Second Tampa Channelside condo developer declares bankruptcy

Last summer, dozens of people sued The Place at Channelside to get their money back on condos they felt they overpaid for in 2005.

On Wednesday the developer had had enough. Key Developers Group and its owner Fida Sirdar asked for Chapter 11 protection.

His is the second bankruptcy filing this year among Channelside condo developers. Towers at Channelside LLC declared insolvency in January.

Sirdar completed two eight-story towers last year but many investors who paid top dollar during the housing boom wanted out of the 245-unit complex at Channelside Drive and Washington St.

You've got to sympathize with both parties: The developer who built with confidence knowing he had bona fide buyers and the buyers who realized too late that imploding home values would skin them alive.

Comments

[Patty]

James... Please tell the whole story. A family member of mine is one of the people who had a contract for a condo at The Place.

Not all the people who bought were investors. Nor were the only people suing, investors either.

I won't get into specifics, but there were many issues written about in the lawsuits that have merit. Please take the time to read the suits before posting on your blog - you would be enlightened that there's more to the story than just some group of buyers regretting their decision.

I know my family member feels bad about the whole experience, because it is a nice building overall. But promises that were made were broken (and I'm not talking about investment promises!) and that, combined with the developer knowingly allowing the majority of purchasers to be speculators, is what caused this mess.

And by the way, even though I'm just as mad about the speculators, they too had promises broken and deserve relief from the damages caused to them with this project.

Are you aware of any other condo projects in Florida that had 90+ lawsuits filed against the developer (nearly 36% of the buyers)? You won't, because there were real issues at play here that no one in the media wants to admit or report.

Sorry to be harsh, but I just wish the media would stop for a second and research the merits of cases like this before making assumptions.

[James Thorner]

Your point is well taken, Patty. I know the project was officially over schedule after two years had elapsed. But I was only borrowing the words of the buyers' own attorney, Harry Coe, who told me the main reason for demanding a return of deposits is that the value of the units had collapsed. It's completely understandable that a buyer would get the willies if he or she bought with inflated prices in 2005. I wish I had renegotiated with my builder. I'm now sitting in a property 50K less than I paid in 2006. And it's not a pleasant feeling.

[Harry L. Coe, IV]

Hi James, I just wanted to add to your blog and clarify a couple of things concerning 'The Place at Channelside'- first, you are correct, during the Spring of 2007 a number of aggreived purchases in/at 'The Place at Channelside' did in fact file Law-suits seeking the Rescission of their Contracts to purchase at 'The Place' (and the return of their security deposits being held in an Escrow Account) after the Developer, Key Developers Group, L.L.C. again (for the second time) failed to perform on time and deliver substanitally completed units by April 15, 2007- the original completion dates were set for the Fall, 2006 (a half-year earlier) which was voluntarily extended by the execution of an "Addendum" at the request of the developer, by each purchaser. This in effect extended the time that the developer had to complete the building from the originally quoted completion date within "Two Years" as mandated by Federal Law- this was done in good faith and voluntarily by these so-called "speculators", who could have simply demanded a refund at that point and walked away, but instead they gave the Developer one last chance to perform by signing off on these "Addendums". During these delays of course the condominium market did in fact change for the worse, making this more about market timing, and less about shrinking returns. While our clients (my office represented 14 of the 90 or so units in suit) did nonetheless feel the sting of the Condominium bubble-burst, they were still fully prepared to "take their medicine" and to close if the developer had performed and delivered on or before the new, extended completion date of April 15, 2007- this did not occur and our Clients were not willing to wait any longer, thereafter. In addition, the quoted measurements of the actual units themselves were changed by the developer, due to a computational error, rendering each quoted unit about 6-8% (on average) smaller in terms of BAS square footage owned, than originally promised when the contracts were signed (though the interior dimensions apparently remained the same)- this formed another separate legal basis for rescission, under Florida Law. When we first spoke last Summer, about 30 or so suits had been filed by a half-dozen attorneys seeking rescission and refunds- today that number stands at over 90 (just over a third of the units at 'The Place'). However, despite your assumption in your blog, it was not these suits which led to the Developer filing Bankruptcy on March 5- it was the imminent Foreclosure suit, filed by the project's main lender, KeyBank N.A. for over $49 million dollars- this was the primary justification for the Bankruptcy, not the pending Condominium suits (the vast majority of which were in the process of being amicably resolved amongst the parties when the Bank filed for foreclosure in February). You seemed unaware of the $49M foreclosure suit or its role and effect(s) in this matter. In that suit the Bank sought to take over the property itself, and had scheduled a hearing on March 6, 2008 to have a Receiver Appointed to do so- this date is significant, as the Bankruptcy was (apparently) filed tactically by the Developer on March 5, the day before this Receivership hearing was set, to forestall the appointment of the Receiver, and to allow the Developer to remain in possession of the project (Bankruptcy is said to "automatically stay" all State Court litigation upon filing). The developer will of course seek to restructure their outstanding loans and obligations with their lender, Key Bank as well. While in an adversarial position with the Developer, I and my client's do wish them and the project the best outcome and am hopeful that through the reorganization mechanisms available in Chapter 11 Bankruptcy, that the Developer can/will emerge financially solvent and that this project will have new life breathed into it- realistically however there will have to occur a change of market conditions in both the local condominium market as well as the greater, overall Tampa Bay real estate market for this too happen. Perhaps more time will allow these key changes and events to occur- that is after all one of the key tenants of a Chapter 11 Bankruptcy filing- to give a struggling business more time to meet obligations and remain solvent in the interim. While adversarial, I personally do like Mr. Sirdar and would like to see both his current project, 'The Place', and his proposed future ones (Mr. Sirdar recently won City of Tampa approval to erect yet another 30+ story tower on the remaining 1.4 acre parcel of this site) suceed- however my role in this litigation is to seek to advocate for our clients and to seek to strike a fair balance between our clients legal rights and interests and those of the Developer. I just wanted to clarify those points for both yourself and your readers. Thank you. Harry Lee Coe, IV, Esq.

[Harry L. Coe, IV]

Hi James, I just wanted to add to your blog and clarify a couple of things concerning 'The Place at Channelside'- first, you are correct, during the Spring of 2007 a number of aggreived purchases in/at 'The Place at Channelside' did in fact file Law-suits seeking the Rescission of their Contracts to purchase at 'The Place' (and the return of their security deposits being held in an Escrow Account) after the Developer, Key Developers Group, L.L.C. again (for the second time) failed to perform on time and deliver substanitally completed units by April 15, 2007- the original completion dates were set for the Fall, 2006 (a half-year earlier) which was voluntarily extended by the execution of an "Addendum" at the request of the developer, by each purchaser. This in effect extended the time that the developer had to complete the building from the originally quoted completion date within "Two Years" as mandated by Federal Law- this was done in good faith and voluntarily by these so-called "speculators", who could have simply demanded a refund at that point and walked away, but instead they gave the Developer one last chance to perform by signing off on these "Addendums". During these delays of course the condominium market did in fact change for the worse, making this more about market timing, and less about shrinking returns. While our clients (my office represented 14 of the 90 or so units in suit) did nonetheless feel the sting of the Condominium bubble-burst, they were still fully prepared to "take their medicine" and to close if the developer had performed and delivered on or before the new, extended completion date of April 15, 2007- this did not occur and our Clients were not willing to wait any longer, thereafter. In addition, the quoted measurements of the actual units themselves were changed by the developer, due to a computational error, rendering each quoted unit about 6-8% (on average) smaller in terms of BAS square footage owned, than originally promised when the contracts were signed (though the interior dimensions apparently remained the same)- this formed another separate legal basis for rescission, under Florida Law. When we first spoke last Summer, about 30 or so suits had been filed by a half-dozen attorneys seeking rescission and refunds- today that number stands at over 90 (just over a third of the units at 'The Place'). However, despite your assumption in your blog, it was not these suits which led to the Developer filing Bankruptcy on March 5- it was the imminent Foreclosure suit, filed by the project's main lender, KeyBank N.A. for over $49 million dollars- this was the primary justification for the Bankruptcy, not the pending Condominium suits (the vast majority of which were in the process of being amicably resolved amongst the parties when the Bank filed for foreclosure in February). You seemed unaware of the $49M foreclosure suit or its role and effect(s) in this matter. In that suit the Bank sought to take over the property itself, and had scheduled a hearing on March 6, 2008 to have a Receiver Appointed to do so- this date is significant, as the Bankruptcy was (apparently) filed tactically by the Developer on March 5, the day before this Receivership hearing was set, to forestall the appointment of the Receiver, and to allow the Developer to remain in possession of the project (Bankruptcy is said to "automatically stay" all State Court litigation upon filing). The developer will of course seek to restructure their outstanding loans and obligations with their lender, Key Bank as well. While in an adversarial position with the Developer, I and my client's do wish them and the project the best outcome and am hopeful that through the reorganization mechanisms available in Chapter 11 Bankruptcy, that the Developer can/will emerge financially solvent and that this project will have new life breathed into it- realistically however there will have to occur a change of market conditions in both the local condominium market as well as the greater, overall Tampa Bay real estate market for this too happen. Perhaps more time will allow these key changes and events to occur- that is after all one of the key tenants of a Chapter 11 Bankruptcy filing- to give a struggling business more time to meet obligations and remain solvent in the interim. While adversarial, I personally do like Mr. Sirdar and would like to see both his current project, 'The Place', and his proposed future ones (Mr. Sirdar recently won City of Tampa approval to erect yet another 30+ story tower on the remaining 1.4 acre parcel of this site) suceed- however my role in this litigation is to seek to advocate for our clients and to seek to strike a fair balance between our clients legal rights and interests and those of the Developer. I just wanted to clarify those points for both yourself and your readers. Thank you. Harry Lee Coe, IV, Esq.

[Ari Hinkelberger]

Hey Harry.
Nobody is going to pay 200K for those things. Not today. Not next year. Not in 2010.

Aint happenen brother. The choice is really simple. Walk from the whole property or short sale the loan with the lending institution.

Only a fool would think that the Tampa economy could support 15K condo units at 250K+.

Come on. Total greed. And the whole gang got caught. Just like the guys who purchased Yahoo at 156 ten years ago. I feel sorry for the tenats. They will have to wait upwards of 8-10 years to get back to level par on those mortgages. Anyone who purcahsed one of those units made a horrible financial move.