Airport concession winners linked to city officials

In just nine days, the Atlanta City Council will have a chance to award one of its biggest plums: the contracts to run restaurants and shops at the world’s busiest airport.

Mayor Kasim Reed’s administration wants the City Council, at its Jan. 3 meeting, to sign off on a list of proposed winners whose contracts cover 150 storefronts throughout Hartsfield-Jackson International Airport.

“In terms of dollar amounts, the concessions of course are enormous,” said City Council member Yolanda Adrean. “We’ve got the busiest airport on planet Earth.”

A concessions contract at Hartsfield-Jackson International Airport can be a long-term cash cow. Many run for 10 years, with gross sales for the total group of concessionaires expected to hit $377 million per year.

Because the stakes are so high, concession deals at Hartsfield-Jackson have sometimes been steeped in corruption and cronyism, including a bribery scheme in the 1990s that landed two city councilmen and one concessionaire in prison, and a lawsuit over the selection of an advertising contractor that cost the city millions.

Against that checkered backdrop, Mayor Kasim Reed took the stage this year and found himself with the opportunity to redo the concessions lineup as the airport prepared to open a new international terminal next spring.

Reed vowed that the process would be honest and transparent: the anonymous selection committee would be fully vetted with background checks, and the mayor would remain at arm’s length throughout. He also noted that he had returned campaign contributions from all of the competing companies — even though the donations are legal — to “avoid appearances.”

A review by The Atlanta Journal-Constitution shows financial and political links between the mayor and major concessionaires, and also between the businesses and other city officials.

Reed refused to be interviewed for this article but asked the newspaper to submit written questions. He responded with written answers a day later.

“I was not involved in the solicitation, evaluation or selection of the winners of this procurement,” Reed wrote in response to a question about whether such political connections played a role. “I did not have any discussions with bidders or provide help or advice of any kind. Further, I am not aware of any discussions between staff and the bidders.”

Who gave what

After a council committee voted to approve the contracts on Dec.14, The Atlanta Journal-Constitution obtained a list of contract winners, and compared it to data compiled by Common Cause Georgia and the National Institute on Money in State Politics.

The newspaper’s examination found:

  • Hojeij Branded Foods Inc. won one of five large packages of restaurant concessions. The company is controlled by Wassim Hojeij, who was a member of host committees for Reed campaign events. Hojeij, his relatives and people linked to his company contributed at least $27,000 to Reed.
  • Atlanta Restaurant Partners won both as a prime contractor and as a subcontractor. The partnership is made up of Daniel Halpern, who co-chaired Reed's campaign, and family members of former Mayor Maynard Jackson. Members of Atlanta Restaurant Partners and their relatives contributed at least $16,700 to Reed's campaign. Halpern's wife Sonya served on Reed's transition team. After he became mayor, Reed named Daniel Halpern to the board of the Atlanta Housing Authority. Halpern also made campaign contributions to City Council member Lamar Willis, who sits on the transportation committee.
  • An entity called HMSHost, one of the biggest winners in the competition for concessions, contributed $6,100 to Reed, although $2,000 was later refunded.
  • Entrepreneur Mack Wilbourn gave at least $3,400 to Reed in contributions made personally and through his company, Mack II, which was selected by the city as a prime contractor for restaurants in the airport's atrium and Concourse A. Because the rules allowed him to do so, Wilbourn also won restaurant spaces as a subcontractor throughout much of the rest of the airport. Wilbourn, who was acquitted of charges in a major airport corruption case in 1994, has also made campaign contributions to City Council member C.T. Martin, who chairs the transportation committee that oversees the airport.
  • Paradies-Atlanta II, another longtime player in airport concessions, was recommended as concessionaire for a collection of stores on Concourse E and the new international terminal Concourse F. Company founder Dan Paradies went to prison in connection with the 1994 bribery scandal. (He retired as CEO at that time; his nephew Gregg is now chief executive.) People linked to Paradies-Atlanta donated at least $2,250 to Reed since September 2009, according to campaign finance databases, although some of that money was refunded.
  • Delaware North Companies won another of the five large packages of restaurant concessions. In the first half of the year, Reed received multiple donations of $2,500 from the Jacobs family of Buffalo, N.Y., who are affiliated with Delaware North and own the Boston Bruins.

The people behind Atlanta Restaurant Partners, Mack II and Paradies are all established airport contractors who already do business at Hartsfield-Jackson.

Some significant contributors did not win contracts. Roberson & Reynolds is one example. Principal Nancy Jafari, her husband Lohrasb, and partner George Reynolds combined to give $16,800 to Reed.

Rushed process

The process, launched last spring and led by airport general manager Louis Miller, hit turbulence early on. The city in September decided to scrap an initial roster of proposals, saying too many of them lacked required documentation.

New proposals were solicited and evaluated during the fall. Then, in the first step of the approval process, lists of winners were couriered to members of the City Council’s transportation committee around midnight on Dec. 14, less than 12 hours before they were to meet and vote — a much shorter time than normal. The packet was not on the meeting’s agenda. The rushed schedule — ostensibly to help keep the international terminal on track for its spring opening — was controversial.

“Obviously, the international terminal completion schedule is a tight schedule,” said Councilwoman Keisha Lance Bottoms, a transportation committee member who made the motion to vote on the packages. “If we hold anything up on our end ... there’s a pretty significant economic hit.”

The committee meeting on Dec. 14 was a preview of things to come when the full council weighs in, Bottoms predicted.

“Some were satisfied with the process,” she said. “Some were not.”

Adrean said the international terminal’s looming deadlines create a sense of urgency.

“The international terminal needs to open, it needs to open on time, and it needs to have concessionaires,” said Adrean, who met with Miller last week for a briefing on the evaluation process. “Getting this in place is important.”

Reed’s administration did not release the scores of the winning bidders to the general public. The AJC requested the documents under Georgia’s open records law, but the city’s lawyers would not provide them, and said the documents are exempt from disclosure until the council approves the legislation and Reed signs it.

Regardless of the outcome at City Council, the heavy overlap between political connections and winning proposals could fuel criticism from “pay-to-play” reformers who say that should be banned.

“The feeling is that if you want to have a chance at getting a contract, you need to be in line to give money to candidates for Atlanta office,” said Kerwin Swint, a professor of politics at Kennesaw State University and board member of Common Cause Georgia. “That’s the definition of pay to play.”

Common Cause Georgia, a watchdog group, has pushed for regulations to limit political contributions by companies that compete for airport contracts. The city has no such restrictions in place. Nor do any other metro Atlanta governments.

This summer, Reed publicly opposed pay-to-play reform, saying the city’s ethics rules for contributions were already “as strong or stronger than any major government in the state of Georgia.”

Drop in the bucket

Contributions from contenders for the contracts were a relatively small slice of the $3.6 million Reed has raised since opening his campaign for mayor in 2008.

Reed reported that he refunded $600 in contributions from executives of Hojeij Branded Foods, $1,000 to Gregg Paradies and $2,000 from HMSHost.

However, the mayor did not return other contributions made this year before the concessions procurement began.

Halpern, one of the big winners in the restaurant proposals, said he has been successful in winning contracts because “we’ve demonstrated ourselves to be very experienced operators of restaurants.”

“The only perhaps influence or advantage some people have had is if they’ve been at the airport and done a great job for the city,” Halpern told the AJC. “We give the city the best opportunity to realize the greatest value of their real estate.”

Halpern, who runs T.G.I. Friday’s franchise operations, also said that background helped him attract partners who could team up on proposals.

Delaware North said it regularly contributes to a variety of causes and political campaigns based on its business interests, and said it has acted in compliance with Georgia laws.

Another of the small packages of restaurants went to Global Concessions Inc., controlled by Terry Harps, who contributed $6,000 to Reed since Sept. 30, 2009.

Harps said through a spokesperson that he has donated to a number of political campaigns over the years in Fulton, Clayton and DeKalb counties and has always contributed to campaigns that he believes will have the best impact on the city. He said his contributions are for the greater good of the city and are not related to his business.

The AJC asked Reed why he allowed airport concessionaires such as Halpern to play roles in his campaign, given that questions could be raised about possible conflicts of interest at the airport. Halpern, a longtime Democratic operative and restaurant executive, was one of four co-chairs of Reed’s campaign.

“I selected Dan Halpern as my campaign co-chair because of his qualifications for the position,” Reed said in his written response to the AJC.

To compete for the contracts, many of the companies struck joint ventures among multiple concessions companies, and enlisted additional businesses as subtenants. The airport said it wanted a strong presence of local brands in its new concessions, and this arrangement facilitated that.

The Varsity, Shane’s Rib Shack and Willy’s Mexicana Grill were among the well-known Atlanta brands recommended for spots at the airport. Some airport restaurants are operated with licensing agreements rather than by local restaurateurs themselves.

The way the process worked also gave businessmen such as Wilbourn and Halpern multiple chances to win.

That’s because although the city had limits on how many contracts a prime or joint venture partner can win, there were not limits on how many winning proposals subtenants could participate in. Wilbourn’s Mack II and Halpern’s Atlanta Restaurant Partners, among others, could partner with multiple companies competing for the same contract and boost their chances of winning.

That helped a subtenant like Mack Wilbourn win parts of all five of the large restaurant package contracts.

Goes on ‘all over America’

Winning concessionaires also contributed to the campaigns of some members of the City Council.

Wassim Hojeij, his family members and business associates were among the most generous, giving to several council campaigns, including more than $12,000 in donations to Council President Ceasar Mitchell. Mitchell does not have a vote on council legislation except in the event of a tie.

Other winners contributed too, but in smaller amounts.

In 2009, council member Ivory Young received a $1,000 contribution from Wilbourn, Hojeij and Concessions-Paschals. Concessions-Paschals had a stake in a winning proposal in Terminal B.

Councilman C.T. Martin, chair of the transportation committee, received $3,000 from Hojeij, $1,200 from Concessions-Paschals and $1,000 from Wilbourn in 2009.

“My position on contributions is that as long as we don’t break the law, it’s gone on all over America,” Martin said. “I plan to run for re-election, and everyone gives me contributions.”

Councilwoman Carla Smith in 2009 received a $1,000 contribution from Concessions-Paschals. Willis received $2,000 from Halpern, $1,000 from Concessions International, $500 from Mack II and $250 from Carol Hojeij.

In an interview with the AJC, Willis said businesspeople have the right to make contributions, although he added that Reed’s return of funds set a good example for other officials. Council members did not evaluate or influence proposals before the winners were announced Dec. 14, he said.

“The idea that campaign contributions influenced this process is absolutely false,” Willis said. “You don’t create a successful restaurant by making campaign contributions. These are people who engaged in the process at every level, including the political level.”

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