In a rare departure from protocol, City Council heard Wednesday from two groups in a dead heat vying for the multimillion-dollar, high-profile contract to operate San Antonio’s new river barges. It seems that whether to give preference to local business owners will be one of the deciding factors for Council members when they vote on Thursday, May 25, amid mayoral and Council seat runoff campaigns.
City staff recommended an out-of-town company that scored one point less than its locally owned competitor on a City scoring matrix that gives extra points for small, local, veteran-, or minority-owned businesses.
The team selected will be negotiating a 10-year, more than $100 million agreement with the City to operate one of the most iconic services in San Antonio. The River Walk hosts more than 11.5 million visitors per year and about 1.4 million utilize the barges that traverse the San Antonio River. The City wants to increase the use and enhance the experience for locals and visitors alike.
Newly formed local company Go Rio San Antonio, which is partnering with Houston-based dining and hospitality company Landry’s, presented first. VIA Metropolitan Transit board Chair Hope Andrade and local restauranteur Lisa Wong own a 51% majority of Go Rio. They were ranked third out of five companies, according to the matrix, with 53.88 points before the Small Business Economic Development Advocacy and local preference points were applied. Once they were, Go Rio received 17.55 additional points for a total of 71.43 points.
“This is much more than just business,” Andrade, who is also a former Texas Secretary of State, told Council. “[This contract is an] opportunity for us as San Antonians to help make a real difference in the city we were born and raised in and deeply love.”
Wong owns several successful local restaurants. She and Andrade together have a net worth of $30 million and decades of hospitality and business experience, Wong said.
Landry’s operates hundreds of venues throughout the U.S., including theme parks, casinos, at least one dinner tour/cruise, and restaurants like the Rainforest Cafe. It also owns the Chart House restaurant atop the Tower of the Americas.
Wong’s team estimated that it would need to hire 250 employees, one of which would apparently be the company’s proposed mascot, a duck named “Rio Rita.” They proposed that the character could be featured in Fiesta parades and other celebrations.
Council then heard from representatives from Chicago-based Entertainment Cruises, operating locally as San Antonio River Cruises, which scored a 70.41 on the matrix without any preference ratings. Former Mayor and registered lobbyist Phil Hardberger, whom Mayor Ivy Taylor accused of interfering with a previous procurement process, is working with Entertainment Cruises.
Hardberger delivered at-times venomous criticism of his opposition.
“Landry’s was not even in the game,” Hardberger said, referring to an even earlier process in 2014 that rejected all three proposals submitted.
“Hope and Lisa are wonderful people – great citizens,” he said. “They’re not barge operators.” And the local over excellence is not a good argument in San Antonio if it hopes to be a world-class city, he said.
Entertainment Cruises have operated in 10 cities for more than 28 years, offering more than 10,000 cruises per year, according to its CEO Kenneth Svendsen. Local Chef Johnny Hernandez has a verbal agreement to work with Svendsen’s company if selected for the contract.
Both teams presented various innovative programming, partnerships, and technologies they hope to implement over the next few years. They also both promised to make an effort to hire those that currently work at Rio San Antonio Cruises, the current barge owner/operator whose contract expires this year.
Entertainment Cruises scored overwhelmingly higher in terms of “quality of proposal” and “experience and qualifications,” both of which were scored by two citizen selection committees.
Go Rio scored a little more than one point higher than the Chicago-based company when it comes to the economic proposals, scoring 19.19 and 18.10, respectively. That’s largely because Go Rio promised a higher minimum payment to the City, said the City’s Deputy Chief Financial Officer Troy Elliott, and had a comparable estimated concession return.
Go Rio is expected to generate $92 million in concessions compared to Entertainment Cruises’ $97 million, but Go Rio’s minimum annual guarantee (MAG) to the City is $73 million compared to Cruises’ $45 million. This portion of the scoring was handled by the City’s Finance Department.
But ultimately two citizen and stakeholder committees and City staff found that Entertainment Cruises was the best choice, City Manager Sheryl Sculley said.
“We’re saying one [Entertainment Cruises] is better than the other,” Sculley reiterated. “It’s a professional evaluation.”
Typically, City staff makes a recommendation to Council, which reviews a scoring matrix and presentation from staff, and then Council votes after hearing public comments made during citizens to be heard – if any. More typically, City staff recommends the one with a higher score and Council agrees.
But the stakes are high this time.
“This [is] an opportunity to do something transformational … [Entertainment Cruises] is the best company to do that,” said Assistant City Manager Carlos Contreras, adding that it is within City staff’s purview, and City Council’s, to disregard the preferential scoring matrix if it’s in the best interest of the City and its citizens. It’s somewhat rare, but it has happened before, Contreras said, at least twice in the past three years.
If anything, he added while answering a question from Councilman Alan Warrick (D2), the first scoring matrix that was scrapped earlier this year is only further “validated by the second” process. Contreras went on to explain why that process was abandoned but was interrupted by Mayor Taylor.
“[We] started a new process for valid reasons so let’s move forward,” Taylor snapped, another rarity for council briefing sessions.
In February, Taylor called for either a reset of the entire process or that Entertainment Cruises be eliminated from consideration after she learned that Hardberger had been allowed to address the citizen selection committee during Entertainment Cruises’ presentation.
“Because of [Hardberger’s] notoriety in the community, [perhaps] no one spoke up to say it was inappropriate,” Taylor told the Rivard Report in February.
Political tension is also high as the mayor and two incumbent Council members are in the middle of re-election campaigns for the June 10 runoff election. Four districts – 6, 9, and 10 – will see new faces as their representatives step down for newcomers and the District 8 representative, Ron Nirenberg, heads into a runoff with Taylor. Early voting starts on May 30.
Nirenberg has accused Taylor of “rigging the process for a big supporter,” referring to local attorney Bill Kaufman, who is working with the current local operating company, Rio San Antonio Cruises.
“I plan to support the strongest company with the strongest bid,” Nirenberg said in a statement last week. “… Hopefully we can do it properly and ethically this time around without political interference.”
Contreras and City Auditor Kevin Barthold co-chaired the evaluation committee, and Barthold assured City Council that the process was fair, objective, and “open. It was honest, they [the committee] didn’t pull any punches.”
Nirenberg stopped short of indicating which company he would vote for. Nor did he call Taylor out specifically for tampering with or delaying the process.
“Here we are, six months away [from 2018] and we still haven’t made a decision about [barge] operation,” Nirenberg said on Wednesday, noting that the new barges, which will be owned by the city, and operators were supposed to be fully deployed for 2018, the City’s Tricentennial year.
Councilwoman Shirley Gonzales was the only Council member to speak strongly against Entertainment Cruises’ proposal.
“I personally was not blown away by San Antonio River Cruises [Entertainment Cruises] presentation,” Gonzales said. “It was a generic presentation done by an out-of-town firm. … Go Rio did a much better job of making me feel proud of San Antonio and what we have to offer.”
However, the 20-minute presentations delivered Wednesday are not the same in-depth applications that either company gave to the committees or to City staff.
Taylor and Council members Joe Krier (D9), Mike Gallagher (D10), and Warrick indicated through their questions that they were leaning towards voting with Gonzales, but for different reasons.
Warrick suggested that awarding the contract to two Latina women would also have a “transformational” effect on a city with a history of discrimination.
“Isn’t that a story to tell and something to champion?” he asked rhetorically.
Krier cited Andrade’s long history in the community and working with the city before asking Contreras if he knew of Andrade making a “commitment to the city and has not honored that commitment?”
Not that Contreras is aware of.
Each team brought consultants, attorneys, and staff to the meeting, and opposing presenters were sequestered from each other without access to cellphones, laptops, or other communication devices – to ensure that neither team could get the upper hand by seeing the other’s presentation.
However, each team had someone attend the others’ presentation and Council discussion afterward.