I see why Dave Bing works for only 1 dollar.

[kraig]

Bing firm's loan extended

Luxury condo project funds must be repaid to Economic Development Corp. in Nov. 2010

David Josar / The Detroit News

Detroit -- A company created by Mayor Dave Bing to build a now-stalled luxury condo project along the Detroit River is inching closer to defaulting on a $698,893 loan from the city's Economic Development Corp.
The bridge loan to Spingarn Development LLC, which was to be used until better financing was found, was due Sept. 22, according to an audit the group submitted to the state treasurer's office in September.
Other Spingarn investors include DTE president Anthony Earley, auto tycoon Roger Penske and former professional basketball player Derrick Coleman, according to a press release for the project.
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A spokesman for the Detroit Economic Growth Corp., which provides professional staff to the EDC, said the date to repay the no-interest loan was pushed back to Nov. 22, 2010, when the board altered the development agreement to give Spingarn more time to get needed funding to start construction.
"The extension of terms to Spingarn is not unique," DEGC spokesman Bob Rossbach said in a statement. "The EDC and the Downtown Development Authority have been responding to the continuing economic situation by extending loan terms to a number of businesses that are generating economic activity or contributing to the long-term economic health of the city."
Rossbach said the developers "had already spent more than $3 million in architectural and other work related to the marketing and construction of the project."
The mayor and other investors have refused to comment on the status of the project or on any plans to repay the loan.
On May 5, Bing put his shares of the project in a blind trust that is managed by two members of his transition team, attorney M. Patrick Dreisig and accountant John M. Sirhal.
"Mayor Bing is hopeful the project will move forward without his involvement," his spokesman Dan Lijana said in an e-mail.
One investor, Tyrone Davenport, chief financial officer of the Charles H. Wright Museum of African American History, said he still had a stake in the project but refused to answer questions and then hung up to take another call.
Earley and Penske did not return phone calls.
Announced in May 2007, Spingarn was to build a $60 million condo complex with 98 units on Atwater between St. Aubin and Chene that were to sell for between $700,000 and $1.4 million each.
The development needed to have two-thirds of the units presold to secure the rest of their financing, but less than half that amount were presold.
For at least the past year, a prefabricated office, which once held full-scale models of some units, has sat locked and unused. Exterior flags are tattered and trash is scattered over the site.
Bing's team was hand-picked by former Mayor Kwame Kilpatrick's staff. The city was to provide clear title to the land and make other improvements to pave the way for construction.
Chances now are slim for the project to get off the ground, said Cary Scott Belovicz, a partner in the Birmingham office of Hendricks & Partners, a real estate development firm.
"Where are you going to get lending in today's market to finance the development and then where are you going to find comparables for the people who want to borrow money to move in?" he asked.
Then there is the price point.
"People can go to the suburbs for that price," Belovicz said. "For $400,000, you can buy in the suburbs what used to be $800,000, and in the suburbs you won't have the taxes you have in the city."
It is not unusual for loans made by the Economic Development Corp. not to be repaid.
According to the same audit the EDC provided the state, of the $6.6 million in outstanding loans as of June 30, 2009, the EDC expects to be repaid just $1.3 million.
"We are not in this to make money," Rossbach said. "The value is in creating a situation that is beneficial to new businesses."
Other EDC loans that have failed to be repaid have been made to the shuttered Sweet Georgia Brown, Seldom Blues and most recently to Coleman, who was sued by the group earlier this month over $200,000 it gave him to build a retail strip mall.
Last year, the organization sued Lawrence and Raymond Joseph after they borrowed $170,000 to open a fast-food chicken restaurant on East Jefferson. In less than a year, they filed for bankruptcy and never repaid the loan. The EDC won the case and is still trying to get paid, according to court records.

[artds]

how dare Mr. Bing be willing to take the risk of trying to bring a luxury housing development to the city's riverfront and not have the foresight to predict a collapse of the housing market!

[Detroitnerd]

"Bing's team was hand-picked by former Mayor Kwame Kilpatrick's staff."

I'm unsure what this means or what the connection between Bing and Kilpatrick would be...

[kenp]

This was an exciting project a few years ago, and as I recall we were positive in our views on this site. Then the s..t hit the fan and here we are. Give Bing and his partners some credit for trying to help redevelop Detroit

[artds]

"Bing's team was hand-picked by former Mayor Kwame Kilpatrick's staff."

I'm unsure what this means or what the connection between Bing and Kilpatrick would be...

It means nothing other than KK was trying to do what all politicians do, which is score political capital by facilitating developments that the citizens want by bringing in people who are willing and [[seemingly) able to create them.

[rjlj]

What does Bing working for $1 have anything to do with this?

[Detroitnerd]

I think the implication is that there's more ways to take profits and get sweetheart deals than just a paycheck.

[Detwa]

It is not unusual for loans made by the Economic Development Corp. not to be repaid.
According to the same audit the EDC provided the state, of the $6.6 million in outstanding loans as of June 30, 2009, the EDC expects to be repaid just $1.3 million.
"We are not in this to make money," Rossbach said. "The value is in creating a situation that is beneficial to new businesses."
Other EDC loans that have failed to be repaid have been made to the shuttered Sweet Georgia Brown, Seldom Blues and most recently to Coleman, who was sued by the group earlier this month over $200,000 it gave him to build a retail strip mall.
Last year, the organization sued Lawrence and Raymond Joseph after they borrowed $170,000 to open a fast-food chicken restaurant on East Jefferson. In less than a year, they filed for bankruptcy and never repaid the loan. The EDC won the case and is still trying to get paid, according to court records.

Note to self - write proposal to EDC group to fund new swampland community project on St. Aubin. It's a sure thing!

BTW, I'm only joking.

[Fury13]

"Bing's team was hand-picked by former Mayor Kwame Kilpatrick's staff."

I'm unsure what this means or what the connection between Bing and Kilpatrick would be...

It might be worth mentioning that MANY of Bing's appointees are former Kilpatrick people.

Just sayin'...

[1KielsonDrive]

Bing firm's loan extended

Luxury condo project funds must be repaid to Economic Development Corp. in Nov. 2010

David Josar / The Detroit News

Detroit -- A company created by Mayor Dave Bing to build a now-stalled luxury condo project along the Detroit River is inching closer to defaulting on a $698,893 loan from the city's Economic Development Corp.
The bridge loan to Spingarn Development LLC, which was to be used until better financing was found, was due Sept. 22, according to an audit the group submitted to the state treasurer's office in September.
Other Spingarn investors include DTE president Anthony Earley, auto tycoon Roger Penske and former professional basketball player Derrick Coleman, according to a press release for the project.
Advertisement

A spokesman for the Detroit Economic Growth Corp., which provides professional staff to the EDC, said the date to repay the no-interest loan was pushed back to Nov. 22, 2010, when the board altered the development agreement to give Spingarn more time to get needed funding to start construction.
"The extension of terms to Spingarn is not unique," DEGC spokesman Bob Rossbach said in a statement. "The EDC and the Downtown Development Authority have been responding to the continuing economic situation by extending loan terms to a number of businesses that are generating economic activity or contributing to the long-term economic health of the city."
Rossbach said the developers "had already spent more than $3 million in architectural and other work related to the marketing and construction of the project."
The mayor and other investors have refused to comment on the status of the project or on any plans to repay the loan.
On May 5, Bing put his shares of the project in a blind trust that is managed by two members of his transition team, attorney M. Patrick Dreisig and accountant John M. Sirhal.
"Mayor Bing is hopeful the project will move forward without his involvement," his spokesman Dan Lijana said in an e-mail.
One investor, Tyrone Davenport, chief financial officer of the Charles H. Wright Museum of African American History, said he still had a stake in the project but refused to answer questions and then hung up to take another call.
Earley and Penske did not return phone calls.
Announced in May 2007, Spingarn was to build a $60 million condo complex with 98 units on Atwater between St. Aubin and Chene that were to sell for between $700,000 and $1.4 million each.
The development needed to have two-thirds of the units presold to secure the rest of their financing, but less than half that amount were presold.
For at least the past year, a prefabricated office, which once held full-scale models of some units, has sat locked and unused. Exterior flags are tattered and trash is scattered over the site.
Bing's team was hand-picked by former Mayor Kwame Kilpatrick's staff. The city was to provide clear title to the land and make other improvements to pave the way for construction.
Chances now are slim for the project to get off the ground, said Cary Scott Belovicz, a partner in the Birmingham office of Hendricks & Partners, a real estate development firm.
"Where are you going to get lending in today's market to finance the development and then where are you going to find comparables for the people who want to borrow money to move in?" he asked.
Then there is the price point.
"People can go to the suburbs for that price," Belovicz said. "For $400,000, you can buy in the suburbs what used to be $800,000, and in the suburbs you won't have the taxes you have in the city."
It is not unusual for loans made by the Economic Development Corp. not to be repaid.
According to the same audit the EDC provided the state, of the $6.6 million in outstanding loans as of June 30, 2009, the EDC expects to be repaid just $1.3 million.
"We are not in this to make money," Rossbach said. "The value is in creating a situation that is beneficial to new businesses."
Other EDC loans that have failed to be repaid have been made to the shuttered Sweet Georgia Brown, Seldom Blues and most recently to Coleman, who was sued by the group earlier this month over $200,000 it gave him to build a retail strip mall.
Last year, the organization sued Lawrence and Raymond Joseph after they borrowed $170,000 to open a fast-food chicken restaurant on East Jefferson. In less than a year, they filed for bankruptcy and never repaid the loan. The EDC won the case and is still trying to get paid, according to court records.

Excellent post and questions, Kraig. Thanks for calling it to our attention. Now prepare yourself for all the posters who will question you and call you names for attempting to inform us and open a discussion.

[Retroit]

It is not unusual for loans made by the Economic Development Corp. not to be repaid.
"We are not in this to make money," Rossbach said. "The value is in creating a situation that is beneficial to new businesses."

So... an organization that is supposed to be developing the economy is not interested in the companies it loans money to being able to make enough money to repay those loans?

The DEGC Business Development team is dedicated to business retention and expansion in order to maintain the health of Detroit’s local economy and ensure long-term grown of the city’s employment base.

source: http://www.degc.org/business-services.aspx

[PQZ]

The article is full of misrepresentations, not the leastof which is this one.,,

"...Bing's team was hand-picked by former Mayor Kwame Kilpatrick's staff. The city was to provide clear title to the land and make other improvements to pave the way for construction..."

The EDC acquired the land under Archer for the casino district. When the casino deal changed under Kilpatrick the EDC - which is not mayorl staff by any means - was asked by Kipatrick to develop a plan for the area and execute, per their charge as public corporation. The Council weighed in on the plan and per state legislation approved the plan and its funding. It included selling land for private developemnt and reconstructing the bonmbed out infrastructure of the area, regardless of who developed the land.

In early 2006, the EDC identified eight parcels that were ready for redevelopment and issued a public request for proposals with specific parameters for design standards [[i.e. pedstrian friendly, streetwalls, screened parking, height limitations etc.). Teams that showed strong funding capacity, strong construction and management experience and designs that were within the context of the site were selected for further deal negotiation.

Roughly seven or eight teams submited proposals. All proposals were evaluated on an objective, numerical system. Ultimately three teams were selected to enter into negotiations for the redevelopment of four parcels. None of the three developments have materialzed as a result of the collapsed housing market that hit just as the teams would have been going in to presales.

Several high power teams were rejected because their designs contravened what has been envisioned for the area. Notably Peebles Development wanted to do a Riverfront Towers style development with no street retail and large towers on the site where Belyue's team won the rights. That team, BTW, submitted what was essentially four and six story Texas Donuts.

In the end, Spingarn got the rights to try to develop the site they have referenced in the article, Chuck Betters and Jerome Bettis were to develop the site across from the last of the Strohs holdings on Atwater and a team led by Dwight Belyue won the rights to develop the vacant parcels adjacent to and across from the state park. The other three parcels were removed from consideration as the bids for those parcels were woefully inadequate.

All bids were vetted by professional staff that forwarded their recomendations to the EDC board. The EDC board decisions were then reviewed and approved unanimously by Council. Some council members had their staff review the entirety of documentation around the bid process and found nothing untoward.

Let me be very, very clear. At no time did Kilpatrick or any of his staff have a voice in who was selected or how the proposlas were reviewed. It was entirely EDC professional staff.

For Josar or his editors to imply that this was a handshake deal or was done without proper public vetting is irresponsible and lazy journalism at best. Cynical muckraking and deliberate distortion for circulation gains at worst.

[Detroitnerd]

So not only are lots of Bing's appointees former Kilpatrick people, Kilpatrick and company put together this whole deal for him? Yeah, no wonder he works for a dollar a year.

[Blueidone]

Geeezzz...is it even somewhat possible that his motives were good? That at the time this project was developed it was a great idea? That Bing and the EDC had no way of knowing that the market was going to go to hell? That he chose not to take a salary because his company pays him enough to live on?

There's doesn't ALWAYS have to be a conspiracy, does there?

[kraig]

Here's the thing. Dave Bing, amongst a lot of other people, benefited from having a good relationship with Kwame Kilpatrick. Now, I'm not condemning anyone for being smart enough to establish and maintain a relationship with whomever is in charge, that's just good business. But, how objective is the DDA/EDC/DEGC going to be in evaluating whether or not to go after the same mayor that plays a large role in appointing their respective boards for defaulting on a loan? By being the mayor, Dave Bing is now going to receive a free pass on any project he has been involved in for the next four years. Which is well worth promising to give up his salary in order to garner the votes needed to win the office.

PQZ, I respect your knowledge an insight on a lot of things, But, I have to humbly disagree with your position that Kwame Kilpatrick and his administration had no involvement in the decision to go ahead with this project. If recent history has shown us nothing else, it has shown us that Kwame attempted to have his fingers in every pie that he could. After all, Roger Penske, who was also involved in this project, didn't pony up $50,000 for no reason whatsoever.

[Fnemecek]

By being the mayor, Dave Bing is now going to receive a free pass on any project he has been involved in for the next four years. Which is well worth promising to give up his salary in order to garner the votes needed to win the office.

Not by the way most people do math.

The loan in question was for $698,000.

I couldn't find the exact figure as to what Mayor Bing gave up, but I found several news articles that reported it at $176,000 per year as of 2005. I presume the salary that he agreed to forfeit would have been at least that high. This means that the total amount that he has agreed to give up is approximately $704,000 [[$176,000 per year x 4 years).

Why would anyone agree to give up $704,000 in order to get preferential treatment on a $698,000 loan?

One then has to remember that, while Mayor Bing was one of the investors in this project, he was only one of them. In order for Karl's theory to be correct, Mayor Bing would have had to agree to not only give up compensation that was greater than the loan but he would have only received a portion of the benefits while taking on all of the costs, which - I want to emphasize again - were greater than the loan itself.

This simply doesn't make any sense.

Finally, I also want to emphasize that no one has pointed to a single area where this loan was treated differently than any other that the DDA/DEGC/EGC has made and that this entire matter was duly disclosed to the public when Mayor Bing began his mayoral campaign.

I believe that there are many things that one can, and should, criticize Mayor Bing and the DDA/DEGC/EGC about. This, however, simply isn't one of them.

Prior to his candidacy, Mayor Bing and a group of other investors attempted a real estate deal in Detroit. This deal has since been caught in the same economic troubles as every real estate deal in the nation.

Mayor Bing's share of this project has been moved into a blind trust. Maybe those operating the trust and those other remaining partners will be able to salvage this deal. Maybe they won't.

We'll have to wait and see what happens with this deal. However, there hasn't been any evidence presented to date that would show any impropriety.

[1KielsonDrive]

Geeezzz...is it even somewhat possible that his motives were good? That at the time this project was developed it was a great idea? That Bing and the EDC had no way of knowing that the market was going to go to hell? That he chose not to take a salary because his company pays him enough to live on?

There's doesn't ALWAYS have to be a conspiracy, does there?

The older and more experienced you become, the more suspicious you should be. Life has a way of teaching you that lesson. NO, there doesn't ALWAYS have to be a conspiracy. But YES, you should always look for and expect one. Particularly when it comes to politicians.

[Blueidone]

1KielsonDrive...I don't know how old you are, but I'm 60...age has nothing to do with it.

I agree with Fnemecek's assessment until someone proves otherwise.

[iheartthed]

It means nothing other than KK was trying to do what all politicians do, which is score political capital by facilitating developments that the citizens want by bringing in people who are willing and [[seemingly) able to create them.

Which begs the question... What exactly is Mr. Bing's real estate development experience that makes him qualified for heading such a project?

[kraig]

Not by the way most people do math.

The loan in question was for $698,000.

I couldn't find the exact figure as to what Mayor Bing gave up, but I found several news articles that reported it at $176,000 per year as of 2005. I presume the salary that he agreed to forfeit would have been at least that high. This means that the total amount that he has agreed to give up is approximately $704,000 [[$176,000 per year x 4 years).

Why would anyone agree to give up $704,000 in order to get preferential treatment on a $698,000 loan?

One then has to remember that, while Mayor Bing was one of the investors in this project, he was only one of them. In order for Karl's theory to be correct, Mayor Bing would have had to agree to not only give up compensation that was greater than the loan but he would have only received a portion of the benefits while taking on all of the costs, which - I want to emphasize again - were greater than the loan itself.

This simply doesn't make any sense.

Finally, I also want to emphasize that no one has pointed to a single area where this loan was treated differently than any other that the DDA/DEGC/EGC has made and that this entire matter was duly disclosed to the public when Mayor Bing began his mayoral campaign.

I believe that there are many things that one can, and should, criticize Mayor Bing and the DDA/DEGC/EGC about. This, however, simply isn't one of them.

Prior to his candidacy, Mayor Bing and a group of other investors attempted a real estate deal in Detroit. This deal has since been caught in the same economic troubles as every real estate deal in the nation.

Mayor Bing's share of this project has been moved into a blind trust. Maybe those operating the trust and those other remaining partners will be able to salvage this deal. Maybe they won't.

We'll have to wait and see what happens with this deal. However, there hasn't been any evidence presented to date that would show any impropriety.

I see your point. I'm not condemning anyone or accusing anyone of impropriety. I'm pointing out that there are a lot of things [[perks) that come with being the mayor tat makes it well worth giving up the salary. A free pass on a no interest loan being among them. Access to the City's two pension boards, the procurement process and the alphabet soup [[DEGC/DDA/TIFA/Brownfield Redevelopment/EDC etc.) can be parlayed into amounts that far exceed the $704,000.00 that you pointed out.

Just look at Bing Steel. Prior to the election the company had been cited for a number of violations. Does anyone honestly believe that the B&SE Department has been writing citations for Bing Steel since Bing has been elected?

The benefits of being the mayor far exceed the salary. If you don't believe me, there's a guy living in Southlake that you may want to check out.

[1KielsonDrive]

1KielsonDrive...I don't know how old you are, but I'm 60...age has nothing to do with it.

I agree with Fnemecek's assessment until someone proves otherwise.

You got my take on it. I stand by it. I got your take on it. I disagree. Anyway, that's what were posting here for - to debate it.

[1KielsonDrive]

BTW, Fnemecek makes good points and presents his information to back them up. I'm still a skeptic. Politicians, as well as others, have been known to lay down for a lot less than a couple hundred thou. I'm not saying Bing has, I'm just saying why not debate it. Which is what is happening here. I'm listening.

[1KielsonDrive]

And, if you remember correctly, KK was immune from criticism when he became mayor, and we see what happened to him. No one should be sacrosanct.

[MichMatters]

BTW, Fnemecek makes good points and presents his information to back them up. I'm still a skeptic. Politicians, as well as others, have been known to lay down for a lot less than a couple hundred thou. I'm not saying Bing has, I'm just saying why not debate it. Which is what is happening here. I'm listening.

You debate something with measurable truth or fact it it. Unless you have something otherwise, at this point it's baseless speculation which you can theorize about. That's not debate; it's idle speculation. Just want to be clear about the difference between the two. You can't just make a speculative rumor or personal hunch and "debate" it. There is nothing to debate; hell, it's probably not even conjecture.

[1KielsonDrive]

You debate something with measurable truth or fact it it. Unless you have something otherwise, at this point it's baseless speculation which you can theorize about. That's not debate; it's idle speculation. Just want to be clear about the difference between the two. You can't just make a speculative rumor or personal hunch and "debate" it. There is nothing to debate; hell, it's probably not even conjecture.

MM, you still have a hard on [[??), so to speak, over something or other I've said in the last 25 years. I suspect it has nothing to do with DetroitYes, or maybe it's my take on religion. In any case, if I was to agree with you completely, totally and 100%, you'd still have a hard on. Go for it. Get it out of your system. This is your little group therapy - for free.