Last week, a baffling conflict unfolded about the Landmark Hotel, the nine-story construction project on the Downtown Mall at 200 E. Main St. But the fight wasn’t between the city and developers or between neighbors and developers—rather, it was between developer and developer. And throughout the week, financial backer Halsey Minor and his developer partner Lee Danielson offered completely contradictory facts about what was happening.
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Regardless of who’s at the helm, locals hope this doesn’t become a monument to the financial crisis. |
In Danielson’s version, there is no problem. On Monday, I had gotten a tip that construction was coming to a halt because of funding issues. But when I spoke to Danielson at 5pm, he said, “There’s still work going on there. Everything seems to be fine.”
The next day, The Daily Progress reported that the project would be coming to a halt. That report was based on Minor’s version.
In Minor’s version, the project is in serious jeopardy and will shut down completely because his lender, Silverton Bank, had failed to make a $1.1 million payment. He was looking around for other financing, but with the global credit crunch in full swing, it didn’t look good, money only available at exorbitant interest rates.
“It’s a frigging mess,” said Minor. “The hotel will get built in the long term, but it’s not going to get built until banks start lending again.” Minor said he put up $7 million to the $24 million borrowed from a Silverton subsidiary that does hotel financing, Specialty Finance Group LLC.
Throughout the week, Danielson stood by his earlier statement. “Everybody’s working, everybody’s paid, everybody’s fine,” said Danielson on Thursday, November 13. “I don’t understand what’s going on. It’s been a pleasure to work with the bank.”
As the days wore on, each “partner” introduced facts to back his claim. Minor said he had the written resignation of the construction firm. Indeed, calls to Clancy & Theys Construction Company, the company managing the project, were directed to Minor.
But Danielson said the construction firm hadn’t resigned. And Silverton Bank issued a statement that seemed to back Danielson. “It is against bank policy to comment on any individual loan or project,” reads the statement, issued by bank spokesperson Cristi Kirisits. “Notwithstanding that policy, the bank is in the position to honor any and all of its commitments for each of its projects in accordance with their terms.” On November 15, it specifically responded to Minor’s claims: “Construction continues at the project site and funding of the loan is proceeding per the terms specified clearly in the loan agreement between the borrower and Specialty Finance Group. Any assertion otherwise is inaccurate.”
Tom Elliott, city building inspector, got shifting reports from construction consultant Cliff Harrison. On Tuesday, November 11, Harrison told Elliot that they would meet on Friday to discuss closing down the project. On Thursday, November 13, Harrison told Elliot that the meeting was off and that the money had come through.
Reached on Friday, Harrison said that work will continue for the foreseeable future. He did acknowledge that there was an issue with getting money, but said that it was resolved.
“As is the case with the bureaucratic process of running financing through lending institutions, there was a delay with getting payment out, but everything is on track,” says Harrison.
The crane was still in full swing on Monday, November 17. But Even if the bills are paid, who knows what will happen with the project now. Thursday evening, I got an e-mail response from Minor to follow-up questions to make sure he stood by his earlier statements.
“If Lee can keep it going without bank funding then God bless him,” said Minor. “I think he’s describing a miracle, like the Cobblers Shoes when little elves come in and do all the work at night.”
In response to my question to clarify his relationship with Danielson, he replied that “I am the 100% owner,” reiterating that the project was shut down. “Mr. [Danielson] is the former developer. We won’t be needing his services when the project resumes.”
Danielson would not directly respond to Minor’s statement, but said, “I started the project, I’ll end the project. I don’t wish any ill will to Halsey. I have no idea why he’s doing all this. Except the obvious.”
Danielson implied that the obvious is issues over money. Danielson would not specifically lay out the issue, but suggested generally that it had to do with changes to the project’s details that Minor, as the equity partner, was obligated to pay for rather than the bank.
“The bank has no obligation to fund anything until they know whether all the costs are going to be paid for,” said Danielson. “He’s tried to blame the bank. The bank’s been great. This appears to be a smoke screen for other issues.”
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Halsey Minor (center) broke ground on the Landmark Hotel in March with Lee Danielson (right) and city Mayor Dave Norris. Now Minor is breaking with Danielson on the project. |
Both Danielson and Minor have incidents in his respective history to raise questions. Minor, who made his fortune during the dot-com boom principally by founding and selling CNET.com, is currently embroiled in lawsuits with Sotheby’s over several paintings he bought at an auction in May, most notably Edward Hicks’ “Peaceable Kingdom” (purchase price, $9.6 million). Minor hasn’t paid, claiming that Sotheby’s failed to disclose its stake in the painting while at the same time advising him on the purchase. Minor says that dispute has nothing to do with this dispute.
Minor also never followed through with a $25 million pledge made in 2000 to the University of Virginia for a “Digital Academical Village.” According to a Fortune.com article, he was unhappy with the way the project was proceeding, and the project was killed.
Danielson pointed a Daily Progress reporter to Minor’s history, telling the reporter to “Google” Minor. But Danielson too has a Google-able past.
As longtime Mall development watchers know, this isn’t the first time that Danielson has squabbled with a partner. In 2001, a similar relationship he had with Colin Rolph, with Rolph being the pocketbook and Danielson as the jackhammer, dissolved into lawsuits. Prior to that split, the duo had built the ice rink, the Downtown movie theater. Danielson had planned to develop 200 E. Main St. into a hotel, but sold the property to Oliver Kuttner for $3.8 million. When Danielson found Minor in 2007, they bought it back for $4.5 million (presumably with Minor’s money—he manages the LLC).
Regardless of what happens between Danielson and Minor, local residents can only hope that the project does keep moving along. Otherwise, we’re going to be stuck with an ugly but imposing monument to the great credit crisis of 2008.
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