That appears to be a fine first step so that things will be better once prevailing wage is a part of the commitment, in writing signed by Flaherty-Collins, if the deal is done at all.
Nedegaard had a reputation of being against unions, and I am told he and Shingobee did the commercial node at Armstrong [the Corborns store] without using union labor.
I think the Allina Clinic contractor used union workers and while I can criticize design aspects it appears the contract was performed quickly and in a quality way.
Regarding Flaherty and Collins soliciting an equity partner or an outright buyer for the downtown Indianapolis ramp-wrap, "The Cosmopolitan," besides achieving liquidity, a motive might be inability to gain long term mortgage financing after construction and the construction lending entities wanting to be cashed out.
Earlier the 210 Tower Chapter 7 bankruptcy Flaherty-Collins' LLC intermediary encountered in North Carolina, and some citizen grief, was posted in Crabgrass. E.g., this link.
The original article from North Carolina was online here. That was in Charlotte, NC. It was a condo tower project.
The Chapter 11 Flaherty-Collins splat involved a separate shell LLC intermediary in a different city. That shell experience was not a condo project, but rather in a shared-wall rental project, The Exchange at Brier Creek Apartments in Raleigh, NC. It has its own story. Reporting from Indianapolis, here, stated:
A spokesman for Flaherty & Collins blamed Brier Creek FC’s financial troubles on an outside management company it used before turning those responsibilities over to its Flaherty & Collins Management division.
“They failed to get it leased,” Mark Conover said Thursday morning. “At the same time, what happened with the economy, the rents didn’t rise like they should have because of the job situation in Raleigh, and we missed a couple of [debt] payments.”
Brier Creek FC has no employees but pays workers provided by Flaherty & Collins Management Inc. to operate and manage the complex. In its bankruptcy filing, Brier Creek is asking to use collateral it has with its bank, First Horizon Home Loans in Irving, Texas, to pay the employees. Payroll expenses total about $46,000 a month.
First Horizon loaned Brier Creek FC $24.8 million to develop the apartment project, according to court documents.
“If debtor is not permitted to use its cash collateral to operate its business and maintain the property securing the Indebtedness, the debtor will have to cease operations,” Wendy Brewer, the attorney for Brier Creek FC, wrote in a court filing.
In exchange for the collateral, Brier Creek FC said it will provide replacement liens to First Horizon and will make monthly payments to the bank equal to the current interest amount of $36,100 month.
Brier Creek filed for bankruptcy reorganization to keep its lender from selling the loan to what Conover referred to as a “hostile group.”
The largest unsecured creditors listed on the bankruptcy filing, Indianapolis-based LC Investors LLC and Flaherty & Collins Development, are owed $3 million and $1.2 million, respectively.
[emphasis added]. There is a story to the willingness to blame others when things went wrong -- others did not maximize rental cash flow, the market is blamed, and there is using Chapter 11 in wanting to block a "hostile group."
A second thing:
Here, per the sidebar touting in the above image (also presented in that earlier post), Crabgrass noted Flaherty-Collins' website puffing over a recent project, using much the same non-reassuring puffery wording Sakry, here, reported with regard to the Ramsey ramp-wrap-rental.
That puffery was about a project called Cumberland Pointe [it is extreme tackiness to put that extra "e" onto something as with one former council member-politician-land speculator wanting shoppes and restaurants at early Clown Center times and talking].
A third and fourth point:
As recently as late April of this year, Cumberland Pointe ended up, in all places, in federal court litigation. Presumably, it was because actuality and puffery were not fully congruent. It augers in a way what we in Ramsey may anticipate; buying into a lawsuit as a possible outcome of having dealings with Flaherty-and-Collins. It's happened. They are not strangers to the federal judiciary in general, nor the bankruptcy courts.
This link.
That pattern of leaving a wake of litigation on three major properties, and pushing an equity position sale on the Cosmopolitan project in downtown Indianapolis, suggest that if the Ramsey ramp wrap gets built, and is a failure, or even a success, a second position behind a construction loan rollover that is not (in today's market) roll-overable is not a bright spot to put the City of Ramsey into because of personal at-the-council-table feelings "It oughta work..." fueled by Landform projections, the famous Darren Dashboard, that suggest taking the step leading to a large commission for Landform is a step the city should risk.
Some may think buying into a potential litigation mess is neat, that risk=taking on public money is fun, or that failure and litigation is low probability, but it is something the city could avoid by not making a wrong first step.
However, with Cronk of Flaherty-Collins being a City fiduciary, I am confident the existence of this very recent Indiana federal court litigation was fully disclosed and discussed with city officials before they engaged in a conference call with Flaherty-Collins' Pittsburgh lender. Surely that would not have been withheld information, not after the experience of city officials being surprised about there being two very recent North Carolina bankruptcies, with Flaherty-Collins having excuses and/or explanations to offer, after a local public press discovery, of each. Just exactly as this one was also fully disclosed to Ramsey officials. From February, 2011, in federal court in Chicago.
Existence of such litigation would not have been willfully withheld, not by Cronk, the city's fiduciary working with Lazan, another city fiduciary with due diligence duty.
I admit to not knowing the seriousness of issues in those two most recent lawsuits, because I am not a subscriber to the Pacer federal legal data resources, as our city attorney or Bray of the Briggs-Morgan firm doubtlessly have, between them.
Surely if I found the litigation pattern out, as an unpaid citizen who only Googles without any contact with FC insiders, those paid thousands of taxpayer money every month in return for a duty of care and of loyalty, also found equivalent detail. And duly reported it. Knowing and meeting their duty of loyalty.
_______________UPDATE______________
The Brier Creek report has interesting numbers, it appearing that Flaherty-Collins were running a payroll ten grand higher than the $36,000 monthly debt service cost, for "management services" with the shell front Raleigh LLC empty but the management coming from the insulated-from-liability Flaherty-Collins Indiana core operation. The largest unsecured creditors of the FC shell were other FC entangled arms, wanting to front run the lenders on some form of "collateral" which might have been escrowed money, a performance bond, or some such.
One of the two Cumberland Pointe lawsuits is an insurer suing both sides of the other dispute. There, again, might have been some performance bond disagreements. These are guesses because, as noted, I do not have the PACER database access that the city's legal advisers have to check court papers and dispute history.
And as a fair disclosure matter, material facts such as dealings history with others and behavior when downside risks prevailed in earlier developments are things that should have been disclosed, in fairness, by Mr. Flaherty and Mr. Collins. Cronk could not have worked for them without factual knowledge in mind when being City of Ramsey's fiduciary, via Landform and co-fiduciary, Lazan.
It appears in the Brier Creek situation there was a cash-flow shortage between rental income and costs, and, curiously, neither Mr. Flaherty nor Mr. Collins stood ready to personally bridge the gap, with bankruptcy court dancing by the shell LLC being a more favored avenue of conduct.
A time or two in the past I went to a race track and I would buy the daily racing form on the belief that a horse in today's race would more likely than not prove true to its past record, even if carrying different weight or on a wet vs dry track -- but the same horse with the same jockey in the saddle.
It seemed a logical thought to bet that way.
____________FURTHER UPDATE___________
An anonymous comment points out the FC massive-rental-project empire is in only five states, (with North Carolina conspicuously absent). Curiously, their bottom feeding experience and expertise is largely confined to the same states, primarily Indiana, Illinois and Ohio.
So is Ramsey and our ten-thousand lakes State to be added to one, or both of those categories? Mass-rental, and/or bottom feeding?
Not a sidebar poll, but readers are encouraged to "vote" by comment. One, the other, or both.
___________FURTHER UPDATE______________
The degree of public welfare-for-the-wealthy subsidy participation is so staggering it is easy for one factor of the several to be overlooked. Besides accelerating and guaranteeing the train stop will be in place and operational by the middle of next year of FC can walk, wherever the ramp-wrap-rental adventure stands at that time:
[1] there is free parking spaces built with tax money [it may not be direct City property taxation, but it is a grant, and they don't come from the tooth fairy, they come out of taxes at some level of government, national, state, metro-wide, county, city, or HRA/EDA]. If either the HRA or EDA gets money other than cash traceable to some taxation, at some government level, send an email letting me know detail.
[2] There is SAC and WAC fee compromise, where if John Peterson had been given similar SAC and WAC charge reductions at the cornfield on Highway 5 at Trott Brook or at the Bauer gun club development, both venues might have fully built out before the market turned bad.
[3] There is the proposed playing-banker with city money, bonding etc. for the purpose of giving credit to Flaherty-Collins unavialable from within the private sector [including capability/willingness of Mr. Flaherty and/or Mr. Collins to put personal fortune at risk sufficiently to fund it completely within the private sector].
All three are big-ticket subsidy. Banking on a second lien, millions, and hard to say how much, ultimately, is at risk. SAC and WAC income compromised to allow FC a greater profit-making chance has to be made up from tax income elsewhere, for the city and its HRA and EDA to have balanced budgets. Expanding the ramp with tax money, and giving free parking spaces to the private-sector landlord-adventurers' thin shell LLC cannot be called anything but a pure giveaway.
That is a lot of subsidy when taken together, from Republicans or Democrats, but this level of stupendous expenditure is via irrefutably true GOP socialism, for the benefit of a single chosen amenable landlord, done at an extreme, with arrogance. With McGlone even daring to say there is no subsidy.
Really.
He has said that.
Remind me, precisely how much capital are Mr. Flaherty and Mr. Collins putting into this leveraged adventure of theirs?
Two and a half million dollars was what I heard on one televised Council/HRA event, but the thing's a moving target where yesterday's commitment changes [e.g., the McGlone statement at the start, of using local contracting and local labor may prove ephemeral, when all the dust's settled].
How many times greater is the City's apparent willingness to gamble with public tax money?
In comparison to the pair of Indiana gentlemen's capital contribution while it is they who are seeking for upside profit potential, from their adventure?