On the paper trail of the 31st Street Hotel
Project marked by disagreements, cozy private dealings

The City Council  will be asked Tuesday to approve zoning changes that will affect the density and height of oceanfront hotels as part of a deal to fulfill commitments to its convict partners Edmund C. Ruffin and Bruce Thompson.

Some members of council see the proposed change as being part of normal public policy.  But records obtained under the Freedom of Information Act, however, show that if it isn't done now, Ruffin and Thompson can't build the proposed 300-room 31st St. hotel as required by the city contract.

The city would be subject to damages for design costs for the enlarged hotel and Ruffin and Thompson could force the city to allow them to build a 168-room hotel as stipulated in the original request for proposals (RFP).

There are also legal questions about whether the project has been changed so extensively from the original RFP that the city will have to re-bid it.  Either way, the city is being squeezed in the middle.

It is all part of a lengthy, private,  behind the scenes negotiation process in which some members of council say they have been excluded and been denied full information about the deal.

Five years into the deal, Ruffin and Thompson still have not received financing or a franchise, but City Manager James K. Spore and Councilman William Harrison Jr. have virtually guaranteed the pair they'll get about anything they want from the city.

As early as Jan. 4, Harrison wrote Thompson: "...I have due diligenced [sic]...to make certain that we have given in to your issues raised wherever possible."

Lawyer Kevin Martingayle, who obtained previously undisclosed documents said of the project:   "One thing is for certain:  This project has been a mess. The public doesn't want it, the city and developers have been bickering, financing remains an unresolved issue, and there's still no announcement of a franchise award. This is about as stable as Enron stock." 

Portions of the recent correspondence show a paper trail of events that seem to make it the private project of Harrison, Spore, Branch, Sessoms, and the two convict partners that is going to be done at any political cost.

Interviews have indicated there is little question anyone else on council was privy to private information and deals.

Nov. 28, 2001:  Letter from Thompson to Councilmen Harrison, Linwood O. Branch III and Spore regarding his frustration in setting up a meeting to resolve issues about the project:

He wrote:  "...I observed the council meeting last night and you can well imagine as a developer with purely an economic interest in this project, I am tired of being subject [sic] to ridicule and criticism at council meetings (emphasis added).  I do appreciate the clarifications Mr. Harrison made pursuant to the allegations of our nonperformance in yesterday's meeting; however, our failure to execute this Agreement and begin the development process is being portrayed as 'our inability' to perform.'  This continues to further damage our reputation and credibility."

Dec. 5, 2001:  Letter to Harrison & Spore regarding negotiations and applying rent to the purchase price of the land from the city, Thompson wrote:

"I will work with you on these issues; however, I must get comfortable with the city's approach to Rudee Loop and  (Thompson's emphasis) how we save face when (if) we acquiesce to the rent modification (emphasis added).  It appears that the council and the public at large will perceive this change which is costing me $700,000 (+/-) as the reason it has taken so long to amend the agreement;  i.e., the Developer changing the deal/rent to his economic advantage when in fact we all know that this could not be further from the truth (emphasis added).

Dec. 18, 2001:  Email from Thompson to Harrison and Spore.  Thompson complained new items were being added to the deal:  "I can not sign the document today...specifically the city has now asserted it can not give us the rent credit even if we are the retail provider...the successful bidder (retail shops in a parking garage across from the hotel are to be put out to bid)...now I find that we loose an additional $160K per year in cash flow if we do not get the retail RFP...".

Harrison emailed him back and demanded::  "Get it done this week, Bruce.  I personally reviewed the document, and with the exception 

of the rent credit issue you have raised, which is valid, I see no other points that are new.  If the document is not finished before the end of this week, there will be no chance of getting it to the council for the Jan. 8 meeting."

On Dec. 27, 2001, Spore told Thompson the deadline for signing the agreement was 5 p.m. that day. "This is disturbing since several of us (in city government) had worked very hard..." to meet the deadline, adding, "I am hereby extending the deadline..." to 5 p.m., Dec. 31.

Dec. 29, 2001:  Thompson replied to Spore   that he'd reviewed all the but the deed of lease for parking, lamenting:  

"...There were a few business points that were overlooked...i.e. how we were getting the 300 units of density now that you can not convey the street and your attny [sic] opinion that you can get it for us or...what...same with height and bridge variances...which the city has said all along would be no problem but what if...we need to 2004  on the rudee [sic] timeline as the 2003 timeline suggests that all is going to go smoothly...and I can tell you it will not...among other things we know we are probably going to get a contest on the rfp."

Thompson got an auto response back from Spore's email because he was out of town for the holidays.  Thompson then emailed Spore:

"How am I suppose [sic] to get this done by your deadline when you and Dean (Block) are both out until after the first...LETS PRAY...THE ATTNYS [sic] CAN GET IT DONE...OR BILLY (Harrison) CAN STEP IN...NOTE TO BILL...IF YOU ARE AVAILABLE YOU MIGHT WANT TO CALL CAROL (Hahn, assistant city attorney). AS I DO NOT KNOW WHO SHE IS GOING TO GO TOO [sic] FOR DIRECTION WITH DEAN AND JIM BOTH OUT... (uppercase Thompson's emphasis)."

Dec. 30, 2001:  Email to Harrison, Spore, et al from Thompson complaining that in reviewing the documents, he found them disappointing.  Thompson worried that the homeless would find refuge in the parking garage.  "...Also noticed significant and detailed language pertaining to our default and their remedies if we fail to pay rent, but did not see any default proviso or remedies if they (the city) did not provide parking in the manner in which it is to be provided etc ...i.e. open 24 hours...clean and professionally managed, well lit and safe and secure [heck for all I know they (the city) could be bound by the right of public assembly and other issues here that would let vagrants sleep in the garage as they do at 24th Street park] (emphasis added)...".

Jan. 4, 2002:  Email from Carol Hahn, assistant city attorney, to Sam Kroll, Thompson's lawyer, with copies to Block, Harrison, Lilley, the city's outside lawyer, and Spore:

"I've seen some emails ...that the 31st Street modification is no longer on the table.  Just a few things.  I hope the Developer understands that the city/authority has tried to accommodate his requests as best it could.  Though he might characterize our last responses as 'take it or leave it,' I think that they are better characterized as 'this is ... (the) best the city and authority can do.  I hope you can reiterate that characterization to your client."

Jan. 4, 2002:  Email from Carol Hahn to Harrison expressing opinion about Thompson's 'take it or leave it' email ultimatum of the same date, the negotiations were out of her hands.  She acknowledges the 'deal' was 'done' to approve zoning changes.

"I believe Developer is hung up on the fact that deal terminates if he can only build (less than 250 rooms [despite my assertions that zoning change would be put forward during Master  Plan review process and that vote would occur pre 6/30/02 (the date Harrison, Branch, and Sessoms  leave office - the trio that can assure a favorable vote),,,.

"POTENTIAL ISSUES ABOUT WHICH I'VE HEARD NOTHING OTHER THAN 'BRUCE IS DECIDING' (Hahn's emphasis):  (a) Rudee Loop restriction expiring 12/31/03 not 12/31/04, (b) Oceanfront Credit Support (letter of credit securing our ground lease subordination) increase every three years with CPI vs. beginning in Year 6...".

Council is expected in a strongly split vote to approve the privately scripted plan.