notre Dame in May, or when he weathered criticism for admitting he avoids dining or drinking alone with women when his wife is absent, Bozell said conservative groups were eager to stand by the vice president.

"ForAmerica, and plenty of others, came to the vice president's defense on the Notre Dame commencement address and when he was attacked on how he lives his personal life," Bozell said. "And all of us would do it again a thousand times over if we had to."

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Mike Pence stays above Trump scandals and in touch with Capitol Hill - Washington Examiner

Forbes

Business Is Good For President Donald Trump -- Mostly Forbes President Donald Trump's expansive business empire brought in nearly $600 million in revenue since January 2016, according to a financial disclosure report released late Friday. The documents, which Trump was required to file with the Office of ... Donald Trump Reports He's Getting Rich as PresidentThe Atlantic Why we still really need to see Donald Trump's tax returnsCNN Escalating investigation puts Trump and his staff at legal oddsPolitico HuffPost -Fortune -Mother Jones -Box all 238 news articles »

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Business Is Good For President Donald Trump -- Mostly - Forbes

Barack Obama has taken to Twitter to share a heartfelt Fathers Day message to his two daughters.

The Democrat former president wrote on social media on Sunday: Of all that I've done in my life, I'm most proud to be Sasha and Malia's dad. To all those lucky enough to be a dad, Happy Father's Day!

Along with the Fathers Day wishes, Obama also posted a picture of his daughters and his wife, former first lady Michelle Obama, who wrote her own message to her husband.

The Democrat has previously spoken of his admiration forSasha and Malia, who grew up in the spotlight, having turned 16and 18respectively while their father was in the White House.

In his final press conference as president, Obama says in comments carried by Today: "Every parent brags on their daughters or their sons, but man, my daughters are something. And they just surprise and enchant and impress me more and more every single day.

His social media message differed somewhat from that of his predecessor President Donald Trump, who used social media to celebrate his approval rating going up and complain that he was the victim of a witch-hunt.

The new Rasmussen Poll, one of the most accurate in the 2016 Election, just out with a Trump 50% Approval Rating. That's higher than O's #'s!, he wrote on Sunday morning.

And in an earlier tweet, the president had said: The MAKE AMERICA GREAT AGAIN agenda is doing very well despite the distraction of the Witch Hunt. Many new jobs, high business enthusiasm.

However, Trumps children did remember to send their president father well-wishes, with Eric sharing a picture of the whole family and Donald Jr. writing: Happy Father's Day dad. Thanks for everything you've taught us and for fighting everyday to #maga. We love you. #fathersday.

Trump Jr. also shared a message from his father written in 2013, in which the Republican had said: Happy Father's Day to all, even the haters and losers!

However Trumps daughter Ivanka shared a Fathers Day message to her husband Jared, the father of her three children, but failed to mention the president.

She wrote: Happy Father's Day! Thank you, Jared, for loving, encouraging and teaching our kids (and me!) everyday. We love you very much! #fathersday.

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Barack Obama's Father's Day Message Was A Little Different From Donald Trump's - Newsweek

Every President since FDR has had a presidential library but, as Daily Show correspondent Jordan Klepper pointed out, Trump "communicates totally different than any president we've seen before." We don't know how much paperwork the president is generating, but we do see the tweets he sends out unedited and unfiltered. The library focuses on collecting those into a space where visitors can look at them as part of a larger whole.

The museum's content was collected by the Daily Show's digital department, which had to read every single one of Trump's tweets as part of the show's "Third Month Mania" event back in March. They picked out the ones they found most interesting and threw them into a tournament bracket, letting viewer vote on the best tweets in each round. The voters eventually settled on his "gross incompetence" tweet as the top post.

While it's easy to dismiss this current project as a gag, given that it is a temporary exhibit put on by a cable show on a comedy network, the library takes its subject somewhat seriously. For the most part it refrains from pointed commentary, treating its subject to the same sort of organization and context you'd see for artworks in a museum gallery. A few choice tweets are printed out and framed, like the infamous taco bowl tweet and the more recent convfefe typo, with labels that give you the time, date and medium -- "Twitter for Android," of course. The cards also contain the sort of overwrought copy you often find on works of modern art talking about influences, like the taco bowl's "oblique symbolism" that "embodies Trump's trademark patriotism," or comparing convfefe to Gilbert Stuart's "Unfinished Portrait" of George Washington.

Daily Show host Trevor Noah said the museum is about "giving context to the tweets; not absorbing them one bite at a time, but looking at them as a body of work." So the exhibit organizes and displays Trump's tweets by subject, with comments on movies and TV shows grouped as "Constructive Criticism." A entire pillar is dedicated to "Concern for the Integrity of the American Presidency," featuring tweets from his period as a vocal birther.

Another wall in the library drilled down to more specific points of interest -- like Trump's commentary on the dissolution of Kristen Stewart's and Robert Pattinson's relationship. The tweets on this wall are presented as together as a narrative, a sort of physical version of Storify, focused on such ephemeral things as Diet Coke. A few of the president's Twitter targets have their portraits on display as well, accompanied by the relevant tweet and a sound bite from them.

Despite all this attention to replicating a traditional museum layout, The Daily Show still had a little fun with the concept. There was a giant Magnetic Poetry-esque display where you could rearrange typical Trump words into a tweet. A Trump nickname generator gave me the moniker "Sleepy Kris," which honestly isn't that inaccurate. The centerpiece of the exhibit was a stage replica of the Oval Office. But instead of sitting behind the Resolute desk, attendees were asked to put on a robe and sit on a golden toilet to compose a presidential tweet in 30 seconds. Noah said this is how they imagine Trump does most of his Twittering, no different from many of us. It's not intended as an insult: Noah referred to him as the "millennial President," with some of the same problems, like a fear of losing our job because of something we posted online.

But the similarities should end there -- most of our tweets don't have the power to affect the economy or foreign relations. The speed at which these presidential missives come is changing how the media reacts to the news, even a program like The Daily Show. Klepper explained that with so much information coming out, it's more to pick and choose what they cover, drilling down into specific topics rather than trying to keep up with each new development.

The Daily Show does consider Trump's Twitter official statements by the President, regardless of whether they're being posted on a personal account. "He's speaking for America," Klepper said, especially since he doesn't have a lot of press conferences and his tweets have the ability to affect policy. When I asked Klepper if he thought this could be the end of the prepared statement he said, "God, I hope not. It's okay to get some unfiltered thoughts, but I do miss the days when people thought about what they were going to say and the consequences they have."

This Twitter gallery is meant to be a living work, with a screen displaying Trump's live feed that sounds an alarm whenever it's updated. But like a deleted tweet the library is also ephemeral: It's only open this weekend in New York, closing its doors on Sunday. That doesn't preclude the Daily Show from doing it again, or taking it on the road to other cities. The library is even looking for sponsors, though Noah joked that an unnamed resort in Florida they contacted never got back to them.

Photos and additional reporting by Cherlynn Low.

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'The Daily Show' celebrates the tweets of Donald Trump in new exhibit - Engadget