City Plans Downtown Heliport Contract without Competitive Bidding
The administration of Mayor Eric Adams plans to award to the current operator of the Downtown Manhattan Heliport (DMH) a “sole source concession agreement” for up to 18 additional months, which will not require competitive bidding from other prospective vendors.
The facility, located on the East River waterfront at Pier 6 (near the intersection of Coenties Slip and South Street) is publicly owned but leased to a private operator by the Economic Development Corporation (EDC)—a non-profit corporation that negotiates strategic partnerships designed to harness private-sector resources to public projects. DMH hosts more than 20,000 flights each year (or upwards of 50 per day), the preponderance of which are sightseeing tours, which has for years sparked quality-of-life complaints from local residents aggrieved by noise. Complaints about helicopter noise have jumped in recent years, rising from an average of about three per day in 2016 to more than 2,000 per month currently, according to data from the City’s 311 service.
Two arms of City government, EDC and the Department of Small Business Services (SBS), are seeking permission from a third, the Franchise & Concession Review Committee (FCRC), which is part of the Mayor’s Office of Contract Services, to bypass the usual process of soliciting multiple offers and selecting the prospective partner offering the most lucrative terms.
According to EDC documents reviewed by the Broadsheet, this move is explained by the rationale that it “intends to keep DMH operational while EDC, on behalf of SBS, procures a heliport operator to enter into a new concession agreement, as the former agreement expired April 30, 2023.”
The company has been embroiled in controversy since taking over the DMH facility in 2008. After being selected as the operator, it hired the former EDC official in charge of aviation to run the heliport, while also acknowledging that he had advised the firm on formulating its proposal. This led to a lawsuit by the losing bidders, but the legal action did not nullify the City’s decision to designate Saker as the DMH operator.
More recently, in a development first reported by the Daily News, as Saker’s franchise at the DMH was nearing its end in April, the bidding process for a new contract raised ethical concerns when it was revealed that Saker’s chairman is a law partner of an EDC board member. This prompted two rival bidders for the DMH contract, Thoroughbred Sea & Air and Helo Holdings, to file formal complaints. In the aftermath of these filings, a March hearing to determine the new operator (at which EDC was expected to recommend renewing Saker’s contract) was called off. Before that cancellation, according to documents reviewed by the Broadsheet, EDC expected to earn at least $25 million over the ten-year life of the new lease it had planned to give Saker.
In a pair of previously unreported developments, Thoroughbred Sea & Air raised two specific concerns about the possible conflict of interest related to EDC selecting Saker to continue operating the DMH. The first is that Andrew Kimball, EDC’s president, “has, or at least had, a business relationship with Samuel D. Goldstein, Saker’s chief executive officer.” The second is that EDC board member Morris Missry is a partner in the law firm representing Saker in a lawsuit brought against it by a tenant at DMH, New York Helicopter Tours, for refusing to allow the company to continue flying at DMH after a related firm entered bankruptcy during the Covid pandemic. (The EDC is also a co-defendant in that suit.)
In its response to the first allegation, EDC said that Mr. Kimball “had no direct involvement in EDC’s RFP [request for proposals] process in connection with the Downtown Manhattan Heliport procurement. He was not provided with RFP submissions, he did not participate in the RFP interviews, evaluation or selection process. Further, NYCEDC has confirmed that there is no conflict of interest presented by the past business relationship between Mr. Kimball and Sam Goldstein. There is no current business relationship between Mr. Kimball and Mr. Goldstein, and the referenced business relationship occurred when both of them worked at different companies, prior to Mr. Kimball’s appointment as NYCEDC President.”
Replying to the second allegation, EDC said that its “Board of Directors does not participate in any aspect of the review or approval of the RFP, RFP responses, the evaluation and selection process or even the conditional selection of a concession operator.” EDC continued, “Mr. Missry had no actual involvement in the procurement and thus, he did not influence the transaction or have any disclosure obligation with respect to the procurement or the conditional selection. Accordingly, NYCEDC finds that Mr. Missry’s status as a member of its Board of Directors did not prejudice” the competing bid submitted by firms hoping to take over from Saker as operator of DMH.
A public hearing to consider the sole source concession agreement proposed by EDC to award the DMH concession to Saker for an additional six to 18 months is scheduled for tomorrow, Wednesday, July 12, at 22 Reade Street, starting at 2:30pm. At this session, the terms to be approved include three six-month periods commencing in September. (The second and third six-month periods are renewal options, exercisable at SBS’s discretion.) For the first of these periods, Saker’s rent will be either a minimum of $1,036,811 or 30 percent of gross revenues, whichever is greater. In the second and third periods, Saker’s minimum rent will be cut in half, to $518,406, while the alternate rent (30 percent of gross revenues), will remain the same. (This discount comes in addition to more than $1 million in rent that the EDC forgave Saker during the Covid pandemic.)
Saker Aviation did not respond to a request for comment. Representatives for Thoroughbred Sea & Air and Helo Holdings declined to comment. A spokesman for the City’s Department of Small Business Services referred all questions to the EDC. An EDC spokesman said, “later this week, the Franchise & Concession Review Committee will hold a public meeting for the purposes of commenting on the interim concession agreement for continued operations at the Downtown Manhattan Heliport. We are going to resume our competitive selection process for an operator at DMH shortly.”