Minor difficulties: Hotel owner, bank at odds
Charlottesville’s most-hotly anticipated building project, the Landmark Hotel, has erupted into controversy, as $24 million in bank loans disappeared last week, according to the hotel’s owner, Internet millionaire, Charlottesville native, and UVA alumnus Halsey Minor.
“It’s a mess,” says Minor. “I’ve already got my money in this. I put up $7 million in equity up front. They had until Friday to pay $1.1 million, and they just didn’t. They flat-out did not pay.”
Minor, who says he’s considering litigation, says the only silver lining with Georgia-based Silverton Bank is that the alleged lack of explanation gives him more legal leeway.
“It’s actually easier for me now,” says Minor, “given that they didn’t try to say that they didn’t pay because I didn’t do something.”
That's a contention with which Silverton Bank disagreed in a statement issued on Friday November 14, the day after Minor's comments hit the Hook's website.
"We disagree with Mr. Minor's comments," the statement read. "Construction continues at the project site, and the funding of the loan is proceeding per the terms clearly specified in the loan agreement."
That same day, Bill Goggins, chief contractor on the project for Norfolk-based Clancy & Theys, said that any problem had been resolved.
"The money has been paid from Silverton," Goggins said, "and work continues."
Indeed, on the morning of Monday, November 17, the sound of saws and the sight of workers atop the nine-story structure were there for all passers-by to see and hear.
According to the project's developer Lee Danielson, the issue with the money was not the bank's but Minor's. Danielson says that Minor has "unfairly maligned" Silverton and has "not been in default," and that the trouble could have begun when Minor introduced some "owner-initiated changes" which, Danielson says, could have led the bank to cut off its funding.
"The way construction lending works," says Danielson, "is you put in your equity, and the bank has its debt, and if there are changes in the scope of the project, and those change orders are not presented to the bank, the bank is under no obligation to continue to fund the project, unless they know where the money is coming from to fund those changes."
Pressed on whether this was the case with the Landmark, Danielson says, "The loan documents are the loan documents, and they're very straightforward."
Where such a turn of events would put Minor is unclear, but Minor says that despite the public spat with his lender, he will remain as the project's owner.
“I own it, and I’m not selling it,” says Minor. “People have asked me to sell it to them, and I’ve said no. I’m going to deal with the issues at hand and find financing that’s fair once the market improves, and we’ll carry this project whole.”
If Minor has his way, Danielson won't be along for the ride. Minor has begun calling Danielson the project's "former developer," though Minor has declined to respond to the Hook's request for elaboration, and Danielson says he's not about to step aside.
"I can say with certainty," says Danielson, "that I will be in this project until the end."
This is not the only transactional woe of Minor's at present. Most recently, Minor has been rebuffed in his effort to buy Miami’s historic-but-closed Hialeah Park racetrack, which Minor admits he offered to purchase without having visited the site.
Earlier this year, New York-based auction house Sotheby’s sued Minor over his refusal to pay for a painting he bought at auction in May. According to the suit, the Charlottesville native and CNet founder won Edward Hicks’ “Peaceable Kingdom with the Leopard of Serenity” with a bid of $9.6 million but failed to pay for it and two other paintings.
On October 1, Minor countersued, claiming that he has “elected not to pay” Sotheby’s because, he claims, the auction house failed to inform him that “Peaceable Kingdom’s” previous owner had given the painting to Sotheby’s as a means of paying off his own debt to the auction house, and thus the auction house’s advice and appraisal regarding the painting were tainted.
Asked to address the fact that Sotheby’s and he are telling quite different stories (including a $1 million discrepancy over the amount Minor bid at auction), Minor said, “Of course they are. Do you really think Sotheby’s is really going to own up to what they did?” A Sotheby’s representative did not immediately return a reporter’s call at the time of this post.
Additionally, Minor appears to be taking a hit in the California real estate market. In March 2006, he purchased a palatial glassed-in mansion in the Los Angeles suburb of Bel Air featuring a manicured courtyard, a full gym, and an unspoiled view of the city for the sum of $20 million. Now, Minor has put the home back on the market with an asking price of $12.9 million, a possible loss of $7.1 million.
Minor says that he’s selling the house at such a reduced price because upon buying the house, he found several leaks that required “hundreds of hours of painting and caulking,” for which a court awarded damages on which Minor refused to place an exact figure.
Minor asserts that neither the Sotheby’s suit nor his sale of the house are indicative of anything about his present financial well-being.
“What does my house in Bel Air have to do with the fact that the bank didn’t send a check?” says Minor. “Halsey Minor paid; the bank didn’t pay. People can twist facts all they want.”
All this comes eight years after Minor stepped down as CEO of CNet, the tech industry news website he co-founded in 1992 and built into one of only two Internet-based companies to join the Nasdaq 100 index in 1999 alongside the likes of Intel, Microsoft, and Home Depot.
When Minor left CNet in 2000 at the age of 35, he received a retirement package worth a reported $200 million. In 2004, with an estimated net worth of $286.1 million, Fortune ranked him the 15th richest person under 40, sandwiched between golfer Tiger Woods (14th at $295 million) rapper and music mogul Jay-Z (16th at $286 million).
In a recent Portfolio magazine profile, Minor– who recently plunked down $15.3 million for one of Virginia’s most historic plantations– downplayed any suggestions that he should become the governor. Still, he supposed he’d make a good one because he’s “very creative,” and has “faith in my own decisionmaking process.”
–last updated 10:10am, November 18
November 12, 7:26am headline: "Hotel stopped, and Minor's talking lawsuit– again"
November 12, 4:05pm headline: "Minor on hotel: 'Halsey minor paid; the bank didn't'"