Sunday, December 20, 2009

Questions about the steel contract

Updated December 22 (see below).

The RDC's bombshell raises more questions than it answers.

We now know that the cost of Phase III of Beale Street Landing -- the steelwork for that unnecessary boat dock and helical ramp -- has gone up by $6.9 million.

According the Benny Lendermon (in June), the total cost of the steelwork was then estimated at around $10 million. With this latest increase, the cost now seems to be close to $17 million. The steelwork is a very large part of the project, whose total cost has recently been reported to be $35 million. (My reckoning puts the total at closer to $37-40 million, but that's another story.)

According to a recent email, reproduced below, from City Administrator TuJuan Stout-Mitchell, the contract for the steelwork was "awarded August 2009".

In my opinion, that raises a lot of serious questions and I believe Mayor Wharton and the City Council ought to seek the answers.

-- Does "awarded August 2009" mean that Mayor Pro Tem Myron Lowery signed the contract?

-- If so, had the RDC advised him in August of the cost overrun of $6.9 million? Did he sign it and commit the City anyway, even though the City Council hadn't yet approved an increased CIP (capital improvements) budget for the project? Was he duped?

-- Or: Is the RDC now claiming that the steel prices have increased since August? (And if so, why wasn't a price protection clause included in the contract?)

-- Was the RDC's "Plan B" to take the money away from Phase IV if the CC didn't ultimately approve the increase? Or did they just assume that the City Council would inexorably feel compelled to approve it?

-- When exactly were City Council members told? After the contract was signed? Shouldn't they have been told before and given an opportunity to have a voice?

The RDC's bottom-line argument for continuing BSL amounts to this: We've gone too far and spent too much to turn back now. But Phase III is a huge portion of the cost ($17 million) and may itself be the tipping point (e.g. halfway).

-- What was the urgency to sign in August rather than wait for the new Mayor? Does this award amount to RDC backing the City into going "too far"? Was Lowery deceived into signing this contract?

-- Does the City still have the option to cancel this contract? Or at least put a hold on it? Does each day that goes by put the City deeper into the hole, and help foreclose on any other options?

People's jobs are at stake (not to mention reputations). In particular, the jobs of RDC officials and even those of the architects' and contractors' who advise and depend on the RDC for work.

-- Whether or not Lowery and City Council were deceived, doesn't this go to show that a private-public partnership operating without proper public oversight creates a situation with built-in conflicts of interest?

All these questions and more ought to be answered at the first City Council meeting in January. I respectfully suggest to Mayor Wharton that he have his personal staff start finding the answers. I mean personal staff -- and not anyone associated with RDC or with decisions made in the past.

Updated December 22, 2009: I've been told that officials of Friends for Our Riverfront asked the City to search for such a contract. I was told that that no such contract could be found, although there is a contractor's number assigned for LCI (the company that was supposedly awarded the job).

This suggests the high probability that the contact hasn't been signed yet. "Awarded" would have meant only that the bidder was chosen. If so, then that is very good news. It means that $17 million hasn't been spent yet on the steelwork, and if the project is cancelled then much or all of the cost is still recoverable. That gives the Mayor and City Council more flexibility in considering alternative courses of action.

Continues...The email [my bold emphasis]:
From: Stout-Mitchell, TaJuan
Sent: Friday, December 11, 2009 10:59 AM
To: Keplinger, Juaness

All Federal funds for Beale Street Landing, with the exception of the FY 2009 grant, are included in Phase 3, which was awarded in August 2009. Approximately $800,000 has been expended. The FY 2009 grant is not yet available.

No awards have been made on the Cobblestone Restoration and Walkway project.

TaJuan Stout Mitchell
City of Memphis
Office of Intergovernmental Relations
125 North Main Room 336
Memphis, TN 38103

Addendum: If you want to make your thoughts known to City government, here are their emails:,,,,,,,,,,,,,

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