CCDC spends $1.6 million for reports analyzing new City Hall project
So far, the Centre City Development Corporation (CCDC) has spent $1.6 million analyzing the financial prospects of building a new City Hall. The breakdown (PDF), which CCDC sent to City Councilmember Carl DeMaio in a letter today, shows that the bulk of the money was spent on two reports produced by financial services firm Jones Lang LaSalle (JLL), plus $116,700 for a review by Ernst & Young. The review, and the second JLL report, were deemed necessary when the lead analyst at Jones Lang LaSalle changed jobs suddenly after the first analysis was completed.
The letter to DeMaio was part of an exchange that began last Tuersday when tenant-leasing agent Irving Hughes sent a letter (PDF) to Mayor Jerry Sanders last week, claiming JLL had assumed rental costs would only be slightly discounted, which revealed a bias on JLL’s part toward building a new city hall. The letter claimed that they, Irving Hughes, would be able to get the city a 50-percent discount on future leases, and thus it would not be economical to build the project.
CCDC today released JLL’s response to Irving Hughes, which, to paraphrase, called bullshit. In its response, JLL accuses Irving Hughes of using old data, misunderstanding JLL’s assignment and making unsupported claims about the lease rates it could get. The first two paragraphs sum it up (Gerding Edlen is the proposed builder of the new civic center, and the “Hold Steady” scenario is one that assumes no new project is built):
“This is in response to the inaccurate assertions and unsubstantiated claims made in a letter dated May 12, 2009 that was authored by Irving Hughes and addressed to Mayor Jerry Sanders and City Councilmembers (IH Letter), which critiques certain assumptions made in Jones Lang LaSalle’s (“JLL”) April 2009 updated financial comparison of the Gerding Edlen Development (“GED”) proposal and the “Hold Steady” non-development alternative.
The IH Letter’s assertion that JLL’s findings in the updated financial analysis “provide an incredibly misleading conclusion of ‘cost savings’ from building the proposed City Hall” is in itself misleading. Furthermore, the IH Letter inaccurately describes fundamental elements of the “Hold Steady” scenario and incorrectly represents the lease cost assumptions contained in the current JLL financial analysis.