Corporations are suing Maryland over transit public-private partnership fiasco

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Highlights

1) National: What impact will the Supreme Court vacancy have on privatization and public interest law? It could be substantial. It’s worth rereading the 2017 Congressional Research Service report Privatization and the Constitution: Selected Legal Issues, which focuses on the interpretation of inherently governmental functions. “While the federal government employs various forms of privatization, the transfer of government functions and services to other entities has its constitutional limits,” the report says. “As explained by Supreme Court Justice William J. Brennan: ‘The Government is free, of course, to ‘privatize’ some functions it would otherwise perform. But such privatization ought not automatically release those who perform Government functions from constitutional obligations.’ Congressional efforts to privatize or delegate functions or services may raise constitutional questions regarding Congress’s authority to empower other entities.” 

So pay attention to the positions and case records of potential nominees on these issues. A few questions from Members of Congress at any confirmation hearings would be in order.

Other areas of law and privatization that will be impacted by a change in the court’s composition include public funding of religious schools, whether directly or by vouchers; the increasing use of corporations to flout, preempt and displace state and local laws that protect the public interestprotections for public sector workerspublic lands and parksprotections; and permissible levels of incarceration in both public and private prisons—the subject of a bitter 5-4 SCOTUS decision in 2011. For some historical perspective, check out “Constitutional Limitations on Privatization” from 1998. 

2) National/North Carolina: National Nurses Organizing Committee/National Nurses United is celebrating the largest hospital union victory in the South in 45 years. “Asheville, NC HCA nurses vote ‘Yes’ to unionize in Landslide Vote by 70% for National Nurses United. It’s a new day at HCA’s Mission Hospital in Asheville, North Carolina, for registered nurses, for their patients, their community, and as a message to nurses and all workers across the South. In the first private sector hospital union election win in North Carolina, the largest at any nonunion hospital in the South since 1975–RNs at Mission voted this week by a stunning 70 percent to join the nation’s largest RN union to secure a powerful voice for improved care and workplace safety. For labor as a whole, it is also believed to be the largest union election win in the South in 12 years.”

Bonnie Castillo, the executive director of National Nurses United, says “we couldn’t be more proud of the unity, the perseverance, and the patient advocacy and dedication of the Mission RNs to their patients, colleagues, and community.”

3) National: Former Labor Secretary Robert Reich says the federal government should build internet infrastructure. “We’re in an intangible economy that has a lot of public goods attached to it that we are still treating as if they are private investments, such as all of the Internet connections we need,” Reich said. [Watch the whole CNBC interview, about 15 minutes]

4) NationalWho benefits from public green space? Scientific American’s Mallory Richards has some answers. “As cities around the world experience the effects of urbanization and increased density, how and where we provide green space to urban dwellers becomes more important. Proximity to green spaces such as parks and biking trails helps to promote physical and mental health, and should be shared equally amongst urban communities. However, like many public goods, new green space can create higher demand for housing in areas nearby, driving up living costs and displacing low-income groups that have been there for decades.” Richards says, “for these reasons, cities must take a more critical and community-centered approach to greening initiatives.”

5) Songs for the Common Good: “Music is the one time that my head isn’t filled with briefs and opinions. All that is put on a shelf, and I just… enjoy,” Ruth Bader Ginsburg said. In the Public Interest’s Donald Cohen says “We need music to get through this.  I certainly do. Below are the details for this Saturday’s Zoom concert with Amythyst Kiah.  She’s fantastic.  It’s ticketed and all the funds go to Amythyst who had all tours cancelled. If you plan to buy a ticket, now’s the time. If you weren’t sure, check out her music and you’ll be sold.  If you already bought a ticket, share (or delete) this email. The first show I organized with Rissi Palmer (was a great night. It really did feel like we were watching a show together (with mute button on mostly.)”

Education

6) National: American Campus Communities, one of the largest private developers of student housing, “reported an 8% drop in occupancy in September as the COVID-19 pandemic continued to hinder college attendance,” Bond Buyer reports. “On-campus or nearby student housing is commonly built as a public-private partnership with a college or university using revenue bonds through a conduit issuer. The college or university can assign students to the housing and often leases space in the buildings for services such as meals and parking.”

7) Arizona/National: The U.S. Securities and Exchange Commission has settled fraud charges with an Arizona charter school. “When Park View sold its bonds in 2016, the SEC said the school was in dire financial trouble so that it could not pay its operating expenses without borrowing heavily. Before the 2016 bond offering, Slagle and Park View funded the school’s ongoing operations by improperly using money that was set aside in reserve accounts for a prior bond offering in 2011, the SEC said. The bonds were issued by the Industrial Development Authority of the County of Pima, Arizona and Park View was the conduit borrower. Park View was solely responsible for making payments on the debt. ‘When the 2016 bond offering took place, Park View and Slagle did not disclose Park View’s current financial difficulties to investors in those bonds,’ the SEC wrote. ‘Instead, they authorized an offering document, called an Official Statement (the ‘2016 Official Statement’), which contained false and misleading financial projections.’” The Bond Buyer reports that “the allegations of the misuse of bond proceeds from 2011 reminded [Peter Chan, a partner at Baker McKenzie and former SEC enforcement lawyer] of Harvey, Illinois in which the city misled investors by diverting bond proceeds from their intended use.” [Sub required] 

8) Arizona: The former principal of Discovery Creemos charter school has been sentenced to prison after pleading guilty in a $2.5 million enrollment-inflation scheme. “Cadiz, who has a high school education, said he was ‘dragged’ into the scheme. Charter schools, unlike traditional school districts, do not require advanced degrees for those running the publicly funded but privately operated campuses.” 

9) California: Carl Peterson has penned an interesting report on what’s become of El Camino Real High School after it was privatized under a law created to allow parents to privatize “underperforming” schools. He ties the history to upcoming school board elections. “As voters in LAUSD’s Board District 3 get set to choose between a life-long educator and a charter school employee, this lack of accountability should be at the forefront of the discussion. Incumbent Scott Schmerelson has a proven track record of supporting successful charter schools while holding these publicly funded private schools accountable when they break the rules. The challenger, Marilyn Koziatek, works for Granada Hills Charter, which is also a conversion charter that had an excellent record as an LAUSD school. Instead of looking out for stakeholders, her record shows that she is willing to keep violations hidden from parents. Koziatek’s elevation to the board would guarantee that betrayals of the public trust would continue unabated.”

10) California: “Voters in the Sausalito Marin City School District will weigh in Nov. 3 on Measure P, a $41.6 million bond to finance repairs and upgrades at the district’s two campuses,” the Marin Independent Journal reports. “Supporters of Measure P say the bond is essential to upgrade buildings at both campuses to make them safe and functional for students at the two district schools—Bayside Martin Luther King Jr. Academy in Marin City and Willow Creek Academy charter school in Sausalito.”

11) California: The San Diego County Planning Commission has approved a plan by a local charter school organization to build a new high school in rural Rancho San Diego. “Literacy First Charter Schools got the go-ahead for a major-use permit to move its Liberty Charter High School, currently eight miles away in Lemon Grove, to an undeveloped site at the corner of Chase Avenue and Jamacha Road, just outside El Cajon city limits. The project was twice denied earlier this year by the local planning group in Valle de Oro and has received pushback from residents, including a group that calls itself “Save Our Students ~ Safety Over Sorry,” SOS2. Those against it on Friday reiterated that while they are not against the school itself, the site is not right for a high school and they have vowed to appeal the decision to the county Board of Supervisors.”

12) ConnecticutNEA Danbury has come out in opposition to a charter school in the city. “As dedicated Danbury educators, our top priority is always the safety and well-being of our students. Whether the issue is how and when to reopen schools during the COVID-19 pandemic or charter schools trying to siphon students and funding from the district, further segregating Danbury schools — we will always advocate for what is in the best interest of our students and their families, public education, and our community. That’s why we stand strongly against the proposal to bring the Prospect Charter School, run by a charter management organization out of New York, into our Danbury community. The charter school organization wants you to believe it will fill a need in our city, but nothing could be further from the truth.”

13) Florida: The Lee County School Board is shutting down Collegiate Charter School in Fort Myers. “It’s very unprecedented to actually close a charter school that just barely opened,” said School Board Member Melisa Giovannelli. “But Board Members were in unanimous agreement that the school needed to be shut down after hearing reports from staff. Lee Schools Program Development Director Teri Cannady said they didn’t even know who was working there. ‘We honestly do not know who the people are that are on campus that are teaching these kids. Have they been screened? Have they been, all of those things,’ said Cannady. And it was only when Cannady and other staff members finally did come to see how the school was running that they quickly discovered only two teachers were in charge of the entire school.”

Why was the charter approved in the first place? “They are able to open and have their application approved without the facility being selected, and I think that’s a statutory thing,” said Cannady.

14) Illinois: Gurnee-based Woodland School District 50 has filed a lawsuit “seeking the closure of Prairie Crossing Charter School in Grayslake. The lawsuit argues that Prairie Crossing has failed to educate at-risk students as required by the state. “The litigation also claims that, by taking state funds, the charter school diverts money away from services for low-income and underrepresented students in District 50,” The Daily Herald reports. “The Illinois State Charter School Commission granted Prairie Crossing a five-year extension of their charter in 2019. Woodland 50 officials then filed a complaint with the Illinois State Board of Education. In their complaint, Woodland officials noted that just 4% of Prairie Crossing students were from low-income families in the 2018-2019 school year, compared to 35% of Woodland 50 students. Prairie Crossing also enrolled fewer Black students (4% versus Woodland’s 8%) and Hispanic students (6% versus Woodland’s 33%).”

15) Kansas: A charter school has been accused of failing to provide water for its students, leading to dehydration. “Before school started, Beechy met one-on-one with the principal, Shannon Atherton, and he informed her of the school’s mask policy. ‘He sure did let me know that they needed a mask,’ Beechy said. ‘But not life-giving water.’ When her three children, ages 7, 9 and 12 came home from school on Wednesday, Beechy said they were ‘droopy’ and ‘lying around.’ As soon as they arrived home, they started drinking water. When Beechy questioned them, they told her they didn’t have access to water at school. ‘My second-grader was sobbing when she got home,’ Beechy said. ‘They weren’t given water for nine hours.’”

16) Missouri: The former executive director of North Side Community School could receive nearly $300,000 in public funding from the school even as he develops another charter school in south St. Louis, the St. Louis Post-Dispatch reports. “Chester Asher signed a three-year contract with North Side in 2019 with an annual salary of $160,000. One year into his term, the charter school agreed to part ways with Asher, who stepped down to ‘fully commit his energy and talents for social justice,’ according to a letter sent to school families. (…) Asher is now pursuing plans to open a charter school called Ali Academy in the Carondelet neighborhood. After leaving North Side, Asher became an entrepreneur-in-residence at the Opportunity Trust, which typically pays prospective leaders annual salaries of $90,000 to $125,000 to develop and open charter schools.”

17) Pennsylvania: The Reporter says, remember charter school reform? It’s more important than ever. “Before the pandemic hit, there was some supposition that charter funding reform was gaining support in Harrisburg. A study had just been released by Temple University Center on Regional Politics titled ‘A Tale of Haves and Have-Nots,’ that said more than half of Pennsylvania school districts are on a path to fiscal distress. The study cited the state’s current charter school tuition formulas as a major factor making public schools go broke. And then the pandemic took over most practical efforts in public education, and the focus of administrators and school boards shifted to learning how to safely and adequately educate students. No one was thinking about charter school reform. Until now. Budget season is getting underway and school districts are discovering that the pandemic and the resulting uncertainty about if, when and how schools reopen is causing more families to try cyber charters. More are disenrolling from public schools, and the budget impact is growing.”

18) Pennsylvania: Robert L. Leight, a retired professor of education at Lehigh University and a former member of the school board of Quakertown Community School District, poses some questions about how we should look at cyber charter schools in light of the pandemic. “Cyber charter schools have not lived up to expectations, in my opinion. On state assessments in the 2018-19 school year, cyber school students scored consistently lower academically than students from conventional public schools. Charter schools are expensive to local school districts. Cyber charter schools were paid $606 million by school districts in 2019-20. The average tuition rate is $11,306 for the school term for nonspecial education students. For special education students the average yearly payment was more than $24,000 across the state. Some charter schools advertise that education by charter schools is “free.” Although they are free to the parents of individual students, that payment is made by funds provided by the students’ neighbors through school taxes.”

19) South Carolina: Corporate tax breaks are bleeding South Carolina public schools of funding, according to a new Good Jobs First report. “In this report, we present our findings on the programs, deals, and costs, and offer a menu of policy options to protect the state’s most foundational economic development investment—its public education system.”

Infrastructure

20) National: The longer-term outlook for infrastructure financing is looking bleak for state and local governments. “With the economic shock of the COVID-19 pandemic producing estimated state and local budget shortfalls of about $450 billion for fiscal 2020-2022, according to Moody’s Analytics data, governments from coast to coast are cutting costs by shelving current infrastructure projects, and postponing ballot measures or legislative initiatives for funding. (…) So far in 2020, $9.6 billion in state and local transportation projects were delayed or cancelled as of August 11, while $141 billion worth of funding initiatives or ballot measures were vetoed, cancelled, or postponed, the American Road & Transportation Builders Association (ARTBA) reports. Further such actions appear imminent.” 

21) National: Writing in Infrastructure Investor, Amber Infrastructure Group’s Tom O’Shaughnessy says predevelopment agreements (PDAs) between public and private collaborators in infrastructure projects can help avoid conflicts and litigation. “Traditional PPPs still have their critics, and rightly so in some cases. Cost overruns, missed deadlines and quality concerns have encouraged a largely promising procurement method to be discredited in the eyes of some municipalities. This is leading to a logjam of new initiatives coming to market at a time when they are needed most. If PPPs are not structured in the right way, they can overlook the very meaning of their own definition.” So “pre-development agreements provide for superior risk management because the public body and the private investor can work in far closer collaboration than otherwise would be the case. The fundamental premise of a PDA is in return for a lower or deferred cost in the design of a new project, bidders gain a first right of refusal when that project is ultimately procured.” [Sub required]

22) Illinois: The shutoff moratorium for many state-regulated electric, water, sewer and natural gas utility companies—such as Illinois American Water, Nicor Gas and Aqua Illinois—expires in 10 days. “More than 20 groups in Central and Southern Illinois have formed a coalition called ‘No Ameren Shutoff.’ An organizer with the group encouraged Illinois residents to contact the Illinois Commerce Commission and submit a complaint about utility shutoffs.” Food & Water Watch has called for a “water shutoff moratorium, restorations of water service, and a halt on all utility rate hikes”

23) Iowa: Jeff J. Medinger of Clinton has some choice words about the Iowa utility board’s stewardship of water rates. “On Sunday, Aug. 30, there was an article about the Iowa-American Water Company, with a headline that said, ‘Utilities Board sets rate-hike hearings.’ Now, I would like to know why Iowa-American Water would be asking for a rate-hike in the middle of a coronavirus pandemic? Thousands of people are getting it and dying from it everyday. Also, people have lost their jobs because businesses have closed their doors. Iowa-American Water asks for rate hikes every four or five years, and the utility board gives it to them. It has to be stopped. I think Iowa-American Water should cut back on donations, pay, raises and spending or take pay cuts until the pandemic is cleared. To me, Iowa-American Water sounds greedy.”

24) Maryland: There will be no quick and easy solutions to the disastrous Purple Line public-private light rail project.  The Washington Post reports “it will take four to six months for the state to decide how it will complete the 16-mile light-rail line through Montgomery and Prince George’s counties, said Kevin Quinn, head of the Maryland Transit Administration. The state is exploring managing some work in the short term and then seeking a construction contractor or another long-term public-private partnership, Quinn said.” 

The corporations that have pulled out of the deal are now suing Maryland taxpayers for $100 million over the state’s “refusal to pay for delays and allegedly requiring the firms to ‘mask’ delays in some project schedules.” (This is the same amount that Maryland directs in COVID-19 aid to small businesses and nonprofits). “A judge’s determination of whether PLTP may terminate the project’s contract because of extended delays would determine how much the state would have to pay PLTP if it leaves the project. Those costs, including paying off the firms’ construction debt, could exceed $367 million, state officials have said.”

25) Maryland:  Meanwhile, some citizens are saying that the state should apply the lessons learned from the failure of the Purple Line public-private deal to Gov. Hogan’s toll road project.  “While the state figures out how to clean up the fiscal and literal mess of the partly constructed Purple Line, the elephant in the room is the even bigger public-private partnership on deck: the 50-year, $11 billion project to add toll lanes to Interstate 270 and Interstate 495. The Maryland Department of Transportation (MDOT) is forging ahead with the public-private partnership toll-lane contracting process, despite the pandemic, the state budget crisis and the clear risks of the public-private financing model.” 

26) Nevada: The Las Vegas monorail’s private owner has declared bankruptcy and will be rescued through a government agency buyout

27) Ohio: The Bond Buyer reports that “the Securities and Exchange Commission is conducting a probe of FirstEnergy Corp. whose former subsidiary’s municipal bonds benefited from Ohio taxpayer bailout legislation at the center of bribery charges that brought down the State House speaker, according to a private lawsuit.” [Sub required]

Criminal Justice and Immigration

28) National/Georgia: A whistleblower says detained migrants and nurses at the Irwin County Detention Center in Georgia, which is run for profit by Lassalle Corrections, report pervasive medical neglect on Covid-19 and a high rate of hysterectomies performed on immigrant women. The complaint was filed by Project South, Georgia Detention Watch, Georgia Latino Alliance for Human Rights, and South Georgia Immigrant Support Network. One woman told Project South, “When I met all these women who had had surgeries, I thought this was like an experimental concentration camp. It was like they’re experimenting with our bodies” (p. 19). House Speaker Nancy Pelosi (D-CA) has called for a Congressional investigation into DHS.

Journalist Maria Hinojosa says “I have been reporting on women immigrants being systematically raped & abused in detention facilities for over a DECADE-DO NOT BE SURPRISED BY THIS NEXT LEVEL OF ABUSE OF FORCED STERILIZATION. BE ANGRY some of us have been pointing this out yet no one seemed to take it seriously.”

The Intercept reports that “when reached by phone for comment, Amin confirmed that he conducted procedures on immigrant women brought from the facility. He said that after he conducts exams, he requires the approval of the detention center before conducting any necessary procedures.”

Last week a federal civil rights lawsuit was filed against LaSalle Corrections in connection with the death of a woman, Holly Barlow-Austin, in a pre-trial detention facility in Texarkana. “I think it’s a company that sees inmates as dollar signs and puts profits over people’s lives. They could easily fix the problems in their jails, but it would cost money to do so,” said Erik J. Heipt, the attorney representing Barlow-Austin’s estate and family members. “Unless they’re held accountable in some fashion, there’s going to be another Michael Sabbie, another Holly, another Morgan.”

29) National/Revolving Door News: There is a significant revolving door connection between LaSalle Corrections and U.S. Immigration and Customs Enforcement that has been reported on by various media outlets over the past year, such as USA Today and Mother Jones, focusing on Scott Sutterfield, who transitioned from being ICE’s top official in the South to being an executive at LaSalle Corrections. Mother Jones reported that “while Sutterfield served as deputy director and then acting director of ICE’s New Orleans field office, which oversees much of the Deep South, his office began sending asylum seekers to six of the company’s jails.”

At the beginning of this year, Senators Elizabeth Warren (D-MA) and Kamala Harris (D-Calif.) and Congresswomen Pramila Jayapal (D-WA) and Ayanna Pressley (D-MA) sent a letter to Immigration and Customs Enforcement (ICE) and the Federal Bureau of Prisons (BOP) “questioning their anti-corruption policies and practices after a series of high-profile officials responsible for oversight of the private prison and detention industry have left to join the biggest companies in the industry.” The letter mentions Sutterfield, among others. [Text of the letter

30) NationalHow did the mass incarceration state come to be? Doug Henwood interviews John Clegg, a Harper-Schmidt Fellow at the University of Chicago, in Jacobin. “Criminal justice reform matters, but the task before us is, in fact, much greater than that. The task before us is addressing the extreme inequalities in American society that lie behind the high rates of both crime and incarceration.” 

31) National/OklahomaCoreCivic has entered a new management contract with the United States Marshals Service. The contract comes under an Intergovernmental Agreement between the city of Cushing, Oklahoma and the USMS. The contract term began Tuesday with an initial term of three years. It’s subject to unlimited 24-month extensions upon mutual agreement, according to Enid News.

32) California/National: There is a serious spike in coronavirus infections at the Adelanto ICE Processing Center, a detention facility run for profit by the GEO Group. “Prior to this outbreak, the detention center had a cumulative total of 14 confirmed cases since the start of the pandemic. All of the 14 cases involved people who newly arrived at the detention center, the attorney said. 

In April, the ACLU of Southern California sued ICE, asking for the release of detainees at the center because of concerns over the coronavirus and the lack of social distancing. That case is pending in the U.S. Ninth Circuit Court of Appeals. There have been a number of COVID-19 outbreaks at other immigrant detention facilities across the country, including Otay Mesa Detention Center in San Diego, where more than 160 people tested positive for COVID-19 and 1 detainee died from the coronavirus.” The ACLU and an Adelanto citizen are suing to prevent the expansion of the facility.

33) CaliforniaA bill has been introduced in the legislature to tighten up accountability of for-profit prisons and immigration detention centers. The bill “would require the operators of private prisons and immigration detention centers in California to abide by the standards outlined in their contracts with the state and federal government. The Accountability in Detention Act also would provide a forum for legal challenges in the event of breaches of those standards. The bill, AB 3228, says that if the operator of a private prison or immigration detention facility violates the standards, an injured person may sue the company. If the person’s case is successful, the court could order the private operator to cover his or her attorney’s fees.” The bill awaits Gov. Newsom’s signature. 

34) CaliforniaNew legislation opens a path to professional firefighting for formerly incarcerated people. “Assemblymember Eloise Reyes, who sponsored the measure, argued that opening up this opportunity to people who already put in the effort to train as firefighters will be a public safety benefit. She pointed to several studies that found states with the most occupational licensing restrictions have higher recidivism rates. ‘Signing AB 2147 into law is about giving second chances,’ she said in a statement. ‘To correct is to right a wrong; to rehabilitate is to restore … We must get serious about providing pathways for those who show the determination and commitment to turn their lives around.’”

35) GeorgiaClosure of the GEO Group-operated D. Ray James federal correctional facility in Folkston has been postponed. “Carter, U.S. Rep. Doug Collins and U.S. Sens. David Perdue and Kelly Loeffler, all Georgia Republicans, had appealed jointly to the Bureau of Prisons to keep the lockup open, citing potential job losses and questioning whether it would be wise to move inmates during the COVID-19 pandemic. Charlton County Administrator Hampton Raulerson said he doesn’t have enough information to speculate about finding another tenant to occupy the prison. The uncertainty has not impacted the business community, but he said a decision to shut down the facility will be felt throughout the county. ‘If we lose it, we’ll take a hit to all sales tax revenue,’ he said. ‘We’ve had our hands full in the office.’”

36) International: “Continued mismanagement and outsourcing of our Prison Service has failed the taxpayer and prisoners” says British Labour Party MP Shabana Mahmood. “In a striking echo of the failures of probation service privatisation, it outsourced a complex service without fully understanding what it was contracting out. Demand for reactive maintenance work as a result of poor-quality assets or vandalism has cost the taxpayer almost £143 million more than expected.” 

Public Services

37) NationalPost office workers can be defenders of key public goods, writes Liza Featherstone. “If you starve public goods of resources, they don’t work as well, which can then breed public support for private sector ‘solutions.’”

38) National: How well protected are Americans from unwanted privacy intrusions in the growing number of contact tracing apps? ALEC is worried about the government’s role, but blithely ignores the massive record of privacy violations by private corporations, rather ridiculously claiming that customers can just “find alternative products or services if a private sector company fails adequately to protect privacy.”