How they deliberately avoided competition in procurements of land and hotel developer

Jones Lang LaSalle (JLL), the City Hotel Advisory Committee’s lead consultant in this procurement, foresaw the land valuation problem mentioned by Andy Stout in the previous report. And they proposed a procedure to avoid that problem, along with a way to get real competitive bids for the hotel development itself.

This was alluded to in a JLL presentation to the Mayor & Board July 31, 2013 and spelled out in their report to the Downtown Hotel Advisory Committee (HAC) titled “Downtown Frederick Hotel, Site Acquisition Strategy Recommendations,” October 11, 2013.

Site first, then open-to-all competition at that site

JLL recommended a two-stage procurement under which the City would separate out site acquisition from choice of developer. In Stage One it would secure a site by negotiating simultaneously with owners of four suitable sites (Galleria/Wormald, FNP/Randall, Post Office/USPS,300&340E Patrick/Jemal) doing the best deal by competing the four acceptable sites against each other.

JLL urged this in two places in this report, first: “An initial question posed to JLL was: Should a site be selected first or should a hotel developer be selected first? 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 site is secured, steps to select a hotel developer through an RFP process can commence. This two-phased approach brings several key benefits:

  •  Having a site selected when the developer selection process begins will give the project credibility with potential developers by reducing risk and enhancing certainty from the developer’s perspective
  •  Land purchase negotiations are likely to be more challenging than selecting a developer. If a developer is selected first, any land purchase negotiating leverage is compromised.
  •  Jones Lang LaSalle, with our significant hotel and development experience and developer connections, can provide input as to developer and hotel site preferences.” (page 4 of October 11, 2013 report)

The consultants returned to this later in the report: “Non-exclusive and concurrent negotiations will create a competitive process among the property owners to present DHAC and the City of Frederick the best possible transaction terms.” (p9 of October 11, 2013 report)

In Stage Two there would be open competition among hotel developers to develop the City-secured site.

A Project Schedule timeline chart shown at the earlier workshop p3 showed:

— in green below March 2013 through September 2013 Site Acquisition

— in orange/pink below October 2013 through March 2014  Developer RFP

If the City Purchasing office had been in charge of this procurement then my guess is they would have followed JLL advice and we might have had a fairer, more honest procurement. We would have had the News-Post site in competition with three other sites. However the City outsourced the procurement process to the Downtown Hotel Advisory Committee (HAC), a shadowy group of city and business insiders that has met for years behind closed doors in violation of all the the tenets of open government — no public notice of meetings, no published agenda, no open meetings, no minutes, no aldermanic liaison, no legal staff.

A HAC job

The HAC rejected, or at least ignored, the competitive procurement procedure recommended by JLL. Instead of the JLL pro-competition procedure, they throttled competition by doing a one stage procurement, limiting eligible sites and limiting bidders to those who already ‘controlled’ a site — those owning the site, or possessing a contract-to-buy the site. An early date for submission of proposals also limited bids.

It was a sham competed procurement in which Plamondon’s winning proposal was received and worked on many weeks before the phony RFP even went out. The other proposal (from Wormald) was given perfunctory attention we know from timesheet invoices, and from Ed Wormald’s account.

On top of that the scoring of the proposals was absurdly biased — the Randalls-FNP site with demolition of historic stuff was scored better for historic impact than the Wormald-Galleria site with no historic stuff to demolish.

The evidence is overwhelming that the HAC did not want real competition either for the land or for a hotel developer. This insider cabal knew who and what they wanted and they were not going to let competition get in the way of a good fix.

JLL presentation to Mayor & Board 2013.07.31

20130731M&BwkshopJLL

JLL report to HAC 2013.10.11

20131011JLLsiteSelection#2

2018.02.18 addition & minor edits 2018.02.24

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