Parking contract mired in intrigue

Parking lots
Parking lots

A contract to manage three city-owned parking lots around the French Quarter that led to the downfall of former City Councilman Oliver Thomas in 2007 is again stirring up intrigue, with one of the bidders accusing city officials of trying to steer the work to a favored firm.

The contract to operate the French Market Corp.’s lots is in limbo at the moment. Late last month, the four bidders were winnowed to two. A meeting of the group’s board was set for May 28 to pick one of the two finalists, Premium Parking and SP Plus. SP Plus is a joint venture between the incumbent vendor — the national firm Standard Parking — and New Orleans businessman Ronnie Burns.

The French Market Corp.’s interim director, Ann Duplessis, prepared an analysis for that meeting arguing that, although Premium Parking had ostensibly submitted a cheaper quote than SP Plus to manage the 628 parking spaces, it had failed to consider various expenses. That meant the challenger’s proposal would end up costing the city more, she found.

Premium’s owner, Jim Huger, cried foul, saying the fix appeared to be in for SP Plus, and the vote was deferred. A second meeting had been scheduled for June 17, but officials on Friday first said they are postponing that meeting while they review the procurement process to make sure the city’s rules were followed, and later Friday said they plan to rebid the deal entirely — though they strongly dispute Huger’s allegations.

Huger says Duplessis’ evaluation was based on faulty assumptions, and he was shocked that she essentially altered Premium’s bid without running the changes past him.

“It is clear from the analysis ... that the current administration of the French Market Corp. is doing everything it can, including altering our proformas, withholding information, and providing false information to steer this contract to the incumbent,” Huger wrote in a letter this week to French Market officials.

He also griped the French Market board didn’t alert bidders that it had passed a rate increase — to take effect this month — that is expected to add perhaps $300,000 in new revenue. That’s significant because the parking-lot operator and the city split a portion of the profits, which means bidders in part based their submissions on how much cash comes in.

Duplessis said Huger should have known about the increase, which was adopted at a public meeting. As for his proposed expenses, she cited her background in banking and said: “I can read these numbers, and I know when something’s not right.” She added that four of the five members of the subcommittee that chose the finalists gave SP Plus a higher score than Premium before ever seeing her analysis.

Huger declined to speculate on why city officials might favor SP Plus.

The firm is half-owned by Burns, an ally of Mayor Mitch Landrieu whom the mayor named to head a board setting up a new community hospital in eastern New Orleans. In addition, Burns has long held the parking concession at Louis Armstrong International Airport along with a partner firm that recently merged with Standard. In bidding for the French Market work, Standard tossed out its current partner on that deal, Parking Solutions, in favor of Burns.

It’s not clear why; a message left for one of Parking Solutions’ principals was not returned. Michael Wolf, a spokesman for Standard, declined to comment. Burns said he didn’t know the reason for Parking Solutions’ ouster either, but noted that he has long-standing partnerships with Standard and its subsidiaries.

Burns and Standard have both contributed to Landrieu’s campaigns, among those of many other politicians, and Burns also contributed to Duplessis when she was in the Legislature. Huger, meanwhile, has given money to Councilwoman Kristin Gisleson Palmer, who is on the French Market board, among various other local politicians.

In addition to having the airport work, Burns was one of a handful of partners in the failed, city-backed Grand of the East cinema project in New Orleans East, a group that also included Liberty Bank president Alden McDonald. Burns, a former vice president at Liberty Bank, is now on the bank’s board of directors, and chairs its audit committee.

The Landrieu administration has been trying to recoup $6.2 million from the cinema project’s backers, who defaulted on a loan that was guaranteed by the city when Marc Morial was mayor.

Duplessis, meanwhile, was an executive at Liberty Bank until she joined the Landrieu administration in 2010. She announced May 30 that she was stepping down from her city job and plans to return to Liberty as a senior vice president this month.

The Burns connection is irrelevant, Duplessis said.

“I had made the decision long before this to go back to the private sector,” she said. “I had not even talked to Ronnie about it. He had no influence on me. I didn’t need his influence to go back to the bank.”

Evaluating the parking lot proposals is a bit tricky. For starters, the city’s solicitation for a parking manager is a request for proposals rather than a bid. That means the French Market’s board does not have to pick the contractor with the lowest price.

Even determining whose price is best is complicated for a couple reasons. First, the French Market Corp. picks up specific costs borne by the vendor, and the proposers project different levels of expense. Secondly, the vendors are allowed to propose their own revenue-sharing deals, and those play out differently depending on how much money the parking lot generates.

Last year, the parking lots generated roughly $2.6 million in revenue, according to bid documents. Standard Parking incurred $756,000 in expenses running the lots in 2012, and under the terms of the contract, the French Market picked up those costs. That included a management fee of $122,498.

Both Standard and Premium believe they can lower the expenses significantly, mostly by hiring fewer people and using more automated credit-card machines.

Standard’s proposal says the new joint venture will lower its expenses to $527,000 annually, and it then proposes a tiered revenue-sharing arrangement.

Premium Parking, meanwhile, said it would make do with expenses of about $433,000, and it proposed a revenue-sharing deal under which it would get 25 percent of any net income over and above what the lots generated last year. In other words, the bulk of its fee depends on reducing expenses and increasing revenues.

But Duplessis’ analysis says Premium failed to account for certain costs it would have to incur, and which the city would then have to pay. Among them: group health insurance for employees; landscaping; waste removal; and security. To cover those costs, she added nearly $180,000 to the company’s proposed expenses.

The biggest cost she added was $130,000 for security. Premium had said it planned to use L & R Security, a certified disadvantaged business enterprise, to handle security and meet the city’s goal of steering 35 percent of all contracts to DBEs.

Duplessis said the French Market actually already pays a separate firm to provide security at the lots, so L & R is not needed. But without L & R in its bid, Premium wouldn’t meet the city’s DBE goal, so she added $130,000 to Premium’s expenses.

Huger objected to the addition of the $130,000 to his bid, saying he is willing to guarantee that Premium will stick to the expenses listed in his bid. In order to meet the DBE requirement, he pledged that 35 percent of the value of the job would go to L & R, whether for security or manpower.

It’s worth noting that a second city analysis, requested by Palmer, found Premium’s proposal was actually substantially cheaper. But Duplessis, in an interview, dismissed the analysis — done by Canal Street Development Corp. director Cynthia Connick, also a member of the Landrieu administration — as a “one-pager” that was “not detailed.”

Huger also maintains that Standard has been violating the terms of its current deal with the city by padding its expenses in ways that the contract prohibits. For instance, he notes that Standard bills the city $1,000 every month for landscaping, but also bills the city for the cost of the employee who does the grass-cutting at the lots.

Wolf, the Standard spokesman, said he could not comment on that.

“As a matter of policy, we don’t comment publicly with regard to any ongoing RFP process,” he said. “It’s not fair to the company; it’s not fair to the board. We’re confident the board will come to a fair evaluation of each bidder’s credentials and qualifications.”

Burns, meanwhile, said he saw no evidence of favoritism, and said he’s seen similar bid processes unfold in cities around the country.

“Sometimes, the staff member will say, ‘You didn’t account for this expense,’” Burns said. “The staff does the legwork, and the board makes the decision. At the end of the day, they’re going to select whoever they think is going to serve the city better. That’s the way these things go.

“I have no reason to believe there’s anything going on other than a straight bid.”

Ryan Berni, a Landrieu spokesman, said late Friday that the deal will be rebid not because the Landrieu administration believes the process was flawed, but “to ensure the public’s trust and to ensure total compliance with Mayor Landrieu’s and the French Market’s professional services procurement process.”

“Neither the French Market Corporation Parking Manager Selection Committee nor the FMC Board has taken any action to award a contract,” Berni said in a prepared statement. “Mayor Landrieu has completely reformed the contracting process at City Hall and City agencies from top to bottom. We award contracts based on what you know, not who you know.”

The Standard/Parking Solutions joint venture has run the lots since 2004. For the decade before that, the FMC’s parking lots were managed by a joint venture of Common Street Ventures, a company owned by Stan “Pampy” Barre, and Park One. Barre, a member of Mayor Marc Morial’s inner circle, landed the arrangement when Morial was mayor.

Barre tried to hold onto it during Mayor Ray Nagin’s tenure by bribing City Councilman Oliver Thomas, who was a member of the French Market Corp.’s board. Though Thomas accepted roughly $15,000 in bribes from Barre in exchange for a promise to protect Barre’s interests, the French Market board in 2004 switched vendors and opted for the Standard/Parking Solutions joint venture. Parking Solutions’ principals included Keith Pittman, a former aide to Thomas.

Barre told federal authorities about the bribes to Thomas after he was convicted in an unrelated scheme of skimming more than $1 million from a city energy contract. Thomas, in turn, resigned from the City Council and pleaded guilty to federal bribery charges in 2007. He served three years in prison. Barre, meanwhile, was sentenced to five years.

Editor’s note: This story was updated June 20 to reflect the following change: The $756,000 in expenses Premium billed to the French Market in 2012 included its fee of $122,498.