Damning report on hotel lease

As we and others believed, the Airport lease with Sandspur Development was highly flawed.

The audit of the Airport Hotel lease agreement with Sandspur Development has been released by staff. The audit was due April 30 and was conducted by Richard Law of the Tallahassee CPA firm, Law, Redd, Crona & Munroe, P.A. Several irregularities were found.

EXCLUSIVE RIGHT TO NEGOTIATE
The CPA questions why Julian MacQueen (“Developer”) was given an exclusive right to negotiate for the land. The City position is that the MacQueen approached the Airport with the idea of the Hotel Development when others were not interested and that justified giving him exclusivity.

The CPA states in his report,
“1. The Airport hotel was not a unique or new idea. The City and hotel development community had been aware of the Airport’s intention to lease a hotel site for several years.
2. When the additional 8.49 acres of commercial property was added to the Hotel parcel, this opened up a totally different spectrum of potential real estate developers that could have greatly expanded the potential interest in a competitive solicitation.”

FEASIBILITY STUDY
The Developer hired a consultant to prepare a feasibility study for the hotel project. The Airport Director (Frank Miller) never saw it. Miller did not use an outside consultant to help with the lease negotiations. Clark, Partington law firm was hired to help draft the agreement but the financial term sheet had already been developed and negotiated.

APPRAISAL PROCESS
Miller says that he wasn’t aware that the Airport had been modified to agree with FAA regulations which require one appraisal and one review appraisal. For complex appraisals, Daniel Flynn, manager of properties and development, required to appraisals, plus one review. These policies aren’t in writing.

The appraisers were not told that the land would be subdivided into hotel and commercial space. Had they been told that, “the hotel site would have appraised at a substantially higher value.” They were also not told about the site improvements that the Airport would be making to the site or about the delays in making lease payments.

The Developer had his own appraisal done which was not provided to the Airport Director.

LEGAL REVIEW
City Attorney Rusty Wells told the auditor that he was not given sufficient time during November 2008 to give effective review and input on the lease.

HYATT FRANCHISE DEADLINE
The auditor was given no written proof of any deadline regarding the securing of a Hyatt franchise.

SUMMARY

“The City Council extended broad discretion and authority to City Management to develop a process of leasing such property. At the end of that process, too much reliance was placed upon just one or two individuals to accomplish the objective.”

The City screwed up (my words) by not hiring outside consultants to do the feasibility study and negotiate the lease. The land should have been bid openly.

“The legal review process for the subject lease was a piecemeal effort at best.”

The time given to the Council to review and approve the lease “did not provide a sufficient amount of time for proper notice and feedback to and from the public.”

Read report: lease-audit