Developer Responds to Green Bay City Attorney

The controversy surrounding the Northland Hotel redevelopment continues after Green Bay City Attorney Vanessa Chavez issued a response to allegations from five aldermen concerning actions by Chavez and Mayor Jim Schmitt on the project. Media Trackers Communications Director Jerry Bader spoke with a former co-developer of the Northland Hotel, Mike Frantz, who offered a very different story about the project fund disbursement and gap loan.

In Chavez’s statement she addressed the allegations from five alderpersons who held a press conference and filed a formal complaint with the District Attorney’s Office regarding the Hotel Northland redevelopment. In her response she discussed the “alleged default” of the First Merit bank and proposed “gap loan” for the project. However, the alderpersons claim that the default was the product of improper disbursements, and that the “gap loan” that was supposed to continue funding the project was actually intended to buy out Mike Frantz.

In a past Media Trackers article, Frantz challenged Chavez’s and Schmitt’s claims that the “gap loan” was not intended to buy him out. Frantz continued to do so in response to Chavez’s statement:

“This whole thing is about spin and positioning and posturing….The fact is that there is a little bit of confusion about default and when we were in default, and why in fact that any disbursement at the time that the disbursements went out in July, did in fact put us in default.”

 

To better understand the situation, Frantz offered a timeline of the events in which he said January 2016 was the time in which First Merit became aware of an imbalance in the construction contract and the appraised value:

“In other words the construction contract did not include a certain portion of the building that was actually included in the appraisal which in fact the appraisal was based upon income that was coming out of that particular area of the building, the lower level. So there was a 700,000 dollar imbalance and that was what was being discussed from January until May in terms of how we deal with that, whether it was going to be value engineering, whether we’re going to have to put more money in deal whatever it was.”

“That’s when the angst and all the fighting started to happen between attorneys and so on saying no we’re not out of balance, no we’re not going to change things, this isn’t me saying this by the way, and the banks and builders started to get very antagonistic and aggressive with each other and so on. We did in fact come to a forbearance in May that could’ve been fine, it wasn’t fine, at that point in time we went into default.  Everybody is talking about July being the kicker and that’s why we went into default, no, we went into default when in fact we didn’t sign the forbearance, back at the end of May in 2016.”

 

He then spoke on the improper distribution claim:

“So the next thing that happened, technically if you’re in default you need distribution that went out after that, after May was a default item, no distribution should have gone out until that default was cured, and that didn’t happen. So when the two distributions went out, however they manifested themselves and whatever accounts they went into, they were technically outside the covenant so the loan documents with the senior lender at that time First Merit.”

“I think people continue to think that they didn’t understand it, we were actually in default before the final letter that was sent to the bank which said that these are the reasons they were pulled out of the deal.”

 

Franz also denied Chavez’s claim that Franz chose to seal the court records to avoid embarrassment over the condition of his finances:

“First of all my finances are out there for open records, so I don’t know what the issue is there, secondly where they got the finances and where they made their claims and so on gets a little dirty, and the kind of stuff that it’s just too bad that this whole project has been fraught with. Thirdly my attorney came to me when I was sitting there on the sixth and said do you mind if they close the records and the files and I said I don’t care, it didn’t really matter to me one way or another, but I said I couldn’t see any reason if we got the settlement agreement resolved I didn’t see any reason to have this thing out in the public. It had nothing to do with trying to screen my financial condition and I was not the person who initiated it, they asked me and I said yes it was fine. After the settlement agreement wasn’t executed I was the one of the people who supported opening the records so that just doesn’t ring true in any way shape or form.”

 

While the five alderpersons have been the target of Chavez and Mayor Schmitt’s criticism, this is the third time Frantz has spoken out against the project, yet has received little criticism from the two. Frantz spoke on why:

“I had a relationship with the mayor for four years before, we battled with a lot of issues to try and get this thing done over the course of time and my comment to him was always no is not an answer we’ll figure it out. I think they got to know me. If they want to challenge me and talk about it i’m certainly more than happy to do that because I have the facts and truth on my side.”

“What I would say is that I don’t think that in any of that time over those four years that the mayor and his staff, which by the way the staff turned over a couple of times in those four years, ever didn’t have the passion for the Hotel Northland or wanted the best interest in the Hotel Northland or kept it in mind, I would never claim that, and that includes all the aldermen and everyone else. I would say I think they lost their way a bit, I think they made some mistakes along the way, and why they just don’t step up and say yeah we made some mistakes and let’s fix them and move on.”

“I talked to the mayor on a couple of occasions and we were going to make sure this thing got fixed and I feel a little bit like, one point during a council meeting he said on a complicated project like this sometimes some people get hurt, and I’m like this was always structured and I would never move forward on a project unless everybody won, whether it was the subs, whether it was the lenders, the city, whether it was myself, nobody should get hurt. So I kind of knew where the mayor was coming from when he made that statement, like don’t throw me under the bus Jim, It isn’t going to work.”

 

The five alderman asked the District Attorney David Lasee’s office to investigate their claims. Frantz told Media Tracker he has yet to be contacted by Lasee’s office.

The full interview with Mike Frantz can be found here: