If so that would mean either or both of the gentlemen could put more of their own money into their Ramsey Town Center gamble, so taxpayers do not get raw.
If mid-July is their bailout date, give them until then to work to gain liquidity since, after all, it is their deal, not Ramsey's.
How the private sector is supposed to work: You seek rewards, you take consequent risks, and it is done 100% by the entrepreneurs and their bankers.
Why not be conventional GOP this time, for a change at the council table? Sit tight. See if there is more liquidity roused up in Indiana.
 |
| The Indiana guys, bottom line, their gamble should be with their money. Not Ben's or yours. |
_____________________
An afterthought: Surely Cronk and Lazan did their best to inform Ramsey officials of this latest development because Flaherty & Collins wanting to generate more liquid capital is clearly highly relevant to expectations on the Ramsey ramp-wraparound rental. Surely that was a known factor to all Ramsey participants in conference calls and meetings with the Pittsburgh lender FC intends to use for a first [hopefully only] lien position. The article refers to "offering materials" in reporting, and offering materials take time to produce and apparently are out now in finalized form:
Offering materials note the Cosmopolitan's upscale health and fitness center, yoga and pilates studio, salt-water infinity pool and grilling area, indoor/outdoor aqua lounge and attached parking garage with 342 spaces.
Surely the effort of counterparties to gain liquidity has been known to Cronk, Lazan, or both well before now so that this is not yet another press surprise for those in Ramsey government dealing with Flaherty & Collins. Yet what is puzzling is, knowing of such a liquidity effort, the Ramsey officialdom seems intent to prematurely force a question of Ramsey putting money into the ramp-wrap-rental now instead of seeing whether Flaherty & Collins hooks a fish.
I do not understand this but I anticipate a full explanation will be aired among officials at the Monday, June 27, 7pm special meeting [untelevised]. For it to not be a topic of clear and thorough discussion then would raise or at least allow uncertainties. Surely by the Monday meeting offering materials will have been looked at by lawyers Bray and Goodrich, or at least one of them, to review all potential implications in them that might impact Ramsey's situation. With millions at issue, diligence is due. Dimensions of this offering are material facts impacting the wherewithal and willingness of the Flaherty & Collins principals to self-finance in Ramsey, and how such wherewithal and willingness should be regarded by our officials.
Add candor, to wherewithal and willingness, as things to consider.
______________UPDATE______________
Hat tip again to an anonymous comment, giving this link. I had known of that item and had intended to post about it, got lazy, and this jogs the process. Old news can be helpful news. The report is about a Flaherty & Collins North Carolina bankruptcy previously mentioned in Crabgrass, here. The item is lengthy and well written, so read it for detail I omit -- However, please allow me to focus first on the part of the entire thing that grabs me tightly.
Failed Charlotte skyscraper brings Indianapolis developer back to earth
Greg Andrews - IBJNEWS - November 7, 2009
[...] The project—dubbed 210 Trade—would have been the tallest residential building in the Carolinas, with more floors than any building in the region except the Charlotte headquarters of Bank of America Corp.
But now the only thing spectacular about the unfinished project is the extent of the financial losses. Last month, Flaherty & Collins’ Charlotte FC LLC filed for Chapter 7 bankruptcy liquidation in Indianapolis, listing liabilities of $53 million and assets of just $197,492.
[...] Charlotte FC had planned to build 48 floors on top of a retail portion of EpiCentre. It owns “air rights” required for its project, as well as part of a parking garage.
But it already appears clear there won’t be nearly enough money to satisfy the entire $31 million owed to Minneapolis-based U.S. Bank, the secured creditor first in line for repayment.
That likely leaves nothing for the other secured creditor, locally based House Investments, which is owed $6 million. The outlook is even bleaker for unsecured creditors, who are owed $15 million.
[...] The infusion from House Investments had helped Flaherty & Collins secure financing for the project four years ago without having to meet stiff pre-sale requirements that have scuttled many condo projects around the country, [...]
House and its investors provide what are known as mezzanine loans—high-interest financing that bridges the gap between what banks are willing to lend and what investors contribute in equity. Tim McGinley, the company’s founder and principal, did not return calls.
[...] Charlotte FC said it negotiated for seven months with a lender that would provide additional financing needed to finish the project, but it ultimately backed out because of “the unreasonable positions and delays” of Ghazi [a developer with an overlapping project, but independent of FC control].
Ghazi, on the other hand, contends that David Flaherty and Jerry Collins, principals of the firm, refused to consider financing options that would have required them to personally guarantee debt.
It contends the pair weren’t willing to put equity into the project, “thereby resulting in Charlotte FC being woefully undercapitalized and preventing Charlotte FC from obtaining adequate construction financing.”
That’s absolutely false, said Stephen Lee, a Barnes & Thornburg partner representing Charlotte FC. He said David Flaherty and Jerry Collins did guarantee U.S. Bank debt and each is going to end up losing more than $1 million.
[...]
That's enough for me. Not people a Minnesota city should do business with, in my view.
By itself this report causes that reaction -- but couple it with this report, innocent regular citizen people got hosed for $7.2 million while the two honcho promoters of the thing, Flaherty himself, Collins himself, lost far, far less - $5 million less, per reporting.
And where did that citizen prepaid cash go? I have not seen that little hummer of a question answered in any reporting. Flaherty website info is the firm runs both a management affiliate and a construction affiliate, but whether any such affiliation was used to attain project funds has not been answered in reporting I have seen, nor asked by Ramsey officials, again per any reporting of which I am aware.
Five million dollars. Poof. Gone. Disappeared. Somewhere. Rather than hear excuses or explanations what I'd want to hear is the door closing behind them as they leave Ramsey for good, with Ramsey's fisc being unimpaired by pulling back.
And - what after that cruncher are other troubling facts:
1- The two Indianapolis promoters used a shell LLC to insulate themselves and their extended empire from extended loss, in this case something called "Charlotte FC LLC." That is an FC pattern, i.e., with the shell LLC in other ventures also having the initials "FC" somewhere in naming.
2- As in Ramsey a second position was involved because the FC principals were unwilling or unable to put in sufficient equity to get by with their stake and a single first position lender.
3- The second position took gas, big time, for millions. But it was reported as a high interest rate bridge. Have you seen any interest rate mentioned for Ramsey for the ramp-wrap, in anything near congruence to a suitable rate-sized-to-risk range for such a risky second position? I have not, but I saw a suggestion that if there's initial default unpaid cash just gets rolled into the principal, it growing and growing until some halting point I do not remember. And that's yesterday's proposed terms, where citizens have yet to learn today's.
4- The two Indiana gentlemen appear to have not given personal guarantees to the Carolina first position holder, never mind that it is the second that is at risk and should nail down personal guarantees and an automatic assignment of rents if there's a default on the first or second positions, so that an ex parte court order can be attained to collect rental cash flow to assure the first is serviced so as to not fully foreclose out the second, and to assure FC does not keep hands on rent cash flows to take "fees" for management that would bleed both the first and second positions of servicing money.
5- These are the quality people Lazan of Landform brings to the table, with the Big Muddy Mayor saying, "Great, lets pop some city cash, millions, I foresee a thornless rose garden," or something like that - not those exact words - with alleged contingency "exit strategies" in mind that have not been publicly fleshed out in any fashion whatsoever.
Trust me, okay Bob is an honest man; but Trust My Judgment, no way - it's awful judgment, it's insufficiently risk-averse to be deemed prudent mayor-think. Opinions vary.
The whole Gestalt - It makes one feel uncertain, doubtful, and concerned about Ben Dover, the Ramsey taxpayer.