As he stepped down as president of the Bay Plaza downtown project in late May, financially beleaguered developer Neil Elsey walked away with some cash. A quarter of a million dollars, to be exact, loaned to him by the Bay Plaza Development Group two days after his resignation as head of that company.
The company, an arm of Bay Plaza Cos., also has the option to lend Elsey $250,000 more, according to the loan, which is a second mortgage on Elsey's St. Petersburg house.
Bay Plaza has a city contract to transform downtown St. Petersburg into a $200-million retail and entertainment district. So far, however, the company has been unable to land a single tenant.
On May 28, Elsey resigned as Bay Plaza president amid personal financial problems, including a judgment for Security Pacific National Bank in Los Angeles, which says he owes $2-million from a personal loan. Elsey is appealing the payment order and another lawsuit from Key Bank of Alaska, which claims he owes about $325,000 more.
As it announced Elsey's resignation, developer J.C. Nichols Co. of Kansas City, Mo., also announced it had acquired Elsey's half-interest in the Bay Plaza project. Nichols, which had formed the Bay Plaza Cos. with Elsey in 1986, installed one of its own executives, Robert L. Jackson Jr., as the new Bay Plaza Cos. president.
But Elsey didn't just walk away. For one, he said he would stay on to help find tenants.
For another, public records show his old company, with its new leadership, loaned Elsey and his wife, Georgina, $250,000 on May 30.
In return, Bay Plaza took a second mortgage on the Elseys' elegant home at 1650 Beach Drive NE in St. Petersburg's Old Northeast.
The loan has to be paid back by March 31, 1992, according to terms of the mortgage.
Elsey did not return a reporter's calls.
"The loan was made for valid business purposes of Bay Plaza," Jackson wrote, via telefax from his Kansas City office.
But a dissident shareholder in the Nichols Co. suggested ulterior motives for the loan. "I guess basically in order to get Neil to turn loose, they had to provide him with some dough so he'd have something to live on," said Keith Wilson Jr. of Kansas City.
Asked if that assessment was correct, Jackson, the new Bay Plaza president wrote: "No."
Neil and Georgina Elsey already have a $430,000 first mortgage on their home, which they bought in 1989 for $630,000 after moving here from Phoenix. That mortgage is from Barnett Bank of Pinellas County, and matures in 1999.
The Pinellas County Property Appraiser's Office values the three-story home, with two white pillars, a tile roof, canvas awnings and a circular driveway, at $451,800.
Bay Plaza is insisting the Elseys keep the house, and their finances, up. Otherwise, the loan will go into default, and Bay Plaza can go to court to get its money back. Among the conditions that could trigger a default are a bankruptcy filing by Elsey or foreclosure by Barnett on the first mortgage, according to loan documents.