Paul Hammel
LINCOLN — The state has signed a $500,000, no-bid contract with an Omaha group to determine the feasibility of raising in excess of $900 million in private money to help build a huge sandpit lake between Omaha and Lincoln.
The contract, with officials of the Omaha Philanthropic Trust and its director, Sue Morris, was signed in August employing a rarely used “sole source” exemption that allows state agencies to forgo the state bidding process when obtaining unique services or goods “available from only one source.”
While at least one state official raised concern about the no-bid deal, Tom Riley, director of the Nebraska Department of Natural Resources, said he sought, and received, the sole source bypass because of the “unparalleled connections” of Morris and the Trust to major donors.
“Not our gig’
“The access to all the philanthropic dollars is not our gig,” said Riley, referring to his agency, which regulates surface water use and dam construction and safety.
State Sen. Mike McDonnell of Omaha, a main proponent of the lake, also defended the no-bid deal because of the expertise and experience of Morris, a former president of Heritage Services. That philanthropic organization, founded by some of Omaha’s leading business leaders, was created to financially support Joslyn Museum, the Durham Museum, the Holland Center and other major institutions.
In a letter supporting the hiring of Morris, McDonnell wrote that “the magnitude and complexity” of the proposed public-private partnership for the project makes it “crucial that we engage a firm with a deep understanding of such initiatives and the Nebraska philanthropic communitv.”
Contractor also hired for NU football stadium
If Morris’ name is familiar, it’s because she just signed a $5.5 million contract to raise at least $225 million in private money for the planned renovation of Memorial Stadium on the University of Nebraska-Lincoln campus.
At least one source said that raising $900 million for the big lake would likely be the state’s largest private fundraising endeavor.
The no-bid contract involving the big lake, referred to as “Lake Mike” around the State Capitol because of a trio of supportive state senators named “Mike,” did raise the eyebrows of another Mike: State Auditor Mike Foley.
Foley asked whether the Omaha Philanthropic Trust was really the only entity that could weigh whether there was sufficient interest among private donors in the big lake.
“That just sounds odd to me,” he said Thursday.
Foley added that Morris and the Trust could have just as easily submitted a bid along with other fundraising contractors to obtain the state job.
Lake Mike
McDonnell is one of the three Mikes, along with former State Sens. Mike Hilgers, now the state attorney general, and Mike Flood, now a U.S. congressman, who were leading proponents of the big lake project.
The 4,000-acre lake — designed to rival Iowa’s Lake Okoboji — has been billed as a “big swing” to boost economic development and provide a long-dreamed-about recreational lake near the state’s two largest cities, though there have been detractors.
Past estimates have put the cost of such a lake at $1 billion and more, with 90% of the funds coming from private developers and philanthropists.
McDonnell said determining whether there was sufficient donor interest in the big lake was the “next logical step” in deciding whether the state moves forward on the project, which he described as “an SID (sanitary and improvement district) with a large lake in the middle.”
“There’s a thousand steps and we’ve taken five (so far),” he said.
The big lake idea first emerged as one of the recommendations in a 2021 report from a special state legislative committee, the Statewide Tourism and Recreational Water Access and Resource Sustainability committee, or STARWARS.
The committee recommended $200 million worth of projects to enhance tourism and the state’s quality of life, including enhancements at Lake McConaughy, Niobrara State Park and Lewis & Clark Lake.
Not a dam, but a sandpit lake
Past proposals to dam up the Platte River near Ashland to create a massive lake have been drowned in protests from people living there. But the STARWARS group proposed a different route — digging a massive sandpit lake, using a floodplain of mostly undeveloped farm ground, rather than flooding Ashland and other housing along the river via a dam.
So far, work on the big lake has involved still-to-be completed studies on whether it would adversely impact wellfields that provide drinking water to Omaha and Lincoln and whether it would provide some flood-control benefits.
Sixteen months ago, a nonprofit corporation was created called the “Nebraska Recreational Lake Trust,” to “assist the State of Nebraska in constructing, developing and managing” the proposed lake,”which would provide needed flood control.”
Such private corporations are used by the University of Nebraska, as well as the state, for construction projects involving private money or bond financing. The Nebraska Constitution prohibits the state — but not a private corporation -—from going into debt.
Same officers
Morris is listed as president of the Lake Trust as well as president of the Omaha Philanthropic Trust, and officers of the Omaha trust fill similar roles with the Lake Trust.
Typically, all state agency contracts of more than $50,000 are required to be subject of competitive bidding. But state statutes allow for exceptions for “unique or noncompetitive” services or items.
In his application for a sole source contract, Riley said the Philanthropic/Lake Trust possessed unique knowledge and skills “such as a deep understanding of public/private partnerships, efficiently and effectively facilitating meetings between government agencies and private partners, and unparalleled connections within Nebraska’s philanthropic community.”
To be sure, Morris, who worked at Heritage Services alongside Walter Scott, the late CEO of Kiewit Corporation, has been involved in some major Omaha fundraising projects. Most recently, they include the Veterans Ambulatory Center, Baxter Arena at the University of Nebraska at Omaha and the redevelopment of Lake Cunningham.
The sole source exception was later approved, as required, byAmara Block, head of the Materiel Division of the Nebraska Department of Administrative Services. Block agreed that the service was unique.
The contract requires an evaluation of the potential for private partners on the big lake to be provided by April 30.
$500,000 fee worth it
When asked for comment about the work of the Lake Trust and how the $500,000 fee was arrived at, Patrick Morris of the Philanthropic Trust responded in an email that he was out of town and couldn’t take a phone call.
But he emailed that his organization’s role is to determine the “viability and potential benefits of a public/private partnership,” which will help determine whether the lake project can move forward.
“Given the magnitude and complexity of this potential public private partnership, we are engaging other consultants and our fee absorbs those costs,” Morris added.
McDonnell, who sits on the legislative committee that crafts the state budget, said the $500,000 fee was a reasonable expense given the economic potential of building the big lake.
The senator said he did not think that Morris’ fundraising work on the NU stadium would conflict with the job of assessing whether the big lake is financially feasible. They’re different projects, McDonnell said.
“What we’re trying to do is really economic development, with the idea of retaining and recruiting people to the state,” he said of the big lake.
Riley said that if the Morris report concludes there’s sufficient potential for private investment, and the wellfield study says it won’t harm drinking water supplies for Omaha and Lincoln, the next step would be a full-fledged feasibility study, laying out the exact location and depth of the lake, and precise costs.
If the report on the big lake says private donors/developers aren’t interested, and “it’s not doable,” McDonnell said, “it’s over.”