"DC Auditor concerned about process in disposition of McMillan Park"

Still doing catch-up here -- see this post at the Historic Washington list at Yahoogroups:

But first, a clarifying tweet from Bloomingdame:

Bloomingdame ‏

To clarify-tomorrow's @councilofdc hearing is on 2 pieces of legislation and not on the concern expressed in Auditor's letter.

4:26 PM - 25 Oct 2015

Kathy Patterson, DC Auditor

From: Andrea Rosen aerie@rcn.com [HistoricWashington]
Sent: Tuesday, October 20, 2015 11:00 PM
To: HistoricWashington@yahoogroups.com
Subject: [HistoricWashington] D.C. Auditor Concerned About Process in Disposition of McMillan Park

   

 

In early July 2015, D.C. Auditor Kathy Patterson sent an inquiry to DMPED Brian Kenner asking for information about how Vision McMillan Partners came to be the exclusive recipient of development and property rights at the McMillan Sand Filtration Site and Park, and how the D.C. government came to be VMP’s banker. 

   

Mr. Kenner responded early this month with a chronological narrative and 300 pages of documents. 

   

Yesterday, Ms. Patterson wrote Council Chair Phil Mendelson (with cc’s to Inspector General Daniel Lucas and AG Karl Racine) expressing concern about the noncompetitive process Mr. Kenner outlined, particularly in light of the upcoming Council vote on the Mayor’s resolution (PR 21-307) to extend the city’s agreements with VMP, due to expire in December 2016, to 2021.  The Auditor's letter is below.  The text of PR 21-307 is at http://lims.dccouncil.us/Download/34431/PR21-0307-Introduction.pdf

Competition isn’t just an ideal.  The D.C. Code, Title 10, Chapter 8 - Sale of Public Lands, requires that “A proposed resolution to provide for the disposition of real property transmitted to the Council . . . shall be accompanied by (1) An analysis prepared by the Mayor of the economic factors that were considered in proposing the disposition of the real property, including:  (a) The chosen method of disposition, and how competition was maximized” [boldface added to §10-801(b-1)(1)(A)]  http://dccode.org/simple/sections/10-801.html#stq=&stp=0

  

Those who pay attention to public land disposition in the District know that McMillan is emblematic of our elected and appointed officials’ compulsion to satisfy developers by undervaluing, subsidizing, and divesting assets to them, and to convert land into tax revenue.  Longtime residents and businesses are displaced and dispersed from inexpensive housing and commercial spaces, and newly built structures that are mostly too expensive for those residents and businesses to return to are constructed for the benefit of the supposed endless stream of newcomers. 

What is rather unique about McMillan as just another piece of property to churn is its landmark status, recognized by its inclusion on the National Register (as well as the DC Inventory of Historic Sites); its transmission to the D.C. government under a preservation covenant from the Federal government; its renown as a compelling, even beloved place; and its potential for electrifying adaptive reuses instead of banal suburban-inspired speculative development planned for it, which frankly could be built anywhere if the city exploited another of its holdings or its power of eminent domain over a parking lot. 

What ought to make every resident who cares about this city take notice is our government's lack of respect for any constraints or considerations — social justice, policy, legal, cultural, historical, community, civic, democratic — other than monetary.  As far as the endless stream of condo-buyers:  Bad government eventually drives residents, new and old, who can afford to choose, out of the city.  And so the endless cycle repeats.              

The hearing on PR 21-307 will be held next Monday, October 26, at 9:30 in room 120 of the Wilson Building.

  

Those who wish to testify are asked to telephone the Committee of the Whole at (202) 724-8196, or email Cynthia LeFevre, Legislative Counsel, at clefevre@dccouncil.us, and to provide your name, address, telephone number, organizational affiliation and title (if any) by COB Thursday, October 22.  Persons wishing to testify are encouraged, but not required, to submit 15 copies of written testimony. If submitted electronically by COB on October 22, the testimony will be distributed to Councilmembers before the hearing.  Witnesses should limit their testimony to 4 minutes; less time will be allowed if there are many witnesses. 

        

For those unable to testify at the hearing, written statements are encouraged and will be made a part of the official record.  Written statements after the hearing should be submitted to the Committee of the Whole, Council of the District of Columbia, Suite 410 of the John A. Wilson Building, 1350 Pennsylvania Avenue, N.W., Washington, D.C. 20004.  The record for PR 21-307 will close at 5:00 p.m. on November 2, 2015.  (http://www.dcregs.dc.gov/Gateway/NoticeHome.aspx?noticeid=5675196)

    

Andrea Rosen

  

*****

October 19, 2015

  

The Hon. Phil Mendelson
Chairman, Council of the District of Columbia The John A. Wilson Building
1350 Pennsylvania Avenue, N.W., Suite 504 Washington, D.C. 20004

  

Dear Chairman Mendelson:

  

Based on documents signed by District officials between 2007 and 2015 – spanning the Fenty, Gray, and Bowser administrations – the District has had a plan to develop and revitalize the McMillan Reservoir Slow Sand Filtration Site (McMillan Site). Although in its early stages that plan included a competitive process that resulted in the selection of Vision McMillan Partners, LLC (VMP) as the land development team, it ultimately resulted in a greatly expanded role and exclusive rights for VMP, all without the benefit of a competitive process.

   

As explained in a letter from the Office of the Deputy Mayor for Economic Development (DMPED) to the Office of the District of Columbia Auditor (ODCA), dated October 2, 2015, (hereinafter, October 2, 2015, letter), in July 2006, “the National Capital Revitalization Corporation (NCRC) issued a solicitation for a land development partner for the McMillan Site.” (p.1). NCRC was to be the master developer and through a competitive process, in July 2007, chose VMP to be the land development team. In late 2007, DMPED “determined that VMP should undertake the land development and vertical development and serve as master developer for the McMillan Site.” (October 2, 2015, letter, p. 2). No explanation was provided in the October 2, 2015, letter or in the accompanying documents as to how DMPED “determined” that VMP should take on a more extensive role in the project. In fact, the Letter of Commitment, dated December 10, 2007, between VMP, the District government by and through DMPED, and the McMillan Advisory Group (“MAG”) states:

        

In the Solicitation, NCRC planned to be the Master Developer for the Project.  The Project is now controlled by the District and as a matter of business policy, the District will not play the Master Developer role. The District and VMP both agree that VMP is a highly-qualified development team and has the experience to lead the Project as Master Developer. More specifically, the key revisions to VMP’s role are as follows:

1.      1)  Assuming accountability for project completion per the agreed upon development plans – from inception to vertical completion.

2.      2)  Assuming the full burden to provide the private financing necessary for the project.

3.      3)  Having the opportunity to develop certain vertical parcels in VMP’s areas of expertise.

                

Subsequently, in late 2009, DMPED re-evaluated the plan and “DMPED and VMP agreed that the District would undertake the land development and VMP would have the opportunity to negotiate to purchase the development pads1 within Phase 1 of the McMillan Site.” (October 2, 2015, letter, p. 2). This resulted in a series of Exclusive Rights Agreements in which DMPED initially “granted VMP the exclusive right to negotiate for the purchase of development pads within Phase 1 of the McMillan Site” and, on June 4, 2014, resulted in expanded exclusive rights to include the development pads within Phases 2 and 3. (October 2, 2015, letter, p. 2).

      

Although the documents provided to me indicate that the District of Columbia Office of the Attorney General reviewed and approved for legal sufficiency many of the pertinent documents, including the Exclusive Rights Agreement dated April 23, 2010, and the six subsequent amendments to the Exclusive Rights Agreement that were executed between April 13, 2011, and July 28, 2015, this office has concerns about the expansion of VMP’s role and exclusive rights without following a competitive process. The importance of competition in government process has been highlighted repeatedly by reports of the Government Accountability Office (GAO) and other national, state, and local oversight entities. For example, in a 2014 report to the U.S. Congress, the GAO wrote:

     

Competition in contracting is a critical tool for achieving the best return on investment for taxpayers and can help save the taxpayer money, improve contractor performance, and promote accountability for results. While federal statute and acquisition regulations generally require that contracts be awarded on the basis of full and open competition, they also allow agencies to award noncompetitive contracts in certain circumstances. For example, when the agency’s need for good and services is of an unusual and compelling urgency that precludes full and open competition, agencies may be permitted to award noncompetitive contracts where a delay in award would result in serious financial or other injury to the government.2 (p. 1)

  

GAO further notes that even in such instances where urgency is claimed, an agency should nonetheless secure additional proposals (p.1).

  

1 A pad site is a free-standing parcel of commercial real estate located outside a retail center.
2 United States Government Accountability Office Report to Congressional Committees. March 2014. Federal Contracting: Noncompetitive Contracts Based on Urgency Need Additional Oversite, GAO-14-304. Retrieved from http://www.gao.gov/assets/670/661983.pdf.

                  

Just as it is common knowledge in the construction industry that government practice is to re-bid a project if there is a material change to the scope of work, certainly, the change to VMP’s role and giving it exclusive rights are materials changes that warrant a new competitive process.

   

I share this information with you in light of the upcoming hearing on the McMillan site. I also share this information with Inspector General Daniel Lucas in case he sees merit in his own additional review and with Attorney General Karl Racine given that his office performed the legal sufficiency review mentioned above. Enclosed with the electronic versions of this letter (as indicated below) are the DMPED letter dated October 2, 2015, and enclosed materials, which I received electronically.

   

Please let me know if you have any questions on these matters and I appreciate the opportunity to share these concerns.

  

Sincerely yours,

  

Kathleen Patterson
District of Columbia Auditor

  

Enclosures: As indicated.

cc: Councilmember Kenyan McDuffie (without enclosures) 

Karl Racine, Attorney General (with enclosures)

Daniel Lucas, Inspector General (with enclosures) 

DMPED's Brian Kenner