City To Take Action Against Millennium
Jim Taylor, June 17, 2010
In a press release yesterday the city announced it is beginning legal action against Millennium Nanaimo Properties Ltd. and Suro Development Company in the hopes of recovering over $3 million the city feels owed by this company.
Before the decision was made to spend more tax dollars on legal fees I would like to know what kind of assets either of these companies have with which to satisfy any judgment the city may win?
Further I would like to know, how many tax dollars will have to be spent pursuing this matter legally regardless of the outcome.
It will prove an interesting test of the quality of the contract the city entered into when this whole project began.
As an observation, this city council has always seemed unwilling to engage the legal system to resolve matters. The recent five year contract with a plumbing supplier, and the threat of ‘exposure’ if Mr. Berry was not paid over half a million to stay home, have always seemed enough reason for the city to just ‘roll over’ on the advice of their lawyers.
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Welcome to posting here Jim. Your participation in the wee blog is appreciated!
Good question, Jim. I’ve just sent the following to Al Kenning —
Alastair.Kenning@nanaimo.ca
date Thu, Jun 17, 2010 at 3:00 PM
subject Agreement with Suro/Triarc/Millennium
mailed-by gmail.com
Hi Al – When you have a spare minute could you answer this question:
I think it’s one question but I come at it from a couple of angles.
Who exactly — in terms of what legal entity — is the agreement with Suro/Triarc/Millennium which is considered to have been breached, with. I’m wondering if the agreement was between the City and a limited corporation set up by our partners to handle specifically their Nanaimo projects. If our agreement is with this subsidiary incorporation, does it have recoverable assets? Were personal guarantees secured? Can we ascertain that whoever or whatever legal entity the breached agreement is with that there are, realistically, assets or holdings which could be recovered if the City was successful in getting a favourable judgment in court?
Thanks in advance for giving this some attention.
Frank Murphy
I’m afraid I have to quibble here, Jim. The city IS owed the money. I am sure that the city did not start a suit on a whim. All the agreements can be found on the city’s web site here.
http://www.nanaimo.ca/EN/main/municipal/PortOfNanaimoCentre.html
If Millennium/Suro/Triarc has no money, the suit should be over quickly. I would think that our retainer money should be sufficient. And we certainly can’t afford to make up our mind that they are broke and just lay down and eat it (unless they are going to let us taxpayers get away with no more than a note saying that we don’t have any money). We won’t know the financial balance until the show is over, but we can’t walk out before the final act… unless our staff, our Council and our legal representatives wrote a very slipshod agreement which has no legs. In that case some heads should roll: though as you mentions, the ringleader may already have left the building at our expense.
I don’t read into Jim’s post that the suit shouldn’t proceed. There’s some game playing going on here by the City and I think it’s worthwhile to have the question answered: are there recoverable assets? There almost certainly aren’t or the Suro/Triarc/Millennium have incompetent lawyers and I just accept that’s next to impossible. So the sooner the truth comes out: that this agreement should never have been entered into on behalf of Nanaimo taxpayers, the better. And then we can move on to who can be held accountable.
One of the defendants is Millennium Nanaimo Properties Ltd. Just what kind of assets do you think this company would be holding? I pose the same question of Suro and wonder what due diligence was done to determine if there are assets which can be recovered.
When I posed these questions to Mayor Ruttan his response was less than precise. He said they ‘expected’ the defendants to have assets to cover their obligations, and that the cost of the legal challenge would be ‘substantial’.
From the outside looking in, Millennium Nanaimo Properties biggest asset was the piece of paper they held on Nanaimo lands which were forfeit when the hotel went south. The only visible cash assets they had were the fees they extracted from the city.
As a ‘partner’ they never ponied up any cash to my knowledge. The only thing they brought to the table was their ability to build buildings.
The one they built for the city arguably is badly overpriced by any standards. It went from %50 million to $72 million in short order if you recall.
If you want to know what it is really worth, put it on the market and see what you can get for it. The retail portion was sold to First Realty for less than $4 million on very favourable terms. That I would point out is the only revenue producing portion of that entire complex and it only had a street value of $3.7 million.
So what makes the rest of it worth nearly $100 million?
I am sure Millennium will argue that the city received ample value for the $3 million spent and will be able to demonstrate that in court.
Ron, I have not read through all the agreements clause by clause, but can you point to the specific which says all funds are forfeit if the hotel does not proceed?
I have no problem with proceeding with legal action, I do not share your confidence that the city has done it’s due diligence in the matter. If they have, it will be a first in their dealings with Millennium.
Jim: You misread me if you believe that I believe that proper due diligence was performed. I need a symbol for tongue in cheek (tic?). I do believe that the only way we may find out is by a suit. If due diligence was improperly performed then off with their heads. Til then all I have is hearsay and innuendo and a shopworn faith in the law in the face of all odds. I look forward to a court hearing with bated breath.
I do believe that Millennium still has a hand in a whole bunch of multi-million dollar condos in Vancouver, is it not so?
I’m afraid that I must report that a number of the agreements with Triarc/Suro/Millennium which are supposed to be found at:
http://www.nanaimo.ca/EN/main/municipal/PortOfNanaimoCentre.html
are no longer linked. I have made a request that they be found.
This is a little ‘off’ base but I came across it on my blog when trying to ‘follow the bouncing ball’ of when the different players changed and when the hotel went from 37 stories to 18 to 17 with a never ending string of announcements that the shovels would be in the ground within months now…..
This is regards the sale of the retail portion of this building by the city and the terms of sale:
“It is recently reported that the purchaser to date put $350,000 down on this property with another $1.13 million becoming due this week and the balance of $2.3 million coming due Aug. 11/2010 or when the space is 85% leased. As of Nov. 7 interest becomes payable on the final amount owing @ 4.5% interest. These seem like generous terms.” Nov. 9/08 http://www.nanaimo-info-blog.com.
There have been many different terms surrounding this whole deal where it seemed as if the developers lawyers just drew up whatever type of contracts they wanted, and the city just signed on.
It is troubling to think that serious due diligence was done prior to the never ending string of changes this deal went through with Millennium. It was seemingly clear that the City was over the barrel and had no real choice except to keep going along with whatever ‘new’ deal Millennium came up with.