Bankruptcy suit reveals details about Turner's tries to develop Westport waterfront
Group from Nevada attempted to buy loan secured by 43-acre tract
Former industrial land that Patrick Turner planned to turn in to Westport Waterfront remains undeveloped. (Kim Hairston, Baltimore Sun / February 27, 2013)
In 2008, the City Council and Mayor Dixon approved the issuance of $160 million in bonds to pay for roads, sewer and water lines and other infrastructure at the site. It is the largest such deal the city has ever authorized, said Kim Clark, executive vice president of the BDC.
The arrangement, called tax increment financing, would allow the city to pay for the construction work and then repay the bond holders with property taxes generated by the development. If tax revenue from Westport were inadequate, Turner's development company would be required to supplement the payments.
But the city could not find anyone to buy the bonds.
"It ran smack into the recession," Brodie said. "The TIF market absolutely dried up."
Without the infrastructure, development partners who planned to build structures at the site began to drop off, Brodie said.
"Sometimes, it's purely timing," Brodie said. "It should happen at some future date. ... I'm not less excited about it today."
Neighborhood leader Keisha Allen said members of the Westport community hope Turner can resume his plans but they're more focused on getting the city to resurface their main thoroughfare, Annapolis Road, and improve lighting, landscaping and signage.
"We have a plan of how we want the neighborhood to work," Allen said. "No one feels like they're stuck because of the waterfront."
Fighting to save Westport
In mid-2007, Turner negotiated a $30 million loan with Citibank Global Markets Realty Corp. to pay for the work being done at Westport. The loan was secured by the 43-acre tract Turner's companies held. By 2010, the recession had taken a toll, and Turner's development group was not able to make payments, according to court filings.
That year, Citigroup agreed to sell the loan to Turner for $8.5 million. Turner turned to Fore for help, and Fore and others made payments to stave off foreclosure, court documents show. But the Westport group was never able to secure sufficient financing to buy the loan.
"Over the last two years I have made a major commitment to the Westport project," Fore said in an email. "It is one of the most exciting real estate development projects in Baltimore, with the potential of creating an exciting lifestyle community and thousands of new jobs."
Last July, Citigroup dropped the purchase price to $7.1 million. The bank declined to comment.
Seeking a partner to buy the loan on their behalf, Turner and Fore connected in mid-November with an investment firm from Utah, Vision Capital Partners LLC. Days later, Citigroup initiated foreclosure on the Westport land.
Vision quickly conducted due diligence on the property, according to court documents. During the holidays, Vision offered Citigroup $5.5 million for the loan. The bank considered the offer inadequate and did not make a counter offer, according to court records.
While Vision and Citigroup dickered, it appeared to Turner and Fore that final terms were close. Then, in mid-January, Vision dropped out of the negotiations — but not before passing along what it knew about the Westport property and the Citigroup loan to three Nevada men, court filings say.
The Nevada group, who formed a company called Warhorse-Baltimore Real Estate LLC in mid-January, entered into a contract with Citigroup to buy the note without Turner and Fore's knowledge. (Warhorse is not affiliated with War Horse LLC, the real estate development company recently formed by Scott Plank, a former Under Armour executive.)
Warhorse intended to acquire the loan and foreclose on the Westport land, according to a $225 million lawsuit that Turner and Fore filed Feb. 20 against Vision, Warhorse and their principals. Turner and Fore allege that the two firms violated a confidentiality and nondisclosure contract, misrepresented themselves and conspired to profit from the property's foreclosure sale and resale of the loan.
Ed Bailey, Vision's managing partner, referred inquiries to their attorney, Ezra S. Gollogly, who declined to comment. None of the Warhorse principals, two of whom have been in personal bankruptcy, responded to interview requests. Neither Vision nor Warhorse have filed court documents responding to Turner and Fore's complaint.
According to Turner and Fore's lawsuit, Warhorse never closed on the loan's purchase. Warhorse filed a bankruptcy petition in Nevada on Feb. 21, listing Citigroup as its major creditor. The bankruptcy could be intended to prevent Citigroup from negotiating with other potential purchasers of the loan.
"Citibank wants this project to succeed," said Kenneth B. Frank, an attorney representing Fore and Turner in their suit. "They were very helpful and cooperative ... for a long time."
Citigroup scheduled a foreclosure sale of the Westport property on Valentine's Day, but the auction was canceled after a construction company and land consulting firm filed an involuntary bankruptcy petition against Inner Harbor West LLC.
Turner is attempting to have the bankruptcy converted to a Chapter 11 filing, which would allow his company to attempt to reorganize its finances and might prevent the Westport land from being sold.
Turner and Fore remain confident that the project can be saved.
"I am committed to seeing this project succeed and look forward to a quick resolution of the legal hurdles," Fore said. "Our goal is to finalize the transaction with Citibank so the project can move forward."
Turner said his team is "in the final stages of re-capitalization." But for the Vision-Warhorse saga, the refinancing would be done by now, he said.
"Westport is a dynamic and complicated project," Turner said. "It has the potential to make an enormous contribution to Baltimore City."