Insider deal creates "monopoly": How Vail's exclusive delivery service sparked a lawsuit and controversy

It’s all about who you know.

In just over three years, Matthew Dietz leapt from bankruptcy into a million-dollar, multi-year contract the Town of Vail laid at his feet in a lucrative deal that could ultimately transform ski towns across Colorado.

As business partners, Dietz and hockey buddies William “David” Riddle and Andy Canzanello in 2022 were handed the town’s exclusive distribution service for its main village, the only one authorized to shuttle hundreds of early morning deliveries to the variety of restaurants and shops there.

Previously omnipresent delivery trucks are restricted from those cobblestones and must off-load at underground facilities — and they are required to pay handsomely for the permits to do this — and leave the “last mile delivery,” as they call it, to the partners.

It’s already grown to a $1.5 million yearly renewable contract for the company, 106West, that came without advertisements, without public bids, without competition and without pause despite a town ordinance requiring a public bidding process, The Denver Gazette has learned.

What it has come with are emptier streets, removing large delivery trucks and vans from the pedestrian cobbles that locals say make the quaint part of Vail even quainter.

It’s also come with a lawsuit by the powerful Colorado Motor Carriers Association, the main trade group for truckers, which says the town violated all manner of federal laws by restricting delivery traffic that is protected commerce on public roadways. The suit says that under current laws municipalities can't restrict traffic based on who owns the vehicles. An appeal on the case is pending in U.S. District Court in Denver.

"The Town of Vail effectively has created a monopoly for one company who, along with the Town, may establish the fees, determine routes and services," said Greg Fulton, executive director of CMCA. "In the end we have little companies paying substantial sums of money to use public loading docks to support a program which is more costly than it should be, and one that benefits a single company."

Dietz, 55, recently cashed out from the company, people familiar with the project said, and the remaining 106West partners picked up Tom Corrigan, another hockey fan with deep local ties.

Now, after more than two years as Vail’s official delivery service to the village — records show on average it handles about 15 tons of goods and nearly 100 kegs a day — 106West is about to do the same in Breckenridge, just as other ski towns are giving it a strong look, too.

But it’s not Vail’s program itself, known as an e- service because it uses only electric vehicles to make the deliveries, that’s at issue. Rather, it’s the process the town went through bringing it to fruition.

The village essentially put 106West’s original investors into business, according to records and interviews, by buying the handful of electric vehicles they needed to shuttle everything from food, beer kegs and merchandise to local vendors, passing the local ordinance restricting all others from doing it, negotiating with state officials to smooth the way when state liquor regulations were at odds with that process, and making sure that any other financial needs or desires 106West had were met.

This all happened despite another ordinance approving the program and requiring that the whole deal be put up for public bid, but never was, records reviewed by The Denver Gazette show.

Instead, town officials simply declared 106West to be the only game in town that could do the job even though no one else was allowed to give it a try, and the three men chosen weren’t even doing it in the first place.

But with town officials at their elbow helping — it was largely led by then-Police Commander Ryan Kenney, who is now the town’s police chief — the service devised the program, was allowed to test it out and then, when it proved successful, was handed the contract.

What 106West had been doing previously was delivering documents, medical products and other items from several businesses around town whose ownership they came to know, not just from their deliveries but also from just being locals who had been around for years.

The three founders are pretty much hockey rink rats — Dietz’s family is a long-time developer with deep roots — who basically knows everyone in town.

Canzanello, 42, is a former local hockey star who did a trio of years as a professional in the American Hockey League followed by 9 years as a pro in Europe, mostly Germany, before coming home.

Riddle is another local who worked as an attorney for about 7 years before letting that license lapse in 2022, according to state records.

Dietz, Canzanello and Riddle did not respond to Denver Gazette efforts to reach them.

Similarly, Kenney did not respond to emails.

The three buddies began 106West in 2017, records show, and it quickly garnered steam largely because few other services operated in the Vail Valley.

Dietz was in the middle of personal bankruptcy at the time, federal records show, with debts that neared $1 million, much of it from banks and personal loans. The bankruptcy case closed in March 2018.

106West’s work quickly coincided with Vail officials looking to reduce or eliminate the number of trucks that dotted the village’s cobblestone streets each morning, creating a noisy, dirty and dangerous place for pedestrians.

It didn’t hurt that Vail’s then-mayor and longtime Councilman Dave “Bones” Chapin is part owner of Vendetta’s Italian Restaurant. His partner in that business is John “Popeye” Brennan.

Brennan’s daughter, Jennifer, works at the restaurant and is Dave Riddle’s wife.

Asked to address any conversation he might have had with Riddle about the program, Chapin would only say the idea wasn’t a new one.

“These conversations about removing commercial vehicles from our villages started well before my time as Mayor,” Chapin said in an email to The Denver Gazette. “I have no further comment.”

Vendetta’s is the unofficial gathering place of Vail’s ski patrol, locals say, of which Corrigan has been a member for years.

It was a Vail Resorts executive Jeffrey Babb, the senior director of resort operations, who introduced the three to Kenney in August 2020, according to emails obtained by The Denver Gazette. He called them a "professional team who may be able to help solve some of our issues."

“Those deals were like winning the lottery, once in a lifetime,” a local friend of the businessmen told The Denver Gazette. “They all know each other, they’re all friends, and they all had the connections and the means and the timing.”

'Strong community ties'

The Denver Gazette waded through hundreds of pages of contracts, emails, town meeting records and nearly a dozen interviews to trace the 106West deal that began in 2019, was briefly derailed by the pandemic, then restarted in 2021.

Because Vail is still considered a small town with a resident population of only 4,500, people would only speak on the condition they not be identified because, after all, they said, it’s a small town.

The newspaper found an array of processes and contradictions in the way the e- program came to fruition that raised questions town officials were either reticent to answer or whose responses offered little additional clarity.

It begins with a July 2021 memo from Kenney to the Town Council in which he lays out the efforts he had already made at coming up with the e- program that actually started in 2019.

At the time, Kenney had been on the Vail police department just two years. He came from the Boca Raton, Fla., police department where he served 23 years.

A number of underground loading docks that were already built in town were underutilized but provided the infrastructure necessary for any delivery program to work. In the process of evaluating the logistics, Kenney said he contacted 106West at the end of 2020, calling the three-year-old company “firmly established in the valley” with owners who “were raised in Vail and have strong community ties.”

He offered that his research could “locate only one company” that could do the job.

Kenney later told Vail-Beaver Creek Magazine that he “queried logistics companies from Denver to Texas to the East Coast” about how to do the project. None, he told the magazine, was interested or could.

When The Denver Gazette asked Kenney to provide it with the name of just one company he contacted, he referred the newspaper to the town clerk, who asked it to file an open records request, which it did.

Its response: “After reviewing your request and making reasonable inquiry with the appropriate Town departments, it was determined that there are no public records held by the Town that would be responsive to your request or that the record you request does not exist.”

The Denver Gazette also contacted the top five services in Colorado, each of them confirming they easily could address the delivery program Vail conceived.

None was contacted for their input.

Said one service owner: “For that kind of money, darn tootin’ I’d have taken a shot at it.”

Kenney also recommended the town negotiate with 106West to come up with a 6-month pilot program it helped devise, which the council approved at its July 6, 2021 meeting, records show.

The measure passed unanimously, which included Chapin’s vote, meeting minutes show.

The council approved the $380,703 pilot program contract for 106West a month later. Although Chapin had joined the council meeting virtually before the contract was discussed, the minutes show he was absent from the unanimous vote approving the contract.

106West had an additional request unrelated to the project it was contracted to do: $5,000 for five Epic Ski passes, the lift tickets that can be used at any of five Colorado ski areas owned by Vail Resorts.

Chapin’s term as mayor ended in December 2021. He was elected again as a councilman in November 2023.

The Town Council renewed the 6-month pilot contract in March 2022 for $350,000.

By May 2022, Kenney was trumpeting its successes, noting to the Town Council in another memo that 106West was already moving nearly 30 tons of products on its busiest days and more than 90 kegs from the 18 trucks it was unloading.

Trucker participation in the program was still voluntary, though, without the need for a town ordinance banning them from the cobblestone streets.

But not all were happy about it.

Kenney’s memo reflected that of the 24 other trucking firms that weren’t participating, 18 of them “have said they will not join the program until they are forced by the Town.”

Truckers must pay docking fees

By July 2022,  records show the pilot program was doing well and Kenney told the Town Council he recommended it be implemented fully.

More importantly, Kenney said in a memo that a work group of town officials had come up with an annual fee system for the underground loading docks, one in which the more frequent delivery companies would pay more than the less-frequent users. The fee ranged from $27,000 to $3,000, records show.

In all, the dock fees would generate about $600,000 each year to offset the costs to run the program, Kenney reported.

As a result, the Town of Vail took its boldest action in the development of the e- program: In August 2022 it passed an ordinance banning commercial traffic on the cobblestone streets and established the electrified delivery system.

Small vehicle carriers such as FedEx and UPS would be allowed to continue deliveries for the time being, as would trash haulers, but larger trucks were required to use the docking facilities.

That ordinance contained a key requirement: Any contract for a “town-approved contractor” to run the permanent delivery system must be publicly advertised and put through a formal public request for proposal (RFP).

It wasn’t.

The town said no RFP was issued, according to its response to a Denver Gazette open records request for the documentation.

Town officials then told the newspaper there was no requirement for an RFP since the project was not a public improvement project, such as street construction, and that this was actually a “public/private partnership” in which 106West was a “natural choice.”

“In this case, research was done and no one was identified as running a program like the one the town envisioned, it was a new and specialized service that did not exist, and so we approached the project as a public/private partnership,” Kris Widlak, the town's communications director, wrote The Denver Gazette in an email.

Then, when reminded that the town’s own ordinance required the RFP, Halloran, the deputy town manager, said that was set up for “best practices” reasons.

“The Town of Vail created this concept from the ground up and began with a pilot program in July 2021,” Halloran wrote The Denver Gazette in an email. “At that time, it was not legally required to have an RFP process for the selection of a vendor. Of course, our internal financial policies and best practices would be to have an RFP process going forward which is why that requirement was included in the August 2022 ordinance.”

Then, when asked why that RFP didn’t actually happen, Halloran said it didn’t need to. That’s because, Halloran explained, it was proven — a month before the ordinance requiring the RFP was passed — that only one company could do the job, known as a “sole-source justification.”

That type of justification typically happens when only one company can reasonably offer a service to the government and that determination is then published publicly for several days, according to Colorado’s state rules of procurement. In case of reasonable doubt, the rules say the contract should be offered for public bid even if there’s only a single response.

But either way, a justification should clearly lay out the name of the company, why it’s the only one that can provide a service and proof that other efforts to find a viable bidder were fruitless.

Vail’s own rules on sole sourcing say it should be done sparingly.

“The intent of sole sourcing is for items such as fire trucks or buses where there are not many vendors,” according to the policy.

Halloran pointed to Kenney’s July 2022 letter to the Town Council as proof the sole-source contract was justified. That letter addresses the Town's proposed docking fees and other adjustments to the program but doesn't mention 106West, its potential contract nor any price. It also doesn't contain the words "sole source."

“From our financial policies standpoint, that would be adequate documentation to justify sole sourcing,” Halloran emailed The Denver Gazette.

Town emails show Kenney thought any contract was to be awarded via RFP, only to learn a sole-source contract was already being discussed before 106West was ever hired and two years after the program was up and running.

"I attempted to explain to the (police) chief that I did not request a lot of (financial) specifics from you because of the potential for a future RFP," Kenney emailed Dietz, Riddle and Canzanello in October 2020. "The chief said that is not an issue because the (Town of Vail) is offering this as a sole source."

In its proposal for the one-year no-bid contract, 106West said it needed $1.374 million to run the e- program full-time. The council approved the deal on Sept. 20, 2022.

Kenney told the Town Council that it would be “subsidizing” the company with “start-up capital needs” as well as investing more than $620,000 “to cover the full cost of the 12-month” program.

That included $125,000 to buy all the extra equipment 160West said it needed to do the job — including the electric carts — proposing the town use its own Capital Projects Fund to cover the expense.

The carts had initially been leased for the pilot program.

To help 160West get what it needed, the Town of Vail even applied for — and received — a $250,000 matching grant from the Colorado Department of Transportation.

The funds would be used to buy five more electric vehicles and a trailer for each, electrified pallets to move the cargo, a walk-in cooler to preserve items that need refrigeration, and a variety of additional security features, according to a copy of the town’s grant application obtained by The Denver Gazette.

The town also said in the application that the grant would expand the program to 10 employees from five, although it does not mention 160West as the employer.

The program up and running, the Town Council named Kenney Vail's police chief in March 2023, replacing Dwight Henninger, who held that job for 21 years. The courier program was sited among his accomplishments.

On Nov. 7, 2023, two years after 106West started the pilot program, the Town Council approved the company’s second yearlong contract as the town’s exclusive delivery service.

It was a $1.5 million deal with four automatic one-year renewals.

FedEx, UPS, soon excluded

Dating to the 1970s, the Town of Vail has long known delivery trucks in the conceived pedestrian mall would eventually be an issue that required a solution.

Restricting all large delivery vehicles from the pedestrian areas immediately raised the ire of the state motor carrier association, which has more than 600 members.

Still allowed into the pedestrian areas, though, were public transportation vehicles such as buses, town-owned vehicles, 106West electric vehicles, trash haulers, as well as resident vehicles going to parking garages or guests checking into hotels.

High-volume carriers such as FedEx and UPS were initially exempt but that changed in October 2023.

That’s when only 106West vehicles were allowed to make deliveries in the village

“Although described as Pedestrian Mall Areas, the areas the Ordinance restricts are not boardwalks, but rather motor ways within Vail,” CMCA wrote in a federal lawsuit it filed in October 2023 seeking to enjoin the town from enforcing the ordinance. “The very same motor ways that are regularly used to transport busloads of skiers to and from Vail.”

Truckers could still deliver their products on their own if they chose — by hand.

“Vail has directly inserted itself into the delivery process and in doing so has picked winners and losers: the amended Ordinance expressly permits certain motor vehicles (106West) to deliver goods on the Pedestrian Mall Areas but prohibits CMCA members from doing the same,” the association argued.

It pointed to federal laws that allow for the restriction of certain vehicles on public roadways, noting that none allow for states or municipalities to do it based on the ownership of the vehicles.

“The Ordinance eliminates competition completely — only those entities that Vail approves may make deliveries using motor vehicles, while charging fees exclusively controlled by Vail and/or the town-approved delivery contractor (106West),” CMCA wrote in its injunction request. “The Ordinance stifles innovation — Vail, not the market, will now decide when and how deliveries will be made. The Ordinance eliminates services that the market demanded — the delivery of goods effectuated by motor carriers beyond those that Vail hand-selected.”

Additionally, FedEx and UPS couldn’t fulfill their own contractual promises to deliver products themselves and under certain restrictions.

For its part, Vail officials publicly said the trucks were simply taking away from the town’s beauty.

“And it’s just not a great look when there’s trucks, delivery trucks, parked there blocking the view,” then-Mayor Chapin said during a local podcast in 2021. “Not to mention the noise they create. We’re a pedestrian village, so we should do everything we can to enhance that pedestrian experience.”

Although U.S. District Judge Charlotte Sweeney noted Vail’s argument that “congestion from parked and idling delivery vehicles also hampered access for police and fire rescue vehicles responding to emergency calls,” she ultimately agreed with CMCA and temporarily stopped Vail from enforcing its restrictive ordinance against carriers such as FedEx and UPS.

“Tellingly, Chief Kenney conceded that if two of the exact same type of vehicle attempted to enter the pedestrian mall areas to deliver goods — one operated by 106West Logistics and the other operated by (a carrier) like FedEx or UPS — only the vehicle operated by the Town’s exclusive contractor, 106West Logistics, would be allowed inside,” Sweeney wrote.

Sweeney noted that Vail’s assertion that restricting FedEx and UPS-type vehicles from the village was largely because of safety concerns for pedestrians was misleading.

Vail did not show a clear connection between them and, as such, the amended ordinance was illegal.

The original ordinance barring large trucks could remain in force, Sweeney ruled.

Vail is appealing the decision.

'Doing a great job'

Breckenridge officials were so taken by what was happening in Vail that they took a tour of the e- program themselves.

Impressed, the town chose to pursue its own type of electric-vehicle delivery system. Unlike Vail, however, Breckenridge put it out for public bid.

But the RFP Breckenridge created was so narrowly written that only 106West could submit a proposal, according to copies reviewed by The Denver Gazette.

"To be minimally qualified for consideration for award, proposing firms must have successfully completed a similar project that has a similar degree of complexity within the past five (5) years," the RFP declares. "Of particular interest are projects in communities that have characteristics similar to the Town of Breckenridge."

And that’s what happened.

106West’s initial bid of $1.7 million includes construction of a docking area — Vail already had its own built underground — the cost of the electric vehicles and other items the company needed, according to copies reviewed by The Denver Gazette.

The pilot program would run for a year, Riddle told the Breckenridge Town Council during a February 2024 meeting to approve the contract. Riddle called the Vail project “madly efficient.”

Several other ski towns are considering the same type of e-program including Snowmass, Telluride and Aspen.

In hiring 106West, Breckenridge officials made it clear they saw the once-unknown company as an industry leader.

Said a Breckenridge Councilman Dick Carleton, a restauranteur in town, to Riddle during a presentation before the Town Council: “You guys are the experts and you’re doing a great job over there.”