UPDATED - Sunday November 16th 1:45 p.m.
Late Friday I spoke with Deno Yiankes, President and CEO Investments and Development Division for White Lodging, (he called back rather than send an email).
I asked Mr. Yiankes why building permits had not been obtained, (as first reported by AFW) and if the project was on hold, or cancelled. He responded that the project had not been cancelled and most of the required permits had been obtained, including building permits and foodservice permits through the health department.
I also asked him who they had awarded the general contractor position. Mr. Yiankes said they had yet to appoint a general contractor for the project, but the building plans were completed.
Two things come to mind. 1). Before you can actually get a food permit you have to have the facility inspected, so I think he may be wrong in regard to foodservice permits. 2). I though the general contractor was responsible for obtaining building permits? If one has not been appointed, how did they do that, or am I wrong?
I asked about financing and Yiankes stated equity financing was in place, but the current financial environment was preventing them from obtaining a construction loan. He blamed it on the fact that most lenders are in a holding pattern until some of the new federal bailout programs are finalized.
He stated they only had one interested lender, and they were planning on taking the application to the loan committee in about two weeks. He said they have high hopes they would succeed with this lender within 30 days, and construction could start within 30 days of closing on the loan. If they failed with this institution he said it would most likely be spring before they could get a loan, and construction would start soon after.
I mentioned that Barry Real Estate was making a presentation to city council on November 25th and asked if a White Lodging representative going to be present. He said no. He also stated that Barry Real Estate was not involved with this project. The agreement with the city reads as follows:
THIS HOTEL DEVELOPMENT AGREEMENT (the “Agreement”) is made and entered
into this _____ day of July, 2007 (the “Effective Date”), by and among THE CITY OF FORT WAYNE, INDIANA (the “City”), DEPARTMENT OF REDEVELOPMENT, BY THE FORT WAYNE REDEVELOPMENT COMMISSION (the “Commission”) (the City and Commission collectively called the “City”), and WHITE LODGING SERVICES
CORPORATION, an Indiana corporation, with its principal address located at 1000 East 80th Place, Suite 600 North, Merrillville, Indiana 46410 (the “Developer”).
In reading the agreement, this may be their out.
G. 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.
Since “The Harrison” can be considered a major component of the project, it appears White Lodging is not obligated to “commence construction”. Then you have this section of the agreement.
ARTICLE IV
CLOSING CONTINGENCIES
Section 4.1. Closing Contingencies. The obligation of the parties to close on the Hotel Site and undertake the obligations contemplated hereby shall be subject to the following contingencies having been satisfied on or before December 31, 2007:
[...] 6. Developer shall have obtained a firm, binding commitment for debt financing sufficient to construct the Hotel.
White Lodging obviously did not meet the above requirement. Further down in the document is the following:
B. Contingencies to City’s Obligation to Close. The City shall be under no obligation to close on the Hotel Site unless the following conditions have been satisfied, or waived by the City, in writing, at the time of the Closing:
[...] 4. The City shall have received evidence that Developer has obtained financing sufficient to construct the Hotel, both from equity financing and a construction loan from a financial institution.
Did the city ignore this requirement in their haste to push this project through?
Fire away with the comments.
END UPDATE
Stephen over at the Around Fort Wayne blog is reporting the following.
Barry Real Estate, Harrison Square developers, had been scheduled to give a presentation to the Fort Wayne City Council during their next meeting on the 18th of November. Due to an unplanned extra budget hearing and numerous other items on the agenda, this has been pushed back to the 25th of November. Also during this time, White Lodging Services will be presenting information to the Council as well.
This is pure speculation on my part, but given the current state of the economy, I have a feeling we could be in for some bad news.
According to the Definitive Agreement signed for the new hotel, permits and approvals were to be obtained by September 1, 2008. I made a quick phone call to the Building Department this afternoon to learn that there have been no permits issued as of yet for the hotel area. More here.
Keep in mind that 50 hotel developers were approached for this project, and White Lodging was the only one to come to the table with a proposal.
Does this mean we’re not getting that 2nd-rate economy hotel on land the city of Fort Wayne sold for $17.50?
I called White Lodging to ask if the project was on hold or cancelled. They promised me an email response this afternoon.
AWB
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