A lengthy review of whether prominent local developers violated set-aside rules for minority and women contractors during the $600 million redevelopment of the Iberville public housing complex apparently has been reduced to a $500,000 difference of opinion.
The Housing Authority of New Orleans said last week that HRI Properties Inc., the lead developer for all three Iberville project phases, is no longer under the authority’s scrutiny. It chalked up alleged missteps by HRI and its partners to “conflicting interpretations” of HANO’s subcontracting mandates for minority and women-owned firms.
At the same time, HRI has agreed to pay $500,000 into a new initiative aimed at strengthening HANO’s employment, training and contracting policy and its programs for disadvantaged business enterprises, women business enterprises and public housing residents, officials said.
HANO will match that $500,000 payment, for a total of $1 million.
After a review of all relevant Iberville contracts, the authority closed its investigation in February, HANO spokeswoman Lesley Thomas said Wednesday.
“The agency also identified its (employment, training and contracting) policy challenges and associated monitoring, and determined that conflicting interpretations of the policy may have led to different conclusions on methods of implementation and compliance,” she said, adding that the two entities have discussed HRI’s expected future compliance and that HANO will update its policy.
The authority’s decision was decried by representatives of two firms that are not involved in the Iberville redevelopment but have closely followed the dispute; they said the authority was letting HRI and its affiliates off with a slap on the wrist.
However, an outright censure of HRI’s actions might have proven problematic for the now locally controlled HANO administration, as HRI officials have repeatedly pointed to past approval of the Iberville deal by the agency’s former federally appointed leadership.
During the former public housing complex’s transformation into the mixed-income, mixed-use community now known as Bienville Basin, HRI hired general contractor Woodward Design + Build, which in turn hired a certified disadvantaged business subcontractor, Nolmar Corp., and a woman-owned subcontractor, Strategic Planning Associates. Those two hires were supposed to meet HANO’s requirements for 20 percent DBE and 5 percent woman-owned subcontracting.
But those two firms then passed on the majority of their work to other businesses that weren’t certified as DBEs or woman-owned businesses. Notably, Nolmar — a firm that Woodward owned a stake in until January 2015 — passed on nearly a tenth of its work to two Woodward subsidiaries.
HANO criticized the pass-on arrangement in a September letter to HRI. But HRI and Woodward officials maintained that HANO’s previous federal receiver had approved the deal, while Nolmar and Strategic officials said their oversight of the work performed by other firms should count substantially toward the overall participation goal.
HANO officials then said they were reviewing HRI’s claims ahead of a final determination, a decision that came on Feb. 11.
Besides the $500,000 payment, HRI also has hired an outside firm, the woman-owned DMM & Associates, to help it vet general contractors’ DBE reporting and compliance, according to HRI’s vice president of governmental relations, former New Orleans Mayor Sidney Barthelemy.
“HRI Properties values its partnership with HANO and the city of New Orleans and is proud of the accomplishments on Bienville Basin,” Barthelemy said. “We are pleased the interpretation challenges around the policy for DBE contracting have been resolved.”
The resolution did not please everyone. Stuart “Neil” Fisher, whose firm, Two Canal Street Investors, is suing the city and its consultants over their selection of a rival team including general contractor Woodward for the separate World Trade Center redevelopment, dismissed HANO’s and HRI’s characterization of the Iberville situation as a misunderstanding.
“Nobody pays $500,000 for a minor misunderstanding,” Fisher said. “But that’s business as usual with Paul Flower,” he said, referring to Woodward’s CEO.
Fisher is best known locally for a 2010 email he wrote when he was involved in a proposed redevelopment of the Market Street Power Plant, the former Entergy plant on Tchoupitoulas Street known for its two giant smoke stacks. He said in it that former Mayor Ray Nagin would “get a piece” of that deal.
Later, federal prosecutors presented evidence that Nagin got $100,000 in bribes from Fisher’s partner, Florida developer Michael Samuel, for his support of the Market Street project.
Steven Kennedy of the real estate advisory firm REO LLC, a certified DBE, also questioned the HRI development team’s actions and HANO’s response.
“They got caught, so they put money in this fund to prevent HANO from reporting them and taking them to court to say that they violated the master development agreement,” Kennedy said.
In response to the criticisms of himself and his company, Flower said that Woodward “completely lived up to its contract with HRI.”
He also said the firm looks forward to meeting the DBE requirements on its share of the $364 million plan to turn the former World Trade Center building into a Four Seasons Hotel and condominiums.
Follow Jessica Williams on Twitter, @jwilliamsNOLA.