Not-so-open bidding?
TAF’s bidding process is similar to the state’s public bidding requirement with two important caveats — it can limit which companies are allowed to bid and it does not have to pick the lowest bidder.
Stokes McConnell, a bond lawyer with Long Law Firm who drew up the bonds for the west side addition, said having several companies vying for the job ensures competitive pricing in the end.
Craig Kaster, a Zachary construction lawyer, said this process had advantages over the state requirement that all qualified contractors be allowed to bid, and that the bid be given to the lowest bidder.
“You don’t want some guy who every time he’s on a job he’s late, he’s on lawsuits, and has poor supervision,” Kaster said. “When you let everyone bid, you get crummy contractors and then you get into problems with them doing a bad job or guys quitting, so it’s not very efficient.”
Several construction lawyers and contractors said TAF’s bid procedures present the potential for favoritism.
One local construction attorney who asked to remain anonymous explained that “If I’m Donald Trump, and I’m wealthy enough to give contributions to LSU, then I’m going to expect some special consideration for a project.”
Another construction lawyer, who also asked to remain nameless because of possible repercussions to his business, said he has heard through the grapevine that people do not like the way TAF does business. Some in the construction business have complained that they were not given enough time to negotiate a project, and the bid ended up going to “the big guys,” he said.
Joe Caldarera, co-owner of J Caldarera & Co., Inc. in LaPlace, is a frequent bidder on state contracts. He said he cannot even get on the bid list for TAF or LSU, and is frustrated with the apparent politics involved with the Foundation.
Caldarera’s firm constructed Zephyr baseball stadium in New Orleans and attempted to get on the bid list for the renovation or construction of Alex Box Stadium.
“The Zephyr field was scheduled to be an 18-month job. We did it in eight months,” Caldarera said. “We’ve been invited to different speeches on the exemplary job we’ve done, so you’d think if [LSU and TAF were] building a baseball stadium, we’d be the first on the list.”
He said his marketing department, after many tries to get on the bid list, advised him that the company’s efforts would be in vain.
“You can’t just be a contractor who’s confident in doing the job,” he said. “The thing is that you must be in with someone.”
Kevin Tingle, owner of CK Construction of Louisiana, a local construction firm, said as a newcomer to commercial construction he would not be at the top of TAF’s list.
“Knowing what I know about the [construction] industry, in commercial work, it’s who you know commercial-wise,” Tingle said. “It’s just not a level playing field.”
He said in most cases, contractors are not aware of the opportunity until a project breaks ground. By then, some contractors are left with thoughts of missed chances.
“I think everyone would agree there are some big-name companies that pretty much have a large hold on the market,” he said. “ It’s certainly [TAF’s] prerogative, but I know other contractors who would do a great job and probably for cheaper,” he said.
Gina Miller, secretary and treasurer for Miller and Associates, a top 100 Louisiana construction company based in Iowa, La., said her company has never tried for a bid with TAF.
She said their geographical location is part of the reason Miller and Associates has not tried to get on the bid list, but she also said the company “does not have any in” with TAF.
“They’re going to hire someone who’s affiliated with them,” Miller said.
Determining who gets the contracts is difficult at best since the general contractor hires all subcontractors and no master list of subcontractors has to be filed as a public record.
Richard said TAF has nothing to do with hiring subcontractors because that is the main responsibility of the general contractor. For the west side addition, the general contractor is Mississippi-based construction company Yates Construction. He said the hiring of general contractors has been fair and balanced, and that TAF’s board of directors makes a conscious effort to rotate jobs to different companies.
“We don’t have to bid anything out,” he said. “We could just award contracts. Do we do that? No.”
“We bid every project out. Those people who feel that [TAF bids to friends] obviously have no motivational drive to go to the different construction sites and prove or disprove that theory.”
Actually, TAF cannot award contracts, as stipulated in the fraternity/sorority statute that requires every organization that leases public land to conduct competitive bidding.
 
A lack of oversight
TAF’s private status has benefits for the University — it allows for speedy construction, it can solicit large donations by promising anonymity to donors and it can arrange private financing of public projects.
The problem comes when the state has not yet set up the procedures needed to protect the public’s interest when private institutions are doing public works.
The question of whether TAF is private or public leaves some regulatory offices scratching their heads.
For the west side expansion project, The Reveille found that the question of who is responsible for approving a private project on public land was hard to answer.
This isn’t the first time TAF and its operations have been questioned.
The tangled mess became apparent to former Gov. Buddy Roemer in 1988 and Bill Lynch, Louisiana’s first and only Inspector General.
TAF was one of the first organizations Lynch investigated.
Kenneth DeJean, former First Assistant Attorney General, prepared a report for Lynch that examined TAF’s practices. Among its spending practices in 1990 were:
• $318 for two car dealers’ season tickets.
• $2,812.30 in airfare for coaches’ wives to attend the LSU vs. Ohio State football game.
• $24,119.18 of expenses for the coaching/athletic staff spouses and children to attend the Hall of Fame Bowl in 1989.
• TAF paid a rent on space leased from LSU that was substantially below the going rate for rental space in Baton Rouge.
• The Foundation is given “rights” which the ordinary class of citizens is not given because of its close relationship to the University and its performance of public function.
Lynch concluded in a report on April 29, 1991, that TAF “is both a public body and that the bulk of its receipts are public funds. The Foundation’s principal source of income is derived from the ‘right’ which the university could just as easily exercise itself to generate income and therefore is an asset of the university which cannot be donated to a private organization.”
Then-governor Roemer, acting on Lynch’s recommendations, vetoed a proposed bill that would have given TAF total privacy.
Lynch’s conclusion that TAF was a public agency did not last long. TAF was given complete privacy in 1992 by incoming Gov. Edwin Edwards.
Roemer said he vetoed the legislation giving TAF added privacy during his term because the bill did not hold TAF accountable for spending money for public purposes.
“TAF needs to be competitive and not run the Athletic Department, but needs to be accountable for its operations,” Roemer said.
TAF’s current status allows it to foster an athletic empire at the University while keeping details underneath a privatized blanket.
Even though TAF has been ruled a private non-profit organization, it does generate some public records that shed insight into its operations. Each year, for example, it must file a public tax return with the Internal Revenue Service. This Form 990 is available on the Internet through a Web site dedicated to non-profit information.
TAF also files a variety of private records on its public Web site. These include an audit of its books by its accounting firm, Ernst and Young, audits by the Louisiana Legislative Auditor and the audit required by the NCAA for athletic booster clubs.
The Reveille also reviewed a TAF member list published in Purple and Gold’s 2003 Football Guide, published P&G Communications, and the east and west side bond prospectus, which outlines the financial stipulations of each million-dollar deal.
A push for change
State Sen. Joe McPherson is one who believes quasi-public projects such as TAF need more government involvement and public scrutiny.
McPherson attempted to do something about it this past legislative session. His bill, SB 39, was passed by the legislature but vetoed by the governor.
McPherson’s bill proposed that the Commissioner of Administration track and record all parties involved in any cooperative agreement such as those between LSU and TAF to make sure everyone is following the rules.
The purpose, he said, was to “prevent cronyism and abuse of public funds.”
Although McPherson created the bill primarily to protect construction of student housing, he said he also intended it to impact athletic foundations as well.
He said he does not have a problem with TAF getting involved with University deals, but said TAF’s involvement needs to have public scrutiny.
“TAF has an extremely important role,” he said. “We need million-dollar coaches, but when they [TAF] start taking over government functions, I think we need to slow down and make sure we have the proper regulations.”
McPherson said he plans to reintroduce his legislation in the 2005 regular session with some minor changes to clarify his intent. He said he already has talked to Gov. Kathleen Blanco about changes that would ensure her cooperation. Blanco vetoed his bill in the 2004 Session because of concerns over the language.
In the meantime, McPherson said rules already in place — that projects on state land go through Facility Planning and Control — should help regulate a wishy-washy system.
McPherson’s bill would require state government supervision of all projects for public entities, even those done by private groups.
“It also would require that all public projects go before the Joint Budget Committee for approval before proceeding, he said.
“That’s where the public gets to know about these projects,” he said.
McPherson knows he’s in for a fight.
“Excuse the pun, but I’m taking on the tiger by the tail,” he said. “You know how influential that organization is. Now, I think athletics is a good thing, but I’m more concerned with LSU’s standing as an academic and research institution.”
 
Risky business or sweet deal?
Financing $150 million in athletic expansions isn’t the easiest of jobs. But TAF, with no credit history and no ability to guarantee payment, has done it anyway.
The group financed the west side stadium expansion, stadium renovations and a state-of-the-art football practice facility through a $90 million bond. It is financing the east side stadium expansion through a $60 million bond, which has since been refinanced to about $43 million.
Two Baton Rouge banks, Bank One for the east side and Hibernia for the west, have stepped in to help TAF sell the bonds.
Even though TAF owns the construction projects, the banks will take the loss if TAF is unable to make its payments. Hibernia already has committed to paying bond holders who invested in the west side project even if TAF were to default.
The bond prospectus issued March 1 by the Louisiana State Bond Commission spelled out some of the possible risks to investors. It also listed actions taken to mitigate those risks.
For example, a streak of losing football seasons could reduce demand for seating in Tiger Stadium. TAF has reduced the chances of this impacting its revenue stream by requiring ticket holders to agree to purchase their tickets on three- or five-year contracts.
Despite the risks, no one expressed a fear of ever experiencing any setbacks.
McConnell said TAF already has collected deposits from ticket holders who signed for some of the hottest seats in Baton Rouge.
Richard said every new Stadium Club seat — about 3,250 — was pre-sold in approximately four and a half weeks.
Just in case an unforeseen failure were to happen, TAF has a rainy-day account — a percentage of member dues and contributions set aside from the last 13 years. Richard said it’s just a good business practice.
Even a major disaster such as the NCAA administering the death penalty for recruiting violations probably would not diminish TAF’s revenue enough that the Foundation would have to default on bond payments. After all, TAF has 30 years to pay back its loans.
Only one school — Southern Methodist University in Dallas — has ever received the death penalty of no football games for one year, and no home games for a second year. Edwis Neski, SMU senior associate athletic director, said the NCAA’s punishment of his school in 1987 had long-term impacts far beyond the one year of no football.
”We lost all but three scholarship athletes because they were allowed to transfer,” Neski said. “You could say people found other things to do with their Saturday nights.”
Another factor lessening the risk to bond holders is that good seats in Tiger Stadium are hard to come by and few fans would risk losing seats that have been in their family for years.
Thomas Karam, a marketing professor who worked with the Center for Student Athletes for 20 years, said people cannot talk about a college experience without having a memory at some sporting event.
“The emotional impact of LSU sports and how wonderful it is for rekindling memories is very valuable,” Karam said. “I mean, sometimes I feel bad if I don’t take my son to every football game.”