Wednesday, December 12, 2007

The Garzini Letter

Cue ominous tones. A little lightening and thunder. And send "The Letter" to Juniper Ridge Partners. The one that said the City has a spine. No more amateur hour, put up or take a hike.

It's here And I wish this letter had been sent months earlier, for it actually addresses some of the concerns with Juniper Ridge Partners("JRP") and the Disposition and Development Agreement("DDA") the City has been negotiating with them.

To many it seems as JRP has been trying their damndest to get a sweetheart deal covering the next 25 years. Case in point: the only binding part of the Memorandum of Understanding" signed between JRP and the City back on Sept. 6, 2006 is the part that guarantees JRP at least $2.5 million.

The important part, you know.
11.5 For a period of the greater of (a) one year after the date of this MOD or (b) six months after the expansion of the UGB and end of any appeal periods, the parties agree to exclusively negotiate, in good faith, terms and conditions for the disposition and development of the Property (the "Exclusive Negotiation Agreement"). The City and the Agency agree not to solicit any other proposals or negotiate with any other private developer regarding the Property during the Exclusive Negotiation Agreement. At the end of the Exclusive Negotiating Agreement, if a DDA is not executed, the City Council will vote to either (a) extend the Exclusive Negotiating Agreement for a mutually agreeable period, or (b) terminate the Exclusive Negotiating Agreement. If Developer negotiates in good faith but a DDA is not executed and the Exclusive Negotiating Agreement is terminated, the City will reimburse Developer and Investor 75% of their master planning, design, legal, marketing and related expenses, up to a maximum reimbursement of $2,500,000. By separately initialing this paragraph 11.5, the parties further agree that this, and only this, paragraph 11.5 of the MOD shall be binding on the parties. The remaining provisions of this MOD are non-binding and shall be given no force and effect, pursuant to paragraph 11.2. If this paragraph is not separately initialed,
there shall be DO binding exclusive negotiation obligations on any of the parties.
So, it doesn't guarantee them $2.5M, it says 75% of expenses up to $2.5M. Big difference. Yet, $2.5M is the amount listed on the "Detail of Juniper Ridge Costs Through FY07-08".

When I read this memo from Garzini, I was struck by how many of the issues he raised should have been raised long ago. Like this one:
At certain junctures throughout the twenty-five year term, the City needs to be able to evaluate the project, including the performance of the developer and the investor, to determine whether the City wishes to continue the arrangement. We need to modify the term and add provisions to provide for scheduled review and potential termination (and related remedies if the City elects to terminate the DDA because such termination is in the public interest or is pursuing termination because of developer or investor default).
Now put this into the context of this part of the MOU:
MANAGEMENT; OPERATION; KEY PERSONNEL.
The parties acknowledge and agree that Developer was selected by City to develop the Project because of Developer's unique qualifications and proposal for development. Because of the scope and nature of the Project and the relationship between the City, the Agency and the Developer, the qualifications, key personnel and identity of the Developer are and 'will continue to be of particular concern and importance to the Bend community and its City representatives. For these reasons, the parties agree that subject to the terms of the DDA, the Developer) by and through Ray Kuratek and Jeff Holzman, will be involved in the Project through the build-out period.
I mean does any sane organization commit to 25 years of the same crew, with no performance guarantees?

Yet our City's negotiators, whether staff or council members, seem to have wanted to. Why? That's one of my big questions.

I have an open records request in for all communications between Garzini and JRP, as well as any payments to JRP. To be continued...

12 comments:

Anonymous said...

Dec 13,2007
Hwy. 97, Cooley Road steering committee meeting planned
by Bend Weekly News Sources
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A steering committee that includes three Bend City Councilors -Bill Friedman, Jim Clinton and Mark Capell - and a senior manager from the Oregon Department of Transportation (ODOT) will meet Friday to review evaluation of potential improvements to the intersection of Highway 97 and Cooley Road.

The project team will present technical evaluation of the concepts including cost, traffic operations and impacts, as well as feedback from property and business owners, neighborhood representatives, and other community members.

The meeting will be held from 1 to 3 p.m. on Friday, December 14 in the DeArmond and Sawyer rooms at the Deschutes County Service Center, 1300 NW Wall Street, Bend, Oregon. Time at the beginning of the meeting will be reserved for public comment.

The City of Bend, ODOT, and Deschutes County are working together to identify an improvement to the intersection of Highway 97 and Cooley Road that will accommodate traffic for the next ten to twenty years. The project identified through this process will keep traffic moving until improvements to the Highway 97 corridor are implemented. The City of Bend plans to select a preferred design concept for the intersection of Highway 97 and Cooley Road in the next few weeks.

bruce said...

I'll be working or I would go. I went to the last one and they seemed to be leaning toward moving the highway east.

Anonymous said...

Bruce,

Here's another perspective on the efficiency of money, public versus private.

Both me & you have both seen Tetherow & BorgmanVille ( schwab JR ).

Bauhofer got a loan of $30M to build the roads, develop the 1400 acres, and look at all the improvements, ... Then go look what $15M has brought to JR ( Borgman Homesite ), about twenty acres have had some dirt moved around, and a big pile of gravel created.

It's simply mind boggling, if Bauhofer, had been using the efficiency of money using JR techniques it would cost $500M just to develop the lots at Tetherow.

It's all like Tetherow is real, they're doing the real thing, they're using real money. ... The City of Bend, has already spent $5M for the work that Knife-River did at JR, and its NOT even paid yet, they still have to beg Wall-Street for a muni-bond sometime this month.

Perhaps this is WHY Tehterow is SO awesome efficient and CRAPTACULAR, the guys up there are getting paid, and they're humping. The guys at JR, have NO idea if they're going to get paid or when, and thus everything is budgeted 4X to cover the cost of late-payment.

Leave it to the City of Bend to find the lowest possible use and efficiency of the use of money.

Anonymous said...

Let's look at whats going on at Juniper-Ridge on the behalf of Les Schwab.

A complete fiasco. The city has NO money yet they spend it like it grows on trees.

Just the new Ingress to Les Schwab campus cost the city $5M or more, and they approved the expenditure without the money budgeted, they said "We'll just get a bond later", not even a motion to approve the bond, to date the bond still is not in place, and now rates are up, and Bend will pay top dollar, because it is a RISKY muni-cdo play for any NYC investment house.

The city is in-efficient, spends money it doesn't have, approves projects with no hope of finance.

Bend city-hall is complete without fiduciary responsibility. Old time businessmen in Bend, are going out there minds watching Bend be economically driven into the toilet.

There should be an immediate halt to all new expenditure, and any expense over $1M for anything, MUST be approved by the MAJORITY ( citizens ), this may sound in-efficient, but our present crew, is beyond wasteful, they are criminal in their waste and fraud.

Anonymous said...

The entire Les Schwab gift package of now approaching $15Million taxpayer dollars was all done in secret.

The city may get $5M soon for a cdo-muni bond, but after that the city credit will have collapsed. The bond rating of Bend will be simply too low.

The bankruptcy Bend, is just the fault of city-hall, its the fault of the Bulletin & VCB/DVA, and the cheerleaders that refuse to cover what actually goes on in Bend.

Bend is in desperate need of a new newspaper that covers Bend City-Hall.

The Bulletins editor is tied to the City of Bend Public Relations and tourism, the goal of the past five years has only been to sell condos.

The Source is only about promoting events all year round by its owner Aaron Switzer, and Mr. Switzer owns most of the event he promotes. Ergo, the financially the source is a loser, and certainly not a newspaper.

The Bulletin is a financial loser, and makes most of its advertising revenue from Les Schwab, thus they'll never comment about how Borgman ( Schwab CEO ) is stealing tens of millions of taxpayer income.

What is good for Les Schwab, is NOT good for Bend.

Anonymous said...

You forget that Mike Schmidt, CEO of the Chamber of Commerce, was involved enough with Juniper Ridge Partners that he helped Andy Anderson vet Kuratek. From the 10/19/05 CC packet, "Issue Summary: Master Developer Selection":

*

EDCO wanted KURATEK at first, because if they has used a legitimate ( tramell-crow ) outfit, the bait&switch may not have worked.

What happened is that Kuratek turned out NOT to be a push-over.

This was always a done deal, to PAYOFF kuratek $2.5M, but to give all of Juniper Ridge to Les Schwab for FREE.

Schimdt may have interviewed Kuratek 'partners' down in San Mateo, to make sure that he was a certifiable flake. The city should have used Trammel-Crow, but they would have sued the city for its corruption. EDCO&Friends NEVER wanted the County 'deed' definition of Juniper-Ridge, they always wanted the Les Schwab Private Prison from Day-One. Garzini had sold this dream to them back in 1998.

EDCO, Chamber-of-Commerce, Schwab, ... have ALL been involved in this BAIT&SWITCH all along.

They waited until OLD man Schwab died, or near death. Within days of Schwab being hospitalized, BORGMAN signed the infamous 12dec07 agreement. This HAD ALL been planned all along, they didn't even tell KURATEK.

Chamber of Commerce, EDCO, ( old-boyz to quote Kuratek ), had this outcome PLANNED ALL along. Note also that Garzini had been involved with ALL the EDCO boyz all along.

Garzini is going to have his private-prison at Les Schwab.

Anonymous said...

This is all about prisons, the fastest growing business in America.

Ron Garzini is the #1 cheerleader in America for Prisons.

Like he says, "prison are like hotel without 100% occupancy year-round".

Anonymous said...

The Garzini/Kuratek is just a fraud to keep the citizens of Bend focussed away from the Les Schwab deal.

In this respect, at the end of the day, Kuratek may have been part of the dog&pony show "Fraud" all along.

Trammel Crow would have NEVER played these games, and remember the clock runs, and Kuratek gets $2k/day, and Garzini $150/day. All for help Les Schwab's Borgman create a Tire-Flipping Prison Empire.

bruce said...

I think the next few weeks are pivotal, and should be quite interesting.

Anonymous said...

Blogger bruce said...

I think the next few weeks are pivotal, and should be quite interesting.

*

Bruce,

What evidence do you have that Garzini & Les Schwab have NOT already signed off the deal?

Your assuming that its still open, but you have NO proof it is closed.

bruce said...

I've requested a copy of the Contingency Removal Agreement twice now. The first time there was no such thing, and right now I'm waiting for the answer for the second request.

Anonymous said...

Bruce,

You seem to jump around here are the players.

EDCO - economic development central oregon - a whos-who in the region that controls everything

JRP - juniper ridge partners - ray kuratek, out own Rasputin that charmed city-hall

Chamber of Commerce Bend - good ol boyz, prior mayors, but the old guard of bend,

city-hall - the new breed of liberal talking, but mindless business people and career politicians that currently run bend

central-oregon-real-estate -> chaired by judge scott cooper of crook county, who also just happens to be the executor of the les schwab estate.

***

city-hall went with JRP, because they hated the 'good ol boyz'.

EDCO wanted Les Schwab to have Juniper Ridge all along.

Garzini has been involved in the whole plan since 1998.

The same day that Borgman ( schwab ceo ) was made CEO ( dec 13, 2006 ), he did the secret LS agreement, they had to wait until old man schwab was hospitalized.

In april 07, Schwab died, and judge cooper takes over all regional disposition of schwab estate. Cooper reports to the governor regarding central oregon real estate issues and planning.

***

EDCO went along until sep 06, went it was clear that JRP wasn't going to bring in money. Money that they intended to use all along to fund the Schwab move, kuratek never knew.

Chamber of Commerce obtains JRP MOU and goes ballistic about terms, note that everything was put together by Anderson who is Garzini's old pal, and eventually bring garzini back.

***

Today of course, its a horrible mess. The secrecy since 2005 was largely the fact that the newbie poly-tick-ians running city hall, hated the EDCO & Chamber old boys. Trouble is ALL three groups had different plans for Juniper-Ridge, and were ALL spending city money on three different paths.

Today it appears that the EDCO path wins out, e.g. Schwab gets JR, city pays, and Garzini gets his dream of developing the largest private prison in America, right next to the #1 resort in America.