JRA Convention Center Hotel Amended Protest 04-24-2016

7/26/2019 JRA Convention Center Hotel Amended Protest 04-24-2016

1/6

May 24, 2016

Jackson Redevelopment Authority

Board of Commissioners

218 S. President Street

Jackson, Mississippi 39201

On March 4, 2016, Advanced Technology Building Solutions (ATBS), filed an official NOTICE

TO PROTEST to the Jackson Redevelopment Authority (JRA). The NOTICE OF PROTEST was timely

filed and within the protest period. The Protest Proceduressection of the Request for Proposals states

that protest submissions shall be concise and clearly state the grounds for the protest; furthermore, the

protest must be submitted no later than seven (7) business days following the filing of a notice of intent by

the Jackson Redevelopment Authority. On February 24, 2016, the Commissioner met and selected

Engineering Design Technologies, Inc. as the Developer for the Convention Center Hotel. The

Commissioners failed to respond to the original NOTICE OF PROTEST. NOW COMES, this AMENDED

PROTEST due to additional conflicts of interest that must be added to the record.

AMENDED NOTICE OF PROTEST

Selection of Convention Center Hotel Developer

1.

The Jackson Redevelopment Authority (JRA) is legally precluded from awarding the

hotel development project to Engineering Design Technologies, Inc. (EDT).

Pursuant to the Mississippi Ethics Laws and the terms and conditions of the Request For

Proposals (Prohibited Interests.), the Selected Proposer must represent, warrant, and covenant

that: (3) neither the Selected Proposer nor any subcontractor or affiliate of the Selected Proposer

is a business with which any official, employee, member of the governing body or other public

servant of the Authority or the City is associated if such official, employee, or member of the

governing body shall have participated or will participate in any manner with respect to a

proposed Memorandum of Understanding or Redevelopment Agreement or any work relating

thereto; and (4) no official, employee, member of the governing body or other public servant of

the Authority or the City, and no person who shall have been a member of the governing body of

the Authority or the City during the preceding one-year period, has or shall have any interest in

the Selected Proposer or any work relating thereto which would cause a Memorandum of

Understanding and/or a Redevelopment Agreement with such Selected Proposer to violate Title25, Chapter4 of the Mississippi Code of 1972.

According to Ethics Opinion 05-119-E from the Mississippi Ethics Commission, MS Code

Section 25-4-103 (p)(ii) defines Public Servant to include an agent of the governmental entity.

The Opinion went on to state that the Commission has previously opined that an attorney for a

governmental board with a general scope of representation who is not a government employee is

an agent for the board and therefore a public servant.


2/6

Based on information and belief, Zach Taylor has served as JRAs General Counsel for more than

twenty (20) years, and he assisted JRA with drafting the RFP in question; as such, he would meet

the definition of Public Servant. Mr. Taylor is a partner in the Jones Walker Law Firm, and the

Jones Walker Law Firm is listed as Lead Legal Counsel in the EDT Proposal.

The above-referenced prohibitions in the RFP track the language in the Mississippi Ethics Law,and they will prevent the Selected Proposer, EDT, from being able to represent, warrant, or

covenant that there are no prohibited interests of any parties in its proposal. The less restrictive of

these prohibitions would require that Zach Taylor could not have received any compensation

from JRA for at one year before he or his firm could attempt to secure work directly or indirectly

from the Jackson Redevelopment Authority.

Where Zach Taylor served as JRAs General Counsel and received compensation within a year of

EDTs submitting its proposal to develop the convention center hotel and where Zach Taylor

assisted with the drafting on the JRA RFP and where EDT listed Jones Walker (the Law Firm of

which Mr. Taylor is a partner) as its Lead Legal Counsel, there is the appearance of impropriety

and bias in the selection process.

The selection of EDT as the hotel developer violates the Mississippi Ethics Laws, as well as the

regulatory prohibition that JRA placed in its RFP.

25-4-109 (1) and 25-4-109 (2) of the Mississippi Code of 1972, as amended, state that upon a

finding by clear and convincing evidence that any elected public servant or nonelected public

servant has violated any provision of this article, the commission may censure the nonelected

public servant or impose a civil fine of not more than Ten Thousand Dollars ($ 10,000.00), or

both. The commission may further recommend to the Circuit Court for Hinds County that the

elected public servant or nonelected public servant be removed from office, suspended, orsubjected to a demotion or reduction in pay.

2. Selected Proposer EDT must be disqualified for submitting a plagiarized proposal.

Much of the information contained in EDTs proposal was proprietary information that belonged

to the Red Leaf/ATBS Development Team. As contained in the detailed Official Notice of Protest

filed in this matter with JRA in September, 2015, information was presented to JRA showing that

quantitative information and descriptive narratives in the EDT proposal were taken almost

verbatim from previous convention center hotel proposals that had been submitted by members of

the Red Leaf/ATBS Development Team.

For reasons unknown to us, JRA never took any action to address the Notice of Protest. We will

assume that this was an oversight and respectfully request that JRA will review the claims made

in the subject protest and disqualify the EDT proposal on the basis of Intellectual Property Theft

and/or fraud.


3/6

3. Selected Proposer EDT must be disqualified for fraudulently misrepresenting its financing

structure and commitment.

First, the commitment letter from Hamershlag Sulzberger and Borg created the impression that

the Public Finance Authority of Wisconsin (PFA) was going to issue tax-exempt bonds for this

transaction and that the bonds would be collateralized by Hamershlag as a Qualified InstitutionalBuyer. The Qualified Institutional Buyer designation does not mean that Hamershlag has the

financial wherewithal to guarantee $73,000,000 in bonds. Further, the bonds will not be tax-

exempt but can only be taxable private activity bonds. This means that the flawed financial pro

forma that EDT presented was even more flawed, because the interest rate and resulting debt

service will be much greater than indicated in EDTs projected profit and loss statement.

If JRA were going to accept the premise that EDT/Hamershlag has $73,000,000 in assets to

pledge as collateral for bonds to be issued by PFA, it should have required verification that such

assets exist and are available to secure the bonds.

4.

Selected Proposer EDT must be disqualified because of the following:

a)

The financial projections were not based on any assumptions of occupancy levels and room

rates in our current market. EDT assumed an occupancy rate of 75%, where Red Leaf

assumed 53%. EDT assumed an Average Daily Rate for the hotel rooms of $180/day, where

Red Leaf assumed $133/day.

b)

EDT stated that it obtained its assumptions from a hospitality consultant known as JDS

Research. A diligent search by members of our financial team found nothing of record on

JDS Research. The information provided by Red Leaf with respect to the local market and

occupancy and room rates came from STR Reports requested by Starwood, the Red Leafhotel operator.

c) EDTs proposal was nonresponsive with respect to the preferred features in the RFP. While

an overhead connector was requested, EDTs proposal did not offer one; but in its

supplemental response, EDT said that it could add one at a price to be later determined if JRA

insisted that one be in the plan. Red Leaf included the cost of the overhead connector in its

proposal.

d) EDTs proposal was nonresponsive with respect to the parking in the RFP. While 700 spaces

in a parking garage was preferred, with 300 covered spaces being the next option, EDT

offered 300 spaces in a combination surface parking and a parking structure. Red Leaf stated

it would deliver 1,000 parking spaces in a garage.

e) EDTs initial proposal stated that its financing structure required approximately $11,280,000

from the City of Jackson; in its supplemental filing, EDT stated that it would not require the

loan or financial assistance from the City, but it failed to update its capital stack to show

where the requisite $11,280,000 will come from.


4/6

f)

Hamershlag Sulzberger and Borg stated that it will provide funding to PFA to issue a total of

$200,000,000 in bonds, but Hamershlag is a merely a broker-dealer.

Hamershlag stated in the EDT Proposal that it has completed financings and advisory

services in municipal underwritings that average almost $60 BILLION over its stated last

three year period. The Hotel Selection Committees Financial Advisors should have verifiedthis claim and number of other questionable claims.

Further, Hamershlag failed to disclose that two of its major principals, Melanie S. Sweet

(Executive Chairperson) and L. Mychal Jefferson (Major Shareholder) are both currently

embroiled in litigation for Securities Fraud. In additional, L. Mychal Jefferson and his

partners purchased a defunct company called Hamershlag Sulzberger Borg and registered it

with the Secretary of State for New York on January 3, 2000.

g) Although EDTs Proposal gives the impression that it is a Mississippi Local Development

Partner, Mississippi Developers, LLC, is owned by Mitzi Bickers a resident of Atlanta, GA.

h)

On information and belief, members of EDT development team and members of the City

Administration exerted undue influence on members of the Convention Center Hotel

Evaluation Committee to select EDT as the hotel developer.

5. Commissioner Conflicts:

a)

The City of Jackson, Mississippi issued a Request for Proposals for an EPA Consent Decree

Program Manager in November, 2015. The proposals were evaluated and narrowed down to

two proposals being considered. One Proposer was Black & Veatch; the other was AECOM.

Each Proposer listed its partners in the venture. Black & Veatch partnered with Neel-

Schaffer. AECOM initially had Mitzi Bickers as a partner.

b)

AECOM amended its proposal by removing Mitzi Bickers as a partner and listed its

partnering firms as Access Training, Inc. (Commissioner Andria Jones company), M&M

Professional Services, LLC (Malcom Sheperds company), M3A Architecture (William

McElroys company). This proposal was delivered to the City of Jackson in December 2015

and has been recommended by the Yarber administration for approval by the City Council.

c)

On December 15, 2015, the City of Jackson approved the contract of Integrated Management

Services (IMS) as the Program Manager for the Municipal Special Sales Tax InfrastructureImprovement Fund. One of the sub-consultants/subcontractors listed in the IMS Contract is

Access Training, Inc. (Commissioner Andria Jones company).

d)

After these proposals and contracts with the City of Jackson were accepted, Commissioner

Jones continued the serve on JRAs Project Committee. Although these transactions listed

Commissioner Jones company Access Training, Inc. as partners with IMS, M3A, M&M


5/6

Professional Services (affiliates of Mississippi Developers and Hamershlag Sulzberger Borg

Group), a review of the JRA and Hotel Evaluation Committee minutes does not show that

Commissioner Jones recused herself from the votes or even the discussions regarding the

EDT/Mississippi Developers proposal.

6. Additional Actions of JRA Commissioners, JRA Staff and External JRA Attorneys:

a) Zach Taylor had served as JRAs General Counsel for decades, but he was removed as

General Counsel in 2014. On November 5, 2015, the Mississippi Business Journal reported:

Meeting Oct. 28, 2015, the agencys governing board voted to put terminated JRA attorney

Zach Taylor back on the payroll as special counsel. The appointment comes a year after the

agencys governing board fired the Jones Walker attorney as JRAs general counsel but kept

him on at $265 an hour to complete Authority work he had under way. Under the new

arrangement, Taylor will take on legal work as directed by the JRA board. The rehiring came

on a motion by board member Andria Jones.

b)

A review of above-referenced minutes shows that Zach Taylor of Jones Walker drafted the

RFP for the Convention Center Hotel while engaged as JRAs counsel. Jones Walker is listed

as the Lead law firm in the EDT/Mississippi Developers proposal.

c)

Jackson Redevelopment Authority Commissioner Andria Jones used her official position to

select EDT/Mississippi Developers as Developer of the Jackson Convention Center Hotel

while she was in partnership with several businesses that comprise the EDT/Mississippi

Developers hotel development team.

d)

As early as June 2015, the business relationship between Andria Jones, through her companyAccess Training, Inc., and IMS (Lead Engineer in the EDT/Mississippi Developers Proposal)had been established.

e)

When the EDT/Mississippi Developers Development Team submitted its proposal on June30, 2015, its representative signed a Conflict of Interest Statement certifying that no official,employee or member of the governing body of JRA had a personal interest, direct or indirect,to the Proposer or to any member of the Proposers development team.

f)

Additionally, in January 2016, in connection with JRAs annual audit, each JRACommissioner returned signed letters/questionnaires to the Manager of JRA, Mary Ealey,stating that neither the Commissioner nor a related party had any material interest, direct orindirect, in any transaction or pending transaction to which the Jackson RedevelopmentAuthority is or will be a party with respect to the sale, lease, or purchase of property.

g)

On February 24, 2016, Commissioner Jones voted to approve EDT/Mississippi Developers asthe developer of the Convention Center Hotel.


6/6

7. Applicable Legal Standard and Conclusion:

Although JRA reserved the right to waive any bidding irregularities, it is well-settled in

Mississippi jurisprudence that fraud or favoritism in a procurement process is basis for rejecting a

bid or proposal. In W.G. Yates & Sons Construction Co. v. City of Waveland, 2010-CA-01799-

COA, the Mississippi Court of Appeals held that waiver of the irregularity is permitted only when

such waiver does not provide an opportunity for fraud or favoritism or affect the integrity of

the competitive bidding process (emphasis added).

The Court further stated that

In Parker, 721 So.2d at 677 (24), we noted that the Supreme Court has recognized the

following purposes of competitive bidding:

to secure economy in the construction of public works and the expenditures of public

funds for materials and supplies needed by public bodies; to protect the public from

collusive contracts; to prevent favoritism, fraud, extravagance, and improvidence inthe procurement and to promote actual, honest, and effective competition(emphasis

added) to the end that each proposal or bid received and considered for the construction

of public improvement may be in competition with all other bids upon the same basis, so

that all such public contracts may be secured at the lowest cost to taxpayers.

a)

Commissioner Andria Jones has a direct or indirect material interest with virtually all of theabove-listed entities that are members in the EDT/Mississippi Developers hotel proposal:Mississippi Developers, LLC; Hamershlag Sulzberger Borg Group, Inc.; Jones Walker; M3AArchitecture; and Integrated Management Services, Inc. (IMS).

b)

Commissioner Jones held material financial interests as a partner with these companies thatforged a partnership to develop the Convention Center Hotel through the EDT/MississippiDevelopers Development Team; yet she failed to disclose these relationships and continuedto adamantly promote the selection of this group. Clearly these relationships created anopportunity for favoritism and affected the integrity of the competitive bidding/proposalprocess.

c)

As a result of these conflicts and prohibited interests, the Jackson Redevelopment Authorityis legally precluded from awarding the hotel development project to the EDT/MississippiDevelopers Development Team.

For the reasons stated, the Jackson Redevelopment Authoritys selection of the Engineering

Design Technologies, Inc. as the Developer for the Jackson Convention Center Hotel should be reversed.

Respectfully,

/s/ Don Hewitt

Don Hewitt, Managing MemberAdvanced Technology Building Solutions, LLC (ATBS)Local Developer Partner

Documents

JRA Convention Center Hotel Amended Protest 04-24-2016