Danielson's back? Billionaire's backing enthuses Landmark creator
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The inside of the proposed Landmark hotel as it appeared on Monday, March 5.hawes spencer -
Minor and Danielson on groundbreaking day in 2008.file photo by Jay Kuhlmann
Lee Danielson, the man who sparked a downtown Charlottesville renaissance (along with some battles against business partners), was publicly identified Monday as one of the interested bidders for the unfinished Landmark hotel, as the jurist overseeing the bankrupt 11-story structure sent a "stalking horse" off to pasture.
On March 19, federal bankruptcy judge William E. Anderson, who had set a January 15 deadline for the so-called stalking horse, Milwaukee-based hotelier Timothy James Dixon, declined to accept Dixon's day-earlier proposal to pay $3 million for the towering fiasco. Instead, the judge said at the close of the 2.5-hour hearing, that he wants the building's shell and land auctioned— even if that means entertaining live bidders inside his courtroom.
"I want to sell the property," said Anderson, indicating a preference against sealed bids. "I like," the smiling judge explained as he thrust his hand skyward, "to see the competition and the money bouncing up."
The judge was far from alone in urging new money into the construction project, which hasn't seen any action— other than the courtroom variety— for more than three years.
"I want the bleeding to stop," said Richmond-based attorney Craig Young, who represents the unsecured creditors, the ones least likely to see a cent. "I want the legal fees to stop, so there's something to go around."
While Judge Anderson agreed with the sentiment, he declined to immediately give the unsecured creditors what they were seeking: a $200,000 fund that was a key component of the proposal by Dixon, the hand-picked successor to the financially-strapped owner of the project, Halsey Minor.
An oft-successful technology investor and Charlottesville native, Minor has suffered a spate of setbacks that include several creditor lawsuits and the ignominy of getting named, along with wife Shannon, as California's top tax deadbeats, with an unpaid balance of about $14 million.
His financial woes may not have ended, as even the attorney representing his bankrupt company, Minor Family Hotels LLC, in explaining why Dixon should get a "break-up fee," informed the court: "Despite the promises of Halsey Minor to pay him, Mr. Dixon has received zero."
Minor, unreachable for comment after the hearing, has blamed his lender and Danielson for losing the Landmark. This now L.A.-based businessman, a co-founder of Cnet, has initiated steps to sell "Fox Ridge," his Free Union-area farm. That's several months after he filed an "affidavit of indigence."
One man clearly not indigent is Alexander von Furstenberg. The son of wrap-dress inventor Diane, the stepson of media titan Barry Diller, and a billionaire hedge-fund manager in his own right, von Furstenberg allegedly wants to buy the Landmark with Danielson running the show.
"He's a hands-off investor," says Danielson, drawing a contrast with Minor, with whom Danielson sparred over everything from the Landmark's mural to its proposed skybar.
In a post-hearing telephone interview, Danielson says his bid would trump any others because it won't be contingent on bank financing, something that's in short supply these days— particularly at a site where the last bank, Specialty Finance Group, is still owed over $13 million.
Other creditors include general contractor Clancy & Theys, claiming over $2 million, and the city of Charlottesville, owed about $135,000 in back taxes.
At an earler hearing, Dixon touted his $3 million bid as a substantial premium over a recent appraisal valuing the Landmark at just $2.1 million. He said last fall that he'd earn a seven percent fee on the $15-$18 million in new money he estimated it would take to finish the hotel and also take a 10 percent ownership stake upon completion.
On Friday, March 16, two months after deadline and one business day before the more recent hearing, lawyers circulated his proposal, an asset purchase agreement that was not entered into evidence but which allegedly gave him a pre-closing escape hatch.
"Going forward on a stalking horse that can walk away is not the right way," said John Maddock, attorney for Specialty Finance. "The terms of the agreement allow Mr. Dixon to sit back and decide whether he wants to buy the hotel."
Another lawyer went further in attacking Dixon's proposal.
"He owns a hotel. We're not talking about Conrad Hilton here," said the attorney for an unpaid concrete company, Bill Shmidheiser, who also likened Dixon to Dick Cheney, who famously conducted a vice-presidential search and then chose himself as the most qualified.
"There's no money on the table," said an exasperated Shmidheiser. "The debtors had a year and a half."
Although the Minor Family Hotels lawyer then said that Dixon would remove his escape clause and even offered to put Dixon on the stand to testify, nobody, including the judge, expressed eagerness for that to happen.
"You all will have to agree," said the judge, indicating that he'll require a substantial cash deposit and a level playing field. "And then we'll sell the property to the highest bidder."
One interested party mentioned inside the courtroom was Green River Partners, a Maryland-based firm led by Darren Linnartz.
The judge asked the lawyers to get together and come up with, within 60 days, the terms for an auction that would occur by June 18. If they can't, they'll be invited to another hearing, this one in Lynchburg, on April 5.
Although he caught an overnight flight from the west coast, Danielson— who developed the Main Street Arena (as the Charlottesville Ice Park) as well as a nearby mixed-used building and a Regal cinema— was unable to attend the hearing due to fog in Charlotte. But what he heard makes him sound a note of confidence for his chances, and in his billionaire backer.
"It's a good investment," says Danielson. "And he was impressed with what I've done in Charlottesville."
20 comments
The real buzz kill for auctioning off the property is how much any new owner will have to spend to complete the project, whether as a hotel or something else. Looking at some of these numbers, it's hard to draw any conclusion other than many millions have gone elsewhere than into that building.
Somebody's going to have to get that thing at a deep discount to make it pay off and it's real long odds any creditors are going to ever see much of their money.
Sort of like trying to sell a $10K nominal value used car with a blown engine that would take $10K to fix....
When did Lee Danielson spark a downtown Charlottesville renaissance? I remember him building an ice rink that was obviously a bad idea even as it went up and which ultimately failed as a business concept. I remember a historic building facade being destroyed. I even remember him pushing against widespread opposition to have the city build a road across the Downtown Mall. Then there is that big concrete thing that looks like a dead building. Renaissance though? I can't seem to recall him being responsible for anything like that.
Lee created a dream ice rink in Charlottesville and unfortunately the small population and summer weather made an rink too expensive a proposition. But, the building is beautiful, and the movie theater a definite plus for the entertainment corridor of the region. Lee, we are glad to have you back. How about a spiffy old folks home on the downtown mall - I can see the scooters now, and ya know, the baby boomers will want to be where the action is, not out in the burbs or rural Crozet , no, the Mall is the place and we know YOU can make it happen.
Have to agree here with saywha? Long ago there was an ice rink here - but if you are not native to this area, you wouldn't know of that.
The issue is these insanely wealthy come in from other areas with these hairbrained ideas - ahum - Value America - swoop in promise the moon leave and look at what the city is left with - bailed out the Omni Hotel, this Hotel which is nothing but an eyesore and various other projects which left many to pick up the pieces.
Minor - well though he is a "native" he has no appreciation of the area. The bigger they are the harder they fall and karma is nature's hit man - enjoy it Halsey - you were a @## in school and apparently that hasn't changed.
Its gonna be hard to find someone to through good money after bad. The news can tout any positive economic signs it may but things are not looking up especially with gas going up. The last time gas hit 4 bucks a gallon it was the catalyst for what we see today. Its gonna take some one with millions in throw away money whos not really looking for a fast return. The banks will look at this as a lost cause.
Just like a bad penny. Why did Danielson say that he was paying the workers when the bank was not giving the payroll for several months?
I skated at that old rink. It was in a cheap metal building which still stands off Greenbrier Dr. West and even though it was in a cheap structure it still couldn't pay its bills.
The problem in Charlottesville is an astonishing lack of awareness and a non-existent longterm vision for the future of the city. This pipsqueak of a town is completely dwarfed by the interests of private developers on the one hand, and the interests of UVA which single-handedly keeps this place going. Never mind the big land conservation tax write-offs that surround us. A lot of issues seem taboo because too many stake holders like it the way it is. Big and small.
"We need a expensive luxury hotel on the downtown mall. We will compete with Boar's Head and the Inn at Keswick and get their customers, because the mall is fantastic and only a few of the rich want to golf while here. Companies want to spend big these days on conventions and we will be on the top of the list. So 16 million has been spent so far, most of this money has been lost in bankruptcy but now we can pick up the pieces and be the ones to finish and profit from it."
Meh. Just make it a state park and get a fat tax credit. Problem solved.
Heh...yes, I too skated at the rink on Greenbrier - across from the theater that croaked out there too. I suppose, given the huge growth in population since the time of the old rink, that one might imagine there is a big enough market to sustain an ice rink, but not in that kind of building, in that location. Maybe, if it were another steel building out on cheap land...maybe.
Does the Downtown cinema really make that much money? Each time I'm in there, the staffing is more and more sparse. How about the "Downtown Grill" - which I'm given to understand became essentially a private club for it's original investors, since the constant cash infusions required to keep it operating far exceeded what it took in from the general dining public. Danielson is a joke - he was a disaster down in Miami (where he is from originally) and only arrived here looking for fresh marks when he'd run out of folks to fleece with his development schemes down there.
The "downtown renaissance" is a function of the mall itself, and it continues despite the best efforts of the City and the Downtown Business Association. More than anything it owe's it's ressurection to the return of residents over the past fifteen years.
Let's turn the hotel into a fancy Barneby's Pizza!
Go to the ice rink in Charlottesville even around 10pm - look at happy kids leaving their hockey practice - Danielson built it, it seems a lot better than an empty parking lot that was their before.... Go to Downtown Grill - its full, yes, pricey, but its GREAT - every investor would be happy to be a part of it - there has never been any cash calls....stop this bs... I know Danielson - he never developed anything in Miami... at least get your facts right...
If Danielson gets this hotel back - that will be done....for the benefit of all Charlottseville
I recall taking the kids to the Greenbrier skating rink. They loved it. Now as adults some took the time to go to the Ice Park. I disagree the Ice Park was a money loser. When the final tally came in, it broke even except for the high property taxes the City had on them. And that was with management that wasn't really on its game, in terms of advertising, and keeping the public aware of when they could come and skate. I think it can still make money as a year round skating rink. Maybe not tons but it can make money.
If anyone thinks people are gonna come to this cow town and spend big bucks to rub shoulders with Cville's elite, fat chance. You never know what little critters you'll be carrying home with you. People with bucks won't to be insulated from those environments, not look at it or hear or smell it.
A handful of happy kids alone doesn't make for a good business concept, nor does failing to make enough money to pay property taxes. Successful businesses end up making more money then they cost to start and run, all expenses being considered.
Danielson's try at making a successful business out of running an ice rink didn't work out and it didn't do anything like starting a renaissance downtown. The only reason that building a rink or another movie theater downtown even seemed possible was that the renaissance was well under way already.
Too bad 15 million didn't go to buying a 1 million dental office and 14 million more to pay for dental care for the many who need it around here instead of this project. With 15 million the socialist (X who ran for City council-can't remember name) could open his office to give anyone a job at 13 an hour, the living wage, like he wanted the City to do. But 15-16 million wasted on this.
The "psychology of prior investment" is a powerful driver of behavior. All the money borrowed to erect our own local "Skelator" is long gone, like an eight ball of coke after a lost weekend. Could its highest and best use be to be torn down and the parcel of land used for something else?
From what I can read here I didn't know that Halsey had so many relatives.
Seabird, I've looked and other than yours I can't find a single mention of what you knew about how many relatives Halsey (or anyone else) has. Maybe you intended to comment on another article?