City of Wichita bungled west bank development bidding process, documents show

City Hall botched the bidding process for an apartment development on the west bank of the Arkansas River, an Eagle analysis of internal city documents shows.

The bungled bidding began with an arbitrary decision by city staff almost three years ago to allow only three weeks for downtown development proposals to be bid. That first came into play this year on a proposal to build apartments on city-owned land at First and McLean, according to documents – internal city e-mails and background paperwork – obtained by the Eagle last week through an open records request.

The brief bidding window is virtually unheard of at City Hall, where council members say a 30- to 60-day deadline is customary for high-dollar project proposals. The decision to allow it escaped notice of city administration – including City Manager Robert Layton – for three years and was corrected only when it was caught by council members in late March.

The bidding process left the public with two divergent impressions: The original short-term request for bids was designed to favor the early, first bidder for the downtown land, and the extension was tailored for a competing group with a track record of council support.

Mayor Carl Brewer said the city didn’t intend to favor any developer in the bid process. But he acknowledged the city needs to craft a smoother, fairer bidding process for residential, retail and entertainment developers who might want a piece of downtown revitalization.

A partnership of local investors led by Bradley Fair developer George Laham – including several contributors to council campaigns – was awarded the riverbank project in a 4-2 city council vote Aug. 6.

The partnership proposes to build River Vista, a $24million complex of apartments, office and retail space along the river. It proposes to pay $100,000 for the land. The partners include Dave Wells of Key Construction, Old Town developer Dave Burk and Wichita theater owner Bill Warren.

The losing developer, Steve Clark – a longtime critic of council spending – has complained publicly that he had a tacit commitment from City Hall to build his $17million The Riv apartments before the bidding process. He also has said that he had no idea the city would seek other proposals. Clark and his development team spent almost two years crafting The Riv proposal, which included many of the same elements of Laham’s winning bid, before the competing bid emerged in late March this year.

But city records show he had as much as two years notice the project would be bid out.

It’s a mess that Brewer said firmly will not be repeated. He pledged last week to appoint a broad-based committee to fine-tune the city’s bidding process.

“Of course, I certainly have concerns with how the whole thing has played out,” he said.

The bidding process

The First and McLean property, 4.5 acres appraised at about $600,000 by Sedgwick County, is one of eight city-owned downtown sites identified in late 2010 as spots where development could spur even more downtown projects.

On March 16, the city published in The Eagle a request for proposals – a bid solicitation – for the land. The proposals were due three weeks later on April 6.

The abbreviated bidding process was a reward for interested downtown developers, a “bonus for coming forward with a letter of interest,” said Scott Knebel, the city’s downtown revitalization manager. City staff decided to go with a three-week bidding process – to move prospective downtown projects along as quickly as possible – in late 2010 as they prepared the initial prospectus for the downtown catalyst sites.

Knebel said the three-week period grew out of “talking among staff here in City Hall about how long is an abbreviated process — three weeks, 30 days.”

“We decided on three weeks,” he added, referencing city urban development chief Allen Bell and Brian McLeod of the city’s law department.

When the land RFP was published in March, Layton – who council members say is responsible for reviewing RFP requests before they are published – and council members were taken by surprise.

“I was not aware of the three weeks until after the notice was published,” Layton said.

“We never should have a short RFP,” council member Jeff Longwell said. “We’ve done them for much smaller opportunities, for procurements of a different nature, and we’ve provided a much longer time frame.”

Longwell went to the city manager, as did other council members, around March 23, as the notice of the April 6 deadline was being published a second time. They wanted a longer bidding process.

“We have only one chance to get this right,” Longwell said. “We’re going to honor the process and pick the very best proposal. You can’t honor the process by throwing out a three-week process.”

At the same time – March 23 – the Laham group first contacted the city with its competing proposal for the First and McLean land, confirmed Laham Development chief operating officer Amy Liebau. Laham and Clark are longtime development adversaries, according to city sources and sources within the Laham group.

One week later, the city extended the deadline for First and McLean proposals, publishing an amended bid solicitation with a new May 6 deadline. Laham’s group filed its proposal with the city at approximately 4 p.m. May 6, according to the city documents obtained in the open records request.

Longwell said Layton should have put the brakes on the RFP with the earlier deadline.

“Since Bob is the only one who gets to review those before they hit the street, then I certainly have an expectation that he does that, that he does review them,” Longwell said.

But Brewer said, “Everyone shares the blame on this one.”

“Yes, the manager and city staff are supposed to catch these things,” he said. “But you know, we as elected officials should be aware of these issues, too, and we should have caught it as well.”

Clark’s protest

Clark, who headed the losing The Riv development team, began working with the city’s downtown revitalization staff in early 2011, after the city issued its initial prospectus for the eight catalyst sites.

His group eventually filed details of its plan with the city, essentially opening the details of The Riv up to city staff.

This summer, Clark contended that his development team didn’t know the city intended to seek other bidders for the apartment project. He sent a four-page protest letter to Layton in late July.

Clark said he had a “preferred developer” agreement with the city to build the apartments and had no knowledge that the city planned to seek other bidders. He repeated those assertions at the Aug. 6 council vote, then withdrew his plan and left council chambers after the vote.

He said that he believed he had a commitment from the city to his proposal because city officials had begun negotiating a development agreement with him. He also took issue with Knebel’s claim that The Riv developers “always knew” they would have competition for the project.

City Hall officials said they saw Clark’s comments another way – as calling Knebel a liar.

Yet, in an e-mail sent the afternoon of Aug. 6 to Knebel, Clark acknowledged that the city had indeed notified The Riv’s legal counsel in mid-2012 of its intent to bid the project.

In addition, the city’s prospectus for the land at First and McLean, issued in January 2011, states clearly on its second page that any projects for that land or other catalyst sites downtown would be bid out.

The Eagle’s open records request yielded a city paper trail of plans to issue an RFP on any catalyst site downtown.

Included is an e-mail string beginning Jan. 30, 2013, between Knebel, Clark and Mike Nichols, an attorney representing The Riv. In the e-mails, Nichols is clearly notified that the city will issue an RFP under urban renewal law for the land at First and McLean.

A project timeline from the summer of 2011 and a list of city project reviews from late spring 2012, also provided in the open records request, both reference a future request for competing development proposals. Both were mentioned in the e-mail string.

At 4:23 p.m. on Aug. 6, Clark acknowledged in an e-mail to Knebel that Nichols did represent Clark Investments in the apartment deal, but continued to maintain that he did not receive the information.

Clark and his son Stephen, who handled the project for Clark Investments, did not respond to a call seeking comment for this story.

Brewer, who voted for the Clark plan, dismissed the notion that the botched RFP suggested any favoritism, of Clark early on with the short three-week deadline for proposals or of the Laham group later with the one-month extension.

“I wouldn’t say the city was trying to kick Steve out or get him in,” Brewer said. “I’m certainly not happy that Steve’s proposal was out there before the other proposal was. I think too many people knew about Steve’s proposal. That’s just being honest.”

Best deal for city

Brewer and Layton say that the bidding process, while flawed, did yield the best deal for the city in the Laham plan.

“The reason I’m not too concerned (about the original three-week time frame) is we corrected it,” Layton said.

Longwell agreed.

“If you wanted to slant this thing to one developer, then the one who’s had two years to work on the project had a big advantage,” he said. “If you want to put everyone on an equal footing, then provide a minimum of time to allow them to formulate a plan. That doesn’t give anyone an advantage.”

But Brewer isn’t happy with the city’s performance on the apartment project.

“If we’re going to do these things, we must have a fair and equitable process for everybody,” the mayor said.

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