A Peek Inside the Ugly Convention Center Hotel Bidding Process
As mentioned earlier this morning, the city council’s Economic Development Committee will name the convention center hotel developer today -- behind closed doors in executive session, the Dallas way. And, yes, odds are it'll be Woodbine Development emerging from those closed doors as Your Convention Center Hotel Developer, though we're not the only ones figuring it's all but a done deal. Ray Garfield, principal at Garfield Traub Development, also agrees. Fact is, that’s one of the reasons why his company dropped out of the bidding process by declining to submit a proposal.
“As we were reading the tea leaves, we were saying this thing would probably go to Woodbine,” he tells Unfair Park.
He insists, though, that he’s not bitter, and his reasons for believing Woodbine will be the winner are much different than the conspiracy theory that we’ve cooked up. You see, we figured a marriage between John Scovell, Woodbine’s president and CEO, and Mayor Tom makes too much sense.
Scovell, who donated $5,000 to Leppert’s campaign, is also the chairman-elect of the ultra powerful Dallas Citizens Council (you remember them -- they run the city) and was on the board of directors for JPMorgan Chase, which contributed $10,000 to Leppert’s campaign. And, of course, Woodbine is owned by billionaire Ray Hunt, who will likely get a sweetheart deal to rid the city of the Reunion Arena land, which, ironically, could have been used to build the hotel.
Oh, and then there’s this quote we got from a prominent politician regarding Scovell: “He’s very nasty. Very nasty. And he knows he’s running the show. He knows he’s got everybody at City Hall doing what he wants to do, so, if anybody wants to get in the way, he gets enormously pissed off. But, you’ve got to give them [Woodbine] a hand, they certainly get what they want all the time.”
But enough with the conspiracy theories and unnamed sources. We’ve got too much to get into before the decision is made.
The committee has three proposals to choose from, as noted this morning: from Woodbine, Matthews Southwest and FaulknerUSA of Austin. The proposals have been scrutinized by two teams -- a development team and a financial team.
Heading up the financial team are Dave Cook, CFO for the City of Dallas; Wayne Placide, co-financial adviser for First Southwest Company; and Noe Hinojosa, co-financial adviser for Estrada Hinojosa. Placide and Hinojosa are paid financial advisers to the city. The development team includes Karl Zavitkovsky, director of economic development for the City of Dallas; Frank Poe, director of convention and event services for the City of Dallas; and Tom Wurtz, public works and transportation program manager for the City of Dallas.
In addition to these teams, input was received from the city attorney’s office, the six underwriters for the project and bond counsel for the City of Dallas -- McCall, Parkhurst & Horton LLP and Escamilla & Poneck, Inc. The city also consulted the Dallas Convention & Visitors Bureau Customer Advisory Group, a 37-member group composed of people representing trade groups and professional associations on a state, regional and national basis.
The city received six responses to a Request for Proposals for the hotel project. A pitch from Jones Lang LaSalle of Chicago didn’t make the cut after it was reviewed by two teams in charge of evaluating the proposals, according to Assistant City Manager A.C. Gonzalez. Gonzalez called the proposal “exciting,” but he cited the enormous price tag of more than $800 million and incompatibility with downtown objectives as reasons why the teams took them out of the running for the project.
Most recently, a proposal from Hamilton Properties was tossed out because they failed to post the $1.5 million bid security. This was surprising since Hamilton was represented by Mayor Leppert’s favorite PR machine, Allyn and Company. Hamilton is also building an aloft hotel near the Dallas Convention Center.
The proposal submitted by Garfield Traub Development of Dallas, which partnered with Hines Development of Houston, was rejected because the response didn’t lay out a specific proposal, Gonzalez tells Unfair Park. He says the proposal only alluded to things the developers could potentially do, and the city needed to pay for detailed plans. Ray Garfield calls Gonzalez’s explanation “absolutely wrong.”
Garfield Traub, one of the leading convention center and hotel developers in the country, also competed with Woodbine and FaulkerUSA for this project in 2004. However, Garfield Traub left the RFP process before Woodbine was given exclusive negotiating rights, Garfield says, because of strong signals from the city that the amount of funding required from a developer wasn’t “real world.” This time around, Garfield has harsh criticism about the way the city went about the process.
When the city issued a Request for Qualifications for the project late last year, it was specifically for developers, and choosing an operator (known as a flag), contractor and architect was going to be a collaborative effort. Garfield gave his qualifications in a presentation to approximately 30 city staffers at the Dallas Convention Center. One month later, Garfield was told his company made the shortlist of developers selected to move on to the RFP process.
But the so-called shortlist wasn’t short. In fact, all six developers submitting RFQs were among those asked to move on to the next step, which Garfield calls “an insult.” He claims only three of the developers -- Garfield Traub, Woodbine and FaulknerUSA -- have proper qualifications to take on such a project, and the decision to allow the other three into the RFP process was the first “red flag.”
Garfield also rips the city for making a major change from the RFQ to the RFP. The RFP required developers to partner with an operator, contractor and architect. Additionally, they needed to include a detailed financial plan and were given only approximately three weeks to submit their proposals. Developers were also forced to submit a proposal that included the Chavez property, which the city had optioned.
“What it said to us was that the city had made up its mind about what it was gonna do, and they wanted to scare off as many companies as it could,” Garfield says.
The city also told developers that it reserved the right to break up the groups, allowing it to select a contractor from one proposal and an architect from another. Garfield questions the wisdom of “forcing a marriage” between people who haven’t worked together. He also says the RFP was misleading because it discussed heavy private investment, even though the council eventually voted to publicly own the hotel.
As a result of these concerns, Garfield sent a letter to the city explaining that his company would be non-responsive to the RFP. “We thought it was a very poorly executed scheme, and one that we didn’t want to dignify,” he says.
In the letter, Garfield described his numerous concerns with the RFP process. He says Gonzalez improperly attributed his non-response because of one sentence included at the end of the letter, where he wrote: “Our interest in proceeding in this process is subject to us being appropriately compensated for the work involved in preparing the plan.”
Garfield stresses that a convention center hotel is a necessity in Dallas, something he expressed to the council when it approved the land purchase and public ownership of the hotel. However, Garfield spoke in opposition on the item because he disagreed with the city’s $42 million purchase the land owned by Chavez Properties.
He says it was the “wrong call” to buy the Chavez parcel and was “horrified” that council members would approve something “engineered in the back rooms.” Garfield says the hotel could have been built on the eastern side of the convention center where neglected exhibit halls are located. He also maintains that the city paid more than twice what the land is worth.
“How in the world did they [Chavez] engineer getting the city to ramrod the sale of that property for more money than it’s worth?” Garfield says. “Appraisals be damned.”
As for Woodbine, Garfield says it will be named the winner today and thinks it should be. Although the operator will be chosen at a future committee meeting, he also thinks Marriott, Woodbine’s partner, will be selected as well. Garfield describes Woodbine as an “outstanding company,” and says it will do a great job with the project. He also says Woodbine “deserves the shot” at this project because of the difficulty it faced when chosen as the developer for a potential hotel in 2004.
“They had to go into the teeth of dealing with Laura Miller’s regime, which is just awful, and probably deserve to be given it again with a progressive mayor like Mayor Leppert,” Garfield says.
After again predicting Woodbine as the winner, he said, “I just think that’s the way the politics will play.”
Of course, this comment fit nicely into our conspiracy theory, so we asked if he thought Woodbine’s upper hand had anything to do with the Scovell/Leppert connection. “No, I don’t,” he said. Instead, Garfield said Ray Hunt’s name was important to the city and stressed that Woodbine is extremely qualified for the job.
“I want this hotel to get built,” he says. “We’ve finally got great leadership. We don’t want to lose another chance like losing the Cowboys to Arlington.”
So when the committee emerges from executive session to announce the big winner, everyone can celebrate the great leadership that has given Hunt and Woodbine yet another piece of the downtown pie. Heck, maybe Ray Hunt will be there to give Mayor Tom a handshake and a hug for his hard work.
What’s that? Leppert is outta town? Yup, it’s “personal stuff,” according to Leppert’s chief of staff, Chris Heinbaugh.
And us? We’re soooo there, so come back later for a recap. --Sam Merten