Contract controversy spices up Royal Oak election
Royal Oak — Disputes over downtown development and the handling of contracts for a new city hall, police station and other projects are heating up ahead of elections next month for Royal Oak mayor and city commission.
Mayor Michael Fournier and two city commission members, all up for reelection on the Nov. 5 ballot, are being targeted by a citizens’ group that questions the awarding of lucrative city contracts without seeking bids.
Much of the debate centers on the multi-million-dollar Civic Center project, which some residents and businesses say is choking off parking downtown and jeopardizing the Farmers Market and other retailers. The Michigan Supreme Court rejected a legal challenge to the project in May.
“The city undertook the biggest public works project in its history, called the City Center project, and inexplicably the mayor and commission majority decided to abandon long-standing competitive bidding processes and enter into at least 18 large no-bid contracts valued at more than $30 million,” argues Charles Semchena, a former city attorney and city commissioner.
Semchena said he reviewed dozens of city contracts and wrote a PDF presentation that appears on a campaign website funded by supporters of mayoral candidate Stephen Miller and two city commission candidates, incumbent Randy LeVasseur and Tom Hallock.
The mayor and his allies say they’ve acted in the city’s best interests to attract investment, workers and visitors, arguing that opponents are mounting a “misinformation campaign.”
“Their nonsensical assertions are ridiculous and are at complete odds with the facts,” Fournier said by email.
“The Civic Center was approved after five years of searching, three years of open debate, layers of administration review, and the unanimous approval of the city commission because the project makes us safer, adds greenspace, increases parking, saves operating costs, brings high paying jobs, increases tax revenues, and delivers over $200,000,000 of economic stimulus to our community.”
Critics of Fournier, including his opponent, Miller, are using the “end no-bid contracts” slogan as a rallying cry, and have printed it on lawn signs popping up around the city.
“Honest, competitive bidding for expenditures of taxpayer funds is common in all cities except Royal Oak,” Miller said. “Bidding is in the best interest of taxpayers. It ensures the lowest prices, and keeps politicians honest."
Miller, meanwhile, is facing scrutiny over a pair of drunken-driving convictions: the first in Petoskey in 1995, when his blood alcohol level was 0.10 and a second in Berkley in 2007, when it was recorded at 0.16, twice the limit at which a person is determined to be intoxicated. There were no injuries or property damages in either incident.
“I was embarrassed and humiliated by my past offense, and I do not deny that this happened, I have apologized for it and learned from the consequences of it,” Miller said. “I would like to take this opportunity to apologize again to our community for the offenses that I committed in the past.”
James Rasor, an attorney who supports Fournier, brought up the drunken driving incidents at a recent city commission meeting, saying voters needed to know about them. Miller said Rasor's comments were "designed to distract people from the real issues" surrounding the city's awarding of no-bid contracts.
Patricia Paruch, a city commissioner who is running for reelection, said the city has approved some no-bid contracts but argued critics have portrayed them in a misleading way.
“The ‘no bid contract’ phrase is a convenient dog whistle to suggest to uninformed people that something irregular or illegal might be going on,” Paruch said in an email. “The group of opponents used to refer to ‘9 million in no bid contracts since 2015’; now they’ve bumped up the number to $30 million.
“Actually, the $9 million number is pretty close to being accurate, because despite the dog whistle connotation, the city negotiates contracts without using the bid process when necessary to handle an emergency or, in more cases, when negotiating a contract with an existing low bidder which will result in significant cost savings to the city and ultimately the taxpayers,” she said.
In August 2017, the city commission approved a no-bid contract with the Central Park Development Group, more commonly known as Boji Associates, for the company to buy the Williams Street surface parking lot for $1 and receive $5.5 million to build an office building, on the site. The city also agreed to build a park in front of the building and a parking deck nearby.
In October 2016, the city hired three firms — Krieger Klatt of Royal Oak; Rich & Associates of Southfield; and Nowak and Fraus of Detroit — to do architectural drawings and other studies for the Civic Center project.
The city later hired all three for work on a new city hall and police station, awarding these no-bid contracts: Krieger Klatt, $585,000, in January 2018; Rich, $470,000 in October 2017; and Nowak, $261,000 in October 2017.
After it was selected following a bid process as a construction manager for the parking deck on 11 Mile, Colasanti Construction submitted an alternative proposal and received a $15.55 million no-bid contract in April 2018 to build the parking deck on 11 Mile and in February 2019 received an additional $876,640 for cost overruns.
Colasanti also received the job as construction manager for the new police department and city hall buildings.
The 598-space parking deck was opened in June, and construction began on other components with occupancy of the city hall and police department planned by next August. The city park, to be undertaken following demolition of the existing city hall and police department, is estimated to be finished in August 2021, according to city documents.
Fournier defends the city’s handling of development projects.
“The fact is the Civic Center project is on time and under budget,” he said. "The civic center project has wide community support and fulfills several long-standing goals including superior public safety, increased parking, reduced operating costs for the city, and a beautiful downtown park.”
According to figures provided by Todd Fenton, the city’s economic development manager, the budget for the city hall, police station and connectivity costs is $30.4 million, while construction costs total $29.6 million. Fenton said the numbers reflect the project is $836,852 under budget.
Fournier, Paruch and another commissioner up for reelection, Kyle DuBuc, have been targeted by opponents because of their votes for no-bid contracts.
“The City Commission should be standing up for taxpayers,” said LeVasseur. “Instead they are entering into all these no-bid contracts, many with their friends and campaign donors.”
Hallock went farther, saying: “In my former position as a USPS purchaser, if I issued no-bid contracts like the commission majority has, I would have been fired and prosecuted.”
DuBuc defended his voting, saying the city charter only requires competitive bidding on "public works or improvement" and the charter does not discuss professional service contracts, such as those received by Krieger Klatt, Nowak and Fraus, and Rich Associates.
"The signing of a development agreement with CPDG to build an office building is not a 'public work or improvement' as those terms are legally understood," DuBuc said. "The office building is private. The construction of a parking deck, city hall and police station are 'public works,' which is why competitive bids should be, and were sought for those portions of the project."
Semchena said the office building, while being built privately, comes in a contract that provided city land and a $5.5 million incentive and required the city to build a parking deck and a city park adjacent to the building.
"If that doesn't qualify for a public works project, what does?" he said.
Paruch also insisted the city’s handling of contracts is entirely legal.
“The only legal requirement that the city bid a contract is in our city charter, which provides that when a public works project is not already included in the budget for that year, it has to be bid,” she said.
Michigan law permits municipalities to establish their own bid practices, usually by charter.
DuBuc said the only place bidding is referenced in Royal Oak's city charter is in this clause: "Any public work or improvement/costing more than an amount authorized by the City Commission by resolution adopted at the same time the annual budget is approved and executed by contract, shall be awarded to a responsible bidder in competition." The city has established that as contracts over $25,000.
Fournier referred questions regarding city contract practices to city attorney David Gillam.
Gillam said the Boji group was selected as a preferred developer for the Civic Center project partly based on its interest in following a Royal Oak task force’s suggestions on using available city property for a public space.
There was no request for proposals or competitive bidding process, Gillam said. “The city’s experience has been with RFPs; you don’t always get a meaningful response.”
Gillam cited the wedge-shaped 4-acre site on the south end of Main Street near Woodward and Interstate 696. After sitting was vacant for more than three decades, it’s being developed with a multi-story building with residences and offices.
“Competitive bidding is always a preferred practice,” said Gillam. “But there are exceptions. Your lowest bidder is perhaps not always the best contractor capable of doing the work. You may have had a positive experience with another contractor whom has shown you they have the experience and competence and you can trust to do a good job.”
Gillam gave the city center project and development of an adjoining parking garage as examples of how the city awarded contracts without competitive bidding, and why.
“There were exclusive negotiating agreements sought by some like the Boji group, in which the city decided not to take other offers,” Gillam said. “There was an agreement for a parking deck construction manager; there were about four or five requests for proposals responses,” he said. “Colasanti went further and offered an alternative proposal in which he would not only be the construction manager but would do all the work.”
The city’s website shows an RFP was issued in February 2018 and Colasanti came back with the low bid, $968,781. The company also provided an alternative proposal to construct the whole project for $15,554,000.
“Colasanti had recently done good work on another city parking deck across from the post office and it was felt he could be relied on to do another good job,” Gillam said.
Gerald A. Fisher, an attorney of 40 years including as a full-time instructor specializing in government and municipal law at Cooley Law School, said competitive bidding is always a preferred practice but believes an argument can be made for exceptions to the practice, particularly involving professional services contracts.
"There might be a strict requirement for some school boards but local governments can establish their own practices," said Fisher, who has been involved in municipal law across Oakland County for years. "A general rule is a community can't make gifts or spend money that is not authorized."
Fisher said arguments about money saved by not having competitive bidding are hard to prove if you don't have any point of comparisons, and that issuing a request for proposals is vital, even if not required by a city charter.
"Otherwise, how do you know that you are not getting apples for apples?" he said.