Published: July 28, 2006 11:30 pm         

Lawsuit: Terre Haute House process unfair

A lawsuit filed Thursday in Vigo County Superior Court against Mayor Kevin Burke and others accuses the city administration of conspiring with private developer Greg Gibson and Hulman and Co. to eliminate competition in the bidding process that eventually resolved the fate of the former Terre Haute House.

Also named in the civil action are Gibson, the City of Terre Haute, Seventh and Wabash LLC, Terre Haute Realty Corp., Hulman and Co. and Dora Bros. Hospitality Corp.

Gibson, who heads Seventh and Wabash LLC, purchased the property from the Hulman family’s Terre Haute Realty Corp. The Dora Bros. broke ground Monday on the site on a six-story Hilton Garden Inn, which they will own and operate.

John R. Bischoff, manager of Haute Maison Development LLC, said his purpose in bringing the civil action is to ensure that future public/private projects are conducted fairly.

“The loss here has already occurred,” he said. “The building’s torn down. But the overriding question is: What kind of precedent does this set? What happens next time you have a public/private project if no one questions this?”

Bischoff filed the paperwork here Thursday, but was informed the case would be transferred to Sullivan County due to a backlog of Vigo cases.

Bischoff’s was one of five proposals for renovating or replacing the old hotel and adjacent buildings that were submitted to the Terre Haute Department of Redevelopment during a request-for-proposal (RFP) process initiated in early 2005.

All five were denied for failure to meet the financial criteria the city placed on its request for proposals. The Doras did not submit a proposal.

In the complaint, Bischoff accuses Burke of withholding financial support from all the developers who responded to the request for proposals “to stifle competition and confound the [developers’] efforts” to meet the RFP funding requirements.

In addition, Bischoff claims that Burke’s actions were “aimed at … perpetuating a Gibson monopoly over local government projects.”

Burke, who is on vacation in Mexico, could not be reached, nor could Gibson.

Attorney for the City Kendall Boyd said he had not yet seen the complaint, but said as soon as he receives it, the document will be forwarded to Trident Insurance Services, the city’s insurance carrier. They will then determine the next move. Boyd said he could not comment until he reviewed the suit.

Fred Nation, executive vice president of the Hulman companies, said though he had not yet seen the complaint, he considered Bischoff’s action “outlandish.”

Tim Dora, of Dora Bros. said he had not seen the complaint and could not comment.

Burke, in his most recent public newsletter (dated Jun. 7), distinguished the Gibson/Dora plan from the five failed bids, indicating the Dora Brothers development plan was the only one that did not ask “for public money as part of the risk before any construction was started.”

Bischoff, who spent years trying to purchase the property at Seventh Street and Wabash Avenue to restore the historic hotel, denies the mayor’s claim and insists his plan was not dependent on city money. Bischoff said Burke already had decided to go forward with a plan by Gibson and Hulman and Co. to demolish the structure before the proposal process was even initiated.

In the complaint, Bischoff called the proposal request a “sham” process, designed to discourage interest in the property and eliminate legitimate developers “for the motive of favoritism and enrichment of” named defendants.

Bischoff called the request for proposals “an ambiguous elimination document, with no clear-cut goals, no scoring system, no idea where you were.”

Bischoff says he is no stranger to the RFP process, having been involved with more than 20 similar bidding proposals. “If you don’t score high enough, fine, you walk away. You’re not going to get them all.

“But that’s not what happened here.”

Ice-Miller, the Indianapolis-based law firm that drafted the request document “fully knew what the problems were with funding the deal, and essentially, what happened, they took $2 million off the table, then set up this RFP, primarily based on your ability to fund,” he said.

The $2 million Bischoff referred to is made up of $1 million in Tax Increment Financing (TIF) funds eventually granted to the Dora Bros. project, and $1 million from Hulman and Co. that Bischoff said was widely understood as part of the deal for anyone interested in renovating or demolishing the hotel.

Bischoff said while he feels the case has a strong chance of going to trial, “I’m at an extreme disadvantage going against who I am naming here. They’ve got the best, they can do anything,” he said.

Knowing he was not the only developer affected by what he considers a contrived process added incentive.

“I think if it had been just me, I might not have done this, because I know what a pain it is. I can’t afford to do it,” he said. “I think the thing that compelled me to finally file it was just being around town, I talk to a lot of people, people I don’t even know, here and there. It was apparent even to people who were pretty much divorced from the process – they knew something wasn’t right … There were some things I want to say, I wanted out there in the public record.”

Bischoff is seeking, among other relief, monetary damages for the work required to put the proposal together and for slander.

Bischoff added he has no intention of interfering with construction of the new Hilton Garden Inn, and does not expect the suit to have that effect. “If nothing else,” he said, “I’ve called it. It’s time for everyone to lay their cards out on the table – I’m calling it.”



Deb McKee can be reached at (812) 231-4254 or deb.mckee@tribstar.com.