1. Business

Channelside Bay Plaza has not had the luck of the Irish — bank, that is

Published May 24, 2013

TAMPA — Whither now, Channelside?

The latest offer to buy and revive Channelside Bay Plaza was still in the negotiation stage when the Tampa Port Authority's governing board voted unanimously Tuesday to kill it. But the bigger problem with the downtown retail center is not who wants to buy it.

It's who is trying to sell it.

Tampa Port Authority CEO Paul Anderson said the main stumbling block to reviving Channelside is its current owner, the Irish Bank Resolution Corp.

The IBRC took over Ireland's failed banks and their assets — including Channelside — during the recession. The Port Authority has the final say on any sale because Channelside was built on its land. But the port can use its veto power only on deals that are first arranged by the bank.

The Irish government has ordered the IBRC to liquidate all its American assets. To Tampa Mayor Bob Buckhorn, that's a big part of the problem: The bank is trying to get rid of Channelside. But the port needs a buyer who can save Channelside.

"They've screwed it up so badly," said Buckhorn, who sits on the port board. "They're just doing the backstroke to get what they can out of the deal."

Port officials have also tired of being dictated terms by the IBRC.

"This is a bank that has failed, and they have failed miserably," Anderson said after Tuesday's vote, "and they're telling us this is who we ought to be doing business with?"

• • •

The board voted Tuesday to kill a deal Liberty Channelside LLC had reached with the IBRC to pay millions in cash for the complex. The price was never revealed. But Liberty had yet to reach terms with the port, and those negotiations had stalled when the board acted.

Liberty's partners, Santosh Govindaraju and Punit Shah, declined to comment for this report. But they haven't gone away yet. They said they are reviewing their legal options.

The chairman of the port board, William "Hoe" Brown, said that the board will not accept just any developer for the project. Turning around the 234,520-square-foot complex is key to continuing the revival of the Channel District and the rest of downtown Tampa.

"It's a big opportunity for our region," Brown said days after the vote. "We're going to spend the time necessary to work with people who have the vision, the wherewithal and the commitment to do the deal."

But the port can't just go out and find a developer.

That's the bank's job.

• • •

The Anglo Irish Bank Corp. made the original $27 million loan that Channelside's old owner, the Ashkenazy Acquisition Corp. of New York, used to buy it in 2006.

But Ashkenazy went into default. The Irish bank foreclosed on the property and took it over in 2010. Then Anglo Irish failed amid the worldwide recession. In 2011 the Irish government formed the IBRC to take it over.

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In February the Dáil, Ireland's parliament, ordered the IBRC to liquidate its assets — including Channelside, whose latest appraisal was $12 million.

But to do that, the Irish bank needs the port's approval. Port of Tampa officials said that in the past year the Irish bank has done a poor job of working with them, or even keeping them informed.

A spokeswoman for the IBRC declined to comment on the port's complaints.

"The bank has been a big part of the challenge and why we are where we are today," Anderson said.

• • •

Last year, port officials were excited that the bank was negotiating a Channelside deal with an ownership group led by Tampa Bay Lightning owner Jeff Vinik.

Vinik owns the lease to the nearby Tampa Bay Times Forum and nearly 20 acres of empty land there, making him the Channel District's most important player.

But the board never got to vote on the Vinik plan. In October his group ended its talks with the bank when it learned the IBRC gave Ashkenazy the right to match any offer for Channelside.

That legal hurdle was resolved earlier this year — but Liberty Channelside emerged as the beneficiary.

Port officials weren't happy that the bank's own complication ended the Vinik deal. They were even unhappier the bank gave them a tight monthlong window to vet the Liberty bid.

But what has really upset the board is that the bank won't give them more options to consider. The port board wants to be able to see multiple proposals side by side, not just one at a time. It's a problem that pre-dates Anderson, who took over as port CEO in January.

"Even before Paul had gotten here," Brown said, "we asked the bank to give us more than one alternative."

• • •

Anderson said the port will try to employ a stick-and-carrot approach to the bank: persuade the IBRC to cooperate with the port — or else.

The port's leverage starts with its veto power, which the board exercised Tuesday.

"I think they spoke very loudly to the bank," Anderson said. "They sent a message to the bank to send us some proposals we can look at."

Second, there's the 2010 lawsuit filed by the port against the IBRC to foreclose on Channelside because the complex is in "nonmonetary default" — that means the bank has allowed the facility to fall into disrepair.

It's not as strong a court case as a monetary default — failing to pay on the lease — but it gives the port leverage. The bank could potentially lose Channelside in court and get nothing for it. Then the Port of Tampa could arrange its own deal to redevelop Channelside.

The port had agreed to hold off on the lawsuit so the bank could find a buyer. But last year, fed up with the delays, the board voted to restart litigation. Both sides are looking at a Nov. 18 trial date at the earliest.

Then there's a third option: The Tampa Port Authority could just buy Channelside itself.

After all, if Liberty was willing to pay cash — and port officials think they agreed to pay substantially less than the $12 million appraisal — then the port could do the same thing.

The port is in good financial shape. In 2012, the Port of Tampa reported a record $43 million in revenue and the board approved $70 million in capital improvements.

By cutting out the bank, the port could find the developer it wants. It's risky and expensive, but it does solve the Channelside issue once and for all.

Anderson didn't rule out that option. The problem, though, is that then the port would become responsible for turning around Channelside.

"That is a building that clearly needs a lot of work," Buckhorn said. "It's like buying an old house and then trying to rehab it."

• • •

Right now the carrot still seems the best option: The port wants to encourage the IBRC to find the right developer for Channelside.

To Buckhorn, the most logical developer is still Vinik. A spokesman for the Tampa Bay Lightning owner declined to comment on whether Vinik is still interested in Channelside.

The mayor doesn't know if Vinik is still interested, either.

"But there's a lot of reasons why that would make sense," Buckhorn said. "When you do a deal like this with a partner, you want to know they have skin in the game, that they are going to be just as enthusiastic and aggressive in getting this up and running as you are.

"Clearly, Jeff has financial investments in the Channelside District and he knows the importance of the Channelside project to the Times Forum.

"From that perspective, a bid by Jeff Vinik would certainly be welcome."

Jamal Thalji can be reached at thalji@tampabay.com or (813) 226-3404.


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