Hollywood Commissioners to Burn Pile of $3.5 Million at Tuesday Meeting
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In doing so, the CRA will remove the last bit of leverage it had for recovering the $3.5 million that it first loaned to developer Gary Posner's in 2003, when his HART project was making fabulous promises it couldn't keep. When HART went broke in 2006, the city desperately recruited other developers and finally found one in May 2007. That developer, WSG, would buy out HART, thereby assuming the $3.5 million in debts he owed to the CRA.
Having got this deal from the city, WSG then said, "How's about we don't pay you that $3.5 million after all?" And in its infinite wisdom, Hollywood said that sounded just swell.
Which seems crazy, but hey -- that's Hollywood government. The development agreement was amended to remove the language dealing with that $3.5 million. But if Hollywood taxpayers were outraged (big if, I know), then their elected commissioners had the good fortune of having forgotten to make another alteration to that development agreement: the one whereby the city released the mortgages it held on the property that WSG was to develop.
Granted, the city is obligated to do so by the terms of its revised deal with WSG. But not really more obligated than was WSG to pay that $3.5 million that was the condition of the first agreement. I'm no real estate attorney, but why can't the city just make the same argument that WSG did last year? "Sorry, we thought we could make this work. But not in this economy. So, umm, either pay us the $3.5 or get lost." Sure, WSG can sue, but for the city litigating still might be cheaper than saying goodbye to $3.5 million and losing control of that big chunk of prime downtown real estate.
Instead, it appears the city's intent on suing poor Posner, who seems to in no shape to pay it back. So good luck with that. Here's a piece I wrote about this mess in August. And here are the backup documents for that agenda item. Flip to page five for the closing punchline, where there's a box checked indicating that the legislation has "no budget impact." Nah, I don't feel an "impact" when $3.5 million goes missing from my budget either.