Friday, August 9, 2019

Menominee Nation Arena developer called insolvent; builder wants the keys, says false financial data used

Two lawsuits have been filed this week against the developer of the Menominee Nation Arena.

By Miles Maguire
The developer of the Menominee Nation Arena is insolvent and should be forced to hand over control of the facility to a court-appointed receiver, a Green Bay construction company says in a lawsuit filed late Friday.

In its filing Bayland Buildings Inc. paints a bleak picture of the situation at 1212 S. Main St., where the new arena has been viewed as the key to the remaking of a former industrial area now called the Sawdust District. The facility has drawn thousands to minor league basketball games, concerts and other events since its opening in late 2017.

But Fox Valley Pro Basketball Inc., the developer, owes Bayland $13 million and is in default “of the development agreement with the city of Oshkosh, its obligations to the Milwaukee Bucks LLC and its obligations to other creditors,” the lawsuit says.

Bayland says it was told by Fox Valley that it “has no cash” and alleges that the developer and its president and primary owner, Gregory B. Pierce, “have provided creditors and investors with false financial information in an attempt to raise capital.”

In a separate lawsuit filed Thursday, local businessman Eric Hoopman says that the developer is $100,000 behind in its payments to him and should be forced to settle this debt and return $1 million in principal. Hoopman lent Fox Valley this amount at a rate of 18 percent in January 2018, court papers show.

Pierce and his wife were hit with a delinquent tax warrant in June and owe the state $26,364, according to court records. 

A construction lien of $9,000 was placed on the arena in January by Northern Metal & Roofing Co. Inc., based in Green Bay. 

Bayland said its contract with Fox Valley called for a total payment of $21.5 million. After Fox Valley fell behind on payments, the builder agreed to take a mortgage on the property to cover $13.2 million in debt outstanding. 

Pierce did not respond to a request for comment. He issued a personal guaranty for the money owed to Bayland, and the company says that he is on the hook for $13 million.

According to a filing with the Securities and Exchange Commission, 75 investors have put money into the arena. The development company said it had raised $19.7 million in debt and equity as of May 1 and was still hoping to raise $7.4 million more.

The lawsuits are the second recent setback to the city's efforts to revitalize the south shore of the Fox River. On Sunday the Granary restaurant on West Sixth Avenue said it would close this month. Like the arena, the Granary was in a development district supported by tax incentives.

But city officials say that taxpayers are not at risk of losing money because of the way that the incentives are structured. The city has not provided upfront cash, and developers do not get paid until after they have settled their obligations to the city.

The situation is "very unfortunate," said Mayor Lori Palmeri. She noted that the future of the arena site could also be clouded by lingering environmental concerns. 

The government has taken new interest in a class of contaminants called per- and polyfluoroalkyl substances and known as PFAS. But regulators were slow to issue clear guidance on how to deal with them or even to indicate whether they are present at the arena site.

1 comment:

  1. If parking is such an issue, have shuttle bus running from large vacant parking lots in the city.