TAMPA — Santosh Govindaraju and Punit Shah said their deal for Channelside Bay Plaza was undermined by the same people who suggested they buy it: the Tampa Port Authority.
"We don't believe the port was working in the most honest and straightforward manner," said Shah.
He and Govindaraju are the lead investors in Liberty Channelside LLC, whose bid to buy the retail complex's lease was abruptly killed last week by the port's governing board. The port owns the land under Channelside so it has to approve any sale.
The Tampa Port Authority said Liberty was not forthcoming about its plans or finances and refused to pay $8 million up front in escrow to prove they would fund the upgrades needed to turn Channelside around. The complex has spent years mired in foreclosure and failure.
Negotiations stalled, then turned acrimonious after harsh words from Govindaraju. The deal wasn't yet ready to be considered by the board during its May 21 meeting. But that didn't stop board members from voting to sever Liberty's deal with the bank.
The Port of Tampa said that the Liberty bid was flawed and that it must protect the public's interest in reviving a key piece of downtown. Channelside's owner, the Irish Bank Resolution Corp., fired off a letter saying the escrow demand was unprecedented and unjustified.
Since the vote, Liberty remained silent — until Wednesday. Govindaraju and Shah told the Tampa Bay Times they don't know why talks that started so well could end so badly.
In hindsight, they now believe the port set them up to fail.
"Based on a mountain of evidence," Shah said, "we don't believe the Tampa Port Authority was negotiating with us in good faith."
They didn't even want Channelside to begin with. They wanted to build a 4-star hotel on a valuable piece of waterfront property owned by the Port of Tampa next to Channelside: the parking lot used by the Yacht StarShip dining cruises.
Tampa Bay Lightning owner Jeff Vinik wanted to do the same thing when he bid on Channelside last year — a bid he ended because of legal complications. When the Vinik deal fell through, Shah was still interested in the parcel. Then, he said, port counsel Charles Klug approached him in December with an idea.
"You should just consider buying the whole thing," Shah said Klug told him. "Because then you control Channelside and the lot. Klug said he would refer us to the bank."
So began months of negotiations. The sale price was not disclosed. It is believed to be between $6 million and Channelside's last appraisal of $12 million.
The port even suggested additions to Liberty's bid, such as getting the port to spend $1 million on pedestrian bridges to the parking garage, according to the Liberty partners.
The first hiccup was in March, when the port told them the parking lot was no longer part of the deal. In the weeks that followed, Liberty said the port nixed its own recommendations.
"It's confusing because initially they were giving us these ideas," Govindaraju said. "We thought these guys are helping us, and then one by one these items were taken away and being used against us."
Financial commitment was a huge stumbling block. Liberty showed the port letters from accountants and banks proving they were going to invest up to $25 million. Govindaraju and Shah, both experienced real estate investors, said those letters are standard practice.
But the port demanded $10 million in escrow. That dropped to $8 million. The port said Liberty would offer only $2 million. Liberty said on Wednesday that they were willing to pay $3.5 million up front.
Liberty said no one has ever asked them to pay escrow up front to guarantee improvements. They also didn't want the port to control their $8 million in a joint account.
"We didn't want to be held hostage with our own money," Govindaraju said.
Then there's the inappropriate comments made by Govindaraju during a May 15 conference call, for which he later apologized. He told the Times on Wednesday that he uttered a profanity and used this metaphor to complain about overreaching on the escrow demand:
"You guys are overreaching," Govindaraju said he told port officials during the call, "and in my experience whenever someone overreaches we cut off their hands. I am giving you the opportunity to keep your hands."
But an anonymous source told the political website saint petersblog.com that 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."
Govindaraju said he never threatened anyone, called anyone a liar, or said anything about his "country" — which is the United States.
He was born in Bangalore, India. But his family moved to Carrollwood when he was 5.
"I am deeply disappointed that someone at the port would distort this statement," Govindaraju said. "It's insulting not only to us, but the Indian community. We've all tried to be good citizens in this city, and that is not the way you treat anyone."
So why would the port want to undermine Liberty? The pair speculated that the port may want only Vinik to control Channelside; or the port may want to replicate Liberty's deal and buy Channelside itself for cash; or the port doesn't want anyone else to control the complex because the port is suing to evict the bank and take over Channelside itself.
The Tampa Port Authority said Wednesday that it did not see any need to respond to Liberty's allegations.
The Liberty group said it is looking at its legal options against the port. One matter that may need to be decided by a judge: Can the port board do what it did last week?
Liberty acknowledged that the board can reject any proposal for Channelside that comes before it. But the deal never got that far. Liberty doesn't think the board can veto its agreement with the bank, as it did last week.
"We are still under contract with the Irish bank," said Liberty attorney, Bryan Sykes. "The agreement has not been terminated."
Yet even after all this, Liberty said it's still interested in Channelside Bay Plaza.
"We would like to have this resolved amicably," Sykes said. "We would like to get everyone back to the table to discuss what can be done to satisfy the port's concerns."
Jamal Thalji can be reached at [email protected] or (813) 226-3404.