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Stalled Landmark Hotel Developer, Halsey Minor, Charlottesville, Virginia
Speaks Out Against Bank Subsidiary, Specialty Finance Group

By Tasha Kates, The Daily Progress, Charlottesville, Va.McClatchy-Tribune Regional News

Jul. 25, 2009--The developer behind the stalled Landmark Hotel has spoken out twice this week against the bank subsidiary that gave him the loan for the project -- once in court filings and once on a local radio show.

Halsey Minor was a guest on WINA's "The Schilling Show" on Friday, where he told host Rob Schilling about his dealings with the bank and potential effect of "bad publicity" surrounding the nine-story luxury hotel. He also filed court documents on Thursday accusing Specialty Finance Group of withholding documents.

Minor is embroiled in several lawsuits involving the hotel on the Downtown Mall. Clancy & Theys Construction Co., the contractor for the nine-story hotel, most recently sued him for $2.6 million. The lawsuit accuses Minor's hotel entity of breach of contract and seeks enforcement of $2.1 million of mechanic's liens. Minor previously has filed lawsuits against Lee Danielson and Specialty Finance Group, who also have sued him.

Danielson was the original developer and the person who brought the project to Minor's attention, Minor told Schilling on the radio show. Minor fired Danielson late last year several weeks after the men made conflicting statements to the media about the status of the hotel construction.

According to Clancy & Theys' lawsuit, which was filed June 5 in Charlottesville Circuit Court, Minor Family Hotels LLC didn't make payments of $338,326.76 and $516,252.50 before the site was shut down. The contractor said in the suit that it was completing its work on time and didn't do anything to cause Minor Family Hotels LLC to terminate the contract.

A spokesman for Clancy and & Theys declined to comment Friday.

The contractor's lawsuit said about $9.3 million in work remains to be done on the hotel.

City spokesman Ric Barrick said the contractor's permit will expire at the end of September if construction doesn't resume.

Minor previously has said Specialty Finance Group hadn't delivered on loan payments, which caused the hotel project to stall. The bank has said in court filings that Minor defaulted on the loan "almost immediately" and refused to answer questions about the hotel's construction status.

In an item filed Thursday in Charlottesville Circuit Court, Minor said Specialty Finance Group has made "glaring omissions" in its response to Minor's request for documents. The bank has produced "only" 3,500 pages of documents with no internal or external correspondence, the filing said.

"Despite Minor's good faith attempts to obtain [Specialty Finance Group's] documents, [Specialty Finance Group] continues to obstruct, obfuscate and make further excuses as to why it will not produce the documents it was obligated to produce months ago," the document said.

Minor did not immediately return a call seeking comment for this story.

Specialty Finance Group is a bank subsidiary of Silverton Bank. The Federal Deposit Insurance Corp., which seized the Atlanta-based bank on May 1, announced June 5 that it would dissolve the bank because a qualified buyer hadn't appeared.

A spokeswoman for Silverton Bank was unable to comment for this story, instead directing all questions to the FDIC.

During his segment on Friday's edition of "The Schilling Show," Minor told Schilling that the bank wouldn't let him change his contractor. At the same time, Minor said, the bank was slow in making payments and the subcontractors were doubling their costs.

"So when I let Lee [Danielson] go and brought in consultants to figure out what was going on, I wanted to shut the thing down," Minor said on the radio show. "They didn't want any of the banks to know. We literally hired thespians who picked dirt up and moved it from one side of the site to the other. I was paying, essentially, for them to commit fraud."

Minor told Schilling on the show that he is aware of a "very small vocal minority" who harbor ill will toward him, and believes the resulting bad publicity could taint the hotel's chances of ever being completed.

Improvements around the hotel site, however, won't be halted. The City Council voted earlier this week to spend some of its leftover rebricking project money to do demolition, electrical and masonry work on Second Street Southeast. City spokesman Barrick said Friday that the hotel's developers had agreed to put $200,000 toward the repairs, but city officials have since learned the money won't be available until the hotel is completed or until June 2014.

Barrick said he didn't know if the city would need to move construction items in order to do the work, but he said the city previously has moved the project's perimeter when work ceased on the 100-room hotel.

During his radio show appearance, Minor told Schilling that he has never asked the city to take over the project or contribute anything to it.

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Copyright (c) 2009, The Daily Progress, Charlottesville, Va.

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