Courtyard Permits and General Contractor

I have learned from the Allen County Building Department that, “the general contractor has been in [to the Building Department] to discuss the project and approvals have been obtained from the State, but they have not yet obtained the building permit.”  In addition, the contractor is Sheil Sexton whose headquarters is in Indianapolis with an office in North Carolina as well.

According to the Hotel Development Agreement:

Developer agrees to use its good faith efforts to employ qualified price competitive contracts from businesses located within Allen County, and to utilize qualified and competitive local contractors and trade organizations in the construction of the Hotel, including, where qualified, available minority and women-owned business enterprises.  -section 2.1

I just spoke with Greg Leatherman, Executive Director of Redevelopment for the City.  He was unsure of when Sheil Sexton was selected as General Contractor.  W.A. Sheets, Weigand and Hagerman Construction were given opportunities to bid on the contract.  Greg knew that White Lodging was leaning towards Sheil Sexton and feels that White Lodging has met it’s obligation in offering local contractors the opportunity to bid.  This is a privately funded project, so the City is not privy to every consideration and move made by White Lodging.

To be fair, no one anticipated the current economic situation, nor for that matter House Bill 1001 – which may tie into this.  I like to believe that no one would have put our City at such risk had they known this sort of crisis would be happening.  

The problem was/is, that everything, and I mean everything, has to go according to plan.  And, this plan extends not only into the construction stages but well after construction, when the buildings begin to perform their various functions.  If separately or together each of the private investment buildings do not perform or are not realized, repayment of the bonds taken out to finance the project by the City is jeopardized.  

This leads to property tax revenues being used to make up shortfalls.  This leads to cutting government services (i.e. Public Safety) because there’s not enough money.  This leads to crumbling infrastructure because of inability to keep up with maintenance and or new construction costs.  House Bill 1001 ties into this because of the circuit breakers and limits it placed on what local government may take from taxpayers.  Get the idea?

There is time.  White Lodging Services needs to realize the situation they have put us in.  By demanding and receiving the “out” for their portion of our project, they have put our entire City at risk.  Again from the Hotel Development Agreement:

The City shall have obtained all governmental approvals, and entered into development agreements with other developers for the project known as Harrison Square (the “Harrison Square Project”) as described in Section 3.04. The construction of the entirety of the Harrison Square Project is a condition to Developer’s obligations hereunder, and the Harrison Square Project shall be progressing toward completion prior to commencement of construction of the Hotel by Developer. To this end the City shall have established to the reasonable satisfaction of Developer that all components of the Harrison Square Project, including but not limited to the Stadium, retail component and the Parking Facility shall have either commenced construction or the commencement of the construction thereof shall be eminent. –  section 1.6 G.

I think that many in the community would feel better if we heard something definitive and reassuring from White Lodging.  Part of the problem of the last week is that we’re hearing conflicting information – this needs to end immediately.  It’s clear that there are huge obstacles faced by both developers – but gosh darn it, be honest with us.  It may not be what we want or need to hear, but honesty is always the best policy.

There’s one other thing that’s really irked me about this project.  Where are all the local giants of business whom I listened to expound the virtues of this project back in the Spring of 2007?  Why are they not coming together to offer solutions to the inability to get construction loans?

We have heard from Barry Real Estate many times that they are committed to the project and are doing everything they can.  I truly believe them, but, they also don’t have the out White Lodging does.  White Lodging needs to come before the City Council and let us know exactly what is going on.

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6 COMMENTS

  1. Actually, lots of people anticipated that Harrison Square would be a tough sell in the marketplace. In fact, the entire structure of the agreement anticipates that the deal makes no economic sense.

    If I buy a share of Steel Dynamics today for $6.00, you could reasonably say that I anticipate he share price will go up and, at a minimu, that I think a share is worth $6.00. But if I agree to buy a $6.00 share today ONLY if you give me $3.00 of my $6.00 purchase price AND you agree to guarantee that the price will go to at least $8.00, it would be more accurate to say that I think the stock price is too high and will go down, even though I bought a share.

    This is what we did with the hotel and condo portions of HS. Hardball agreed to invest 14.5 million in condos/retail but ONLY IF:

    -we build a new $30 million dollar stadium and lease it to them for nothing

    -we give them land acquired at a cost of 2 million plus

    -we pay for all of the site prep, demolition and environmental issues

    -we give Hardball $5 million in negotiable Indiana State tax credits

    -we give Hardball millions more in tax abatements

    -we give hardball a 3-way liquor license.

    Everybody knew the project made no sense as a matter of economics.

    The hotel deal is similar but in addition to millions in subsidies we also guaranteed their profits.

    Gee, what a surprise that these projects aren’t viable.

  2. Mark – A couple things you forgot – 1)We hired Hardball Capital to run the ballpark for us in exchange for all the profit earned from concessions – AND no one else had the opportunity to bid on the management contract! 2)PLUS, Hardball gets to specify how the city-paid Maintanance Fund gets spent!

  3. […] week Around Fort Wayne reported that the hotel’s general contractor had been to the building department to discuss the project but had not officially obtained the building permit. A source close to the […]

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