Birmingham Developer Files Federal Lawsuit Against the City Over Bates Street Extension Project

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TIR Equities is suing the City of Birmingham over the Bates Street Extension Project. Pictured above is TIR’s bid for the project.

TIR Equities, a real estate development firm, and its principal, Ara Darakjian, this week filed a lawsuit against the City of Birmingham over a large, mixed-use project that it had bid on as part of a request for proposal issued by the municipality in 2017. Four developers originally bid on what’s called the Bates Street Extension Project, and two continued through the process.

In the complaint filed in the U.S. District Court for the Eastern District of Michigan in downtown Detroit, TIR Equities, which wasn’t selected for the project, sued for injunctive and declaratory relief and damages against the city and two officials, Joseph Valentine, city manager, and Mark Nickita, city commissioner and a member of the city’s Ad Hoc Parking Development Committee (being sued for their “individual and official capacities”).

The lawsuit, in which TIR Equities is being represented by Rossman Saxe in Troy, states the case “arises from the arbitrary and capricious manner in which the City of Birmingham and its officials conducted an unjust, unfair, and unconstitutional ‘competitive’ bidder selection process for the redevelopment of a premier site located at N. Old Woodward and Bates Street in the heart of Birmingham.”

The redevelopment of city-owned property included a four-acre parcel at Willits and Bates streets that today includes an aging parking deck along North Old Woodward and a surface lot behind the structure. The Birmingham Ad Hoc Parking Development Committee was formed to evaluate four responses for the site from a request for proposal issued by the city, and make a recommendation.

The committee, made up of Birmingham business owners and public officials, recommended a project from Woodward Bates to the city commission for further discussion. The group’s proposal includes new mixed-use buildings along Willits and a planned extension of Bates (which today ends at Willits), as well as a total of 1,150 parking spaces (an addition of 380 spaces from the 770 parking spots now available).

Two of the four development proposals were dropped, leaving Woodward Bates and TIR Equities for review. A $370-million plan by TIR Equities called for four levels of underground property for 1,781 spaces that would service 60,000 square feet of ground-floor retail space, 371 apartments including one building that would be 15 stories high, 22,000 square feet of office space, a park, a plaza, and other amenities.

Darakjian says his proposal, which includes Robert J. Gibbs, president of Gibbs Planning Group in Birmingham, and was designed by Robert A.M. Stern Architects in New York City, met the city’s criteria in the RFP. But the commission noted the plan included a request for a tax increment finance district to be set up to help fund the development, along with the use of future parking revenue. According to the committee, the city’s RFP stated that no city subsidies were to be used in the project.

Woodward Bates included Paul Robertson, chairman and CEO of Robertson Brothers Homes in Bloomfield Hills; Victor Saroki, president of Saroki Architecture in downtown Birmingham; John Rakolta Jr., chairman and CEO of Walbridge in Detroit; among others. The group said its plan met all of the city’s requirements and did not need city funding.

The complaint states the city “did not provide for any actual competition, as the evidence establishes that the outcome was predetermined. In fact, the ‘sample’ conceptual design that was featured prominently in the city’s Request for Qualifications (“RFQ”) and Request for Proposal (“RFP”) for the Project — which design defendants later relied upon in “evaluating” the proposals for the Project — was created by the architectural design firm of an equity partner in the selected bidder itself (Saroki Architecture), Woodward Bates Partners, along with Woodward Bates’ own parking consultant (Carl Walker).

“In other words, two important members of the Woodward Bates team (an equity partner and its parking consultant) had been privately working closely with defendants on the details of the project long before the city opened the project to public bidding,” the complaint states. “Meanwhile, the defendants arbitrarily and capriciously failed to reasonably analyze the merits of plaintiffs’ proposal, which, as set forth more fully herein, was superior to the Woodward Bates proposal and which would have resulted in zero net cost to the city.”

The lawsuit states that the city’s selection of the Woodward Bates team was the “culmination of an arbitrary, capricious, unfair, and unjust bidder selection process, tainted by, among other things, favoritism and conflicts of interest.

“Given the imminent likelihood of irreparable and permanent harm, plaintiffs seek, among other things, entry of a preliminary and permanent injunction (1) enjoining defendants from finalizing the contract for the project with Woodward Bates, and (2) ordering defendants to conduct the bidder selection process in a manner that is consistent with plaintiffs’ constitutional right to due process, fair to plaintiffs, and free from favoritism and conflicts of interest.

“Plaintiffs also seek a declaratory judgment finding that the bidder selection process conducted by defendants deprived plaintiffs of their constitutional right to due process. Further, plaintiffs seek compensatory damages in whatever amount to which they are entitled, including for various costs incurred in the preparation, submission, and maintenance of plaintiffs’ proposal, as well as punitive damages, interest, costs, and attorney’s fees.”

In the suit, the plaintiffs asked for a jury trial to review the case, it states: “the conceptual design included in the RFP was merely a ‘sample,’ and it did not represent the requirements for the proposal. Yet the committee improperly treated the ‘sample’ as if it was the standard. For example, the committee treated the 5-story height of the “sample” as if there was a 5-story height restriction on the proposals. This was despite the fact that the RFP provided no height restriction and that City Planning Director Jana Ecker repeatedly represented to both the committee and the commission that there was no such restriction.”

The city said it had yet to be served with a complaint. “As of today, the city has not been officially served about the legal matter, and it would be premature to say anything more until we receive it,” says Kevin Byrnes, communications director for the City of Birmingham. “As a matter of course, the city does not comment on pending litigation.”

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