Old Downtown Firehall
Equity Rental Ltd.'s proposal
Design Works/Grain Bin's proposal
So I’ve heard quite a bit of chatter about the City’s sale
of the old downtown firehall.
There seems to be some misunderstandings about the RFP process
and where Council can take it from here. I thought it’d be worthwhile to get
some facts out there.
Here’s the background in a nutshell:
The previous Council decided to sell the old downtown
firehall last summer, of which I was supportive. Council chose to put this out
in the form of a request for proposals (RFP) as opposed to a straight out bid
process where the highest value bid would get to buy the property. An RFP
process allows for considerations other than purchase price to be taken into
consideration in selecting a buyer. The Community Growth committee was then asked
to give input on what considerations should factor into the RFP. These considerations
and their weighting were made available to those interested in submitting a
proposal. The RFP was then sent out asking interested bidders to submit
proposals for what they would do with the space. Two valid proposals were
received and graded.
Equity Rentals Ltd. proposed converting part of the building
into a restaurant and adding an additional story on the office tower portion
for additional office space. They proposed a buying price of $855,000 and indicated
that the value of their renovations would create a net economic impact of $5.5
million.
Design Works Engineering & Inspections and Grain Bin
Brewing Company proposed locating their brewery there along with a taproom and
retail space. They proposed a buying price of $900,000 and indicated that the
value of their renovations would create a net economic impact of $1.8 million.
I was very pleased to see the companies who submitted the
proposals. Each one has a wealth of experience in the local construction
industry and I believe each would do an excellent job of revitalizing the old
building and that area of downtown.
The report indicates that Equity Rentals Ltd. received the highest
score and administration is recommending that the City enter into negotiations
with them for the sale of the property.
While a breakdown of the scores is not made public, I
suspect that the much greater proposed
net economic impact of Equity’s bid was a significant factor in their greater
score.
So big deal, can’t Council just choose which proposal they
like better?
Not quite.
An RFP is a legally binding process. All potential bidders knew the weightings
before they submitted. All proposals were evaluated against those weightings
and scores were derived. Council had influence over the decision when the
weightings were developed and then gave administration its marching orders. If
Council were to award the RFP to a bidder with a lower score, they would be
opening themselves up to a legal challenge by other parties who submitted. And
those parties would likely be successful.
So what are Council’s options at this point?
1. Accept the recommendation and enter into
negotiations with Equity Rentals Ltd.
If Council goes with this option, they still have the
ability to influence the negotiations of the property sale. As Council did with
the York/Germain site, there would like likely be a condition that work has to
be completed in ‘x’ amount of years. There would also likely be some
verification of the proposed $5.5 million economic impact.
2 2. Reject the recommendation and cancel the RFP
If Council entertains this option, there are three
directions Council could then go if it wants to continue down the path of
selling the firehall (probably more, but these are the ones I’m most familiar
with)
a. Substantially change the RFP and re-issue
If Council feels that what was put in the RFP does not
reflect this Council’s values and priorities, they could choose to substantially
change the criteria in the RFP, re-issue it, and accept new proposals. The risk
with this option is that Council can open themselves up to accusations of bid
shopping. If they re-issued and the new weightings were to heavily favour a
lower-scored bid from the first RFP, there would be grounds for a legal
challenge from other bidders. Also, if a bidder felt that the RFP wasn’t
changed substantially, but only tweaked to get a certain outcome that differs
from the first RFP, Council could again open themselves up to legal action.
b. Wait a year and re-issue
Council can always choose to wait a year and re-issue. This
is normally done when Council is not impressed with any bids or if market
conditions produced bids out of line with Council’s expectations. By waiting a
year, the risk of being accused of bid shopping is significantly reduced.
However, you do run the risk (as you do in option a. and c.) of turning away
potential bidders. There is a significant amount of work that is put into
developing these proposals and to just cancel the process and make everyone
start over can be quite frustrating. If this becomes a pattern, potential bidders
may simply choose to skip on bidding in the future.
c. Choose another method selling the property
Council could list the building at an appraised price and entertain
offers. Or Council could set up a bid process by which the highest bidder gets
the property. The advantage with these methods is that there is less
subjectivity and could generate a higher purchase price for the property.
However, Council would not have as much ability to influence the future
development of the property once it is out of their hands. This includes evaluating
future economic impact of any development.
So there you have it.
Personally, I was very excited to see the quality of
proposals. If only the City had two downtown firehalls to sell…
