After the city council on June 23 delayed voting on the Dallas Love Field Airport concession contracts for a second time, food and beverage concessionaire Gilbert Aranza utilized the council's July recess to commission an analysis of the city staff's recommendations. Dr. Richard A. Briesch, an associate marketing professor at Southern Methodist University's Cox School of Business, wrote in a July 27 report recently released to council members that "the contract extension appears to be a very good deal for the city from a financial standpoint."
Briesch, who spent today at City Hall meeting individually with council members, concluded that his recommendations are consistent with those presented by staff and approved unanimously on February 22 by all 10 members of the council's Transportation and Environment Committee. He described the city's position by citing a blog post from DMN'er Eric Torbenson, who summed up the staff's position thusly:
The cost of going through all this process, plus the challenge of trying to run restaurants and shops during major construction means keeping the same guys in place makes the most sense, even if it means less competition in the short term.
Mayor Tom Leppert "has signaled a lack of trust in city staff and transportation committee" in his rejection of the February 22 vote, Briesch wrote in the 24-page report, adding that he expects potential bidders to prefer to negotiate directly with Leppert and council members. After describing the controversy as "highly politicized, public and personal," Briesch said it "makes me wonder if something else is driving this controversy" because news about the issue has focused on Aranza and ignored the Hudson Group -- the retail concessionaire partially owned locally by state Representative Helen Giddings and U.S. Congresswoman Eddie Bernice Johnson that requested a similar contract extension.
Aranza tells Unfair Park that the idea to hire Briesch came from newly hired Republican consultant Merrie Spaeth, who has a lengthy résumé that includes spokesperson for the Swift Boat Veterans for Truth attack campaign against John Kerry, White House media relations director under President Ronald Reagan and consultant to none other than Leppert when he served as chief executive officer at Turner Construction. Although Aranza is a Democrat, he says Spaeth came highly recommended based on a referral from former city council member Lee Simpson, who once shared a law practice with Aranza and now serves as counsel for the Dallas Independent School District.
Briesch's report would not have been released had it not supported his position, Aranza admits, and he's paid Briesch $10,000 so far, with another $10,000 payment due by September 1, which Aranza stresses is not contingent on the success of the vote.
The white paper -- an authoritative report aimed at educating folks during the decision-making process -- emphasized that revenue is only one of many factors considered during the bidding process. In fact, Briesch cited a 2007 request for proposals at Dallas/Fort Worth International Airport in which revenue was only 15 percent of the five weighted considerations. But even when considering the revenue aspect, he points out that the contract extension includes a minimum annual guarantee of $0.90 per enplaned passenger (those boarding airplanes) compared to $0.59 in 2009 -- a 53 percent increase.
Briesch also claimed that "rather than being rare in the industry, contract extensions appear to be very common," and he used the city's five-year extension last year of the parking contract at Love Field (reported in our June cover story) as an example. The three-year delay in granting Aranza an extension, "already resulted in a loss of revenue," according to Briesch, because Aranza had proposed to invest millions in an expansion of the food and beverage concessions in 2007 (again, as we reported in our cover story).
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"This is what I call a checkmate move," says Ken Carter, one of Aranza's consultants. "Let's let the white paper take center stage because how are you going to attack somebody who's a professor at the business school at SMU who's well-published?"
Council member Angela Hunt, revealed as the swing vote on this issue in our cover story, was contacted for her thoughts on Briesch's report, but we've yet to hear back from her. Leppert's chief of staff, Chris Heinbaugh, sent us the following when we asked for a statement from the mayor.
As you may be aware, one of the incumbent concessionaires at Love Field is circulating a "study" supporting the proposal to extend the current concession contracts for close to 20 years - without a competitive bid. The City did not commission this study so we must assume the concessionaire paid for it to pressure the City Council to approve the proposal. Consequently, we're not surprised that their researcher-for-hire painted such a glowing picture.
Sadly, the entire premise for this study is wrong. Instead of examining the current proposal, the researcher should have examined what concession model is best for our new Love Field Terminal when it opens to the public and to non-stop direct service across the country in 2014. To draw any conclusion that this is good for the City without soliciting ideas and proposals from the market lacks logic and any sense of basic economics. Furthermore, the proposal and this study fail to consider fundamental fairness of allowing any and all to have the opportunity to participate.
It's clear the researcher does not understand what is and what should be on the table. For instance, we don't know what ideas, concepts or branding are proposed for Love Field. Instead of simply extending what we have, what opportunities are there to make our airport among the finest in the nation? These issues and more are critical to the success of our new terminal. This is too important to just wing it.
Soon, City staff will return with new proposals for the Council to consider, including several requiring competitive bids. I am still committed to an open and competitive bid process. That's how you get the best ideas at the best price. It is the best way to ensure accountability, transparency and trust in government. I know many of my Council colleagues share that view and are working towards the same goal. We owe that to taxpayers.
Leppert had instructed city staff to brief the council on Wednesday with alternatives to the current contract extensions for Aranza and Hudson, but no such briefing appears on the city's Web site. Heinbaugh says his understanding is that city staff asked for more time, given that they're also juggling a tough budget, and that the briefing has been postponed until August 18. He told us to confirm with Assistant City Manager A.C. Gonzalez, and we've left a message with him attempting to do so.Briesch Report