Losing WTC bidder challenges winning developer’s selection

Photo provided by Gate House Capital Corp. -- An artist's rendering shows a rehabilitated World Trade Center used as a W Hotel.
Photo provided by Gate House Capital Corp. -- An artist's rendering shows a rehabilitated World Trade Center used as a W Hotel.

One of the two teams of developers that failed to win a city selection committee’s endorsement to redevelop the former World Trade Center building at the foot of Canal Street has asked the city to disqualify the winning proposal.

In a memo to the New Orleans Building Corp., James H. Burch LLC and Peer & Arey Construction said the proposal from Gatehouse Capital Corp. should be rejected because it omitted some required information, modified the original proposal after the submission deadline and does not offer the best value to the city.

The memo, dated Sept. 12, also alleges that Gatehouse was chosen based on “confusion and mistake of material fact.”

“If the NOBC disqualifies the Gatehouse proposal, it may award the contract to the next best responsive proposal that offers the best value to the city,” the developers wrote. That would be the Burch team, which was the runner-up to Gatehouse in the selection committee’s ranking of the three proposals.

Both Burch and Gatehouse proposed turning the vacant 33-story 1960s office tower into a mixed-use hotel and apartment building. The third proposal, from a group of local tourism leaders, was to demolish the structure.

The five-member selection committee appointed by Mayor Mitch Landrieu is expected to make a recommendation to the NOBC board that it begin negotiating a lease with the Dallas-based Gatehouse for the site.

The panel said Gatehouse presented the strongest performance history and financial plan of the three respondents. But the committee wasn’t satisfied with the evidence of the developer’s commitment to dedicate at least 35 percent of the project to certified disadvantaged businesses. In its proposal, Gatehouse did not identify the minority- and women-owned businesses with which it would partner. At last month’s selection meeting, a representative from the city’s Office of Supplier Diversity said the omission wasn’t grounds for disqualification.

But the Burch team argues in its memo that the Gatehouse plan should have been dropped because the city’s request for proposals listed the plan for disadvantaged business participation under “required proposal content,” information that each team “must include.”

“Thus, failure to meet these mandatory requirements should result in rejection of the proposal as non-responsive and disqualification of the responder from further consideration,” the Burch team’s letter said. Committee members praised Burch’s demonstrated commitment to DBE participation.

The Burch letter also cites an addendum to the Gatehouse proposal, in which the company offered to increase its initial lease offer to the city. After the selection committee expressed discontent with Gatehouse’s initial offer of $10 million, the developer, in a letter to the city’s office of procurement, said it would pay fair market value for the building. However, the Burch team also substantially modified its original offer, such as by adding new co-developers who appeared to supplant original proposer James Burch.

The Burch team also argues that the selection panel and Scott Whittaker, a lawyer with Stone Pigman Walther Wittmann, the law firm that advised the committee, misinterpreted and misunderstood Burch’s funding sources and financial capacity.

“The NOBC must reject the committee’s recommendations because the Gatehouse proposal does not offer the best value to the city and the recommendation was based upon prohibited modifications, confusion and mistake of material fact,” the Burch letter says.

Steven Peer, managing partner of the Burch proposal, said the letter was emailed to all the members of the NOBC board, which is nonetheless expected to adopt the selection committee’s recommendation and begin negotiations with Gatehouse.

“We just want to make sure that the hearing process is fair,” Peer said. “We still feel that we have a tremendous proposal both for the economics of the city and also for the site and the community.”

The city did not respond to a request for comment Friday.