Update: Resolution passed 5-0. Here is a link to the resolution.
The Jackson Free Press published a good story last week on Jackson's efforts to build a hotel next to the convention center. The city pushes a storyline of Jackson working with a reputable developer to revitalize downtown. The city acts as a partner with the developer. The developer builds a hotel for the convention center, and we all live happily ever after.
However, there are two sides to every story and the other side of this story is about the developer: Transcontinental Realty Investments (TCI). A company in deep financial trouble. A company charged by more than one lender of committing mortgage fraud. A company thrown out of bankruptcy court twice this year after the lenders and trustee accused it of filing multiple bankruptcy petitions in bad faith. The company is leveraged at nearly 100% and lost $80 million last year. Several lenders sued TCI and its subsidiaries this year after TCI defaulted on nearly $100 million in loans. This is the company Jackson wants to make a partner in building a hotel.
The JFP reported:
"the city would partner with Transcontinental Realty Investors, or TCI, to build the hotel. Representatives from TCI said a convention center hotel will increase business at the Jackson Convention Complex and at downtown businesses."
"If the council adopts the plan, the city and TCI will issue $70.1 million in tax-exempt Gulf Opportunity Zone bonds through the Jackson Redevelopment Authority and $22.5 million in taxable bonds to help pay for the project. Total funding for the project would be $96.1 million...
Ward 1 Councilman Quentin Whitwell expressed concerns about the city guaranteeing the bonds and what would happen if TCI defaulted on its obligations, but Swerdling (City adviser) said that was unlikely. Whitwell also asked what would happen if the hotel did not do as well as they hoped..." Article
"Under the plan, the city would purchase land from TCI for $14.3 million. Either the city or JRA would then lease the land for the hotel to TCI to develop. Since the parcel of land is larger than would be needed for the hotel, the city could sell or develop the extra land around the hotel."
So the city issues bonds, pays $14.3 million to TCI, and jointly assumes the risk with TCI. Naturally the adviser assures Mr. Whitwell and the rest of the city council that everything will be fine. The risk is "manageable". You know, trust us.
Armed Forces Bank filed suit on March 9, 2011 against Transcontinental Realty Investors (TCI) and several companies owned by TCI. One of these companies is TCI MS Investments. Armed Forces Bank claimed it was owed $72,526,355 on a 2004 loan made to TCI. Armed Forces Bank accused TCI of transferring the title to the property purchased with the loan to a "straw" company on December 23, 2010. The straw company filed for bankruptcy on January 4, 2011.
TCI subsidiaries sold several properties to the "straw" company, FRE Real Estate on December 23, 2010. A TCI-owned company changed its name to FRE Real estate on the same day. The properties were secured by loans made by Armed Forces Bank. The plaintiff stated "the transfers and bankruptcy were without notice to Armed Forces" (p.30, paragraph 96).
Petra CRE made similar allegations in its own lawsuit filed on March 15, 2011 in U.S. District Court in the Eastern District of Louisiana against TCI. Petra stated it loaned the money to (TCI company) TCI Amaco on August 30, 2007 to purchase a commercial office building in New Orleans. Petra claims TIC owes $19,500,000 and the company played similar games in New Orleans after purchasing the property.
TCI purchased the building. TCI even signed an agreement with Petra stating tenants would make all rental payments directly to Petra.The shenanigans started in October 2010. Petra claims TCI notified the tenants to "make all rental payments" directly to the TCI-owned management company instead of Petra in violation of the agreement. TCI transferred ownership of the building to FRE on December 23, 2010 as well and recorded it with the Parish Clerk of Court. Once again, the lender said it was never notified of the transfer (Just think Claiborne Frazier, just on a larger scale) and saw its collateral vanish into the ledgers of the straw company.
FRE filed a bankruptcy petition in Bankruptcy Court in the Northern District of Texas on January 4, 2011. FRE listed the Amco building as one of its assets in the bankruptcy petition. The Dallas Business reported in January:
"FRE owns 29 land parcels, six office buildings, an apartment complex and two airplane hangars, with a combined value of $234.5 million, according to the company’s bankruptcy filings. FRE owes a total of $181.5 million on the properties, the company’s filings say. All except four of the properties are in North Texas.
FRE’s filings list more than 150 secured and unsecured creditors, including Armed Forces Bank NA and Wells Fargo Capital Finance Inc." Article
Petra, Armed Forces, and other lenders such as Wells Fargo objected to the petition and accused FRE of filing in bad faith. Wells Fargo also alleged FRE was created as a shell company. TCI subsidiaries transferred assets to FRE even if those assets were secured by loans. FRE then filed bankruptcy while creditors saw their collateral disappear. Wells Fargo claims it lost ten properties securing loans of $8.2 million due to these maneuvers by TCI. The court agreed with the lenders and dismissed the bankruptcy petition on March 1, 2011. Undeterred, FRE filed another bankruptcy petition on April 4. The trustee filed an objection to the petition. The court dismissed the petition in June. However, TCI's legal problems did not stay in Texas. A federal district court in Arkansas entered a $3,441,634 judgment against TCI on March 14, 2011. The court decreed land owned by TCI in Benton County, AR would be sold to help satisfy the judgment.
So let me see: Bankruptcy fraud. Mortgage fraud for tens of millions of dollars. Multi-million dollar judgments. Foreclosures. Phony companies created to hide assets from creditors. Yet, according to Jackson's "advisor", the risk is "manageable" and we should pay $14 million and put the taxpayers on the hook for nearly $100 million.
27 comments:
WOW F'KING WOW. I honestly am at a loss for anything else to say at the moment.
This company looks to be nearly insolvent. It has a market cap of only $20 million and has lost over $40 million bucks this year alone.
http://finance.yahoo.com/q?s=TCI&ql=1
New Jack City sure can pick 'em.
It's only the PERCEPTION that TCI is not financially sound. To suggest otherwise is -- wait for it -- RACIST!!!!!
Why won't the Democrat retard thugs who run the city concentrate on fixing streets? About once a year I actually have to do business downtown, and my truck needs an alignment afterwards.
Question to you fondren white-guilters: Is part of the quaint, hipster, URBAN setting you love so much streets that aren't fit for Kabul? Is that some of your charm?
The State of Mississippi should put Jackson in receivership and take over running the day-to-day operations of it.
And don't get me started on JPD. Thugs with badges.
2:48. I know. I'm going to post the S&P analysis of the company later. Not pretty at all. Lost 76 million last year and 80 million the year before.
5-0? They just don't care over there, do they?
Ghost--
Shows I've been right all along. Whitwell is nothing but a boot-licking RINO.
He should be beaten with a bike chain.
Whitwell is nothing but a boot-licking RINO.
But he sure has a knack for tweeting the same dozen messages promoting himself and extolling his greatness nearly every single day.
It is all as Heywood Sanders predicted and now a desperate Harvey Johnson is about to make it much, much worse. Downtown is bust.
You've embarrassed the local leftstream media again Kingfish.
Depressing pile of news there....
The JFP is a fish, Crozier the fisherman. The fish is hooked in the gill.
who did the vetting of this deal? who was our "independent" expert advising the city and where did he come from? who recommended him/her?
I can't even think about the terms of the deal yet because I'm trying to get over the obvious and glaring situation of the quality of the partner that the city is getting in bed with.
While I know that hindsight is always 20-20, surely, there was a better way to do this deal.
Malachi, and its associates as is involved as advisors!
You would expect an almost $100,000,000 deal be at least Googled by a Councilperson rather than full reliance on an advisor of record. Maybe education travel junkets on not doing that sort of 5 min investigative due diligence happens. Really smells.
3:32 and 3:38. You are simply jealous b/c QW is a "somebody" and you are an anaonymous NOBODY.
Fine work! The 5-0 unanimous decision clearly states "we are all idiots."
This is going to bankrupt Jackson. When creditors come calling for the loan; Jackson will have the last nail hovering over the pine box.
It just goes to show, stupid is as stupid does and all of the bozos connected to any thought of leadership in Jackson will succumb to the very mediocrity they espouse.
What a gaggle of malcontents.
Say what you will about Jeff Weill but he would have voted 'No' today. Instead of fiscal conservatism Whitwell found a need to kiss some ass.
Why don't we see a resolution that reads, "Whereas, the City of Jackson, Mississippi (the "City") recognizes the importance of having entertainment in an "Entertainment District"...
Ghost,
5-0? They just don't care over there, do they?
There are only a few reasons that come to mind:
1. Don't give a shit.
2. Don't understand.
3. Anything, even if it makes no sense, is better than nothing. (Great idea to hand a bunch of bankrupt individuals a guaranteed loan).
4. They don't know what to do.
5. Desperate, very desperate to do something.
Others....?
This is ridiculous I bet TCI was salivating when they saw the idiots they were about to pitch to.
Good Work! Its a shame that citizens dig for information while paid elected politicians sit back and give a rubber stamp without any investigation. Thats the difference between government and business ...
What excuse does QuitWell have for voting yes on this?
Is the King Edward/Hilton Garden Inn consistenly booked up? Do we need another hotel by the Convention Center?
What will the MOU obligate the taxpayer to?
Are we still at the stage where
all legal language is vague and
the city is only expressing its
willingness and intention to
go forward as a partner? Or are we
past that point?
(Have not read all the legal stuff posted yet)
Just how stupid can those people be squatting in city hall "uh ruh" ing each other to death?????
Since these are all essentially Gene Phillips companies that have all filed for Bankruptcies..
Louis Corna works as the CFO, for Gene Phillips, and structures all these real estate transactions for Gene Phillips ...under Pillar Income Asset Management aka Prime Income Asset Management aka Basic Capital Income Management..
And Louis Corna works for Brad Phillips, Gene's son who owns
Liberty Banker's Insurance Company
I have to wonder if real estate properties are transferred from Gene Phillips companies over to his son's Insurance Company, Liberty Banker Life Insurance Company ....
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