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Bid Fail Casts Doubt on Integrity of City Process

Council rejects out-of-state bid submitted after deadline

By Walker County News Today staff

The Huntsville City Council last week took action to spend $48, 500 in tax funds to update the city’s master parks plan and OK’d a bid for $188,863 in additional infrastructure to the $24 million upgrade of the Trinity River Authority’s water treatment plant. But it was a bid for a rocky scrap of land behind high-dollar real estate on Sam Houston Avenue that raised hackles and prompted accusations of unfair practices, if not downright dirty dealing.

At issue is a city-owned .615-acre  thickly wooded and hilly plot located north of 20th Street, south of 19th Street, west of Sam Houston Avenue and east of Avenue L½, and situated behind Humphrey’s Bar and Grill at 1930 Sam Houston Ave. A formal bid process for this property was completed in March.

Businessman Tarek Maloof, who owns several commercial properties on Sam Houston Avenue, did not bid on the lot, assessed at $9,377 with a minimum bid of $10,000. But President of Area Management Services Charles Smither and landowner George Russell did — Smither bid $12,500, and Russell, whose rental unit holdings span several acres in the Avenues bordered by Sam Houston Avenue, bid $12,000. His intention, he said, was to maintain  the land as a natural habitat and drainage-control area.

All three spoke out against the council’s consideration of the high bid, proffered by Stonemont Financial Group based in Atlanta. Stonemont cast a bid of $30,000 for the property, which adjoins another lot the group owns and other lots in a 5-acre area it is interested in buying for purposes of  building an apartment building. Stonemont’s bid came with stipulations that it could return the property to the city in seven months if buyers changed their mind.

The trouble is, city staff entertained the Stonemont Financial bid 19 minutes after publicly opening the Smither and Russell bids at 2 p.m. on the bid deadline day of March 9.

City staff didn’t tell council whether they solicited a third bid from Stonemont before the deadline or if it was a surprise, delivered by email after the city had already opened the Smither and Russell bids, but it was late nevertheless. The Stonemont bid also did not meet the form and information requirements contained in the original bid request provided by the city to all bidders.

In spite of these shortcomings, however, city staff recommended that council accept the Stonemont bid as being “in the best interest of the city.”

But, before council voted, Smither, Russell and Maloof on Tuesday appeared to believe this council action item warranted a lecture on integrity and even insider trading.

What Smither, Russell and Maloof wanted to know was whether Stonemont had advance knowledge of what the other bidders had bid before sending in its own bid.

Smither pointed out that in the public-record bid documents, Stonemont also failed to fill out the required noncollusion statement and had inadequately filled out a conflict of interest statement. At the very least, this pointed to incompetence of the city’s purchasing department, headed by Billie Smith, he said.

“Did the city fall down on the job, or does Stonemont make all of its deals in private?” Smither said after urging council “to act to ensure that staff follows proper procedures, especially in the case of formal sealed bids.”

Smither told council that he thought the fair thing to do would be to reject all three bids, his included, and start over. But Maloof told council Smither’s bid should be accepted as the high bid given that his was received in accordance to the city’s published procedures.

Maloof noted that this wasn’t the first time questionable practices by the city’s purchasing department had drawn his public protest. In 2013, Maloof cast the high bid by the city’s deadline for city-owned property occupied by the former Armory on Sam Houston Avenue, only to see Sam Houston State University officials, with the help of city staff, attempt to pressure council to vacate Maloof’s bid and accept a new bid from SHSU. Council, with the exception of Ward 1 council member Joe Emmett, voted against city staff’s recommendation in that case.

Maloof also argued that the city was getting appraisals on its properties that were well below actual market value. And he noted that the third bid, the one cast by Stonemont, was in fact flawed in that it would have allowed the bidder to back out of the deal if other matters related to its intended use of the property failed to materialize.

Council recessed into executive session Tuesday and returned to vote unanimously to reject all three bids and to start over.

30-Inch Water Line Surge Protection

Council voted to provide surge protection for the main water line into the city from the city’s surface water treatment plant on the Trinity River. The replacement of six existing air/vacuum release valves and the addition of two new ones will provide this protection from line pressure fluctuations.

The need for this protection was triggered by the upgrade of the high service pumps that was part of the recent overall upgrade of the Trinity River Authority water plant.

The project was initially funded in the 2014-15 budget in the amount of $390,000, and council approved the design go-ahead at its July 7, 2015 meeting.

The city received only one bid from 5-T Utilities, Inc. for $188,863.62. Council approved that bid.

A second part of this project, the installation of a hydropneumatic tank is still pending.

Initiate Construction of Town Creek Drainage Project (First Reading) 

Council considered on a first reading a staff proposal to proceed with the construction phase of the nearly $12 million Town Creek Drainage project. City packet information said the design done separately by Klotz and Associates was now 95 percent complete. The construction would be done by Garney Companies, Inc. who was initially contracted with last November to assist the city with design reviews, cost estimating and project reviews with property owners.

Russell, a longtime opponent of the city’s handling of the project, spoke out on the action item before council. “This so-called drainage project has been fatally flawed from the beginning. It could be done right. It could be a great blessing to Huntsville, our future, our history, our ecology, etc., but, unfortunately, as planned, it’s not.”

Council is expected to take up the issue again at its April 19 meeting.

The project was conceived initially as an opportunity to improve drainage in the downtown area and to convert Town Creek into a possible San Antonio Riverwalk type of linear park that would be an attraction for residents and visitors alike. It would also solve the problem of the aging underground tank car pipe in the area between Avenue J and 14th Street.

But there were and still are many unresolved problems. For the most part, Town Creek is privately held. The city does not own or even have easements to many of the properties involved. Nor has it done a good job apparently in working with the people who do. There have been no known public or private meetings to review the project with the owners or with the public or to get their input. Russell, an adjacent landowner, said the city has never contacted him.

The city has secured a large FEMA grant to improve drainage from the creek.  However, though the originators of the project envisioned the construction of a river walk commercial and tourist center along the creek, the current contracts are designed only to address drainage issues. Any adorning will have to be done separately by the city at its own expense. Critics of the project have said they are concerned about the expense of the project and that city officials are not providing enough oversight over contractors.

Parks Master Plan

Council allocated $48,500 for hiring a Conroe-based company, Burditt Consultants LLC, to update the city’s 10-year Parks and Recreation Master plan. Benoit recommended hiring Burditt, as did the city’s Parks and Recreation Advisory Board. The primary purpose of the updated plan will be to assure that city will be eligible for various grants available from the Texas Parks and Wildlife Department and possibly other sources.

City staff also indicated that they would use the plan as a capital improvements plan for Parks and Recreation projects. These projects are separately funded according to overall city budget priorities and individually managed by the city or a hired contractor.

Transportation Investment Generating Economic Recovery (Tiger) Grants

Council authorized the city manager to apply for two transportation grants that are intended to promote economic recovery. The two projects chosen are an extension of Ravenwood Boulevard from its present dead end westward to Veterans Memorial Parkway and the improvement of Veterans Memorial South of Possum Walk to four lanes from the present two lanes.

Allen immediately challenged the choice of these two west-of-the-reeway projects. “Where is the traffic study that justifies the Veterans Memorial project?” he said.

When told there was no traffic study, he then asked, “Without a traffic study, how do we know we need to widen that road from two lanes to four?” When that question wasn’t answered, he asked, “Who at the city used their expertise to decide we need that project?”

At-large council member Don Johnson, one of six council members who lives in Elkins Lake, attempted to answer that question by saying, “This will be a blessing for everyone who lives in Elkins Lake.”

Allen responded, “I’ve got some roads in my ward that could use some of that money, and they sure don’t look as good as the roads out on Veterans.”

Allen also questioned the justification offered by the city staff that the improvement would help justify locating a wayfinding sign on Highway 30 pointing visitors to the Sam Houston Statue via Veterans Memorial, creating a bypass of the city of Huntsville.

“We just directed them out of the city of Huntsville. What is the logic of sending people out of the city of Huntsville when one of the arguments you all have been using for spending money on the statue is that it will bring people into the city and put heads in beds? ….You have just directed them away from all of the restaurants we want them to eat in and away from the hotels where we want them to stay.”

Council ignored Allen’s questions and voted 7-1 to authorize seeking grants for these two projects.

Review of City Policy for payments to Construction Companies

Allen reported that a Ward 3 citizen who had granted an easement to the city for a drainage control project had recently been threatened with a lien from a subcontractor on that project when the contractor the city hired for the project failed to pay the subcontractor for his work. Allen recommended that such contractors be required to provide written proof to the city that they had paid all subcontractors in full before the city made final payment to the contractor.

City Attorney Leonard Schneider had written a letter to the subcontractor stating that the subcontractor cannot legally file a lien against the citizen property in question. He said that if the subcontractor filed such a lien anyway it would be proper for the City Council to direct him as the city attorney to take legal action to have the lien removed.

However, in response to a query from the citizen involved, the city referred the citizen to the contractor’s bonding company for redress. It was also revealed that the city had attempted to contact the contractor without success, and that the contractor had filed an affidavit that all subcontractors had been paid.

Allen made a motion that the city attorney be directed to send an updated letter to the citizen stating that the city would be responsible for any legal fees resulting from the action of the subcontractor. The motion failed by a vote of 7-1 with Allen being the only member voting in favor of it.

Personnel and Appointments 

After an executive session, council unanimously approved a 2.5 percent salary increase for  City Secretary Lee Woodward.

The mayor made and the council approved the following nominations:

To the County Uniform Truancy Policy Committee:

  •        County Court at Law Judge Tracy Sorenson
  •        Municipal Judge John Gaines
  •        Justice of the Peace Janie Farris
  •        Superintendent of HISD’s designee Dr. Mina Schnitta
  •        Kevin Nichols, principal, Premier Charter School
  •        David Moorman, municipal court prosecutor
  •        Marjetta Spriggs, public representative

To the Board of Adjustments – Zoning:

  •        John Cromer
  •        David Zuniga, Alternate A
  •        Anthony Watkins, Alternate B

To the Cemetery Advisory Board: Dennis Reed.

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