Is this any way to run an airport?
In early November 1993, Dallas/Fort Worth International Airport was about to take a small but important step. The board members presiding over the world's second busiest airport were poised to approve its first direct contract with a retail business owned by a person of color.
It was a significant gesture. For years, local minority leaders had battled to get their constituents a bigger share of airport business. But progress was slow, particularly in the area of food and retail concessions, which were controlled by two huge companies that held 20-year contracts. In recent years, after pressure was brought to bear, only a few minorities had been able to finagle a subcontract for a newsstand here or a retail shop there.
But the long-term contracts were finally ending, and the airport was prepared to shake things up. Airports around the country were suddenly seen as valuable retail properties, and the D/FW airport staff was trying to convince the airlines to turn more of their terminal space over to restaurants and stores. They wanted to convert the airport into a thriving shopping mall for the 60 million people who streamed through each year. The board saw this as a way to increase airport revenue, provide shopping variety to the traveling public, and open opportunities for minority- and women-owned businesses.
The vote that November was the first step toward realizing these lofty goals.
At the board meeting, longtime airport employee Jeff Fegan, who would eventually become airport executive director, outlined the proposal. The airport staff wanted to negotiate a contract with black New Jersey businessman Robert Crews to expand his existing bookstore at American Terminal 3E, plus add three more locations, one at American and two at Delta's terminal.
The proposal, Fegan explained, made sense economically and politically. For the past five years Crews had operated Benjamin Books as a subtenant to Host International, which controlled all newsstand and gift shop concessions at D/FW. During that time, Benjamin Books had been one of the highest revenue producers per square foot at the airport. With 20 years in the business and a successful airport-based enterprise nationwide, Crews was in a strong position to operate independently of Host.
Now that the Host contract was almost up, the board's mandate to the staff, Fegan reminded them, was to get more minorities contracting directly with the airport. Benjamin Books, as a 100 percent certified disadvantaged business enterprise, or DBE, would help accomplish that goal, Fegan told the board members. Moreover, a recent survey cited a bookstore as the concession that passengers would most like to see more of at the airport, and Benjamin's was the only bookstore in the entire airport.
"This certainly meets a lot of the objectives we are attempting to accomplish throughout our concession policy," Fegan said.
The importance of what was before them was not lost on the board, composed of appointees from the Fort Worth and Dallas city councils and the mayors from both cities. Board member Betty Culbreath of Dallas was among the first to speak.
"I'm real pleased that we finally have a DBE prime contractor, because that's been my goal all the time, that DBEs should be able to come to this airport and rent space and start their own businesses and not always have to tag along or join on with someone else," Culbreath said. "I'm just finally glad that somebody can have a lease in their own hand and their own name at this airport. So thank you very kindly for that."
While some board members echoed Culbreath's sentiments, others had doubts. Long-term board members such as former Dallas City Councilman Al Gonzalez and Hispanic activist and attorney Adelfa Callejo were upset that the first minority contract was being awarded to someone from out of state. Both made it clear at the meeting that city council members were pressuring them to get more local minorities a piece of the action.
"They're a class operation; there's not a question about that," Gonzalez said of Benjamin Books. "But I also have a question at the back of my mind that well, gosh, we can't send all our money to the East Coast guys ... This may be the first step, Adelfa, in where we want to go ...," Gonzalez continued, "but we're only halfway there. You know the other half is to get the local people over here so that we can get the steam off of us from those council representatives."
Fegan assured the board that Robert Crews intended to take on two local minority partners. Upon hearing that, Callejo said she wanted to make sure that Hispanics got "their fair share of participation." Board members also asked Fegan if Delta had released the space needed for Benjamin Books' two locations. Fegan told them the spaces indeed had been released.
The board voted for the staff to proceed on the contract with Benjamin Books. No one was happier than Crews, who had long called for minority businesses to contract directly with airports around the country.
"Being a subtenant is like sharecropping," he would later say. "You make just enough to cover the seed and have food to eat, but you never get out of debt."
But issues raised at that board meeting in the fall of 1993 would be an ominous portent of things to come. What began as a promising business endeavor and a significant step forward for minority economic rights, soon dissolved into an ugly battle. Now D/FW's first black concessionaire is in court, claiming that the board's goal of attracting local minorities is little more than cronyism and that the airport's mishandling of his contract has nearly ruined his once-thriving business.
Last spring, Robert Crews sued the D/FW Airport board and several staff members for $17 million, contending that officials improperly tried to force him to take on Hispanic partners with ties to board members. He refused to become partners with them because these businessmen already had concessions at the airport and, in fact, were direct competitors of his bookstores. After attending a board meeting where Fort Worth board members complained that blacks were not getting enough minority contracts, Crews eventually entered a joint venture with two black mena former teacher and a lawyer. Still, the airport board on the staff's recommendation voted to evict him for not having minority partners.
He also claims he was made to pay an additional $240,000 not mentioned in his lease before the airlines would release the space he needed for his stores. The lease he signed, however, states that the space had already been released. In one instance, Crews paid American Airlines two years ago for space to expand one of his stores, but the company has yet to turn the space over to him.
Airport officials and their lawyers refused to comment for this story, citing the pending litigation. But in a recent court hearing, attorney Robert Mow of the Hughes & Luce law firm, which represents airport staff named in suit, characterized the suit as a "simple fight with a tenant who was unhappy with the terms of his lease. There is no cause and no harm," Mow said.
But Crews insists he has been harmed plenty. The hidden costs and the delays in opening his stores put him way over budget, hurt his cash flow, and made it difficult to work out the terms of a minority partnership agreement. Then he had to hire an attorney to fight against the eviction--a fight he eventually won.
Crews says he tried to bring his grievances to the airport executive director Jeff Fegan and board president Betty Culbreath. But when they refused to listen, he says he had no choice but to sue. It is a decision, he admits, that has hurt his reputation industry wide. Since his troubles with D/FW airport began, he says more than a dozen leases he has had with other airports have not been renewed.
"It's a very tight brethren, and they don't like people who rock the boat," Crews says. "This has been the most devastating thing to happen in my career."
Robert Crews' battle with D/FW Airport grows uglier by the day. At almost every monthly board meeting since the suit was filed, Crews' attorney, Kenneth Walker, has spoken out about the suspect way he believes the airport is run. He has been adding individual board members to the suit each month. In retaliation, the board recently filed a protective motion, preventing Walker from speaking about the lawsuit at the board meetings.
"It begs the question of what the airport has to hide," Walker said at the April board meeting. "Are you trying to hide special deals being done by certain people and airport board members? Are you trying to hide the airport being a rubber stamp for the airlines? Are you trying to hide your breaches of fiduciary duty?"
After Walker spoke, Dallas Mayor Ron Kirk, who sits on the airport board, threatened to have the State Bar look into removing Walker's law license. "I will pursue your legal conduct in this case in every way possible," Kirk told Walker, a Harvard-educated lawyer and former president of the local association of black lawyers. "I want to make sure you're aware of that."
Beyond the board meeting pyrotechnics, the lawsuit has shed light on some questionable business practices at the airport. In a recent deposition, for example, airport board member Bob Fernandez, a Fort Worth accountant, admitted to Walker that he does accounting work for a minority concessionaire at the airport and has done work for other minority concessionaires in the past. According to the rules governing airport board members, "no member of the board or officer or employee shall have a financial interest, direct or indirect, in any contract with the board ..."
Then there is the fact that the mayor votes regularly on issues involving millions of dollars in revenues to American Airlines. American is a client of the law firm Gardere & Wynne, where Kirk is employed at a yearly salary of $200,000.
As far as Kenneth Walker is concerned, the airport board and its staff work not for the best interest of the public, which owns the airport, but for the best interest of the airlines, particularly American Airlines, which accounts for 70 percent of the flights at D/FW. "I believe the public is getting screwed," Walker says. "Who is the real beneficiary out at the airport? The public gets the crumbs and private interest gets the whole pie."
Take, for example, the case of American Airlines' rent at the airport. Though American is the airport's largest tenant, occupying some of the most valuable real estate in Texas, they haven't had to pay any rent since 1996. In fact, they received a $6.2 million rent rebate last year and are expecting another juicy rebate check this year. The reason for the windfall is the new concession program. The 1968 use agreement between Dallas and Fort Worth that created the airport stipulates that concession revenue be used to offset the airlines' rent. The revenue is apportioned according to how many passengers each airline boards.
Walker says he feels the board is too weak to challenge the use agreement. "I don't believe the original intent of the agreement was to allow the airlines to be there rent free and get money back," he says. "I think it amounts to a huge gift of public funds."
The use agreement also prevents the airport from retaining earnings at the end of the fiscal year. If the airport makes a profit, the money must be returned to the airlines, whose landing fees and rent finance the airport budget. In 1995, for instance, the airlines received $11 million in refunds. The airlines are responsible for making up the difference if the airport has a shortfall, so on the surface all appears equitable. But as a former airport employee points out, the problem comes in the way the airport budget is figured.
"The airport should anticipate profits and plan the budget accordingly," he says. "There are plenty of projects they could budget for, building a parking garage, improving the railroad transit project."
The problem as Walker sees it is that the airlines have taken control of the airport budget process. According to a deposition he took of Janice Davis, the airport finance director, the airport devises the budget then submits it to the Airline Advisory Board, which comprises representatives from all the airlines. The Airline Advisory Board then submits the budget directly to the airport board for its approval.
American and Delta also made a tidy sum when they allowed the airport to convert some of their terminal space into concessions. In 1995, the two airlines sold back their space to the airport for approximately $4 million and $2 million respectively. That cost was then passed on to the concessionaires, in the form of a space acquisition fee, which they had to pay in addition to their rent. The space acquisition fees covered the airlines relocation costs, plus a hefty markup, according to Walker.
Unfortunately, many of the concessionaires have not fared as well as the airlines. They complain that they are having trouble making money because of the high cost of doing business at the airport. Tony Reed, who owns a Mexican restaurant in Terminal 2E, says that unlike Robert Crews, many of the concessionaires who leased space after him were well aware of the space acquisition fees. "We didn't mind paying it, because we thought we were going to be able to make money. But many of us can't even meet our expenses. Now, a lot of us are wondering how fair the space acquisition fees really were."
Reed says another problem is that the airport overbuilt the concessions by 20 percent. Several concessionaires have been forced to ask the airport for rent relief, while others have asked for lease extensions without rent increases. Reed says that the airport also recently allowed concessionaires to raise their prices, from 5 percent to 10 percent above street-level prices.
Former Dallas City Council member Jerry Bartos has never been shy about leveling criticism at D/FW and American Airlines. But when he heard about American's free rent and the problems the concessionaires are having, he was even more incensed than usual. "This airport is managed for the biggest airline, not for the traveling public or the people who own it," Bartos says. "Every airport doesn't do it that way. The mayor and the board at Atlanta's Hartsfield Airport are not so practiced at bootlicking."
When the airport first set up its new concession program, the board was clear that it wanted local minorities to be included. The program, largely, has been a success. More than 50 percent of the terminal concession contracts awarded under the new program have gone to minorities. The problem, says Walker, is that "'local' is a buzzword for discrimination and cronyism."
At least one other concessionaire says he had an experience similar to Crews; when he couldn't consummate a partnership with a minority the staff recommended, he lost his permit. In the mid-1990s, Jeff Haynes, a white California businessman, had a temporary permit to operate several airport shops that sold luggage on wheels. His business grossed about a $1 million annually. He says the airport staff told him the only way he could continue doing business at the D/FW was if he brought in a local minority partner.
The staff suggested Gilbert Aranza, who has numerous restaurants at the airport. When negotiations broke down, Haynes formed a partnership with Jim Rodriguez, a dentist, who also had been recommended to him by the board staff. Haynes claimed that Mario Trevino, head of the airport's department of minority affairs and economic development, dragged his feet in approving his partnership. Although Trevino eventually signed off on the agreement, Haynes says that Pat Gleason, head of airport concessions, told him it was too late and canceled his permit. Gleason then turned around and, without seeking bids for the space, gave Aranza several of Haynes' concession locations. He used them to open Fossil watch franchises.
The Hispanic dentist Rodriguez, meanwhile, entered a joint venture with Tie Rack, a British company that had several kiosks that sold ties and other assorted accessories at the airport. (This occurred without any one else competing for the partnership, according to airport files.) The terms of the agreement, according to files provided to the Dallas Observer in an open records request, show that all the dentist paid into the joint venture was $400, in return for 40 percent of the business.
In contrast, the airport staff looked askance at Crews' joint venture with two black businessmen, whose investment he was going to finance. They wouldn't accept the joint venture until they paid $10,000 each into the partnership.
And then there is the case of Victor Puente, a Fort Worth businessman who owns several newsstands and other concessions at the airport. Board member Adelfa Callejo recommended Puente among several other people to Crews as potential partners. Puente was one of only two people who responded to the airport's bid process for the Benjamin partnership. Airport records show that Puente got a piece of one of the most lucrative white-owned concessions at the airport, the Thomas Cook Currency Exchange, which grossed $16 million in 1997, according to airport records. Cook financed Puente's investment, meaning he did not have to put up a cent in return for 17 percent of gross revenues, according to the records.
"The whole bloody thing is a fraud," says Jeff Haynes, the luggage concessionaire who lost his permit over a DBE partnership dispute. "The way to balance things out is to bring in DBEs that are 100 percent owners. Don't try to impose them on successful small business owners who don't need partners. I was on a month-to-month lease that they wanted to restructure to one year, and they were taking 20 percent of my gross revenues for rent. How do you build up a business that way? How do you get a DBE partner to invest with only the security of one year? There shouldn't be DBE requirements for these kinds of deals. They inject these guys into your business, and they sit back and get a check in the mail. It's ridiculous."
Robert Crews didn't break into the airport bookstore business by horning in on anybody else's deal. He fell into it by accident.
The son of a New Jersey dry cleaner, Crews grew up outside Princeton, a quiet college town where he learned to value books. In 1973, he was fresh out of the service and studying architecture when a brief vacation to California permanently detoured his career path. Looking for a good book to buy while waiting for his flight at New Jersey's Newark Airport, he became incensed when all he could find for sale were "X-rated, girlie books." When he returned from his vacation, he fired off an angry letter to the New York Port Authority, which ran the airports and bus terminals in the New York and New Jersey area.
"I was livid that in the best-published, best-read nation on earth, we didn't make books as readily available as chewing gum," Crews recalls. "I asked the Port Authority why they were selling smut instead of literature."
When Crews returned from his vacation, the Port Authority invited him to a board meeting to discuss his letter. They challenged him to put his money where his mouth was and open a bookstore at the airport.
"I told them I didn't have any money, but I did have a mouth."
With the Port Authority's help, Crews secured a low-interest disadvantaged business loan for $35,000. He then negotiated a 10-year lease with Newark Airport. He used his middle name Benjamin for his bookstores, because he though the name sounded Jewish and that might help him get more credit down the line. Putting in grueling 16-hour days, Crews did a lot of volume during his first three years in business, but it was difficult to make much money. Books are pre-priced by publishers, which locks sellers into a fixed price. The only way he could make more money was to open more stores.
So Crews set out to find more airports to conquer. He branched out first to Washington National and then Dulles--locations close enough for him to reach by car, which helped keep expenses down. Throughout the 1970s and '80s, Benjamin Books expanded into more than a dozen markets, including New York, Pittsburgh, Chicago, Denver, Seattle, and Orlando.
"It just kept going," Crews says. "No one ever had a bookstore in an airport before. And my timing was good. And let's face it, I was helping these airports meet the new federal government requirement to give business opportunities to disadvantaged business enterprises. I became the premier airport minority concessionaire in the country. I spoke all over."
In fact, he spoke at D/FW to a group of minority concessionaires who had finally broken Host's stranglehold on the newsstand business. Crews says he tried to show them how to become more profitable by assuming management and operating responsibilities that they were paying for in additional fees to Host.
Crews opened his first store at D/FW in 1988 at Gate 35 in Terminal 3E. He was grossing about $1,200 per square foot, second only to the duty free shops in revenues. The numbers were impressive and caught the eye of the airport's fledgling concessions department, which was on the verge of planning a major expansion program. In spring 1993, the airport sent letters to all DBE businesses that had a joint venture or sublease arrangement with Host to determine who would be interested in and qualified for a direct contract with the board.
Crews answered immediately, outlining his ability to qualify for a prime contract. Responding directly to the qualifications cited in the airport board's letter, he explained that he held no debts with Host, had a proven track record in operations nationwide, and had the financial capability to build the stores along with sufficient inventory to stock them.
Crews did not hear anything back from the airport, so on a trip to Dallas, he visited with several airport board staff members. He told them he was interested in opening three new stores at the airport and enhancing his shops to include a cafe that sold coffee and light pastries. Each of the staff members told Crews that the board would require him to take a local minority partner if it awarded him a direct contract. In June 1993, he wrote the board that The Benjamin Co. was willing to take on one local minority partner. By the time Jeff Fegan presented the proposal for a lease with Benjamin Books to the board in November 1993, Crews had agreed to select two minority partners, who would have 25 percent of the three new stores, and whom he would help select through a board-approved bidding process.
But minutes before the board meeting was to begin, airport board Executive Director Vernell Sturns and board member Bert Williams pulled Crews into a meeting in Sturns' office. Sturns insisted that Crews increase the local DBE participation from 25 to 30 percent or they would not present the deal to the board. Crews says he objected to this last minute squeeze. He says he acquiesced only after extracting a promise from Sturns and Williams that he could recoup the lost revenue by expanding his menu to include more high-margin items such as frozen desserts, plus adding 2,000 square feet to his existing store in Terminal 3E. In fact, shortly after that meeting, he sent the staff a letter about the expanded menu. The only response he received was a request for a price list on the merchandise mentioned.
In a deposition, Williams recalls the meeting, but not his commitment to menu changes. He maintains that Crews simply volunteered to give up another 5 percent of his business. Regardless, in presenting Benjamin Books' proposal to the board that night, Fegan enthusiastically told the board that Crews had decided to increase the level of local minority partnership.
In March 1994, when the lease was completed and approved, Crews thought it would be only a matter of months before he would have a lucrative, expanded presence at D/FW. He had signed the six-year lease promising him three stores/cafes and an expansion to his original store. It takes Crews about 60 days to build out his stores, but throughout the spring and summer and into the fall, the airport staff threw Crews one unexpected curveball after another that put him seriously behind schedule.
Crews hoped to design and construct the stores all at once, which helps keep costs down. But he quickly ran into his first problem: The airport was trying to develop new construction criteria for the scores of new restaurants and stores that would be opening in the next few years. The airport rejected the plans for Crews' stores, because they didn't comply with plans that the airport had not even developed yet. In fact, the new construction criteria handbook was not finished until October--months after Crews signed his lease. The criteria and the delays doubled Crews' construction costs over his original projections.
The staff also delayed the process for selecting local minority partners. They were revamping the process and wouldn't be finished until the fall. Crews didn't know then that not all businesses were required to go through the bidding process to find a minority partner. Out of frustration, and in an effort to speed things up, Crews called board member Adelfa Callejo in August and asked her for some recommendations for possible minority partners. Her list included Dallas furniture storeowner Ray Quintanilla and Fort Worth businessman Victor Puente, who owned several newsstands at the airport, as well as dentist Jim Rodriguez, Dallas Independent School District board president Rene Castilla, and Dallas lawyer Regina Montoya, who worked for Westcott Communications. Montoya is also the wife of Paul Coggins, the U.S. attorney for the Northern District of Texas.
With the store design and minority partnership process stalled, Crews got more bad news. The airport staff said they would not approve the menu changes he thought had been promised in exchange for increasing the minority partnership. After discussing the problem with board member Bert Williams, Crews advised the staff that Williams thought the partnership should be reduced to the original 25 percent. Plus, the staff told him he would have to pay American and Delta hundreds of thousands of dollars in order for them to turn over the space he had leased. This expense had never been discussed during lease negotiations and nowhere in his lease did it mention what the airport called space acquisition fees. (The capital-improvement clause in Crews' contract does mention that this includes the cost of capturing space from a former tenant. However, at the same time, the lease states that the airlines have released the space to Benjamin Books. Later concession leases would spell out space-acquisition fees and the exact terms.)
Even more frustrating, when Crews went to talk to representatives from the airlines, they weren't certain how much they would charge him. The quotes varied widely, from a low of $40 a square foot to a high of $135 a square foot. He also asked the airlines if he could pay the fee in installments over two years. They refused. Crews claims that both the airport staff and airline representatives told him that it was board policy for tenants to pay the airlines' space acquisition fee. This is not true. The airport and the airlines were in the midst of a long, complicated process of negotiating the location of and price for the space the airlines were giving over to the new concession program. This agreement would not be finished and approved by the board for more than a year.
In October 1994, Clay Pasley, deputy executive director for business and commercial development at the airport, wrote Crews a terse letter. He told him that the menu, DBE participation percentage, and space acquisition fees were not negotiable. He added that if Crews was not happy with the deal, the airport would cancel the lease.
"I had some tough business decisions to make," Crews says. "I thought the stores would be opened by then and had staffed up accordingly. I decided to pay the fees, so as not to stall the deal further, but reserved my right to deal with the unfairness of them later."
In December, Crews sent a check to the airport for a little more than $200,000--about $44 a square foot--to pay the acquisition fees for the two Delta terminal locations and the one at American. Negotiations for the Benjamin Books' expanded space at American were hopelessly bogged down. Crews wanted to take over space from four unused bathrooms to increase his store at Gate 35 in Terminal 3E. Although American representatives told him that the bathrooms were hardly ever used, and they did not have plans to relocate them, the airline quoted him a price of $135 a square foot--even though Crews was going to pay for tearing the bathrooms out. It made the project economically unfeasible.
By early 1995, Crews' airport project looked more promising. The staff had sent out the request for qualifications for minority partners. He finally got the space for two locations in March and they were due to open in June. Of course, that was 15 months into the lease. He had already been paying the monthly minimum lease payment on the two stores since December 1994. All of his costs had mushroomed far beyond his original estimates, and all his calculations were based on the expectation that he would be getting cash from four locations by now.
By spring 1995, as he prepared to open his two stores at D/FW, Crews was in a significant cash crunch. He had no choice but to sell some of his company to investors. An English concern that managed an insurance pension fund bought 30 percent of The Benjamin Co. for $6 million, which is what he had expected his cash flow to be on the new stores that year.
He hoped when the second Delta location and the American store expansion opened, he would begin to catch up. But the delays had made it difficult for Crews to move forward on finding local partners, as his development director explained in a letter to the airport's DBE liaison. "This delay has prevented us from a full and accurate evaluation of the construction costs for the three locations as well as an accurate evaluation of the opportunity to be offered to a potential partner. It would be extremely unfair to the ... respondents to provide numbers that are inaccurate or that do not fairly indicate the opportunity at hand."
Crews told the airport staff that he was also disappointed with the response to the request for proposals for minority partners. Only two people had responded--Ray Quintanilla from Dallas and Victor Puente from Fort Worth. Both men already had direct leases with the airport and opportunities to expand. In a letter to airport staff, Crews said he thought it was more in keeping with the spirit of the airport's DBE program to offer new minorities airport business. The Benjamin Co. offered to hold seminars for minority opportunities.
In May, concessions director Pat Gleason wrote Crews a letter in which he seemed sympathetic to his plight. He said he shared Crews' frustration with Delta's delay in relinquishing the second space in Terminal 4E, the acquisition fees for which he had paid six months earlier.
He offered to give Crews a substantial rent credit.
He also explained why American seemed to be charging so much for the bathroom space he was trying to acquire. If the space the airline was giving up fell within the concession master plan, its price was calculated at a lower rate; for any space that fell outside the plan, the airlines could charge more. Half the bathroom space Crews wanted to use fell outside the master plan.
Gleason's letter also addressed the DBE partnership issue. "I understand your reluctance to finalize your local DBE partnership or joint venture until all the locations are completed. I think it is prudent to wait until all the costs on the new locations are documented so that you are able to make full and complete disclosure to your prospective partners. At that time, you will have our total support and help to finalize the selection process."
In closing, Gleason offered to extend his lease term to expire six years after the opening of the fourth location or the remodel of his existing 3E store, whichever occurred last. The above proposals, Gleason added, were subject to board approval.
Crews thought the offers in Gleason's letter were more than reasonable. What he didn't know was that Gleason never presented the proposal to the board. Gleason also never told Crews that Delta was not going to release the second location until after the master concession plan was finished, the airline was paid for all the space they were relinquishing, and they completed any relocation work that needed to be done. As it turns out, the earliest Crews could have hoped to open his third new store was March 1996--two years after he signed his lease for space the airport represented as having already been released.
In the summer of 1995, Delta announced that they would be reducing their flight schedule at the airport. Crews claims Gleason told him he thought this might affect business if he were to open a second location at Delta. In early September, Crews wrote to Gleason and told him he had decided not to develop the second Delta store. He asked for a refund and said that if space came available in the American terminal, he was still interested in opening a fourth location.
Several weeks later, after Crews had talked directly with Delta personnel about the impending changes, he realized he had been misinformed. He sent a letter to airport staff, telling them he had changed his mind and wanted to go ahead with his original plans. But he was too late. The space had already been leased to Anton's, a food service company. Apparently, Gleason thought fewer Delta passengers meant they would buy fewer books, but would still be as hungry. (Anton's lost their DBE certification a few months later, when a woman no longer owned the business. Anton's appealed and was eventually recertified.)
In mid-October, shortly after Crews gave up the third store, Mario Trevino, director of airport minority and economic affairs, sent him a letter telling him he needed to immediately address his commitment to bring in local minority partners. Crews responded that he was still committed to finding minority partners, but under the agreement he was obligated to do so when he had three stores and an expansion on his fourth. He informed Trevino that he had talked with Delta officials and learned that their plans would not interfere with a second bookstore location, and he wanted to again pursue this site. He vowed to complete one partnership agreement by the end of November and the other before beginning construction on a third bookstore.
By the end of October, Crews had also come to an agreement with American Airlines to pay for acquiring the space presently occupied by two bathrooms instead of the four he had originally intended. He sent them a check for $39,000--about $70 a square foot. Once again, Crews seemed back on track. In November, as promised, he selected a local partner. Through a black church in Fort Worth that The Benjamin Co. had adopted several years earlier--"part of our commitment to give back to the community," Crews explains--he had met Gerrod Anderson, a retired teacher turned insurance agent, who was interested in learning about the book business. Crews told Anderson that their joint venture would begin when his third store or expansion was complete.
The news that Crews finally selected a partner did not seem to please Mario Trevino. In January, he fired off an angry letter asking Crews to provide his department with an explanation stating why he was rejecting Quintanilla's and Puente's proposals. Crews had already told one of Trevino's co-workers that he didn't see the point of bringing on partners who already had direct contracts with the board. Besides, Crews says, Quintanilla and Puente were competitors. They both sold books, and, in fact, Puente's newsstand was right next to a Benjamin Books store. And, as he would later tell one of the board members, he sat in one board meeting and heard Fort Worth board members complain that not enough African-Americans were getting concession contracts. So, he made a conscious decision to find blacks with whom to form a partnership.
Throughout the spring and summer of 1996, the airport staff continued to give Crews a hard time. They objected to the joint-partnership agreement because Anderson was not investing money directly. Instead, Crews had devised a mentoring arrangement, where Anderson would contribute his time to learning the business in exchange for an equity share in the company. They had similar objections when Crews formed another joint venture with Joe Epps, a local black attorney, who wanted to learn the book business.
Crews tried to explain to the airport staff that requiring his partners to pay into the deal wasn't fair. "The whole economics of the original deal had eroded," Crews says. "I contracted for three new stores and an expansion on a fourth to be open for six years. Two stores open a year and a half late, I don't have the third store or the expansion. In these deals, you make money from the third year on. If you don't start for two to three years, you break even on the last day of the contract. Gerrod will never make money. I was trying to protect the partners from losses. If he signed a note owing the company $300,000, he could have never paid it off.
"If Gleason had made good on his promise to find me a fourth store and extend the lease six years, the deal would have penciled at some point. We wouldn't have made up for what we lost, but we would have made money from that point forward."
No matter what Crews did, he could not convince the staff that he was attempting to fairly honor his commitment. In the fall of 1996, he received a notice that he was in default on his lease for not having an approved joint venture with DBE partners. He had 30 days to comply or they would begin eviction proceedings. Crews retained Kenneth Walker, who could not believe the airport was trying to evict a minority concessionaire for not having local minority partners. On its face, it seemed absurd. Walker also argued that a local geographical preference used in awarding contracts is illegal. Even so, Walker insisted that Crews' joint venture/mentoring partnership was valid.
The board members remained unconvinced and at the March 1997 board meeting, they voted to evict Benjamin Books. "This man got a contract, and he never intended to comply with it," Culbreath told The Dallas Morning News.
The Federal Aviation Administration says that if a person makes a good faith effort to find DBE partners, then they have fulfilled their obligation under law. Finally, the board concluded that Robert Crews indeed had attempted in good faith to recruit local minority partners. After Epps and Anderson paid $10,000 each into the joint venture, the board decided not to cancel the lease.
Crews was relieved, but he still felt he had been treated unfairly. He wanted to speak with airport Executive Director Fegan about the other unresolved issues that had hurt his business--the space acquisition fees, the lease extension Gleason had proposed, the third store he never got and the American terminal expansion that had never been completed. Fegan refused to meet with him, as did board chair Betty Culbreath. So in May, he decided he had no choice but to file suit.
Crews is still operating his three stores at D/FW and they are doing well. They grossed $3.8 million last year. But that is not nearly what he would have been making, had he gotten what he contracted for and the stores had opened on timenot to mention what he had to pay in legal fees to fight the eviction and the hundreds of thousands of dollars he had to pay in acquisition fees. What he wanted from the board initially was for it to make him whole. He asked for $500,000, the fourth store and 2,000-square-foot expansion he was promised, and a six-year extension on his lease.
Fegan refused to present Crews' demand to the board. Now it is up to a court to decide if the airport owes him anything. Crews is asking for $17 million, which represents the revenues he lost, plus damages.
Crews firmly believes he was the victim of two sinister scenarios. First, the airport staff misrepresented to him--and to the board--that the space for his new stores had been released, when it had not. The delays this caused, and the fees he was unaware of when he signed the lease, hurt the economics of his deal. Staff could not give him the relief he was seeking--a lease extension, rent rebates, and a delay in choosing partners--because it would have meant telling the board that they had been deceived in the first place.
Crews also believes his minority partnership had been promised to two people with close ties to airport board and staff. When he rejected them, the staff retaliated by trying to evict him.
A state district court master recently held summary judgment hearings to determine whether the case has enough merit to proceed to trial. If the master decides that it does, a trial has been scheduled for November.
Win or lose, Crews must contend with what the whole ordeal has done to his once sterling reputation.
"I know I am seen as a problem child in the industry now," says Crews, whose company has shrunk from 50 stores to 35 in the last two years. "At airport conventions people walk up to me and say this person or that person from Dallas says you were a problem. What they don't understand is how these people screwed up a man's business. You know, all I wanted to do was give people a chance to buy Gone with the Wind and Tale of Two Cities. Isn't it ironic? This has become a tale of two cities.
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