City’s lead consultant JLL advised 2-stage procurement so many hotel developers could compete for DHCC

The City disregarded advice from its lead consultant Jones Lang LaSalle (JLL) on structuring of its procurement of the downtown hotel/conference center (DHCC) to maximize competition, it is apparent from a newly released report. The consultants, paid some $335,000 for their advice, recommended a two-stage procurement in a nine page report titled ‘Downtown Frederick Hotel’ dated October 11, 2013.

First the City would negotiate purchase of any one of four sites, all considered suitable for the hotel. These included the Post Office site, the old Frederick
News Post site, the Galleria site across the creek, and the Union Mills property on East Patrick. With a deal for a site done, JLL proposed the City would then conduct an open procurement allowing an unlimited number of hotel developers to bid with proposals at the chosen site.

The October 2013 report states: “JLL’s recommendation was (and continues to be) to select a site first and secure it through an option agreement or land purchase contract. Once the (hotel) site is secured, steps to select a hotel developer through an RFP process can commence.” (p4)

This ‘two-phased’ procurement would provide the City with several key benefits, JLL reported.

The project would have more credibility with hotel developers if the City presented them with a site first up.

If a site controlled by the City was put up for development there would be open competition for the site and for the taxpayer subsidies the City was able to cobble together.

Plus JLL pointed out that if the developer was selected already controlling a site, and if the City planned to then buy the site to help the developer then, in the warning words of JLL “any land purchase negotiating leverage is lost.” (Since first posted the last two sentences have been rewritten for greater clarity — editor.)

Fred-News Post site, Galleria ranked equal 2nd

JLL arrived at the four sites suggested for negotiated purchase following an examination of seven possible sites and a threshold ranking that eliminated three of the seven.

The Post Office site was ranked #1 with 9 points. (The applicants submission in the Historic Preservation  Commission cases HPC489-492 in a Memorandum to Lisa Murphy falsely claims that the consultants ranked the News-Post site #1.)

The New-Post and Galleria sites were ranked equal-second with 8 points. The Union Mills property (in two lots on East Patrick just east of East St) fourth with seven points.  Three other sites (MARC parking, Potomac Ed, Brickworks) scored only 4, and were excluded from further consideration with a threshold of 5 points.

A table shows the criteria used in the ranking:

— 30% for ‘catalyst for downtown growth and revitalization:’ factors within that being closeness to the center of downtown, frontage on Carroll Creek, business spinoff, character of the site

— 25% feedback from developers on the sites

— 15% ease of acquisition based on likely time to acquire and price

— 15% site size: accommodate the ‘program,’ provide for expansion?

— 15% ‘developability:’ community support, access, visibility, prior approvals, lack of historic buildings, lack of site issues (steepness, contamination)

The report has a table (see nearby) showing strengths and weaknesses of each of the seven sites. The News-Post site’s strengths were its location and short walking distance to the Square Corner. Weaknesses were ‘historic elements of site may limit potential hotel size’ and need for expensive underground car parking.

A June report by JLL was blunter saying the location of the Birely tannery building “on this site presents design challenges.” Also that the “program may need to be altered (i.e. less than 200 rooms) in order to accommodate tannery.”

Reported here:

‘The program’ is plannerspeak for the specifications for a project — the kind of facilities, the size, the number. In effect JLL predicted the need for downsizing the project if the News-Post site was selected.

The minimize-competition procurement the City undertook

Just months after this in February 2014 the City conducted a quite different, single stage procurement. The request for proposals (RFP)  specified that bidders needed to have ‘site control’ — meaning either unconstrained ownership, or a contract to purchase — of the site to be eligible. The RFP effectively limited bids to one per site, or a maximum of four. Plus potential bidders had to be ready to move fast.

The RFP as first issued only allowed six weeks from issuance to the submissions deadline (2/14 to 3/28.) That clearly ruled out the Post Office site given the need to negotiate a relocation, and the Union Mills site was on track to being renovated into office space. So practically the rules limited competition to two.

And it almost became one when Ed Wormald notified the City he couldn’t get his proposal together without more time.

By contrast Plamondon’s proposal was received by December 2013 a couple of months before the RFP was even issued, as shown by JLL timesheets accompanying its monthly invoices.

The RFP was written around Plamondon’s proposal.


download the JLL report from October 2013




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