City of Phoenix To: Mayor and City Council Date: November 4, 2015 From: Ed Zuercher CO. City Manager Subject: WEST FILLMORE PROCUREMENT PROCESS The external review by Sanders & Parks of the RFP process for the West Fillmore Redevelopment project is complete and further testimony has been provided by Trammell Crow at an open forum on October 29 and at today's special meeting of the City Council. You will recall that on October 5, | asked the City Attorney to retain outside counsel to review the procurement process. While no bidder filed a protest, a newspaper story highlighted one bidder's concern about the RFP process and about a possible conflict of interest. Subsequent media reports have continued to cast a cloud over this important procurement. Brief background on this procurement For more than ten years, the City and the Phoenix Industrial Development Authority (IDA) have worked to acquire land around 5" Avenue and Fillmore. This location is one of the last parts of downtown with limited redevelopment. As a result of these efforts, an opportunity exists for a legacy investment in the restoration of this part of downtown. As staff noted in their presentation today, the City Council acted, in 2004, 2009, 2010, 2013 and 2014, to authorize acquisition of this land. As noted in the Sanders & Parks’ report, the Council on March 25, 2015 approved the RFP selection criteria. The RFP was then issued on April 30, 2015. On August 26, 2015, all proposers were notified that the evaluation panel recommended awarding the redevelopment contract to Phoenix Fillmore, which consists of Trammell Crow and the Cesar Chavez Foundation. A few weeks later the newspaper article referenced above was published. At my direction, the City Attorney requested Sanders & Parks to review the City’s procurement process and determine if any violations of the City and Arizona's conflict of interest laws occurred. Outside counsel interviewed City staff, members of the evaluation panel and representatives of the two highest-ranked bidders. In the last two years, the City Council has directed staff to revamp the City’s procurement code and related systems to enhance the efficiency of the process, emphasize transparency, and allow qualified bidders a fair opportunity to participate. But sometimes questions are raised about the propriety or faimess of the process.When this occurs we evaluate three issues: * Has staff conducted the process fairly for all participants? «Is there a direct conflict of interest under state law or City rules? * Is there an appearance of a conflict that could undermine the bidders’ or the community's perception now or in the future of the procurement? Conclusions of the review Outside counse''s review concluded that: (1) the procurement process was conducted by staff properly in all respects and fundamentally fair, and (2) no evidence of a direct violation of conflict of interest law related to Councilman Nowakowski exists. The outside counsel did mention better practices could have been used to prevent the possible appearance of conflict of interest. As for question (3), there continues to be a perception issue for the City. Next steps The public's trust is built largely upon the perception of fairness and transparency as we conduct the City’s business. Sanders & Parks’ conclusion as reiterated at today's meeting is that no laws have been broken. | acknowledge by all accounts and the panel's review, Trammell Crow and the Chavez Foundation have submitted a quality project. However, | believe there is a negative perception of this procurement and it is in the City’s best interest to correct that image. Negative perceptions and the resulting impacts are larger and longer-lasting than the benefits of continuing to move the current procurement process forward. This project is too important to the City to have any cloud over it As a result, | have directed Deputy City Manager Paul Blue and Community and Economic Development Director Christine Mackay to cancel the current procurement and re-issue the RFP as soon as possible. c: Paul Blue Christine Mackay Gretchen Wolfe Brad Holm