Friday, June 22, 2018
Business

Channelside dispute turns personal for Port Authority, potential buyers

TAMPA — The sale of Channelside Bay Plaza is stymied by more than just a business dispute.

Now it's getting personal.

The Tampa Port Authority and the Liberty Channelside LLC ownership group are divided over the port's demand that Liberty put up $8 million in escrow before moving the deal forward.

The port owns the land under Channelside, and its governing board must approve the sale.

But the dispute took an unfortunate turn Wednesday morning, according to port counsel Charles Klug, during a conference call with Liberty members.

The port ended the call after Klug said Liberty made "unprofessional comments."

Then, late that night, Klug wrote a letter to Liberty spelling out the port's position that ended with this admonition:

The Port of Tampa "remains willing to continue with negotiations; provided, however, that certain rules of decorum are followed."

"These include no harsh or foul language during the negotiations and no threats to or against any of the participants. The Port will not tolerate such statements or threats and advises Liberty's representatives to govern themselves accordingly!"

What was said to port staff and who said it? Klug declined to be specific on Thursday.

"I would say the conversation was less than civil and unprofessional," he said.

He did say, however, that he has had many cordial meetings with Liberty, and none of their statements Wednesday led him to call the police or worry about the safety of port staff.

The Liberty Channelside partnership of real estate entrepreneurs Santosh Govindaraju and Punit Shah released a statement from Shah on Thursday to the Tampa Bay Times apologizing for the harsh language used.

"It was not our finest moment but we are committed to a civil and professional negotiation," said Shah in the statement.

They denied a report made by an anonymous source to the political website saintpetersblog.com that said Govindaraju "accused one of the Port's representatives of overreaching and said that if they were in his country, they would cut off the liar's hands for such an offense."

Liberty Channelside said Govindaraju used the hand metaphor to make a point about "overreaching," but that no threat was made or implied. They apologized for using the metaphor but said the anonymous source mischaracterized those comments:

"We do want to be clear that we never referred to any country and we never called anyone a liar as we have seen reported."

Liberty Channelside's statement also expressed dismay with the $8 million request.

"We were frustrated and rather shocked because we have never been asked for such an escrow and the amount of money requested seemed to us to be overreaching," said Shah.

The Tampa Port Authority said the $8 million escrow is necessary to prove that Liberty is financially committed to making the substantial physical, cosmetic and tenant improvements needed to turn around the dilapidated Channelside complex.

Liberty is also asking the port to give up its ability to enforce the lease's penalties and to dismiss the port's lawsuit to evict the bank that owns Channelside so the port can take ownership.

"They've been saying a lot of good things which we like," Klug said. "But we need this commitment before we waive our rights to enforce."

Liberty Channelside has offered to pay $2 million up front, but nothing more.

"We believe our track record illustrates our commitment to our projects, and we were surprised to be asked for additional financial proof," Shah said.

Patrick Berman, senior director for retail brokerage at the real estate firm of Cushman & Wakefield, said the port's escrow request is very unusual. Berman, who is a friend of Shah, said few developers are asked to pay so much money in advance.

"In my opinion the Tampa Port Authority is penalizing the new buyer because of the mistakes and omissions of the previous owners," he said. "They're saying this is a mess, and we're going to make you, the new buyer, pay by putting up a huge deposit.

"To me that is not a normal, reasonable transaction."

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

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