The Chesapeake House travel plaza the Interstate I-95 in Northeast,… (Baltimore Sun/Kenneth…)
The state Board of Public Works approved a half-billion-dollar contract on Wednesday to replace the two travel plazas on Interstate 95 north of Baltimore over the objection of a losing bidder that has vowed a legal battle to stop the deal.
By a 2-1 vote, with Comptroller Peter Franchot opposed, the board awarded Miami-based Areas USA the 35-year contract to replace and operate Chesapeake House in Cecil County and Maryland House in Harford County. Areas will take over operation of the plazas — two of the nation's busiest — in September, with construction to begin almost immediately.
"We are pleased that we prevailed and look forward to getting started and giving the people of Maryland travel areas that are welcoming gateways and that they can be proud of," said Xavier Rabell, CEO of Areas USA.
But executives at HMSHost, based in Bethesda and operator of the plazas since 1987, contend the bidding process was illegal and biased. They say they will file suit in Baltimore Circuit Court seeking to get the vote overturned and the project rebid.
HMSHost attorney Paul Mamilian called the board's decision "a disservice to the citizens of Maryland" and warned that "the state has put itself at risk."
The project is the second major public-private partnership undertaken by state transportation officials within the past three years as they look for ways to upgrade infrastructure without incurring taxpayer expense. A $1.3 billion deal with Ports America Chesapeake to enlarge the Seagirt Marine Terminal to handle massive Panamax cargo ships opened the door for other deals, said Transportation Secretary Beverley Swaim-Staley.
She told the board, consisting of Gov. Martin O'Malley, Treasurer Nancy K. Kopp and Franchot, that the 48-year-old Maryland House and 36-year-old Chesapeake House are great revenue sources, but "well beyond their useful life" and do not compare favorably to rest areas in states along I-95, from Connecticut to Delaware. Repairing or rebuilding them by conventional state procurement methods would require dipping into money set aside for other projects "and take us years," she said.
Areas has agreed to spend $56 million to replace the plazas with modern, airy structures and share a portion of its revenue with the state, which it said could amount to as much as $488 million over the life of the contract. In addition, it will spend millions on upkeep and capital improvements as the plazas age.
Swaim-Staley said the Areas bid exceeded all three goals outlined in the state's request for proposals and offered $148 million more than what HMSHost proposed.
But HMSHost lawyer John Wolf said the Maryland Transportation Authority didn't follow its own rules in evaluating the bids. HMSHost was told last December that its bid was acceptable and negotiations with bidders would begin after the holidays.
Areas received an email from a Maryland Transportation Authority official on Jan. 4, "but HMSHost got no such email. Only one proposer was allowed to improve its offer — Areas," he said.
Kopp called the contract dispute "a very difficult situation" but said that after reviewing all the documents she concluded "that the process was fairly done and I think the request for proposals was clearly written."
But Franchot warned that with a legal challenge pending, "I just get the feeling we're jumping the gun here," and that the state could be forced to repay Areas for its expenses should HMSHost win.
He expressed concern that a Montgomery County circuit judge had issued a temporary restraining order two weeks ago against awarding the contract, saying HMSHost "is likely to succeed on the merits of its claims."
Philip Andrews, a lawyer for Areas, called delaying the contract vote "a terrible mistake."
"The chances of Host prevailing are very small," he said. "Host has an uphill battle. Courts don't substitute their judgment for that of the [state] agencies."
And Assistant Attorney General Stan Turk said Judge Eric Johnson lifted the order — "a seat-of-the-pants kind of thing" — last Friday and agreed to allow the case to be refiled in Baltimore, where all the defendants conduct business.
"Host has never said, 'We would have given you a better offer,'" Turk told the board. "Host has never explained why it didn't give the MDTA its best offer."
Areas will keep one travel plaza open throughout the redevelopment. Maryland House, to be built on the same footprint, will close in September and reopen in December of next year. Chesapeake House will then close, be rebuilt on an adjacent site and reopen in September 2014.