Acquest vs. Valiant on the Library Lot

The RFP page for the Library Lot RFP has been updated.  At first reading, I thought material had been deleted, but instead the page has been expanded with several subpages.  Hooray for transparency!

A major event on the revised page was that the letter from Acquest to the committee, discussed at the advisory committee meeting on February 23, has been posted on the site.  It is here.  The letter contains some interesting points.  This blog post will be updated tomorrow with some review and analysis of the letter.

UPDATE: Since the city website has been inaccessible at times lately, go here to see the Acquest letter.

As Tom Whittaker notes in his comment below, much of this letter is about process issues.  The letter is in response both to the Valiant letter (January 28) to the RFP committee  and to the January 25 Ann Arbor Chronicle account of the committee’s January 21 meeting. ( We made the Valiant letter available on February 11 and this letter from Acquest is dated February 17.)  A note: We did not report on the January 21 Advisory Committee meeting because the Chronicle did such a thorough job of it.  Although there were some details and side points that could have been added, the Chronicle account was accurate and reasonably complete.

Acquest’s letter is partly a rebuttal of comments made at the meeting (as reported by the Chronicle).  Some of these have to do with the design of the project.   One of the things that I noted about that January 21 meeting is that the committee’s comments were inappropriately directed toward design issues, though there were no RFP criteria for design except that the project had to adhere to current planning guidelines.  Acquest’s letter says,

“As to comments describing our conceptual design as “hulking” and “blocky” we would like to emphasize that our team has endeavored to craft a conceptual design that we believe will fully comply with both the RFP requirements as well as the newly adopted D1 Zoning regulations, especially those regarding required building and streetwall setbacks, density, floor area ratio and building height. We are fully cognizant that the specific of our design proposal will need to be more fully developed and vetted by the Planning Commission, East Liberty Historic District and by the City Council.”

I thought at the meeting that even some staff members and certainly committee members seemed to be making judgments according to their personal reactions to design of the two projects, and as Acquest is noting here, that was inappropriate.  The committee did not make any effort to compare the two projects to the actual criteria stated in the RFP.

The letter protests both the committee’s ranking of the proposals (Valiant was #1 for most committee members, though it was tied with Acquest by two) and the fact that Valiant’s letter appeared to be negotiating with the committee, noting that “As we examine Valiant’s response to these deliberations as contained in its January 28 letter, it has proposed major changes to its proposal wherein (they meant whereas) we have not.”   There is a procedural question here, whether the committee should be accepting alterations to proposals at this stage, especially if other proposers have not been offered an opportunity to do so.

The letter notes that there were several inaccuracies in committee members’ characterization of their proposal but that “The general tenure (they mean tenor) of the reported deliberations…would suggest that based upon the initial written and oral presentations, the Committee has preliminarily reached a decision in favor of Valiant. It’s much too soon to rank the two finalists.”

Committee deliberations so far have not included any real evaluation of the financial feasibility of the two proposals.  Indeed, staff has discouraged the committee from any real analysis of the financials.  But Acquest makes an important argument (in light of our own analysis) about the assumptions that each made about viability of a new hotel enterprise.  “We contend that our … projected costs are much more in line with the realities of the market, i.e. our assumed average daily rates are $135 versus Valiant’s at $179. Our assumptions assume occupancy in the stabilized year of 67%, certainly an aggressive assumption in today’s depressed market, but considerably more conservative than Valiant’s 75%.”   (Note: our analysis indicated that this is indeed too aggressive, though less so than Valiant’s.)  Also, they would pay the city outright for the air rights, while the Valiant proposal involves a more complex lease arrangement, one that Acquest says bears more risk for the city.

The most confusing aspect of Acquest’s proposal has been the role that a city and/or county-financed conference center on the old Y site would play.  This letter clarifies it somewhat; they indicate that the conference center is only a desired aspect to the deal, not a required one.  Of course, that means that they are only contracting to build a new hotel on the city lot, not to provide a conference center.

Finally, they challenge Valiant’s plan to have an independent study done of feasibility, and implicitly challenge that study’s veracity, saying that such studies should be done under the direction of the city.

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2 Comments on “Acquest vs. Valiant on the Library Lot”

  1. Tom Whitaker Says:

    I think the most interesting part of Acquest’s letter is their highlighting of the failure of the committee to follow the selection process outlined in the RFP. That process called for several criteria to be analyzed and rated for each proposal. Each rating would then be weighted per a prescribed formula, and then presumably, the ratings would be totaled to reach a definitive and relatively objective ranking. Instead, the individual committee members simply and subjectively ranked the proposals 1, 2, 3, etc., in their entirety, and then discussed their individual rankings as a group. They never even used any math to reach a final recommendation.

    It’s interesting that this process complaint is coming from a proposer who is actually still in the running. No one can dismiss this complaint as coming from a sore loser, or from people who are simply anti-development of any sort. We now have complaints from citizens, eliminated proposers, and proposers still in contention. And still, no one involved in this process is going to call a halt to it?

    A private entity has considerable latitude to make decisions about bid proposals and are largely free to change the rules as long as they avoid fraud or other illegal activities. In the public realm, the bar for fairness and equality among proposers is much, much higher. This letter identifies a number of failings of the selection committee and lays the groundwork for a potential future claim of unfairness, should the ultimate decision be based on this faulty process. This is the kind of risk the city attorney should be concerned about: the LEGAL risk. It’s not his job to analyze the risk of the financial package.

    Clearly the City and DDA don’t have the skill set required to handle these kinds of complex public-private development deals. Future public land decisions ought to be the result of comprehensive public planning. Then, the land sale or lease should be made contingent on that planning, using zoning or deed restrictions to achieve the planning goals. The sale or lease should then be made as simple as possible and not involve public investment, bond sales, give-aways or other public risk, unless there is a clear an obvious benefit to the City.

  2. John Dory Says:

    I agree, Tom.

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