The problem: Dollar Bank wants the $7.9 million owed by the Center on a loan the bank made to the Center. The URA wants to control what happens to the Center property and site and is holding up a sale that would generate proceeds to repay the loan.
Here’s the solution. The URA should pay off the loan with its own funds and take control of the property. It can then preserve it for the use it wishes. The Center could perhaps repay the URA at some point in the future through sharing revenues if it ever becomes a thriving concern. If it does not the URA would have the option to sell the property and let the private sector use it in a profitable manner.
This solution isn’t ideal in that as long as the URA or its tax exempt designee owns the property it will pay no property tax whereas a private owner would pay the tax. Moreover, a private developer would likely employ a significant number of workers whose salaries would be subject to the payroll preparation tax. As matters now stand the Center is paying very little in the payroll preparation tax. The too, a hotel would collect hotel occupancy tax that supports the Convention Center and other tourism development activities.
The problem with all the legal machinations is that they are eating up money in legal bills and no one is benefitting from that except the lawyers.
So, why doesn’t the URA cut through the clatter and pay off the loan and then set up a management team to operate the Center? Probably because they see no way to make the operations financially viable. If that is the case they should get out of the way and let the bankruptcy work itself out.
And perhaps Dollar Bank has learned a valuable lesson. Making loans to financially questionable ventures in which he URA is involved is probably something to avoid in future.
