Several years ago, the Municipality embarked on a second journey to develop the property on Washington Road, across from where I attended first and second grade. We began our trip with an RFQ (Request for Qualifications). The thought was that by seeking out an established developer with the demonstrated credentials to build on this site, we would avoid the delays and ultimate failure experienced with the site's predecessor project. It was a good plan and we in fact received a response and proposal from one such firm.
Then we picked the other one.
Zamagias Properties showed no experience developing residential condominiums when the firm was first selected to develop this property and handed more than $1,000,000 in TIF loan proceeds. Following a review of their website this morning, it appears not much has changed. Please see the attached letter I sent to the Commission regarding this project, more than six years ago. My letter includes the firm's original submission to demonstrate their competencies.
The Municipality's web site indicates there will be a "Zamagias update" on October 22. It is time for the Commission to move on with a developer who maintains a successful track record for developing first class projects appropriate for this site. If the Commission elects to continue its partnership with this developer, it must also insist on the developer making good on the TIF loan.
Bill
Update September 23, 2012 11:00 AM In response to today's 7:25 AM comment, Bill Matthews felt it was easier to post the documents rather than try to describe the repurchase agreement and extension.
Zamagias - MLPA Sales Agreement The repurchase section is on page 15 of the agreement.
Zamagias Agreement 6th amendment Note: The seventh amendment was in January 2012.
Update September 24, 2012 11:59 AM Here is supporting evidence of the conflict of interest mentioned in Bill Lewis' item number three of his 6:05 PM comment. Ballon Conflict of interest Ballon was the vice chairman of the Parking Authority and remained so until dismissed in July 2011.
Update September 23, 2012 11:00 AM In response to today's 7:25 AM comment, Bill Matthews felt it was easier to post the documents rather than try to describe the repurchase agreement and extension.
Zamagias - MLPA Sales Agreement The repurchase section is on page 15 of the agreement.
Zamagias Agreement 6th amendment Note: The seventh amendment was in January 2012.
Update September 24, 2012 11:59 AM Here is supporting evidence of the conflict of interest mentioned in Bill Lewis' item number three of his 6:05 PM comment. Ballon Conflict of interest Ballon was the vice chairman of the Parking Authority and remained so until dismissed in July 2011.
21 comments:
they can't be serious about sticking with these guys - but then again this is mount lebanon - the happiest place on earth
Why do commissioners continue to grant extensions? I was at the January meeting and thought I was missing something since it was the umpteenth extension. It didn't make any sense to me.
Elaine
Feller told the Tribune Review that Mt. Lebanon didn't lose any money. How can that be the case?
7:31 is confusing our town with Disneyland
or maybe not
8:33 PM. Feller is technically correct with regard to the TIF loan, and TIF loan only. If/when Zamagias defaults, the Commonwealth (taxpayers) has to pay it off.
What has not been admitted is that tens of thousands of our local tax dollars have been wasted on facilitating this farce since 2005 by the Municipal staff (legal, planning, inspection, zoning, administration, public information/magazine, traffic, engineering, etc.) as well as hundreds and hundreds of hours wasted by the commission and our various boards and authorities. And this does not include the time and cost incurred by other facilitators - the School District, County and Commonwealth.
A replacement or substitute scheme will have to start all over at square one and require a repeat of the entire lengthy process and cost.
How much real estate does Zamagias own?
11:48 AM. You can look it up on the County assessment website. There are four parcels fronting on Washington Rd. & Kenmont.
Someone brought up to me yesterday they thought possibly Zamagias Properties received special consideration along the way because one of its employees was on the MTL Parking Authority board.
First, it was not just an employee; it was the project manager for the Washington Road project.
Second, I made a related inquiry in 2005 when (amongst other things) I could not understand how an unresponsive RFQ response qualified this developer to submit a final proposal for consideration. Noting in my letter,
Rich Sahar presented an overview of the responses that were received. He indicated that a total of five (5) responses were received but that only one of those provided all of the information and documentation that was required. He went on to state that it was the recommendation of the Parking Authority Board that they request all the respondents be allowed to respond to the RFP that is scheduled to be issued as a next step in the process. Mt. Lebanon Economic Development Council Minutes, March 9, 2005
The sole satisfactory response was not from Zamagias Properties. Nevertheless, Zamagias Properties was afforded an opportunity to supplement its initial RFQ response and ultimately borrow more than $1,000,000 against a project that is as gone as yesterday.
As a consequence of my query, the Parking Authority’s solicitor assured the Parking Authority Board that there was no conflict, writing:
I have reviewed documents sent to me regarding a perceived conflict of interest issue raised by Bill Matthews. I have also reviewed my file on the 418-434 Washington Road development. After review, it is my opinion that the alleged conflict of interest is without merit … The entire process was handled objectively and fairly by the Parking Authority.
So it goes.
-- Kurt Vonnegut
Funny how things keep coming back to the Parking Authority.
Elaine
Not a conflict of interest ? Really now, lets see :
1) the general counsel of the PA Ethics Commission told me in that time frame that a solicitor of a governmental agency providing a formal conflict of interest opinion about a board member of that agency is in itself a blatant conflict of interest. Reason being that that agency solicitor is retained and compensated by that board. As simple and obvious as that ! Hmmmmm.
We had an similar situation involving a Commissioner and the then Muni solicitor around that time. Interestingly, in this latter case, the solicitors opinion was based on only information provided by the Commissioner, also an attorney; and, the solicitor ended his opinion with of course the standard disclaimer "this opinion is based solely on the facts and information provided me by..".
2) Members of the public had complained repeatedly to the Commission about the Zamagias conflict. Finally, the Commission directed the solicitor of the Parking Authority to render a conflict opinion. At the time, there was at least one, more probably two, Commissioners who were attorneys, plus the Muni solicitor, all of whom had seemingly missed law school classes on conflicts, and were not up to date on case law either.
3) There are Authority minutes that show that the then vice chair of the Authority, also being Zamagias' Dir. of Development/Project Manager for the Washinton Rd. project, was involved in preparation of the RFQ and where responses to the RFQ were discussed.
4) While the Authority put up a front of no conflict for a couple of years, board minutes in the final year or eighteen months of the Authority indicate the conflicted board individual would leave the meetings when the Zamagias project was to be discussed due to, yep, a conflict of interest - it was then a different Commission who were closely observing the Authority.
This all was just the opener to a very long list, over a very long time, of *things* that were amiss about this project and its governance.
Has there been or will there be lessons learned from this misadventure ? Stay tuned.
Bill Lewis
Perhaps the good news in this is that there is no more parking authority to do these kinds of deals.
This will all fall into the hands of the current commission (only one of which is an attorney) which has no ties to Zamagias.
It should make for an interesting conversation. At the very least, there ought to be a "poop or we are pulling you off the pot" moment.
My understanding, and maybe one of the Bill's can explain it more, is that the commission does have recourse through a couple of avenues.
First, they don't always have to extend the agreement. Second, if they decided not to extend the agreement, there is a buyback provision but I don't know how much that is. Third, Zamagias, in my opinion, has kind of protected itself by buying private property on either side of the site which would NOT be part of the buyback provision, however, if that corner lot in Mt. Lebanon was deemed blighted, why wouldn't those adjoining properties be the same?
The point is, there are very legal and very public ways to make Zamagias the fool in the end.
I posted the Zamagias Agreement and extension as an update to this thread.
Elaine
I believe the Sixth Amendment is the current Amendment,and there is no Seventh as yet as the Sixth is in effect until Dec. 2013.
The Fifth Amendment was one of very short duration - March thru Dec. 2011. The Commission then instituted the Sixth Amendment in Oct.-Nov. 2011 to make sure provisions were included beforehand specifying that all Agreement rights would legally transfer to the Municipality upon consolidation (Jan. 1, 2012).
The Fifth Amendment included a then new provision, insisted upon by the former Parking Authority board, requiring Zamagias to pay the Parking Authority $500 per month for the life of the Agreement. The Authority board was upset with extension after extension of the project timetable because the Authority had lost the parking rights and revenue from the property, but had required Zamagias to provide the Authority 18 free public parking spaces in the completed project, which kept being extended. This $500 monthly payment was incorporated into and part of the Agreement per-se, and was not part of just the extension of the buy-back provisions in Amendments 5 & 6 as I recall.
Any bets on whether the $500 per month has and is being paid by Zamagias since the Sixth Amendment went into effect ?
Bill Lewis
7:25 AM. Yes, the Municipality has options or courses of action they may take. Recall that the original development plan with all its local approvals plus the TIF are dead, fini, over. Zamagias to proceed with a development has to start all over at square one. And he has only until December 2013 to make headway.
Recall or recognize also that (1) Zamagias property assemblage consists of parcels acquired from four different owners, (2) that the former Parking Authority connected parcels sold to Zamagias for $520,000 comprise the largest size or acreage of the four, (3) that the former Parking Authority properties are at essentially the center of the overall property assemblage, and (4) the other three parcels touch or are contiguous to only the Authority's former parcels, but not to each other - in other words, they are independent or isolated without the Authority parcels, and (5) the former Authority parcels together are in fact economically feasible for development as is.
With this in mind, if Zamagias fails to do what is required under the original Sales Agreement and Amendments thereto by end 2012, the Municipality can exercise the buy-back provisions and acquire ownership of the former Authority parcels and have them developed.
Contrary to an erroneous opinion given to the Commission in 2011, the former Parking Authority then and the Parking Enterprise Fund now has adequate and available funds to purchase the former Authority parcels in question.
If the Municipality did this, Zamagias would hold title to three unconnected parcels of value far less than the total of some $1.2 million that they overpaid (largely with TIF loan proceeds).
Mt. Lebanon holds the cards here, and it is time to play hard ball with Zamagias instead of continuing to be what has been characterized as the "go-along-to-get-along patsy".
Bill Lewis
He owns a lot more than 4 properties! Many are held in the names of a corporation for that specific site.
He's a VERY rich guy John. Doesn't need TIF. I wonder if he's connected with something else that is giving him such a great deal?
Maybe the commissioners should request a list of EVERYTHING before granting another extension
A fine example of what Government involvement will do for you.
It reminds me of this:
http://www.youtube.com/watch?v=I1wg1DNHbNU
"Same as it ever was!"
There is another update on this topic. This time, a letter from the Director of Development from Zamagias Properties, who also happened to be the vice chair of the Parking Authority.
Elaine
Yes Elaine, today's Update 2X certainly illustrates and confirms things.
The public can challenge and appeal conflict of interest opinions of the type and nature described in the posts and comments; but, it would require filings with courts, extended time delay periods for scheduling and significant out of pocket legal expenses to the point that the public just throw up their hands.
And I believe some public officials well know this.
Bill Lewis
The Parking Authority had over $800,000 in uncollected parking tickets. They negotiated this sweet deal with Zamagias using their own employees. The solicitor said there was no conflict of interest and yet, Raja voted against dissolving the Parking Authority. That is why he will never get my vote.
We need tougher staff people too. Just my opinion.
Elaine
I'd never vote for Raja. In my opinion Raja is an individual of very low quality who has many character flaws.
Bill Matthews wrote,
"The Municipality's web site indicates there will be a "Zamagias update" on October 22. It is time for the Commission to move on with a developer who maintains a successful track record for developing first class projects appropriate for this site. If the Commission elects to continue its partnership with this developer, it must also insist on the developer making good on the TIF loan. "
Contact the Commission at commission@mtlebanon.org and ask them to get this moving.
Elaine
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