|By Brian McNeill, The Daily Progress,
Charlottesville, Va.McClatchy-Tribune Regional News
Nov. 12, 2008 - A major financing problem has halted construction of the 100-room, nine-story Landmark Hotel project on the Downtown Mall.
The luxury hotel's owner, Halsey Minor, said Tuesday that an Atlanta-based bank has failed to deliver a promised $24 million in financing -- leaving construction crews and other contractors unpaid for their work.
"No one got paid for September," Minor said.
Under an agreement with the bank, Minor said, he would pay $7 million in equity and the bank would pick up as much as $24 million to pay for the project's construction. Minor said he has paid his share, but the bank has fallen behind and missed a $1.1 million payment that was due Friday. So far, Minor said, the bank has paid around $4 million of its total $24 million obligation.
"I think 'furious' is the right word to describe how I'm feeling," Minor said. "But we'll find another bank."
Despite the funding challenges, Minor added, the project will be finished eventually.
"I'll get it up," Minor said. "Just hopefully the banking situation will turn around."
A spokeswoman for the bank said late Tuesday that the bank was not sure that it holds the loan for the project and that they would look into the matter today.
The hotel's general contractor, Clancy & Theys Construction Co., was deferring questions Tuesday about the hotel project's status to Minor, said Bill Goggin, vice president and CEO of the company's Virginia division in Newport News.
The Landmark Hotel project was not included in a list of Clancy & Theys' active projects on the company's Web site Tuesday.
Construction on the Landmark Hotel project got under way in March and was scheduled to wrap up next July.
Minor said he is not sure how long the project will be delayed, but said that it could be a while before he can find another bank willing to extend credit at a reasonable rate during the nation's ongoing financial industry meltdown.
As banks grapple with the global credit crunch, financing for multi-million-dollar projects such as the Landmark Hotel is extremely hard to come by, Minor said. While some loans are available, banks are charging up to 16 percent interest.
"I've got to be able to get not just financing in place, but financing in place that is reasonable," he said.
Minor said he has hired a Los Angeles-based attorney to represent him as the issue moves forward.
"I'm going to clear things up with the bank," he said. "It'll either be a lawsuit or a settlement. The wheels are already turning on that process."
A "fair amount" of work remains to be done on the 86,000-square-foot boutique hotel, which recently reached its "topping off" milestone, in which crews added the building's top floor. The building project is at 200 E. Main St., at the site of a building that was most recently home to the Boxer Learning software company.
To see more of The Daily Progress or to subscribe to the newspaper, go to http://www.dailyprogress.com.
Copyright (c) 2008, The Daily Progress, Charlottesville, Va.
Distributed by McClatchy-Tribune Information Services. For reprints, email email@example.com, call 800-374-7985 or 847-635-6550, send a fax to 847-635-6968, or write to The Permissions Group Inc., 1247 Milwaukee Ave., Suite 303, Glenview, IL 60025, USA.