Hotel owner, developer tell different tales

Construction on the nine-story, 100-room luxury hotel on the Downtown Mall is about to grind to a halt — or is it?

The owner of the $30 million Landmark Hotel is saying that the Georgia bank financing the project has fallen behind on payments for a $24 million loan. As a result, he said, the project’s army of construction workers have not been paid since September and will cease work by the end of the week.

Yet the hotel’s developer, Lee Danielson, tells a different story.

“I’m the developer,” he said. “We’re still building. We’re still working.”

Danielson suggested that the hotel’s owner, Halsey Minor, is perhaps “a little confused” about the financial health of the ongoing boutique hotel project.

“He’s not a real-estate guy,” Danielson said. “He keeps his own counsel. I don’t know why he says the things he does.”

Danielson added that he is unaware of any problems with the project’s $24 million loan, which is underwritten by a subsidiary of Atlanta-based Silverton Bank called the Specialty Finance Group.

“Maybe Mr. Minor knows something I don’t,” Danielson said. “But I doubt it.”

Minor, however, said he has paid $7 million in equity but the bank has paid only $4 million of its $24 million commitment. Silverton Bank, Minor said, missed a $1.1 million payment deadline Friday.

“I’m not the one paying now,” Minor said. “I’ve put in my equity.”

Minor, a millionaire and co-founder of high-tech news Web site CNET, said that he might sue over the missing payments. He added that he believes the bank may have been affected by the global credit crunch and is unable to finance such a pricey project.

Cristi Kirisits, a spokeswoman for Silverton Bank, said in a written statement that the bank intends — and has the wherewithal — to honor its financial obligations.

“It is against bank policy to comment on any individual loan or project,” Kirisits said in the statement. “Notwithstanding that policy, the bank is in the position to honor any and all of its commitments for each of its projects in accordance with their terms.”

The project was originally slated to wrap up by summer 2009 but is facing a significant delay, Minor said, as he must resolve the issues with Silverton Bank and secure new financing at a reasonable interest rate. He may also have to find a new construction company, he said.

“I have a resignation letter in my hands” from the general contractor, Minor said.

Other companies involved with the Landmark Hotel project — such as contractor Clancy & Theys Construction Corp. — have declined to comment, referring all questions to Minor.

Minor said that the money has been cut off, so he is not sure how the project’s developer expects to keep construction ongoing.

“If Lee Danielson can figure out a way to keep the project going on Monday, he’ll be the world’s best developer,” Minor said.

If Danielson’s optimistic view of the hotel project proves correct, Minor added, he would be happy to be proven wrong.

“God bless Lee,” Minor said. “If he can get it to happen, then I’m all for it. I don’t know. Maybe he’s got some genius way of getting it done without the bank paying.”

The conflicting accounts were a bit perplexing Wednesday. When asked why his story differed so sharply from Minor’s, Danielson replied: “I suggest you Google him and see what else he’s gotten up to.”

Minor lately has exchanged lawsuits with auction house Sotheby’s Inc. The company sued Minor on Sept. 2 after it said Minor had not paid for three paintings, including Edward Hicks’ “The Peaceable Kingdom with the Leopard of Serenity” for a reported bid of nearly $10 million. In response, Minor filed a class-action suit against Sotheby’s, alleging that the firm had concealed a financial interest in the paintings’ sale.

Minor’s legal entanglements with Sotheby’s have nothing to do with the Landmark Hotel’s troubles, Minor said. The construction woes are simply a matter of money not being delivered from the bank, he said.

After reading Danielson’s comments Wednesday on The Daily Progress’ Web site, Minor laughed and called them “humorous.”

Minor declined to comment further.

“He can go and do his thing,” Minor said. “I’m just not going to engage.”