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    Two Canal Street Investors filed a lawsuit March 23, 2016 in Orleans Civil District Court against consultants and attorneys who helped the city pick a developer for the vacant World Trade Center building.

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    Two Canal Street Investors consultants lawsuit

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    Two Canal Street Investors filed a lawsuit March 23, 2016 in Orleans Civil District Court against consultants and attorneys who helped the city pick a developer for the vacant World Trade Center building.

    Copyright:

    © All Rights Reserved
    Download as PDF or read online from Scribd
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    3K views24 pages

    Two Canal Street Investors Consultants Lawsuit

    Uploaded by

    Katherine Sayre
    Two Canal Street Investors filed a lawsuit March 23, 2016 in Orleans Civil District Court against consultants and attorneys who helped the city pick a developer for the vacant World Trade Center building.

    Copyright:

    © All Rights Reserved
    Download as PDF or read online from Scribd
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    of 24
    No. GOPY FILED: CIVIL DISTRICT COURT FOR THE PARISH OF ORL STATE OF LOUISIANA 390% piviston «AL ‘TWO CANAL STREET INVESTORS, INC. VERSUS JONES LANG LASALLE AMERICAS, INC. GREG HARTMANN, JUDD STENSRUD, STONE PIGMAN WALTHER WITTMANN L.L.{' SCOTT T. WHITTAKER, AND ANGELA J. CROW] PETITION FOR DAMAGI NOW INTO COURT, through undersigned counsel, comes PlatttT, Two Canal Street Investors, Ine. (“TCSI), who files this Petition For Damages and respetflly avers as follows ‘TCSI is 8 domestic business corporation, incorporated under the laws of the State of Louisiana, authorized todo, and doing business, within the State of Louisiana “Made Defendants in this action ace: 4. Jones Lang LaSalle Americas, Inc, a Maryland business corporation, authorized ‘0 do business, and doing business, within the State of Louisan . Greg Hartmann, a person ofthe age of majority and a resident of Colorado, in his capacity a8 a Managing Direcor of the HLL Hotels and Hospitality Group. a division of ILL; and © Judd Stensrud, a person of the age of majority anda resident ofthe State of linois, im his capacity as an Associate Asse! Manager in the JLL Hotels and Hospitality Group, a division of LL; and 44 Stone Pigman Walther Wittman 1.1.C., a Louisiana limited Habilty company auhorized todo, and doing business, within the State of Louisiana as law fem (Stone gman’): and Scott T Whitaker,» person ofthe age of majority and a resident of the State of Louisiana, in is capacity as a Member of Stone Pigman: and © Angela J. Crowder, a person of the age of majority anda resident ofthe State of Louisiana, inher capacity as Special Counse at Stone Pigman. JURISDICTION AND VENUE, 3 Sariadition is vested with this Honerale Court pursuant o the Louisiana Constitution Amtcle V. § 16 and Louisiana Revised States Title 13, § 1137 4 ‘Venue is proper in this Honorable Coust pursuant to Articles 42,73, 74, and 8 ofthe Louisiana Code of Civil Procedure. EACIUAL BACKGROUND s ‘This action arises out of the unlawful, bad faith andlor negligent misrepresentations by Defendants, JLL and Stone Pigman, through their respective agents, Mr. Hartmann, Mr ensrud, Mr. Whittaker and Ms. Crowder, in connection with a public procurement process “orchestrated by the City of New Orleans and the New Orleans Building Corporation (NOBC™ together withthe City of New Orleans, the “City”) to lease for 99 years (the “Lease” the public Property located at 2 Canal Street, New Orleans, Louisiana, formerly known as the World Trade Center building (ihe “Public Property”). 6 ‘The legally mandated requirements that gover the leasing of public lands ate set forth in the Public Lease Law, RS. 41:1211, et seq the “Public Lease Law”) ‘The purpose of the Public Lease Law is to give all persons a chance to hid on leases oF the public lands, to prevent boards and other authorities from favoring one person over others, and to produce to the various agencies of the State named therein larger revenues by requiring ‘compatitive bidding forthe leases of publicly owned properties. Such leases are required to be warded to the qualified proposer who offers the highest rent/bid for the public prope. 5 ‘Two-Phase Public Property Lease Procurement Process: RFQ/REP. (On September 29. 2014, the City isued Request for Qualifications No, 8975-01712 (the “REQ’)! secking qualified developers for the lease and redevelopment of the building and riverfront site that constitute the Public Property, 9. TCSI was one of 11 proposersrespondents wha timely submited responses to the RFQ. The qualification, reputation, experience, capability and conceptual development plan of TCS] was validated during that first phase of the Public Property Lease procurement process when ‘TCSI made the shortlist ofthe five most qualified respondents tothe RFQ. lo. (On January 2, 2015, the City issued Request for Proposals No, 8975-01775 (the “ RFP") as the second phase of the Public Property Lease procurement process, to which only the five shortlisted prequalified responders tothe RFQ were permitted to submit REP proposals " Section I ofthe RFP (Evaluation and Selection Process) further sated, in pertinent pan, “The Selection Committe reserves the right to equest clarification or additional information and ‘0 request that respondents participate in interviews or make presentations to the Selection Committee oF its consultants Al evaluations shall be made according tothe eiteria set forth herein and willbe made according othe Selection Committe’ business judgment ~ (Emphasis added). cn eof City Consul JLand Stone Pi The City hired the law firm of Stone Pigman, who, in turn, engaged JL as a eansultant, to assist the City’s Selection Committee its due diligence, review and evaluation of the Proposals submitted in response o the REQ and the RFP: and also to market generally the Lease ‘of the Public Property to possible respondents tothe RFQ) the RFP. | Acopy of the RFQ is atached feet 8 Exhibit | * Acopy ofthe RFP is anached hereto a Exh 2 With respect to S one Pigman, Mr. Whittaker’ and Ms. Crowder' were the chief agents (among others at Stone Pigman) tasked to carry out the sulting services to he rendered in conection with the Public Property Lease procurement process. 14, With respect to JLL, Mfr Hartmann’ and Mr Stensnad® were the chief agents (among. “others at JLL) tasked to carry out the consulting servies ty be rendered in connection withthe Public Property Lease procurement process Is. Defendants (Stone Pigman, Mr. Whittaker, Ms. Crowder, JLL, Mr. Hartman, and Mr Stensrud, collectively, the “City Consultants") were engaged a8 experienced andlor licensed Professionals with a particular skill set and knowledge to assist the City, and its RFQIREP Selection Committe, with the evalua mn, recommendation and, ultimately, the selostion of the REP respondent that would he awarded the lucrative 99-year Lease for the Public Property 16, Pursuant to such engagentents, the City Consultants hel discussions and negotiations with cach ofthe REQIREP proposer; inlerproted and analyzod bid submissions produced charts and drafted summaries that were cirelated ro the Selestion Commitee and other key decision rnakers; eld briefings and made presentations and specific representations 10 the Selection Committee and other key decisions makers throughout the RFQIRFP procurement process and, notably, privately briefed the members of the Selection Committee in advance of the cleston ‘Committee's public meeting to seore and tank the five prequalified RFP submissions forthe Lease ofthe Publi Property 1. ‘The City Consultants (2) made decisions about what infocmation to gather about cach RFQ/RFP respondent and their respective Public Property Lease proposals, (ii) hose what information to emphasize and highlight; and (it) decided what information or facts to exclude in its work product, presentation and briefings to the Selection Committee and key decision makers. This allowed the City Consultants to effectively ic edueaton and erode of Sot T. Whit tac as Exhibit 3 “Proesinalbi eftesen and credential of Angel J. Cows atachet ss Fai { Proesionat hin, eketon and credentials of Greg Hartmann tached as Exhibit Professional io, education al cedennls fF Sense ached ss Fait *Prtesona steer the Selection Committe Is, Im actuality, the work product, actions, omiss ns and representations of the City Consultants were integral to informing the Selection Committe, and served as the basis and foundation of the “business judgment” of the Selestion Committe in evaluating and ranking the RFP proposals ofthe respondents ‘9 (On December 15, 2014, the top five (5) respondents slectd to patsipate in the RFP process (the second phase ofthe Public Property Lease procurement process) were: () TCS; (i Carpenter & Company. Ine. Carpenter") Woodward Interests LLC (“Woodward ith Carpenter, “Carpenter Woodward” (i) Crescent Tower Pariners, LLCIHRI Properties, LLC HRI", iy 2 Canal Redevelopment, LLC (*2 Canal Redevelopment”; and (v) Oxford Capital Group, LLC Oxford) 20 ‘The REP provided that the City appointed Selection Committee would review and ‘evaluate the REP proposals (100 total possible points, follows Quality of overall proposal (10 points) Project characteristics: construction and operation and management plan (15 points) (Quality of financing pian and financial resources; project feasibility (20 points “Acceptance ofthe terms and provisions ofthe Lease and Parcng Agreements (20 points) Benefits tothe City (25 points) DBE Participation (10 points) 21 Initial REP Pro (On February 16, 2015, TCSI submitted its initial REP Lease proposal for the Public Property to he developed asa luxurious fivestar Hotel Allessandra New Orleans: approximately 200 high-end, high-rise apartments; and a family friendly Tricentennial Tower attraction ‘The form of the Lease included in the RFP requested rent in the following six (6) categories: Non-refundable Deposit Interim Rent; Base Rest; Percentage Rent; Parking Rent; and 6. Profit Participation Tests init RFP proposal offered the highest rent forthe Publie Property in each of the specifically requested rent categories, as follows |. $23 Million Non-refundable Deposit $2.5 Million'year in Interim Rest 3. $2.5 Million year in Base Rent (with CP! increases every five yews) 4. Six percent (6%) of gross sales above the percentage rent threshold evel (as defined inthe Lease 5. $714,000/year in Parking Rent for the lease of 350 spaces i the former Word “Trade Center Garage (at fill market rate); and 6, Tem percent (10%) Profit Participation if there is a sale, exchange or other transfer ofall or a portion ofthe proposed develapment project 24 (On February 16, 2015, when the REP proposals sere submitted by the five prequalified proposer, TCSI's submission unequivocally offered the highest rent payments in all eatezories of rent listed in the RFP, as validated on the recon by one of the five-memiser Selection CCommittoe members, Me. Andrew Kopplin, the City’s Chief Administrative Officer, during CSIs February 27,2015 presentation tothe Selection Commits. 2s, ‘Throughout the Public Property Lease procurement process, Defendant City Consultants hal private conversations wih the REP proposers, and requested supplementary information and clarifications, but they had more fequent and favorable communications with the Carpenter ‘Woodward team, In fact, the REP proposers were linited to communicating only sith the City Consultants, as the REP prohibited anyother communications with representatives ofthe City 26 ‘Throughout the Public Property Lease procurement process, Defendant City Consultants transmitted pertinent updates and information to two influntal contacts relative to the development ofthe Selection Committee's “busines judgment” concerning the REP proposals () Ms. Cynthin M. Connick, Chairperson of the City’s Seletion Committe: and (i) Ms Rebecea Dietz, Executive Counsel to Mayor Mitchell J, Landriou. The City Consultants sai wally participated in several in-person briefings with the Mayor an! other key decision ‘makers, notably, in advance of the Selection Committees public meeting scheduled for March 24, 2015, to score and rank the RFP submissions ‘The City Consultants role as the only parties allowed 10 communicate with REP Proposer, and the subsequent transmission ofthe content of such communications, as well asthe is and summary evaluations, bythe City Consultants to the Selection Committee and other key decision makers, impused upon the City Constants a dy’ to accurately and completly represent the respective RFP proposals. The City Consultants efestively acted asthe exehisive soutce for materia ets and information lative wo the outcome of the Public Propoty Lease procurement process; therefore, the Selection Committe (ae other key decision maker). 38 well asthe RFP respondents, ll justifiably reli on the City Constants to reasonably perform ‘heir professional duties and provide accurate information 2% al” REP Offers; TCSI Sull Clearly Offered the Highest Rent to the Fach RFP proposer was asked to submit a “best and final” Lease offer on March 17. ropes 2015. As revised, these “best and fir REP submissions revealed that TCSI sill proposed the highest rent for the Public Property over the 99-year Lease term, and Carpenter Woodward. i ‘act, offered the lowest cent forthe Public Property over the 99-year Lease ten.” 2», On March 17, 2015, TCSI submitted its “Best and Final” Lease offer to the City Consultants. The Lease offer included a total of $65 Millon payable to the City in 2013, with another $3.7 Million per year payable starting in the rst year of operations under the 99-y ‘Lease ter, with an increase to over $7 Million por vex stating in year 31, TCSI's Lease offer hhad a total value of over 83 Billion x. In contrast, Carpenter Woodwarl’s “Best and Final” ofr was substantially lower” Carpenter Woodward offered $SMillion in total of upont payments (compared to S48Milhion offered by TCS) and rent of $3.25 Million per yer for the First 10 years, subject to rent credits for the $SMilion upiomt deposit and any property taxes paid over « certain real estate tax hurdle. Carpenter Woodward only committed tos minimom annual rent of S2Milion per yea for the first 10 years, increasing to $2.SMilion in years 11-20 “ILL Project A Income Pent "UTCSI's es ad Final Ofer atachsdas Exhibit 8 * Capener Woodar's Bes ap Fina Ofer tached as Eshisit 9 is Summary Chart, tached as Exhibit 7. Sac ex, M ine on chen ova NOC The City Consultants” Instructions for “Best and Final Offers" clearly set forth the various categories of Lease rent roquested from the bidders, Those categories inched (i) a non refundable deposit, (i interim rent during construction, (ji) Base Rent, (iv) Percentage Rent, (v) Profit Participation, (vi) parking rent, and (i), a new category 10 initially requested in the REP traction rent, SLL provided a otal for all ofthese categories (excluding parking rent which was offered by TCSI, but not by Carpenter Woodward) called “Total NOBC Income Potential (ndiseountedy TOTAL NOBC INCOME POTENTIONAL (Undiscounted) ~ Rent Offered” TCSE TCSt ‘RT | 2 Canal Oxford Carpent Option! | Option 1 | (Starwood) | Redevelopment | (Godfrey) | Woodward (Alessandra) | (Alessandra) | Opti | _(Hitton) (Four Seasons) ae | | | Year 1," $68 Millon | $23Million | S105) Si0Mifion | SSNillon | $8 tton Union Million Payment it [ieee Total Over | $8030 | $3207 | $3.165 | ~SEDADBilion | STS? | STTRAT MMilion 9p-Year | Billion | Bitton | Billion | Bion {teaseTerm | ES ae H 32 The City Consultants represented that Carpenter Woodward offered the highest economic benefit o the City when “Total NOBC Fixed Rent” is combined with the estimate foe “All City Taxes", However, that analysis, whether negligent or intentional is materially erroneous for 1) By arbitrarily focusing only on fixed rent, huge portions of the ther rent categories (ike percentage rent, attraction rent, and parking rent which wore specifically Fequested in the RFP and instructions for “hest and final” offers, wore aehiteaily liruinated from consideration. There is no reasonable hasis for excluding large portions of the requested rent to determine the highest bid or the highest economic benefit In fac, this is precisely the type of hid manipulation ark! modification th provides evidence that the City Consultants eeeated such analysis for the express purpose of attempring to justify the pre-planned selection of Carpenter Woodward, ‘who offered the lowest bid JLL used the wrong method to calculate property taxes, whieh erroneous methodology favored Carpenter Woodward's atifiially inflated fudget. TUT, used project costs to estimate the property taxes that may be payable in connection with the Lease of the Public Property. Both TCSI and HRI notified JLL and Stone Pegmnan that the New Orleans Assessor does not use project or construction ests te calevlate Property taxes fr hotel projects in New Orleans." ILLs use ofthe wrong method to calculate property taxes was compounded by the use of an inflated. consiuction ‘budget by Carpenter Woodward in the amount of $360 Million. Conversely. in Carpenter Woodward's RFP response, which provided a markeup of the proposed i (toe rom Daniel Davie, counsel for TCS, to Angela Cro (Cty Constant 0048080) tached ae Exe 10 Lease ofthe Public Property, Carpenter Woodward would only guarantee @sminimum construction budget of $200 Million.” Furthermore in the final Lease actually signed by Carpenter Woodward's affiliate ently. Two Canal Owner, LLC, as Lessee, here shockingly no obligation whatsoever for any minimum construction holget at al. It is felling that the inflated construction budget of Carpenter Woodward 28 used for favorable “scoring” purposes, but the City or NORC got no assurance of any such actual benefit from Carpenter Woodward. The City Consullan’s treatment of this issue was clearly wrong, materially prejudicial to TCS! and the other bidders, and influenced the business judgment ofthe Selection Committee and other key decision makers i) The use of estimated property taxes by the City Consultants is self highly speculative. The City Constants ignored the possibility tat fhe fonmer Wort Tre Center bulging may continue to be tax-exempt since it wl ill he own by the Cty ‘of New Oriens andthe NOBC. In Board of Conmm'r for the Part of New Orica City of New Orleans. ofa", the Honorable Judge Piper Griffin grant summary judgment in favor ofthe Port of New Orleans against the Assessor of New Orleans and held that property oxened hy the Port, but leased to a private. for-profit entity retained its character as public property used for public purpose and was thus Tax: xempt. That decison i currently on appeal to the Fourth Cieut Court of Appeal UE that decision is uphel, then the sane analysis would apply hee. tn fe, hee, the ty and the City Counil have approved a Cooperative Endeavor Agreement that expresely acknowledges thatthe Lease was forthe imporant public purpose of redeveloping the Public Property. Thus, there is a very trong case that the Public Property hee is used for a public purpose, and thus tax exempt. Therefore, the property taxes payable in connection withthe Lease of the former World Trade Center building are fr fom eran. TCS raised this see as point of information wth the City Consultants. In tur, the City Consultants used TCS inquiry ast the potential tax exemption ofthe Public Propet as an occasion to unreasmably call TCS rent proposal into qucstion, That was completely unwarranted since TCSI clearly and unequivocally agreed and acknowledged in ts proposed lease mark-up coments that ‘TCS! would be responsible for any property faxes tht became duc in connection with ‘he Lease ofthe Public Property.” iv) Despite the numerous errors by JLL in its estimated property taxes for each bidder even if those estimated taxes (which clearly favor Carpenter Woodwarl) were added {0 the total rent offered (without arbitrarily excluding any potion ofthe rent offered, ‘TCSI would sill have the highest bid __TOTAL RENT AND PROPERTY TAXES (Undiscounted) ‘FESLOption! | TCSI Option T | Carpenter Woodward | ‘Tova Rent” [$3030 Billion | $3207 ition | — $773.47 Mition ANGiy | S8B007OK0IS | —Saa00,701,013 | — Saraswat Taxes Total Rent | S6880-701013 | ST907,701,013 | sE7RR,IIO STF | ana city | “tases I Thus, by any objective measure of the bids, TCSI clearly offered the highest bid " Excerts f Carpenter Woodward's Lease marks sb n response RF [Pre Rs. 009162003246) ‘tached as Exh 11 See specially 47-1. TCSI gurantee inn constucton hes $9 Milin, seh Note that To Canal Owe LC, Dela conpany formed on Mar uber tan that of Carpenter Woodard 30,2015, gold do busines in {osisina om Apri 30,2015, wel ar the Cy Seletion Came tecanmcnaton, a nl ser NOC Bord acceptance of such recommeniation, Twn Canal Cine LE sas heer ited ay Cameney Weedvand [RFO or RFP sabmiscion. or weed in ny proces lated tthe REQ ore RP 28d af Comm City of New Orksans, CDC Ne. 2012-990 oh apatite oisina Fourth ict (2015. on (Pree. 8) an docket for ral argument on Decca 3, 2015 i om Dane Davi, counsel for FCS, Angels Crowder (City Conse, dated Marsh 28.2015, Ree, 09490810) atached a xh 10, The City’s Selection Committe relied heavily on the incorect and hiased analysis of the City Consultants who had regular and indepth meetings with key decision makers, such as the Mayor, his Executive Counsel, his Chief Administrative Officer (Mr: Andrew Kopplin, who alo served on the Selection Committe), and the Chairperson of the Selection Committe (Ms Cynthia Connick)" In act, the Selection Commitee members were briefed in private by the City Consultants prior to their meeting on March 24, 2018, at whieh meeting (i) the City Consultants presented ther biased summary ofthe Lease proposal, (i) the Lease proposals were scored, (i) the pubic was invited, and (iv) the proposers sere warned repeatedly not to ‘comment on the record in response to the material misrepresentations being eommuniested aout ‘oir espoctive REP proposals. x. ‘The structure of Public Property Lease, post REP award, is such that it shifs the financial burden and risk of non-compliance or non-ilivery to the Lease proposer ant nat the City ‘Specifically, at any point of breach of a Lease obligation, the City could swilly terminate the Lease and move on with the next best REP proposal. As a show of TCSTs confidence, and, more importants equity investors! confidence, in the TCSI Lease proposal, TCSI offered the City ‘S65 Million in non-refundable, upfront lease payments in 201 (23 Million at lease signing, and S42 million approximately 69 days later upon close of project financing). os compared to Carpenter Woodward's $5 Million (of which $4 Million was credited agains the interim and base fent). TCSts lease guarantor was Monday Properties, which guarantor provided a Teter the day before the public meeting confiming its readiness to finance TCSI's proposed project, as Alescrihed in TCSI's REP response.” Monday Properties was even described hy the City Consultants as well versed in large seale commer developments, with S11 Billion in transactions and 25 Million in square fet in New York City and District of Columbia" There vas simply no legitimate basis upon which the City Consultants could have reasonably "The Mayor's former Executive Counsel is Ms. Rebeca Diez, who, a6 of November 1, 2015, paced Mb ‘Shacna Wits a the Cy Atrey fete Cy of New Ores e Wilner The Mayor, Ms Rebecea Diet the Cay Constant ad two bighankng memes the Selection Come. tet throughout the ene precarmen roves nou ely 9, DOT! ea Io temuance fc REO oe ‘rfre the Selection Consmite pute maving on Mach 24,2018. Upon nfermton a Belicesich lanes ‘wfings included esssson tout the conten of fhe competing REP props a he dey ofl of he REP sgsponden especie project ear memes 1 Se Ebi 10, Monday Proper” GussntrLeter. ed March 23,2018 See Exhibit ID tps, questioned the silty of Monday Properties 1 finance TCSt's lease proposal. However, if the City Consultants had had any real concems shout TCStS available funds to meet ts commitments and projections, it would have uncovered any such issue within 30 days of the Lease award, when TCSI would have been required to pay & non-refundable $23 Million lease payment to the City: The omission ofthis important fact was also neligent om the pat of the City Constants %, The City Consultants continued the private “negotiations” and conversations the REP proposces up t the date ofthe Selection Committee's public meeting on March 24,2015, when the City Consultants presented their anced interpretations ofthe REP submissions to the Selection Comite, which presentation incuded material misrepresentations pon which the Selection Committee and other key decision makers relied justifiably. 36. Consul ts’ Summary Evaluation of REP Proposals The City Consultants prepared an I-page document called “Summary Evaluation Of Proposals For Redevelopment of 2 Canal Street” in connection with the § ection Commitee public meeting on March 24,2015 (the “City Consultants” Suromary”).= 37. The Cit Consultants’ Summary expressly provided that itis hased “primarily om (a) the inital [REP] Proposals, (b) the supplemental information provided by the respondents [including the “best and final” offers}, (¢) Stone Pigman’s knowledge and experience in the area of real estate development, and (A) analysis performed by Jones Lang LaSalle, the consultant retained by Stone Pigman to assist in the analysis ofthe [RFP] Proposals."=> 38 The City Consultants’ Summary, which was presented to the Selection Committee on March 2 2015, contains numerous msrepresentations regarding the TCSI RFP Proposal an the Carpenter Woodward Proposal, all of which had the efect of improperly favoring Carpenter Woodward, and harming TCSL 39, In Section 1 (Quality of Overall Proposal), the City Consultants’ Summary provides that © See Eshib 2 the Carpenter Woodward proposal includes two new additional buildings, cach oF which overtap onto ajacent areas ouside of the Public Property, “These arcas are owned by the City, but are subject 10 certain rights of Howard Hughes Comporation [(°HHIC")], Evidence of consent by [HHIC} has not been provided; however, the respondent has stated i will modify its desizn plan if these consents cannot be obtained." This indicates tha two entirely new buildings could just be designed away ifthe required consents could not he obtains, even though there was nn altemate ‘lesign presented, no altemate budget, and no alternate number of hotel rooms or condos presented, However, the real bias in this approach is evidenced hy the City’s Consultants misleading. statements regarding TCSI's proposal concerning a less impactfil_ potential contingeney. 40, With respect to TCSI's proposal the City Consultants stated. “A detailed plan for the Project was provided."** Inexplicably, even though TCS! also submitted a financing plan and ‘expressions of interest from funding participants, those facts were omitted fiom the TCS! summary in Seetion I. The City Consultants also stated that TCS included an attraction which is to be located of: te where the ferry terminal is now located, and which area is outside the scope of the RFP. “The respondent has not provided evidence of is rights to the ferry terminal site" ‘The City Consultants feiled to mention that TCSI did provide a letter of interest from TransDee. ‘he manager of the fery teaminal site. Additionally, unlike Carpenter Woodward, TCSI was not asked whether it could modify its design if the required consent could not be obtained, even ‘hough the observation atiraetion proposed by TCSI could have been relocated to the top Noor of the Public Property. 4 ‘The City Consultants also misrepresented. whether negligently oF intentionally, TCSI’s Proposal when they stated that TCSI did not provide “evidence of financing by the proposed attraction operator.”*” In fact, TCSI provided a letter of interest from Gramercy, Ine. for the ‘required equity for the attraction. That was the same level of commitment provided by Carpenter ‘Woodward from its proposed funders at that stage aap Sieap t > Se Exibie 12 ap. | * Se Exits - Gramercy Leer dted Mare 17,2015, sb wth TC's Best and Final Ofer 2 The City Consultants went onto state, “All respondents were asked fo provide comments to the Completion Guaranty form, along with a statement from te guarantor outlining any contingencies to delivery of the executed Guaranty. This respondent has failed 10 provide ‘comments on the Completion Guaranty." This statement was disingentous, a suggests thet TCSI did not offer a Completion Guaranty. In fac, TCS! offered to provide » Completion Guaranty from Monday Properties, a company with billions of dollars in assets.” In contrast, Carpenter Woodward offered a Completion Guaranty from a newly created affiliate entity with no asses, and Carpenter Woodward stated that such entity’ would be Funded with SSMillion, ‘hich funds could also be used to pay construction costs on 2 percentage of completion basis However, reading the City Consultants’ Summary gave the materially false impression that Carpenter Woodward provided a superior Comptetion Guaranty 8 Finally, in Section |, the City Consultants include another gratuitous and false assertion regarding TCSI's proposal when they stated, “This proposal was detailed in tems of design and fre But less so with respect to financial structure.” TCSt provided extesordinary detail egnrding its Financial structure and its financial plans in its inital RFP submission! There is simply no reasonable support for such a statement by the City Consultants, which hae the effect of negligently or fraudulently materially misleading the City's Selection Committee ane other key decision makers conceming TCSI's RFP proposal 44, At the Selection Committs’s March 15 public meeting the majority of commenis made hy the City Consultants about TCSM's Lease proposal were deceptively negative and misleading, while the majority of the comments made by the City Consultants about Carpenter Woodward's Lease proposal wore deceptively and hyperblically positive 4s Trnportantly, even though the JL chat included a estegry to show the total rent fered by each proposer, entitled “Total NOBCI Income Potential” (which inexplicably excluded the ‘requested category of Parking Rent, in Section V of the City Consultants’ Summary. they chose ® Sec Eshibt 2a | "Se Exhibit 2 atp. 6 *Complein Guratoe - Monday Properties (o be poided tian losing) "Such nancial information was ab summarized in the Ci Constants Summary ee Instead to highlight five other rent categories, which exstue portions of the rent ofere or sxlded speculative tax estimates. Eventhough the Selection Commitee was tasked with picking the best Lease proposal from the five prequalified proposer, the City Consultants didnot even present to the Selection Commitee the aetual total rent offers fom each bidder, which comparison would have shown that Carpenter Woodward’ bil was the lowest, with Oxford and 2 Canal Redevelopment offering over S1 Billion more it rent over the tem ofthe Lease, HRT offering over $2.3 Billion more in total ren and TCSI offering more than $2.4 Billion moe than Carpenter Woodward in total ent over he tenn ofthe Lease 46. Jn Section Il of the City Consultants’ Summary, under the Carpenter Woodward Section, the City Consultants tate, “At a $368 million development cost, the Four Seasons proposal is $90-130MM higher than the other four proposals, and as a result would add considerable value {0 the market and property tax base.” The City Consultants made several material false assumptions here. Fits, Capenter Wondward was nat obisated to acutally spend S364 million (0m this project (in fact, in their intial tease comments, Carpenter Woodward would only ‘harantee « conszuction budget expenditure of $200 milion). Second, the stated amount of $364 million included estimates that cither were aot part of the real anticipated cost, oF were sctually payable to Carpenter Woodwatd;e.¢, 8 $30 million contingeney for w own, yettobe Aiscoverd issues (even though their constuction tuget already had a contngeney amount included), and a $15 million development fee payable to Carpenter Woodward. Thi a8 Aiseuselahove, there may be no real estate taxes duc on the Public Popenty since it is public Propet usd fora public purpose, Finally, even if the Public Property were subject to real esate taxes, such taxes are calculated based on net operating income, and not hased on consttion costs, 4 Tncreiby, the City Consutans even go on to provide an excuse for why Coypenter ‘Woodward's rent proposal is so much lower than the other proposals when they slated vith higher costs to build this level of facility and operate this level of service, retum om investment can be challenging for developers relative to sher types of prot inching those propose hy the other [RFP] respondents” This statement was also materially misleading since the other four top, prequalified RFP respondents, including TCS, offered comparable luxury hotels as part of their Lease proposals 48 Also, in Section Il of the City Consultans* Summary, under the TCSI section, the City Consultants stated, “The addition ofa separate attraction is considered highly suspect given lack fof support provided for funding and development.” This point was patently false, whether luded by the City Consultants negligently or intentionally, TCSI provided a leter of ilerest forthe Financing ofthe proposed attraction”, as well as detailed cost and financial projections Also, TESt offered a guaranteed fixed rent of $3 million per year fram its attraction (not a Percentage of gross revenues oF net income, as offerod by other REP respondents). Thus, TSH was willing to take the finan isk relating to its proposed attraction, Additionally the City ‘Consultants omitted, whether negligently or intentionally, the $3 million in fixed attraction rent offered by TCSI from all oftheir fixed tent categories in the JILL chart. Omitting such guaranteed traction revenues constituted a material misrepresentation of TCSI's Lease proposal a Perhaps the best evidence of the City Consultan blatant atempt to sabotage the TCSI ‘id isthe language in Section I of the City Consultants’ Summary where they stated “ITCSI] is offering [the City] the largest potential rent compensation through @ combination of fixed payments, percentage of revenue and income xgenerated by the attraction funded by an entity not party to the respondents, cquity. Their initial proposal, however, supported a portion ofthese rent payments through an assumption that no property taxes would he paid on the proposed tenant improvements. We informed the respondent that such an assumption Is not Warranted, and have attempted to clarify that this respondent does not plan to contest the imposition of real estate taxes, The potential for the promosed ‘Alessandra to pay the level of rent proposed. along with property taxes and abiain funding for the development of the large attraction proposed puts this project ‘more in question than the other four respondents.” (Emphasis added) 50, This language was materially erroncous. TCS} had specifically notitied the City ‘Consultants in an email dated March 23, 2015", as follows: “{TCSI) understands that ad valorem real estate taxes may be due under the ‘proposed lease with the New Orleans Building Corporation and the City of New Orleans for the property at 2 Canal Stet. As provided in Section {1-4 of the {orm of lease, the Tenant is responsible for the payment of all ad valorem or real estate taxes assessed against the Leased Premises. Based on ut siscussions with Assessor Erroll Williams, TCSI understands thatthe assessonent of the property at 2 Canal Street would not be based on the construction costs oF the project. Rather, there is a formula that is based on Net Operate Income, and the residential component ofthe mixed use project would he taxed a lower rate {$e Exits Gramercy Leer dated March 7,215, abmitd with TCSY's Best and Final Ofer. "See Exhbt 10, Ema fom Daniel Davie, eurel for TCI to Angcin Comer (Cy Cosalant), died March 23,2015, free Rec 0490810), than the commercial (hotel) component. Assessor Williams also explained that the land would not be subject to ad valorem or real estate taxes since it ill ‘continue to be owned by the City of New Orleans. Based on the discussions with Assessor Williams, and a review of the actual realestate taxes paid by comparable hotels in the area, TCSI has ineluded a reserve for realestate taxes in is pro forma projections.” (Emphasis added) And yet, the City Consultants’ Summary nevertheless communicated material tmisrepresentations of TCSI's REP proposal to the Selection Committee and other key decision ‘makers, thereby perpetuating materially false and misleading information concerning TCSI's Postion om realestate taxes ypon which the Selection Committe justifiably led in scoring and evaluating the RFP Lease proposals. 22. Additional since TCS! offered to pay a $23 milion nonrefundable deposit upon the execution of the Lease (intended within 30 days after selection), TCSI was obviously willing to take all ofthe financial risk on the projet, and not shift any risk to the City. IF TCST file 40 obtain the required financing then it would lose $25 milion, and the City could have gone to the next highest bidder (which was HRI) If TCSI timely closed its financing, then it would have spent $237 milion (with completion bonds ands completion guaranty). Any defalls, whether in the payment of rent or taxes due under the Lease would then allow the City to terminate the Lease and keep the substantially improved property, along with all upfront rent payments by TCSL Agi, the City Consultants unfairly and materially misepresened the risk of TCSt's Lease proposal to the Selection Committee and other key decision makers, upon which risropresentations the Selection Committee and other key decision makers relied justifiably in Scoring nd evaluating the RFP proposals TCS! also relied justifiably on the City Consultants to Fepresent its REP proposal fairly and accurately to the Selection Committee and other key decision makers, which obviously did not happen, whether by the City Consultants’ negl or intentional acts and omissions. 33 Section IV of the City Consultants’ Summary provides another clear example of ‘isrepresentations hy the City Consultants that were materially detrimental to TCS1. With respect 10 the scoring category forthe acceptance of the tems and provisions of the Lease the City Consultants stated that there were open and unresolved issues with Carpenter Woodward (and the other three prequalified bidders, excluding TCSI, but they were confident that the apen 6 issues could be resolved. However, even though TCSI accepted all ofthe tems and conditions of the Lease (subject only t0 a standard reservation of the right for its Tender to review and ‘comment on the Lease sinee it was to serve as the main collateral fr the project loan), the City Consul Ws stated that, “[TCST] has stated that it accops the Lease and Parking Agreement propose We note, however. that this respondent has qualified its acceptance by stating that these agreements ‘remain subject to review and comment by fis) lender and its legal counsel Therefore, we have more uncertainty rouaeding the Lease terms to which this respondent may imately agree.” At the Selection Committe's March 24, 2015, pubic meeting. Mr. Whittaker also stated that TCSI was the only respondent who has made such a qualification. That was batantly untrue. tn fact, Carpenter Woodward, in its lease comments, specifically imposed an ligation that the City ot unreasonably withhold consent fo comments from Carpenter ‘Woodvand's lender. In actuality, Carpenter Woodward's reservation of rights with respect 10 iis lender comments was much more restrictive than that of TCSI. which simply allowed TCS lender to review the lease and propose comments, which proposed comments the City could accept or reject ints soe dis sion ss Finally in Section V ofthe City Consutans' Summary (Henefits tothe City and NOBC), the Cty Consultants show additional material bias in misrpresenting facts to favor Carpenter ‘Woodard and harm TSI The City Consultants presente their summary f financial offers ina "anne that misrepresented the actual proposals either by excluding categories of ent that were specifically requested (Le, percentage rem, attraction ret, ad parking rent) and including speculative taxes that were not requested oF proposed by the respondents. Even with the errs and omissions, TCS! was stil hisher than Carpenter Woodward in 4 ofthe 5 categories ineluded. {nthe Carpenter Woodward subsection on page 9 of the City Consulta ‘Suramary it state: “The primary economic benefit of this proposal is that they will pay the largest ‘mount of taxes to the City and its general fund. Although its rent to NOBC is substantially tower than the other bidders, the size, quality and structure ofthe development would produce the most direct economic benefit to the City in Present Value. The potential inerease in property values (From larger investment and immediate residential condominium sale), higher payroll due to the premium service levels and induced luxury travelers sould produce higher ‘economic multipliers than the other projects. ‘The notion that Carpenter Woodward could make wp shortfall in rent of over $2 Billion (with an additonal $60 million payable by TCSI in the first vou) by paying higher taxes is utterly absurd, In the TCSI subsection on page 10 of the City Consultants’ Summary, by contrast. it simply stated, “The primary economic benefit of this proposal i ts immediate and potential direct payments to NOB.” There is no mention of the $23 million nosfundale Lease deposit that TCS! would pay within 30 days, or the additional S42 million offred by TCSt at the financial ofsing inthe frst year. The Selection Committe was not informed ofthe otal rent of ‘over $3 Billion offered by TCSL Those glaring and material missions were detrimental o TCS relied upon by the Selection Commi and other key decision makers, and constituted negligence or intentional bad faith conduct on the part ofthe City Const. 56. improper Award ofthe Public Property Lease (othe Lowest Bidder After the “best and final” REP Lease submissions were submitted on March 1015, the ‘City Consultants actively manipulated and misrepresented the respective Lease proposals to such an egregious extent that TCSI's REP submission was materially changed) and ms Undervalued vis-i-vis the proposal fram Carpenter Woodward. By contrast ‘Woodward RFP submission was likewise materially changed, except with the effet of grossly ‘overvaluing its proposed rent and speculative property tax payments and hotel taxes tothe City* (mong oer material omissions and material mistepresentations) v7 ‘The material misvepresentations of TC's and Carpenter Woodward's respective RFP proposals, by the City Consultants tothe Selection Committee and other key decision makers, ‘wether intentional or negligent, wore justifiably relied upon bythe Selection Commitee and ‘other key decison makers, and eaused: i he Selection Committee to select the lowes id (oF all five RFP submissions) ~ ata cost of aver $2 Bilin tothe citizens of New Orleans and the public treasury; and (i) the loss of avery valuable business opportunity to TCSIL asthe actul highest bidder 58 Based om the City Consultants’ material misrepresentations ofthe RFP Lease proposals fon Mareh 24, 2015, the Citys Selection Commitee sored the proposals, and selected the cut ‘ate Carpenter Woodward proposal for recommendation of the award of the 99-year Lease of the "TCS preliminary protest io the Roar of Dieser of he NOR ted March 80.2015, atachod ms Exh 13, 18 Public Property 9 nd ertonens TCS! was prohibited from addressing the glaring misstatements information that were made on the poblic record atthe REP selection meeting in City Counc chambers on March 24, 2015 due tothe City’s decision to clininate any public comment by any representative of TCSI or any other person who had submitted @ Lease proposal in respense to the RFP. 60, ‘TCS! subsequently submitted formal protest letler to the NOBC on March 30, 2015 °° However, on March 31, 2015, the NOBC Board of Directors adapted the recommendation ofthe City’s Selection Committee to award the Lease ofthe Public Prapesty to Carpenter Wooshard, 61 ‘TCS! likewise highlighted cert issues with the RFP procurement process in letter to the New Orleans City Council on May 1. 2015."* However, on May 7. 2015, the New Or City Council adopted ordinances awarding the Lease of the Public Property to Canpenter Woodward, and its newly formed affiliate, Two Canal Owner, LLC a Tm dent Expert Report In the aftermath of the below market Lease of the Public Property to. Carpenter Woodward based on the City Consultants’ misrepresentations, TCS1 engaged an independent expert” to review some ofthe analyses, calculations and representations ofthe City Consultants ‘with respect to the REP Lease proposals of TCSI and Carpenter Woodward, TCSI's independent ‘expert concluded the following" among other meterial inferences: ‘+ ILL did not responsibly critique the varying assumptions, generally accepting the more ‘optimistic Carpenter Woodward projections at face value, resulting in an overstatement of the financial hnefis of their proposal *+ The Selection Committee relied upon JLL for analysis of the direct financal return of the five competing bids, which were outlined in their Summary Evaluation of Proposals and \etsiled in their 2 Canal Redevelopment Project Analysis, + HLL 2 Canal Redevelopment Project Analysis included overly optimistic and ‘unachievable revenue estimates. ‘+ The variance in projected real estate property taxes when comparing the hotel components of TCSI's hotel flag (Alessandta) and Carpenter Woodward's hotel lag (Four Seasons) are projected to be 38.8% higher for the latter property in the JLI See Eehbe Sec Exhibit 4 {LExcets ofthe Eset Report by Del Kendall nd Professions iogrpy atached as Exibi 1S “id 9 summary. This estimate was overstated hased on our analysis and comparison of their respective operating performance, which supported higher room revenues for the Four Seasons and lower expense ratios For the Alessandra, + The 5% discount factor applied to the hotel occupancy tax calculations in JUL

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