The arcane world of airport concessions contracts has been laid bare, and for some what they see isn’t pretty.
After hours of sometimes heated discussion, a racially divided city council voted 8-7 against a proposal that would have given more than half of the concessions space in a renovated Love Field terminal to the airport's current vendors—without a competitive bid— for a term of up to 18 years.
To the surprise of some long-time council observers, the council overruled a recommendation by city staff to extend the contracts of Star Concessions and Hudson Retail Sales—two firms with ties to prominent Democrats, including State Rep. Helen Giddings and Congresswoman Eddie Bernice Johnson—without a competitive bid.
The essence of the city staff recommendation, that the no-bid contracts would be appropriate given the incumbents’ experience, the desirability of minimizing disruptions during the renovation, and the business risks taken by the incumbents—which included significant capital investments—during a period of uncertainty following the 9/11 terror attacks, ultimately failed to carry the argument.
In the three years since the council first embarked on its Love Field modernization plan, the concessions contracts have emerged as by far the most contentious issue, and have led to accusations of political favoritism on both sides.
“I think what happened is, we’ve been working on this for three years, even before I came on the council, “ said councilwoman Carolyn Davis, who voted in favor of the no-bid contracts. “And so I went with staff recommendation, I’ve always supported staff recommendation, but we didn’t win. It takes eight votes to win here at the Horseshoe, and the eighth vote won.”
Hudson is part-owned by state Rep. Helen Giddings and by a trust that manages the assets of U.S. Rep. Eddie Bernice Johnson. Star is owned by prominent Democratic donor Gilbert Aranza. To some, it was the direct—some say heavy-handed—involvement of Mayor Tom Leppert that turned the tide. In April, Leppert began his campaign to stop the deals from being approved, calling them too sweet for the incumbents and bad for Dallas’ image as a fair place to do business.
“These contracts – lasting 19 years – would award major portions of our new terminal to the two incumbent concessionaires without having been vetted through the competitive process. This has short-circuited new ideas and concepts and discouraged competitors, including firms owned by minorities, women and emerging entrepreneurs,” Leppert said in an opinion letter.
Davis, along with six of her council colleagues, was impressed by the incumbents’ track record as tenants, their post-9/11 hardships, and the unanimous recommendation of the transportation committee that the deal go forward.
“They’ve been through thick and thin out there,” said former councilman Ed Oakley, in support of the incumbents. “They’ve been through the building of the parking garage, they’ve been through 9/11, they’ve been through the remodeling of the terminal, [and] they’re now going through another remodeling .”
Carolyn Davis expresses similar feelings. “We also felt that they had never missed a payment, they had paid on-time, and I asked the question, ‘How much money had these concessionaires given the city of Dallas?’” Davis said.
The answer to Davis’ question soon became evident. “They have given the city a lot of money. Lots of money. If you own a building and you’ve got good tenants, you just don’t say, ‘Well, I’m going to kick them out because I think I want someone else who is going to give me more or pay me more,’ you tend to keep the good paying tenant,” Davis said.
“What they were trying to accomplish is encouraging the incumbents to stay through the renovation, and then having space in the new terminal at a rate that was more than what the consultants even recommended,” said Ed Oakley. “The remaining space would be bid out, and if [the new tenants’] rates were higher than what [the incumbents] were paying, the incumbents’ rent would automatically escalate to match. How is that not fair?”
In another victory for the mayor, three council members on the losing end of the 8-7 vote eventually crossed over to side with the majority on an 11-4 vote to put all of the concessions space up for bid once the airport renovation is completed in 2014. This made the final outcome appear less racially polarized.
Both Hudson and Star have been tight-lipped about how they will respond. Through its PR firm, Hudson would only disclose that “At this point, the Dallas City Council has approved a plan for the allocation and process for awarding concessions at Love Field. Hudson will continue to work with the city staff based on the plans approved by the city council.” Aranza (Star Concessions) could not be reached for comment.
For Davis and others, what stands out about the council’s decision is the second-guessing of city staff, which Davis says is unprecedented during her three years on the council.
“This has been the only time since I’ve been on the council, that my colleagues have gone against city staff,” said Davis. “Remember, coming out of the transportation committee we voted 10 to 0. Being a newbie on the council, I looked to [the committee chair’s] leadership on what we should do, because I just hadn’t been briefed on the Love Field situation.”
Davis’ recollections also suggest that the council’s deliberations weren’t always as contentious as they eventually became. Indeed, before the August meeting there was literally no argument since the option to grant the no-bid contracts was the only one then on the table. It was at the urging of the mayor during the June council meeting that voting on the proposal be postponed so that other options could be added.
“There was never an argument. Most of the contracts were going out for bid anyway. We just wanted the incumbents who [had] been there through 9/11 to stay there and recoup their investment, with the amount of money they put into that airport,” Davis said.
© Dallas Examiner. All rights reserved.
© Dallas Examiner. All rights reserved.
No comments:
Post a Comment