Monday afternoon the Redevelopment Commission voted to start the clock ticking. A draft of a letter to Barry Real Estate and another to Hardball announce the city’s holds Barry in default of its agreement with the city of Fort Wayne concerning Harrison Square, namely construction of the Harrison, a mix residential/retail building along Jefferson Boulevard.

After a few “scribner’s errors” are corrected the letter will wing its way to Atlanta and once delivered will set the clock in motion as described in the 2007 agreement with Barry. (I hope the commission remembers to request a receipt.)

To wit: there will be an initial 90-day cure period after which Barry may request a second 90-day cure period, if they are willing to pay $5,000 per day in liquidated damages. Barry, however, could simply throw their hands in the air and turn the whole mess back over to the Redevelopment Commission, (RC) leaving open the question of the lease on the stadium and keeping a gaggle of lawyers off the bread lines. Obviously, there is more to it than that, but that is the nutshell version. Ninety days, the first cure period, carries us to about New Years, where the second cure period would carry to the beginning of April and the start of ball season.

Attorney John Wernet, Esquire, council to the Redevelopment Commission, and a member of the same law firm as Tim Pape, a member of city council and the staunchest supporter of Harrison Square and the RC position on the matter, and the only council member to meet with the stealth Hardball tour group a month ago, said that it is too early to talk about other “remedies.” One can only speculate what he meant because he was rather taciturn, but given he is a lawyer and court is the favored venue of lawyers to settle disputes and redress grievances it must be read between his few, very few lines. Ah, the stuff of dreams for lawyers. “Jeeves, powder my wig!”

Christopher Guerin, the president of the RC, said the commission staff will now be free to talk with other developers and developers will be free to approach the city. Apparently, he is not in close contact with staff. I understand they have already chatted with developers to gauge options and let it quietly be known that the project soon may be officially on the market.

Interestingly, Judi Wire, a member of the commission, asked if the written response expected from Barry would be made public. The lawyers said maybe. She was not pleased, nor was Greg Leatherman, the RC executive director. He felt it important to keep the public informed. So did Mrs. Wire, but the lawyers, Mr. Wernet, Esq., in particular, cited of caveats of confidentiality, exactly what got us in this mess.

To close, Mr. Leatherman added that he has spoken with one prospective tenant, a retailer, for the building, and heard from a little bird that another is exploring the possibility. Parking issues seem to be at the fore. And, Mr. Leatherman said that Barry continues to say they are working hard to secure additional leases, Scotty’s Brewpub once more cited as the white knight. The fact remains, it would be a very expensive building in which to live or work.

The other fact remains that the city has left itself with limited options. Failure to require a performance bond is among the more grievous errors.

Again, when the contract was written we were in the go-go days of the economic boom where property values seemed to increase daily and it was easy, very, very easy, to obtain a loan. Everybody wanted into the building boom, so corners were cut. This is one of those corners. If the economy were to have continued to grow at a similar pace to 2006 then there would be cranes all over the downtown skyline; as it is, construction companies are scrounging for projects and the errors of this project would have paled in comparison to the brilliant successes. As it now unfortunately is the failures stand naked in the lights, center stage.

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Jim,

This is your interpretation of recent events and you’re entitled to it. However, a few facts:

On July 19, the members of the Redevelopment Commission, in executive session, decided that a letter of default should be issued. We would have voted on that publicly at our August meeting if the Scotty’s Brewhouse agreement hadn’t surfaced.

All of this was before John Shoaff spoke out on the $5,000-a-day penalty on August 24th.

What the Redevelopment Commission did yesterday, as it has all along, was continue a process that will, we hope, ultimately result in The Harrison being built, either by Barry Real Estate or some other developer. In other words, we acted to broaden our options, by making it possible legally to talk to other developers. What we did not do was take the punitive measures John Shoaff has argued for.

There has never been any doubt that one day the Redevelopment Commission would seek some remedy for the default, once damages could somehow be quantified, perhaps in the form of a renegotiated stadium agreement.

Again, our priority is seeing that The Harrison is built, and the Commission will continue to act to bring that about.

I stand by every word I wrote in my Journal-Gazette piece.

Sincerely,
Christopher Guerin

Just what is it the Redevelopment Commission doesn’t understand about condominiums being built downtown? It’s a flawed concept. No one is standing in line for a Fort Wayne downtown condo.

According to the National Association of Realtors, the price for condominiums in the Midwest are down 4.1% in 2010 over 2009. To take it out further, the median price has dropped from $195,200 in 2007, to $152,900 in July, 2010. That’s a 22% reduction, and prices are still falling.

Excel file is here.

As for Midwest sales of condos, there’s a 30% reduction in 2010 over 2009, and July over June of 2010 was down 41.7%

On top of that, you can buy a one-bedroom condo at Midtowne Crossing for as little as $54,900, and there’s more than one for sale.

So I have to ask. Where’s the logic? Why are we still stuck on this condo/retail fantasy? Let’s impose the fine, fire Barry, and then put it out for other developers to take a look at.

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Finally, after a lot of prodding by Council members John Shoaff, Tom Smith and Mitch Harper, not to mention you and I, the Redevelopment Commission has voted to tell Barry/Hardball that the Atlanta firm is in default. The building they promised would be completed last year is still to be begun.

Funny, the story in the Journal-Gazette this AM makes it sound like the wise men on the 9th floor independently came to a point where enough was enough and they decided that they had to move on our behalf. We poor masses should appreciate their studied decision.

Frankly, without John Shoaff, who gets no mention in the Ben Lanka piece, they would still be fidgeting over the matter, if bothering at all. Shoaff has bitten into this issue and held on a giant schnauzer despite personal attacks and being frequently marginalized. The matter would not have come to a head yesterday without Shoaff’s determined leadership. Lanka’s writing does a small disservice to journalism.

We have been writing on the topic for close to a year. We have chronicled Shoaff’s criticisms and demands and the substantial push-back from the administration. You might remember that two weeks ago the administration and Redevelopment boss Christopher Guerin rejected Shoaff’s call for exactly what they have no come to embrace. Two radio program appearances, a Journal Gazette editorial calling for Shoaff to back off and an aggressive op-ed piece by Guerin promoting Barry and belittling Shoaff. Guerin made the matter personal by suggesting that Shoaff was seeking revenge.

Smith who stood by Shoaff from the beginning of the discussion was at the Redevelopment Commission meeting yesterday when the commission finally voted to notify Barry/Hardball of its default.

Now, the ball is in Barry’s court. They will receive the letter, to be drafted by the ace lawyers in the administration, and will respond in someway. We will look into their options over the next few days and report.

As for the Journal story, it is disappointing that Ben Lanka did not tell the full story. And, congratulations to John Shoaff for this victory over foot-dragging.

I will add a note and perhaps my friend and fine public servant Greg Leatherman will respond: I guess that Greg has been in communications with Barry for months on this matter and has related to Barry the growing chorus calling for action on the Harrison. I will guess that Barry knew of the outcome of the vote long before it was moved and seconded. I will also guess Greg has thoughts on what Barry might do next. Greg is to report on the matter in a week at council. I am sure he will give credit where credit is due, unlike some around him.

We will also make it a point to reread the contract with Barry and offer our opinion as to whether the $5,000 per day liquidated damages can be capped at some figure in the $450k range, or whether the contact can be interpreted to the advantage of our community, rather than defended by Mr. Guerin to promote the interests of Hardball.

It seems strange that Mr. Guerin would work so hard to promote their interests over those of the citizens to whom he is purportedly to answer.

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September first is the grand opening day of the new hotel adjacent to Parkview Field in downtown Fort Wayne. It should be seen as a feather in the cap of Mayor Tom Henry, and should also call into question the administration’s support for Barry Realty.

When Mayor Graham Richard envisioned the massive central city development there were four components: the ball park, the hotel, the condo/retail building and a parking garage. Three are now operating. Only the Barry Realty promise to build the condo building -four stories, scores of condos, ground-floor entertainment and offices- remains unfulfilled.

Barry says the economy went south and they have had a devil of a time finding tenants and condo buyers. Without those leases in hand they are unable to find financing, they say.

The hotel was similarly stymied by financing problems, but the mayor, to his credit, walked from local bank to local bank hustling the necessary financing to finish the deal. He rounded it up and construction went forward.

So the question has to be asked why the city has not been as aggressive in finding financing for the Barry Building? Tapped out? Less enthusiasm? Bigger fish to fry? It seems that if the mayor could shake the bushes for the hotel he could do the same thing for the condo building where he and his wife avidly signed up to buy the first condo.

But, instead, city redevelopment director Greg Leatherman has been making the radio rounds apologizing for Barry’s unsuccessful fund raising effort and arguing that they should not have to pay $5,000 a day compensation to the city for failing to uphold their part of the deal. That provision, not a penalty, but compensation to the city for lost tax revenues, was negotiated into the contract which was happily signed by Barry/Hardball. Mr. Leatherman argues that such a punitive step would booger the relationship with Barry/Hardball and sully our reputation around the country among those who would like to have a similar sweet deal with local government, as does Barry/Hardball.

Recently, an article appeared in the Savannah Morning News, a leading Georgia paper, recounting a trip by some of their city leaders here to Fort Wayne to see our park. The city officials and chamber of commerce head were flown up by Barry/Hardball and given the grand tour in the hope that Savannah would then replicate Parkview Field in Savannah with Barry and Hardball that city’s partners. Oddly, the mid-August visit by these dignitaries was not mentioned by Mayor Henry to anyone in town, except Tim Pape and a few others. Most city council members found out about the visit ex-post facto. “Why am I always the last to know,” lamented one councilwoman. A second visit scheduled for this coming weekend was postponed by Savannah officials for a variety of reasons, mostly to do with the holiday. Mid-September is now penciled in.

Given that the Mayor has sent Mr. Leatherman to WOWO and WBOI to tout the benefits of the field and to refute Councilman John Shoaff’s demand that the $5k per day be assessed. Chris Guerin, a member of the Redevelopment Commission, also was enlisted to write an op-ed piece in the Journal in support of the mayor’s position. And, the Journal-Gazette issued an editorial last weekend further in support of the mayor’s position and critical of Mr. Shoaff. It is an orchestrated campaign to undermine the councilman’s demand to adhere to the contract or to rewrite it, a message that was fundamentally seconded by Councilman Mitch Harper.

So, why did the administration keep the Savannah dignitary visit hush-hush? Not even, it seems, did the mayor’s PR director know the Southerners were in town until they were gone. One would think that such a high level visit to ooooh and aaaaah over our little gem would be more ammunition for the mayor and Mr. Leatherman/Guerin.

So, one has to wonder why the stealth visit was not announced?

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I heard the other day about what seemed to be a real blatant bit of insider dealing.  It is a lesson in how Fort Wayne works and how rumors grow into something more.

The story was of a sweet-heart deal and conflict of interest.  It involved a leading citizen and one of his employees sitting on a board making the decision on the matter.

You might recall newspaper accounts that the old Allen County/Dimension Ford site just west of Swinney Park may soon become the property of Sweetwater Sound owner Chuck Surack.  He is considering a Jaguar dealership there and has stated he will make significant improvements to the building and grounds, in exchange for a very good deal on the building and grounds.  The cost to Mr. Surack will be minimal, the value of the real estate is considerable. It seems a sweet-heart deal among political and business insiders.  Add to that the fact that Mr. Surack is the employer of one Chris Guerin who is the president of the Redevelopment Commission, the appointed board tasked with unloading the building and grounds.

It just looks, well, a bit oily.

After a number of calls and chats with those involved it seems only a matter of fact in a smallish town with an even smaller pool of potential players.

The plan is to put an upscale Jaguar dealership in the bland little building.  That appeals to the City which  wants the building to be put back into use and returned to the tax rolls.

A source in government tells me that a number of other people came forward to offer uses for the building, but Mr. Surack’s offer was the best by far. The other proposals, did not plan to substantially rehab the building, nor improve the grounds, nor increase the tax base nor create many if any new jobs.  Some of the offers were “okay,” according to my contact, but mostly just took the building as is and did little to improve the economic situation in the city.

At the commission meeting which I did not attend, I am told by two people that Mr. Guerin was surprised the matter was on the agenda and recused himself from the discussion and voting: “He did not speak or participate in the discussion.”  I was also told that the attorney for the commission, John Wernet, also recused himself because his law firm also occasionally represents Sweetwater Sound, the company Mr. Surack has built into an international musical instrument sales powerhouse.

So, that left the other members of the commission to decide whether to accept Mr. Surack’s offer.  They did.  One member added that the other candidates for the property “backed out” and that the whole deal was “above board.”  That member has an excellent reputation in Fort Wayne, so I take her word.

Fort Wayne is a small town.  I will guess there is one degree of separation between most of us; introduce two strangers and they are likely to have twenty contacts or friends in common.  When one moves to the more rarefied air of political of social leadership the links are immediate.  I know Mr. Surack and Mr. Wernet, I know Chris Guerin, I know Greg Leatherman, the Economic Development director for the city, and I know two other members of the Commission.  One is an old junior high buddy and we remain friends, even though he recently turned down my refinance request.  Tisk.

In Fort Wayne, it is hard not to know many of the players in deals that affect the public purse or the community well being.  On the surface this looks very much like a sweet-heart deal.  Dig deeper and it seems that Mr. Surack has offered to invest some of his considerable wealth in a dilapidated building that will soon yield a few jobs and return to the tax rolls.  He will certainly benefit, as well.  I should add that Mr. Surack is a major donor to many charities in the area and has a spotless reputation.  He has created a company, built it into a powerhouse and greatly benefits the city.

So, we have looked into the matter and it seems much worse than it turned out to be.  It seems to have been a fair dealing, but confused by the inherent problems of a city our size in a down economy.  I don’t think this is a conflict of interest.

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