Bill Henry explains city plan to buy The Senator Theatre

Baltimore City District 4 Councilman Bill Henry explains the city’s plan, below. Questions I posed  are marked in blue with the councilman’s responses are italicized.

It should be noted that Astrogirl also had questions for the councilman, but I won’t post those without permission. Besides she is likely to want to do that herself. 🙂


Dear 4th District community leaders and stakeholders:

I just wanted to make sure everyone was up-to-speed on what exactly is happening with the Senator Theater.

The Mayor announced this past weekend that the City would purchase the note from First Mariner and ask them to cancel the auction scheduled for April 20th – http://www.baltimoresun.com/business/bal-md.senator12apr12,0,3729845….

Monday, on the advice of the City’s Law Department, CHAP postponed their hearing on placing the interior of the Senator Theater on the landmark list until after they finish approving their interior guidelines policy.  A vote on both is now expected at their next meeting – Tuesday, May 12th, 1:30pm.

Yesterday, First Mariner agreed to cancel their auction –
http://www.baltimoresun.com/business/bal-bz.senator15apr15,0,7919565….

If the bank auction had proceeded, the bank would probably have been happy with any bid at or above $350,000, because they would have also been able to force the City to pay up to $600,000 (the City’s guarantee) to make up the difference.  Plus, the bank also has liens on the house Tom owns on Orkney (next to the old diner lot) and a lien on his home in Sparks – in theory, they could have auctioned off ALL THREE and as long as they got $350,000 TOTAL, they would have been satisfied – which put all of us in the position of worrying that any speculator could have plopped down a couple hundred thousand bucks and then let the Senator sit vacant for a few years until the economy improved before they did something with it.

The expectation now is that the City, after purchasing the note, will hold its own foreclosure auction.  Unlike the bank auction though, any bidder will have to be willing pay whatever they bid at the City’s auction PLUS the $950,000 of the First Mariner note. We expect no other bidders because anyone who would be willing to do that could have done so already at any time.

This does not in any way preclude anyone from coming forward to bid against the city, correct?
If that were to happen, however unlikely, is the city willing to counter the bids? If so, how high?

What will happen at the City’s foreclosure hearing is that only someone willing to spend $950K or more for the Senator will bid – which will, in all likelihood, only be the City.  The City would probably not try to outbid such an offer, but realistically speaking, anyone who could make it could have come forward at any time in the last several months and done this for less – the payoff on the loan was under $920K just a few weeks ago, before First Mariner accelerated the foreclosure and started adding on legal fees and additional penalties.

The reason that some kind of foreclosure auction MUST happen is that there are hundreds of thousands of dollars of other debt tied to the property that can only be wiped out by foreclosure – until they are wiped out, NO ONE will be able to operate the Theater profitably.

This brings up another point. I’ve not seen/heard how the city’s plan will deal with the amount owed to the state. To truly clean the slate doesn’t that have to be handled?
http://www.mddailyrecord.com/article.cfm?id=11270&type=UTTM

That’s why we have to have our own foreclosure auction – that foreclosure will wipe out the $600K + owed to the state and another $100K + in third-position judgments against the Theater.

And, isn’t Tom’s home also held as collateral within the state loan? So, until the state debt is worked out, even if the city releases the home, the state still has claim to it?

Yes, this is still an issue, but it’s not part of the City’s offer because the City can’t make the State release their lien.  What we can do – and is part of the City’s offer – is say that we will release our lien, in the hopes that the State will follow suit.  State Senator Conway was quoted in one of the news stories as saying that she was trying to convince the State’s Department of Housing and Community Development to agree to release the lien.  I spoke with Delegate Maggie Macintosh on Monday and I believe she was trying to help as well.

Once the City owns the Theater, it will put out a request for proposals to own and/or run the Theater as an entertainment venue; specifics on the RFP process will be announced as they’re developed.

Feel free to check in with me at my work address if you’re interested; if I know something new, I’ll be happy to share.

Thanks!

– Bill
Bill.Henry@baltimorecity.gov


So, from where I’m sitting, it looks like the plan still seems to hinge on:

  • Board of Estimates approval to pay the 1st Mariner mortgage
  • State of Maryland’s debt being erased (in this scenario by the city’s own foreclosure auction)
  • The City not being outbid at their own foreclosure auction.
    As unlikely as it sounds, it remains a possibility

I would suspect that if  this plan does not continue to proceed, we could expect to see 1st Mariner’s auction reinstated.

I would, therefore, like to suggest that supporters contact state officials including those mentioned by Councilman Henry (State Senator Joan Carter Conway & Delegate Maggie MacIntosh) and encourage them to ensure that the plan proceeds, but moreover, to emphasize that the community should have a voice (individually or via the SCT) when it comes time for the city to resell or leasing The Senator Theatre.

-T. Harris

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