A Civil District Court judge appeared Tuesday to be open to ruling that the city circumvented public bid laws and showed favoritism in awarding a lease agreement for the former World Trade Center building to a Massachusetts developer that plans to turn it into a Four Seasons Hotel.
After listening to about three hours of testimony, Judge Tiffany Chase did not rule on the lawsuit brought by one of the losing bidders.
Should she conclude that there is some merit to the claim, plans to redevelop the long-vacant riverfront office tower could once again be scuttled or at least delayed.
Attorneys for Two Canal Street Investors said the lease agreement between developer Carpenter & Co. — in tandem with the local firm Woodward Design + Build — and the New Orleans Building Corp. should be scrapped because the process leading to Carpenter’s selection violated public bid law requirements, lacked transparency and allowed for undue political influence and favoritism.
Two Canal Street attorney Daniel Davillier said that by executing the lease through the NOBC, a public-benefit corporation that acts as landlord for the city-owned site, the city purposefully evaded public bid law rules that would have required the lease to be awarded to the highest bid received from a qualified bidder.
The maneuver was done to allow Mayor Mitch Landrieu’s administration to influence the outcome, Davillier said.
Chase pressed an attorney for the NOBC to explain why the project was not required to follow public bid laws, particularly if the mayor had a hand in picking the five-member committee that selected the winning developer.
“The reason the Legislature enacted the public bid law is to ensure that the playing field is level,” Chase told NOBC attorney Wayne Lee. “I understand that we have this statute that allows (you) to kind of circumvent that provision, but I guess I question how, if in fact the city is doing all the appointments, is that possible?”
Lee said the selection process needed to be flexible to allow factors other than proposed rent payments to figure into the leasing decision.
The Two Canal Street team asserts that it offered the city the most money, with an upfront payment totaling $65 million this year, and that it therefore should have been awarded the lease agreement based on public bid laws.
An evaluation of the financial offers, conducted for the selection committee by real estate consultants Jones Lang LaSalle and the law firm of Stone Pigman, concluded that the Carpenter deal would be more profitable to the city over the life of the 99-year lease.
Davillier also called the impartiality of JLL into question. He said the firm showed deference to the Carpenter team by offering friendly responses to its emails and allowing more time to discuss the project with them. He also said a formula suggested by, and favoring, that team eventually was adopted by JLL to evaluate all of the proposals.
Lee disputed that claim and said all of the teams communicated openly and frequently with JLL.
Two Canal Street “came in and they understood what they were getting into. They participated in the process,” Lee said. “Their complaint is, at the end of the day, the selection committee didn’t agree that they were the best fit.”
Chase agreed that the selection process afforded all of the respondents an opportunity to communicate with the consultants, but she said she was “concerned” that the process may have been skewed in Carpenter’s favor.
“My question is whether or not everything complied with the methodology that was set forth in the RFP and in the RFQ and whether or not that methodology was actually adhered to throughout and applied evenly across the board,” Chase said. “Was the process clearly transparent? Was it followed without any kind of favoritism? That’s really what I’m here to determine.”
Chase previously denied Two Canal’s request to block Mayor Mitch Landrieu from signing the lease agreement. Landrieu signed the 99-year lease May 7, hours after it was approved by the City Council.
Chase has not indicated when she will rule.
Carpenter plans to begin work on the $364 million project this fall, with the hotel due to open in December 2017.