Remember when our local politicians decided to jump into the whole Sonny Astani and Starwood/FDIC stand-off? In late May, Congresswoman Lucille Roybal-Allard, whose district includes downtown, sent a letter to FDIC chairman Sheila Bair. Roybal-Allard wanted to know if it was true that Corus Construction Ventures (CCV), now known as ST Residential was dragging its feet in regards to finishing Concerto. Her letter was prompted by complaints from Astani and City Councilwoman Jan Perry. All along, Astani has said that he suspects that CCV is bleeding him via interest payments and lawyers’ fees, and that their true intent is to foreclose on the building (update: and if they foreclose, CCV gets the third, unbuilt site). Perry says she is involved because the city is losing construction jobs due to the alleged delay, and she wants to see residents moving in to Concerto, spending money in downtown, and helping the economy. Well, Bair has written back.
If Astani was looking for backing from Bair, it's not found in this letter. Download it here. She passes the buck, saying more than once that the FDIC does not control the day to day management of CCV, and defends CCV’s actions in regards to Concerto.
She also defends the structure of the deal: “The FDIC is mandated by law to ensure that it resolves failed banks in a way that maximizes the value to the failed bank’s estate and at the least cost to the Deposit Insurance Fund. The FDIC structured the Corus transaction to meet these obligations. The partnership was structured to give CCV incentives to manage the assets in a way that maximizes the value of the assets to CCV and its partners, including the FDIC as receiver for Corus.”
In an interview, Robert Emmers, a consultant hired by Astani, says Bair has inaccuracies in her reply. He says Astani didn't default on the loan (this is an issue the two sides have long disagreed on). And as a general issue, he points out that Astani tried to buy his loan back from the FDIC after Corus failed (and before Starwood stepped in), and offered to pay 10 percent more than anyone else, if other offers were brought in.
On a larger point, Emmers references comments made by Treasury Secretary Timothy Geithner, whom he believes intended the larger FDIC loan deal to help get the economy going again, and not to end in situations like the one Astani is currently in.
Meanwhile, it's worth noting that Astani isn't the only downtown developer is this predicament. Paul Keller, a principal with the downtown's Urban Partners, was profiled in a Seattle Times story about his Burien Town Square project in that city. In default, and unable to lower prices till an agreement is reached with ST Residential, Keller tells the paper he is basically in limbo, describing talks with ST Residential as "complex and lengthy." The article was published back on June 28th, so perhaps the situation has gotten better.
· City Wants Answers over Concerto Delays [Curbed LA]