The lowest-ranked bidder for New Orleans’ $364 million World Trade Center redevelopment project, which sued the city last year after it was passed over for the job, is now waging a legal war against the consultants who advised the city during the selection process.
In a lawsuit filed in Orleans Parish Civil District Court, Two Canal Street Investors Inc. claims the Stone Pigman Walther Wittmann law firm and the Jones Lang Lasalle real estate advisory firm, which advised a city committee evaluating the five WTC redevelopment proposals, communicated improperly with the winning team; ignored Two Canal Street’s bid, even though it would have netted the city a bigger financial benefit; and analyzed the proposals incorrectly.
Two Canal Street made essentially the same arguments in a lawsuit filed last April against the city itself, not its consultants. That case is scheduled to go to trial in October.
Generally, Two Canal Street argues that the city, the five-member evaluation committee and the consultants should have selected Two Canal’s plan to turn the WTC into a Hotel Alessandra because that proposal offered the highest rent payments to the city — up to $65 million at closing and more than $3 billion over the 99-year lease.
Instead, officials used a more broadly focused scoring process and picked the development team of Carpenter and Co., of Massachusetts, and the local firm Woodward Design + Build, who proposed to turn the long-vacant 1960s office tower into a Four Seasons Hotel and condominiums.
Carpenter and Woodward offered the city only $5 million at closing and $773 million in rent over the life of the lease, the losing firm charges.
“The city’s selection committee relied heavily on the incorrect and biased analysis of the city consultants who had regular and in-depth meetings with key decision makers,” including Mayor Mitch Landrieu and others in his administration, the suit says.
Because of the consultants’ errors, “defendants are liable … for the damages (Two Canal Street) has sustained as a result of their material misrepresentations,” including loss of business profits in excess of $1.5 billion over the 99-year lease, Two Canal Street attorney Charline Gipson said in a statement on the suit.
However, the New Orleans Building Corp., the city public-benefit corporation that acts as landlord for the city-owned site and that also approved the Four Seasons deal, has maintained that it is exempt from a public lease law that requires selecting the highest bidder and was thus free to choose the proposal it deemed best overall. That proposal, the NOBC board decided, was Carpenter and Woodward’s.
The Carpenter-Woodward proposal received an average score of 93.4 from the selection committee evaluators, the highest of the five submissions. Two Canal Street’s proposal averaged 60.3 points, the lowest of the five.
City officials were quick to dismiss the new suit.
The lawsuit “appears to be a frivolous and desperate attempt to further disrupt the redevelopment of the former World Trade Center site,” city press secretary Hayne Rainey said.
Rainey said the city’s process was open and competitive, and that Carpenter and Woodward offered an “impressive past performance history, financial capacity and ability to meet the city’s significant disadvantaged business enterprise participation requirements.”
Barry Ashe, chairman of Stone Pigman’s management committee, said the suit “has absolutely no merit.”
Steven Peer, of Peer Interests, who was formerly on the Two Canal Street team but later sold his interest for $10, seemed to dismiss the initial suit as a money grab in a May email to a colleague.
“If you see an article about filing a suit in New Orleans, it is because the investors wanted to exert some pressure to see if they could recapture some of their investment,” he said.
Asked about the email, Gipson cited Peer’s previous denunciations of the process and consultants.
Follow Jessica Williams on Twitter, @jwilliamsNOLA.