Yet Untitled. Welby Thomas Cox, Jr.
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responded quite out of character. Hamilton would learn over the years that Prolano wasn’t given to self-aggrandizement… but he was short on patience and could be rather annoyed with his need to move on without regard for explanation of the murky world in which he practiced…it was clear enough to him.
Thad continued to probe the partners… “So let’s see, the fact that the firm is academically qualified is of no consequence, and it appears to me that this firm needs one of what I would call the LAP…it doesn’t stand for “ lacca pussi” either, it is luck, politics and A Big Money Pump…am I close”? Thad asked.
The third partner, Dr. Belini, who was previously just satisfied to listen finally spoke up. “It’s sad but true, that it takes more than academic qualifications to work for either the state, local or federal governments. I guess it was a dream that was unattainable for three guys from Hooterville. But Prolano and I can still teach!”
“Yeah,” Thad said. ”Go teach all these young minds that the government is run by a bunch of fucking crooks!”
“With your permission, I have an idea which may work. Prolano, is it possible to get the list of all communities seeking to build a sewage treatment plant”? Thad inquired.
“Certainly, that’s the easy part. You see most of the communities are unable to build a facility without federal funding or a new local tax to pay for the facility,” Prolano responded.
“You mean they wait until they have all the money before they build,” Thad continued.
“Of course, practically speaking no politician worth his retirement and fat pension plan has guts enough to suggest a local referendum for a tax increase on a public facility which neighboring counties are getting for nearly free! The way it works is that there is a list developed by the feds, a sort of pecking order. A community works its way to the top of the list and with its matching funds in place, usually 20%, the feds approve the project for the environmental impact portion and preliminary design. The community puts the project out for bid or Request for Proposals, which all local firms have been waiting for years to bid on. The county in its infinite wisdom selects the engineer, contracts are drawn, the impact statement is approved by the Department of Natural Resources, the design is approved by local, state and federal authority after public hearings for the input of the public, and the plant is built. The county gets a new Sewage Treatment Facility for a 20% investment which they have saved over maybe 15 or 20 years, and the engineers are paid a fee representing 6-10% of the construction cost”. Prolano said.
“Get the list Prolano, let’s meet again in 10 days. I’ve got a plan that may give this firm more business than it can handle, but I’ll need some professional help with the law and taxes before I am prepared to waste your time”. Hamilton said.
Getting the list together was the easy side of the equation. Prolano would later inform Hamilton it was simply a matter of asking for the list from the Department of Natural Resources. The department which historically is responsible for granting large no bid contracts plays a great deal of politics but uniquely, not at this level. One of the few games in town where the little guy can win when his time comes…the only rub being the ability to come forward with the local match or participation funds. If the community at the head of the list fails to comply by not being able to produce the local funding percentage, the funds from the state and the feds don’t necessarily go to the next community in line, and then the politicos begin to have fun…especially the governors’ office.
After receiving the list from Prolano, Thad developed a business plan, which envisioned the issuance of a tax issue for the sale of revenue bonds for a private entity on a lease/purchase of the plant. To confirm and qualify his plan, he retained a CPA, Charles Lorch, and it was Hamilton’s first opportunity to use Corporate Tax and Securities Attorney, Michael Pearlman. Both Pearlman and Lorch were recognized as the most astute council in the field of tax and the law relevant to municipal and taxable bond issues. After several meetings, the business plan took shape. It was now time to meet once again with the partners and it was time to make history with one of the first privatized public works project in the country more than ten years before President Ronald Regan popularized the concept. Hamilton felt a twinge of pride and accomplishment over his team…Butch Cassidy and the Sundance Kid…these guys were good…no great, and they were writing the history of privatization.
“Let’s see,” Prolano said, “We hire a law firm to represent our firm… that’s not the engineering company? The law firm sends a letter to the County Attorney of the targeted county stating that they represent a firm, qualified and capable of providing a turn-key design/build and managed sewage treatment facility? This company, the letter will confirm will be subject to all law and oversight of the County Attorney, County Engineer and the County Magistrates. It will put up all necessary matching funds and own the facility for a period of 20 years, and at the end of this period, the company will sign over the title to the plant to the County for $1 and other valuable consideration?”
“Thad you know the match on the projects you have identified are a minimum of two million?” Dr. Belini informed. “Obviously, we don’t have those kinds of funds!”
Thad responded, “If the plan is approved, the new corporation would qualify as a special- use corporation, according to both Pearlman and Lorch, under the Industrial Development Authority granted to the county when they built an industrial park. The new corporation will induce the county to issue Revenue Bonds representing 100% of the projected cost required to get the federal funds. In addition, the land will be donated to the project by the county and the cost of the property estimate by a value appraisal would be included in the total estimated cost of the project…therefore, we get all the money required through the sale of taxable bonds purchased by some pension fund.
“What a deal for the politicians and for the community! The pork is passed around and there is plenty for all! It was clear as well that the selection process was ripe for the insidious graft practiced by local politicians. While dangling these major projects for the local and regional engineer the politicos are able to maintain a constant cash flow for campaign coffers through the sale of tickets to various political events. $1,000 here, $500 there from a dozen firms vying for work amounts to a tidy tax-free sum for a Commissioner or Magistrate operating on a salary of $ 35 thousand. Little wonder all these corn seeds are shooting for these part-time activities….so much for doing a little community service!” Pearlman laughed.
The object for the engineer is to maintain contact with the elected representative in order to secure votes for the projects when they finally make their way to the docket. This insidious form of corruption is a way of life for all professions wanting to do business in America, in all communities without exception. Every job let for professional services comes with the implicit history of political activity. Politicians and various political cronies have long memories and any firm unwilling to play “the buy the raffle ticket game”… in the denominations suggested, is ostracized from the game, which puts game, in the form of food, on the table! In some states and communities, the ante is bolder. The political party in power plays out these raids. A corporation gift is never acceptable, only personal checks or cash in brown bags…hence ‘the brown bag man’!
While there is sufficient evidence to prove that there is no profession more vulnerable than that of the engineer to the political spoils, Thad seemed to have found a way around the process. Charles Lorch’s research into the tax structure required for this transaction and Michael Pearlman’s development of the three corporation concept, wholly owned by the engineering company, and all represented autonomously by the renowned law firm of Peabody, Peabody & Helm. Thad had discovered that governmental and political intelligence, operating in an economic vacuum, invariably fail to see the upside of its own leveraged strength, and Pearlman had researched and developed the concept into a legal and professionally acceptable form.
Penny pinchers and fools operate most small cities, counties and towns… most barely high school graduates…and that, in name only. Imagine expecting these folks with the responsibility for finding an extra $ 2 million for a federal match project when the entire county budget would not exceed that amount. Only through frugal savings, the most conservative office holders will tell the taxpayers, can