Thursday, May 24, 2018
Business

Tampa Port Authority rejects Channelside deal

TAMPA — The latest bid to revive Channelside Bay Plaza was cut off at the knees Tuesday by an unlikely culprit: the Tampa Port Authority itself.

A new ownership group, Liberty Channelside LLC, had struck a deal to buy the failed downtown retail center from the Irish bank that owns it. But the port board has the final say because the 234,520 square-foot complex was built on port land.

No deal was ready for the board to consider. The two sides were millions of dollars apart in escrow negotiations, which turned hostile. Liberty vowed to keep at it.

But the board was done. Members voted unanimously to kill the deal.

How could they scuttle a sale that wasn't finished, that wasn't even ready for them to consider yet?

They voted to flex their power to kill the other deal: Liberty's agreement to buy the Channelside lease from the Irish Bank Resolution Corp. for undisclosed millions.

"We don't like it," said Hillsborough County Commissioner Sandra Murman, who sits on the board. "We need to tell the bank we're rejecting this proposal."

Murman led the charge to reject Liberty's bid. The deal wasn't even on Tuesday's agenda, but she got the board to consider it anyway. She hardly needed to persuade her fellow board members to go along. They were all ready to be rid of the Liberty bid.

The board didn't like that port staffers had spent "hundreds of hours" negotiating but no deal was at hand. Liberty also had yet to produce numerous requests for financial information. Liberty said it was still working on that, but the board decided not to waste any more time.

"It's time to tell the bank: next up," Murman sad.

• • •

There were high hopes when real estate investors Santosh Govindaraju and Punit Shah unveiled their Liberty bid last month. Then the reality of the port's demands set in.

The pair balked at the port's request to pay $10 million — and later $8 million — in advance as escrow. The money was to guarantee Liberty would make promised improvements. It was also compensation for Liberty's request that the port give up its ability to enforce the lease against the group if it failed to properly maintain Channelside.

Liberty only offered to put up $2 million. Negotiations stalled, then turned tense on May 15 when Govindaraju made some inappropriate remarks.

The duo appeared at Tuesday morning's meeting to extend an olive branch and pledged that they would continue negotiating.

"We are here to apologize for our conduct at the last meeting," Govindaraju said, "and secondly we are here to reaffirm our commitment to Channelside and making it a better place for this city. … We know the port has great aspirations for this project.

"We hope you will meet with us and share with us your comments."

They left during the meeting. Then came the vote. Later, they released this statement:

"We are stunned and confused by news that the Tampa Port Authority has rejected a potential deal between Liberty Channelside, LLC and the Irish Bank Resolution Corp. for the acquisition of Channelside Bay Plaza. …

"The approval for the (bank deal) was not on today's TPA Board meeting agenda, and we have been working in good faith to gather the requested information to formally present our application at the June 18th TPA Board meeting.

"Neither Liberty, the Irish Bank Resolution Corp., nor its counsel had been informed that any discussions concerning Channelside would be occurring this morning at any time."

That wasn't quite the case. Liberty's partners were in the room when Murman said she intended to bring up Channelside later on. But she also did not say at that time that she intended to make a motion to veto the bank deal.

Liberty Channelside said it would review its legal options.

• • •

By stopping the Liberty deal in its tracks, the Tampa Port Authority board hoped to send two messages:

To any developers who want to tackle the Channelside project: Bring your "A" game, and lots of cash. The port doesn't believe Liberty was willing to spend enough.

To the Irish Bank Resolution Corp.: Do a better job of finding the right suitor who can turn Channelside around.

The port isn't going to accept just any deal the Irish bank makes for Channelside, said board chairman William "Hoe" Brown, not after all these years of financial and legal turmoil. Reviving Channelside is key to helping realize the potential of the Channel District.

"What we're going to do as a board here is what's best for our city," he said. "It doesn't necessarily have anything to do with the price someone's paying the bank. We'll do what we think is right and proper for Channelside."

But first the port has to deal with the bank. Port CEO Paul Anderson acknowledged that it has been an impediment.

The Irish bank foreclosed on the complex in 2010 and now owns it. But the port is suing the bank to take Channelside from it. Maybe the port can use the lawsuit and Tuesday's vote to gain more cooperation from the bank.

"There are two separate paths," Anderson said. "We want to negotiate on one hand, and part of our leverage is the lawsuit."

Might the port even consider buying Channelside at a steep discount, as Liberty tried to do? Anderson wouldn't rule that out. Channelside's last appraisal in January was for $12 million, a far cry from the $27 million the Irish bank loaned the old owner to buy it in 2006.

There's also the issue of escrow: Would a new suitor have to put up the same kind of money required of Liberty? Anderson said the port will still require proof of financial commitment.

Could that suitor be Tampa Bay Lightning owner Jeff Vinik? He's already financially committed to the Channel District and intends to develop the 20 acres he bought downtown across from the Tampa Bay Times Forum. He was the frontrunner to take control of Channelside last year — but abruptly pulled back when a legal snag emerged.

His representative declined to comment Tuesday. But once the legal issue was fixed, why didn't Vinik get back into the Channelside race? Is he even still interested in the project?

"We all would like to know that," said board member Carl Lindell Jr., "and I hope he's still interested."

Jamal Thalji can be reached at [email protected] or (813) 226-3404.

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