Portman Calls Tishman Take 'Condescending'

MIAMI—It's a fight to the end between South Beach ACE and Portman-CMC, the two groups vying for the right to redevelop the Miami Beach Convention Center District. But South Beach ACE is clamoring louder for justice while Portman-CMC is using terms like "disparaging" and "condescending" about one of its competior's principals.

After spending much of Wednesday trying to resolve a controversy between the two players, Dan Tishman, chairman at Tishman, the New York-based developer currently overseeing the reconstruction of the World Trade Center, is taking another step to clarify some issues. In a letter to Miami Beach Mayor Matti Herrera Bower and five City Commissioners, Tishman says he is “troubled” by the events that have transpired over the past 10 days.

Tishman's letter aims to make the City aware of the facts that are troubling him. Essentially, he has two major issues: what he calls Portman's "untimely" proposal and the Agreement Not to Sue.

Here's the backstory: ACE wants the City to ignore a revised Portman proposal that came in on July 8, three days past the final deadline. ACE notes that Portman's revised proposal had higher lease payment numbers to the City than its July 5 proposal, numbers more in line with its proposal. Portman-CMC offered a statement: “Both teams have provided clarifications and updated information to the City as a standard part of the process.”

The City Manager issued a letter to the Mayor on Wednesday stating: “In order to continue to be completely transparent with regard to the ongoing Convention Center LOI negotiations, and in order to treat both teams equally with respect to the information both were asked to provide as part of the amended LOI submittal, the City Attorney's Office and the City Manager's Office have determined that information submitted by Portman CMC on July 8, 2013, should not be considered.”

The City Manager issued a letter to the Mayor on Wednesday stating: “In order to continue to be completely transparent with regard to the ongoing Convention Center LOI negotiations, and in order to treat both teams equally with respect to the information both were asked to provide as part of the amended LOI submittal, the City Attorney's Office and the City Manager's Office have determined that information submitted by Portman CMC on July 8, 2013, should not be considered.”

Tishman said he was shocked to learn that Portman was allowed to submit a revised financial proposal on July 8 to “clarify” its July 5 proposal. As he sees it, there are numerous problems with this, not the least of which is that it is in violation of procurement law. What's more, he said, the revised Portman proposal looks remarkably like ACE's proposal.

“The purported 'clarification' in question is who would pay for the retail core and shell in the 17th Street garage,” Tishman wrote. “It is unbelievable to me that any experienced, competent developer could misinterpret the City Manager's memorandum, which clearly stated that “the City would finance the construction of the Garage… the Developer will… lease the retail shell space from the City.” This attempt to provide a benign explanation for such a material revision, even if true, does not explain why unrelated financial terms changed in their untimely July 8th LOI, such as the percentage rent and the rent on retail north of 17th street.”

For its part, the City statement said the administration believes that the contact between the City and Portman following the July 5 submittal deadline was not intended to benefit Portman or prejudice Tishman: “However, Tishman has raised concerns that this contact was improper. Based on this concern (and in order to keep the playing field level) the Administration has decided to consider Portman's original July 5, 2013 amended LOI and not consider any subsequent submittals/clarifications.”

But Tishman is not satisfied with the City Manager's Letter to Commission. He says it did not go nearly far enough to correct the record.

“The entire analysis presented to you and the Land Use and Development Committee meeting was faulty, and a glaring misrepresentation was made to you that 'both teams were submitting modifications to their offers,'” Tishman wrote. “This is not true. I would not do that as a professional familiar with procurement process and would not allow my team to do that—even if requested by a City staffer or consultant. The only interaction my team had with the City's consultant on July 8 was when the consultant inquired as to if our public cost was correct, as he thought it should increase. In other words, he tried to get us to make our offer to the City worse, while working with our competitors to improve their offer in suspiciously similar terms to ours. You should know that based on the July 5th proposals, our LOI provides $43 million more of ground rent to the City in the first 30 years than does Portman-CMC's.”

With regard to the Agreement Not to Sue, Tishman said ACE was asked to sign an agreement not to sue prior to the Land Use and Development Committee meeting on Monday at 5:00 pm. Despite the holiday weekend and extremely short time frame, Tishman said, ACE's counsel diligently reviewed the agreement and advised that it was overreaching and that parts of it were not legal.

“He advised that we not sign it as drafted. After the Land Use meeting, our counsel met with the City Attorney and Assistant City Attorney to review the case law and the City Attorney privately agreed with our position that the Agreement Not to Sue needed to be reworked,” Tishman said. “Unfortunately, this lack of proper preparation time on the City's part created a significant problem for us. You were left with the impression that we were being difficult, when actually we had done our due diligence and were being mindful of the law, a view the City's own counsel now shares.”

Portman offered a final, no holds barred comment after seeing Tishman's letter: “Tishman's disparaging and condescending comments about the Government of City of Miami Beach and its management of this process is an issue between Tishman and the City. We are confident the Mayor and Commissioners will make a decision based on the merits and will not be intimidated by these 11th hour diversionary tactics by Tishman. The basic fact remains the same that Portman-CMC plan is financially superior for the City of Miami Beach.”