Accusations flying over Hobby deal

Turner’s office says Pappas is using a ‘smear campaign’

Mayor Sylvester Turner’s office on Thursday accused Pappas Restaurants of running a “smear campaign” about City Hall’s bidding process as the company fights to renew its contract at Hobby Airport.

Mary Benton, Turner’s communications director, said in a long statement that Pappas blatantly has misrepresented the process as the popular restaurant company has waged a campaign to keep its foothold at Hobby, where it has managed restaurants and bars since 2002.

Benton defended the integrity of the city’s competitive process, noting it was the same one that awarded Pappas its airport contracts over the last 20 years, and said the airport still would feature local brands.

“We are disheartened to learn of the inaccuracies and disinformation being spread by Pappas restaurant group,” said Benton, who would not answer a reporter’s follow-up questions. “We wholeheartedly object to Pappas’ questioning the integrity of the same procurement process that awarded them much success at our airport over the last two decades.”

Representatives for Pappas could not be reached for comment Thursday. The company urged its supporters to sign its “Save Our Pappas” online petition, and changed the banners at its Hobby locations with similar messages.

City Council is considering giving a 10-year, $470 million concessions deal to a subsidiary of the Spain-based company Areas SAU. The company would bring restaurants and bars like The Spot, SpindleTap Brewery, Killen’s Barbecue, Clutch City Coffee and national brands like Raising Cane’s and Longhorn Steakhouse into the airport.

The contract was on City Council’s agenda Wednesday, but several council members delayed the vote by a week, giving Pappas more time to make its case.

The Areas deal came after an unusually protracted procurement process. The city has been asking companies for airport proposals for three years, includ

ing three separate rounds of bidding. It canceled one of those rounds due to close scoring, and requested best-and-final offers from companies a total of four times throughout the process.

Chris Pappas, the CEO of Pappas Restaurants, has questioned those complications as he has urged City Council to reject the proposed contract and renew his proposal instead. Pappas told Turner and council this week that the contracting process has been full of cancellations, requirement changes and other hurdles.

Pappas has hired a lobbyist to persuade City Council members, distributing packets of information to them this week at City Hall. He also questioned the result of the bidding process this week, asking how Areas could have defeated the group led by Pappas, which is called 4 Families of Hobby.

“We feel like if we lost, we’re not sure how we could have lost in those (scoring) categories because we checked the boxes as far as being all the things the city would want,” Pappas said Tuesday.

Benton said Pappas has been a “wonderful concession partner and community member,” but the city follows a competitive process, “not a popularity contest,” to award its contracts. And she offered one reason why Areas was chosen over Pappas’ group: It proposed giving the city a larger share of revenues.

City Hall has not publicly released either team’s figures, citing the ongoing contract process.

Areas proposed giving the city 21 percent of food and non-alcoholic beverage sales, according to a copy of the draft contract obtained by the Chronicle, along with 23 percent of alcoholic beverage and merchandise sales. It is not clear what the Pappas-led group proposed.

The financial factor was worth 10 out of 100 points in the grading process, and Pappas suggested earlier this week his group’s proposal should have won the overall contest.

Ironically, Pappas originally secured the Hobby contract by overcoming a mayor’s opposition regarding compensation to the city.

The group outmaneuvered then-Mayor Lee Brown in 2002 to secure its first Hobby concession contract, a rare outcome in Houston’s strong mayor form of government.

Four Families originally had won that year’s ranking process when a city consultant graded proposals based on design, concept, management and experience, according to Chronicle archives.

City officials later added rent into the criteria, which boosted a competing company, CA One Services, to the top position because it had offered a higher share than Four Families. Some council members objected, accusing the administration of altering the rules to get its desired result.

Four Families later agreed to pay the same rent fee as CA One had proposed, and it won enough council votes to get the deal.

The Turner administration has denied requests to release scoring sheets from the grading process.