Gadi Leshem's California company files for Chapter 11 Bankruptcy protection
By: What Will It Costs Us
Well now another blow to the city... Ogden River Project developer Gadi Leshem is bankrupt. According to the Salt Lake Tribune, Cover-All Inc., the California based carpet installation company owned by Gadi Leshem, filed for Chapter 11 bankruptcy this month, claiming it has just $1 million in assets and $46 million in debts. When will the Standard print this story? The Trib is always ahead of Ogden.
And his property in Ogden is in default in taxes. Will it take years to move through the courts and a tax sale?
Maybe the city should be better at buying property for developers that don't have any money.
And what will be the ultimate repercussions for Gadi's stalled River Project?
So many questions... so few answers.
Update 1/15/09 3:oo p.m. MT: We're reminded that we posted a fine Scott Adams (Dilbert) cartoon, referencing Godfrey administration incompetence and hubris about three years ago. We believe it remains apropos.
Continuing comments are invited.
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42 comments:
And yet another. The business page of the Standard Examiner this morning reports that Stuart Reid's "Ashton Square" project is now officially dead. He's sold the land at The Junction it was to be built on back to the Property Reserve, the real estate development arm of the LDS Church. Link to the story is here. The project was to be a huge one, and a major generator of downtown business, as originally planned. From the story:
Plans called for the building to include more than 60 luxury condominiums ranging in price from about $300,000 to $1 million and encompassing 1,400 to 4,000 square feet, Reid has said. The building's bottom floor was to feature a plaza with outdoor dining at two restaurants, as well as commercial space for two other businesses.... Reid told the Standard-Examiner in 2007 he intended to spend "tens of millions of dollars" to build Ashton Square. At seven stories, Ashton Square would have been the tallest structure at The Junction.
Ah, sorry Rudi. I didn't notice you'd already posted this story below the Lesham story. My bad.
It's been a busy morning here at the spacious offices of Weber County Forum, to say the least.
WHEW!
The near conjunction of our last three stories brings to mind a wry earlier comment made by gentle reader Moroni McConkie, a comment which ranks among the most insightful comments ever posted on Weber County Forum:
"When FDR ran for a third term, H. L. Mencken joked that he supported FDR's reelection. "He ought to be made to bury his own dead horse," Mencken cracked. "It would be cruel and unusual punishment to permit anyone else to take over the autopsy."
Mencken's words came to mind as I read Ed Allen's Flowers-&-Darts paean to primogeniture. Ed's justification for a third Godfrey monarchy? "It basically boiled down to a desire to continue the momentum, maintain the powerful team he has recruited and finish what he refers to as 'a good start.'"
No thanks, Doc. Another four years and that dead horse will be us, buried deep in tetrachloroethylene-tainted native soil."
A bad day for Ogden, but an interesting day for Ogden journalism. Of the three stories of Ogden projects in trouble, one was broken by the S-E, one by the Trib, and one by Weber County Forum.
On one of the threads below, someone called for an audit of city expenditures. I think that happens every year automatically. But what is needed, and very quickly I think, is a come-to-Jesus meeting between the city Council and the administration regarding the city budget for the remaining fiscal year, and looking ahead as well.
The business model for the Boyer Co. development of The Junction [for which, on the mayor's assurances that we would never have to pony up, the city co-signed for the construction bond payments] presumed many up-scale condo and apartment dwellers residing on or near the property, to provide customers for the Junction restaurants and shops. The Earnshaw building project seems to be close to moribund if not already there. Reid has pulled the plug. The new owners of his property have no immediate plans for development. The office block already up still was not fully rented last time I checked. Nor is completed ground level retail space at The Junction yet fully rented, with more coming on line very shortly. Without the planned-on bump in downtown upscale residents, I don't see how the original business model for the project can work.
The question is, given where the City and its debt obligations are now, and where downtown business operators who were counting on a thriving Junction residential component to support their businesses are, what should the city government do? Where do we go from here? Time for some frank discussions between the Mayor and Council... sans rose-colored glasses... to look reality in the face and devise a course of action with damage control as its main component. If Ogden ever needed sound economic leadership in its government, it needs it now. And if the Administration is unwilling or unable to provide it, the Council is going to have to step up.
Funny you should mention that Curm. Check out what's on the Council's Work Session Agenda tonight:
Notice is hereby given that the Ogden City Council will meet in a Work Session on Thursday, January 15, 2009, at 5:30 p.m., in the City Council Work Room, Third Floor of the Municipal Building, 2549 Washington Boulevard, in Ogden City, Weber County, Utah. The purpose of the work session is to discuss the Financial Audit Report and Consolidated Annual Financial Report, the Employee Savings Program, and Council Business.
Seems an ideal opportunity for the first of what we hope will be many Council/Boss Godfrey "come to Jesus" meetups.
Terrific. Another five years these goddamned vacant, delapidated(sp) houses across the street will sit. Lesham won't pay a dime for the hundreds of code violations. He probably won't pay a dime in back taxes. I doubt he'll ever pay for the city's demolition of some of his properties. Oooh, they have a lien against the property.. that really helps when the owner is bankrupt. Likely the city will have to pony up the cash to finish the job after a few more fires and a few more times our firefighters will have to risk their safety.
HEY THANKS FOR RAMMING THIS DOWN OUR THROATS GODFREY, YOU FUCKING LOCAL INCARNATION OF DUBYA...
I swear to god I wish there was some way to recall this idiot.
"I read the news today, oh boy" ...
There has to be back-up plans and strategies ...
Doesn't there?
No regular WCForum reader is surprised that Gadi Leshem, Stuart Reid, and Jeff Lowe -- promised to us by Mayor Godfrey as Ogden's economic redeemers -- have melted down with Rockette-like synchronicity.
Most everyone here recognized all along that those emperors had no clothes.
Unlike the nation, which gets a new president in a few days, Ogden is stuck with its Herbert Hoover mayor for the next three years, whose only qualification for the job was his temple recommend.
Reaping the whirlwind.
"There has to be back-up plans and strategies ... Doesn't there?"
No, nay, never!
Inspired Leaders like Boss Godfrey do not plan for failure!
(heheheh)
On another note, I attended a citizens group meeting last evening on code enforcement for the city. The City Council and mayor wanted a management and operations study. Mr. Carson chaired the meeting and would like input on a survey he will be gathering data form the locals. Please e-mail him and partcipate at:
rcarson@citygateassociates.com
One of the subjects brought up is Ogden rentals, and out of state ownerships. If you have comments pleas e-mail him.
When will the mayor be brought to task for hiring his friends for city employment, Scott Brown, Cami Geiger, Packams daughter and "G" Train as the cities realtor? With the ecomomic downturn his administration budget should be cut.
All those involved with the community/business development offfice should offer their resignation if they have any ethics. Those involved with buying the homes along the river for the city and then transfering them to Gadi Lesham should have trouble sleeping...
Wm M, It's probably time you remove your rose colored glasses, I understand that you can't overtly denigrate lying little matty publicly, but you've got to come to grips with the truth. His lies are well documented as is his lack of wisdom, ethics and general morality. Why would this dishonest little liar have any fallback plan for projects he deemed perfectly sound, and done deals? This is the guy that was mentored by, and spoke highly for Southwick at his trial.
If you look at his choice for the river project, he chose a guy that was facing fraud charges by the state of California. He tried to hurriedly rush a few million to a very overtapped developer for his gondola hotel and downtown water park, that money would have gone straight to Orem. He's still trying to remove the Mt. Ogden Golf Course and adjacent lands into private hands.
Any fallback plans he's got point towards his original intentions, he don't turn back.
Is he going to blame the ecconomy for gadi's failure? Was it the ecconomy or fraud?
Judgement, Wisdom, scams, lies or ignorance.
MM:
"with Rockette-like synchronicity."
Love it!
Pink Floyd said it:
"Mother, should I trust the government?
Mother, will they put me in the firing line?
Ooooowaa is it just a waste of time?
Hush, my baby. baby, dont you cry.
[Godfrey's] gonna make all of your nightmares come true.
[Godfrey's] gonna put all of [his] fears into you."**
TLJ
** "Mother" from Pink Floyd, The Wall
I find it interesting how so many on this blog have been so correct for so long on their projections on just where all of the mayor's plans and projects were going while all along they have been reviled as naysayers and prophets of doom by the now failed mayor and his backers.
Riley,
I suspect that the now-failed Mayor and his backers will continue to bluster their way into new projects. They are simply in it for their own egos (Godfrey) and expected insider financial gain (backers) and are totally out of touch with reality.
Get real, people. It's time for the city council to ask a few questions of the former Pizza Delivery Boy from Harrisville who, thanks to Ed Allen's money, became Ogden's MOST FUCKED UP Mayor -- ever.
Even average citizens are now learning how totally fucked up the little guy is.
Ouch!
"Get real, people. It's time for the city council to ask a few questions of the former Pizza Delivery Boy from Harrisville who, thanks to Ed Allen's money, became Ogden's MOST FUCKED UP Mayor -- ever.
Even average citizens are now learning how totally fucked up the little guy is.
Ouch!"
Here, here. He should be tied to a stake (not stake president, just a wooden stake) and questioned until every last person in town who wants to ask has had the opportunity to quiz him until they're blue in the face.
All of their plans were brilliant, it was the economys fault. Anybody want to bet this isn't their spin?
Geebus, Rudi! I can't believe you actually have a Faux News advert banner displayed beneath your blog header.
Have you sold out, or what?
I know you're a Republican, but this is ridiculous.
Breaking News/ Politico.com:
The Senate has voted against blocking the second half of the Wall Street bailout funds, clearing the way for another $350 billion to be spent to stabilize the U.S. financial system.
The Ogden Council should write their application NOW, for funds to A/B and study extending the existing bus system in Ogden vs getting into some kind of Street Car system, in addition.
As Dan S. recently pointed out, Ogden is a 2 party system: SMART-ies and LIFT- ies. So while LIFT-ies are bemoning the demise of Ice Tower and Water Park projects for downtown, SMART-ies need to get their Application to WashingTON, for some of the $350 Billion for infrastructure rebuild.
There must be one WCF-er who has this app on their computer, ready to print. So what O-BAM-A is still on his train from Philly. By the time our pony express gits there, it will be a tie.
Approval fro the Mayor for this app??? Since when did he ask the OC Council for half the RAMP FUND apps he sends in.
Ogden's public transit system needs an updating more than an Ice Tower, Junction Water Park hotel or more downtown condo space. ALL OF WHICH would be closed on SUN, don't ya know. The current admin cannot even get the Junction to stay open on SUN., for tourists and conventioneeers.
I realize most locals spend their Sundays stealthfully documenting recent clear cutting on private local open space or blogging re saving MT Ogden lands as public and OPEN, on WCF.
ALL the more reason to be first in line for some of that $350 billion. Infrastructure REDO!?! WE NEED IT!!!!
ET,
I believe that $350 billion is part of the TARP (Troubled Assets Relief Program) for the financial sector. The stimulus bill hasn't been passed yet.
Southsider is right, the gravy in the $350 billion is for the same thing the first $350 billion was for, is what the 8 trillion the Federal Reserve has doled out is for, and what the Federal Reserve is for: To enrich and protect LARGE BANKS.
But Ogden City Government (as opposed to Ogden City) will want to get in line early for the Obama spend fest that is coming - totally serious.
As far as Godfrey and his lackeys failing left and right, and yes, being proven to be not only fools but liars left and right, well, it still snows in winter, doesn't it? This was not only entirely predictable, but predicted.
The posts for todays ECF articles are wonderful, by the way.
What should the city do? Let these failures, and all failures, fail. Only when they do, can the true renewal begin. Oh, and default on every Godfrey loan that they can. The damage to the city's credit if any, will be worth it.
(And remember, what the city, and every city, can borrow, is not so much a function of their history as a function of how loose the lending system is at the time that they want to borrow ...)
And my point is, once Obama takes office, he will, sooner or later, implement a stimulus bill that will allocate new money for regional infrastructure projects. Like public transportation. While Ogden was being held hostage, time wise, re how wonderful a Flat Land Gondola system would be for Ogden......other Utah cities, like SLC, got their act together to apply for federal funding for extension of SLC's TRAX system.
SMART-ies in Ogden can NOW rejoice,.......... after a fashion, that this miserable economy continues to lay to waste "economic development" projects proposed in the last 5 yrs or more, for Ogden ( to include flat land gondola instead of real public transportation, Ice Tower, Junction Water Park Hotel, more and more downtown Condos.........).This current economy makes many of these projects.........unreasonable and improbable.
By taking the Flat Land Gondola system OFF THE TABLE, the Ogden City Council can focus on studies of extending the existing bus system vs putting in some kind of Street car system. By the time they study that, Chevrolet may have re-tooled to make hybrid/ green friendly "trolley" cars. And Ogden can buy American.
Any kind of suggestion, by TEAM Godfrey, in this economy, to re-consider the Flat Land Gondola ........is ludicrous. Team Godfrey does not need TEAM OBAMA to tell them so.
Who cares if that gossip that Chris Peterson has been cut out of Big Earl's will is true or not!?! RE: if Chris Peterson stands to inherit SnowBasin, when Big Earl kicks the bucket. Who cares what kind of environmental tic.tac.toe Chris Peterson is implementing with chain saws on land he owns in Malan's Basin.
If Ogden City Council hammers forward with its studies of public transportation, to include bus vs street car, then Ogden City will be ready to apply for the new funding for infrastructure projects that TEAM Obama will make available, sometime in its first year. The TEAM Obama is putting together does not strike me as a group that would be impressed by the OGDEN AS THEME PARK agenda that TEAM GODFREY has been proposing. This recession came just in time. Now we can all re-focus and get down to constructive infrastructure re-building.
My attempts at humor as sometimes misleading. However, I am drawing fire.
Typical republican company. Get taxpayer money for your business, then file for bankruptcy.
One thing the Council should seriously look at is the elimination of the whole ecconomic development department. These guys have hindered almost all individual participation in anything downtown and on river as well. This bureacracy has numerous times prohibited individuals from spending there own dime and taking a risk. Moyal comes to mind as well as some that tried to buy the old Star Noodle before this silly Fisher guy got into bed with Brown. All because they're following some grandiose, silly fantasy of lying little matty's. The key for him is all the control over what and who will be allowed.
The City should condemn leshems properties and clean them up, scrape the ground bare. Place a conservation line, say 150-200 ft. from the river for a parkway and sell the properties to any individual desiring them for the purpose of building a business. This would provide for an eclectic mix and participants would own and have a stake in it. This single do all developer concept is why this thing has lanquished so. If this approach was allowed previously, my quess is there would be more than one building there today.
It's amazing that we've put up with this bureacratic BS for so long and allowed these idiots that have no concept of business making descisions as to who and what will be here.
We are now going to find out just how astute Gadi Lesham has been in building his so-called empire.
If he has had any smarts at all his real estate will not be in the defunct Cover All, Inc. Those assets will be secure in another corporation which can't be touched in the bankruptcy.
Time and the bankruptcy court will just have to determine where Gadi's real money is buried and if he ever really had any.
And let's hope to find out how many of his personal assets have been pledged to keep Cover All, Inc. afloat.
So now the question of Ernest Health and Mayor Godfrey's promotional pitch for Ogden to give them assistance to come to Ogden becomes uppermost in my mind. It is part of the same old Godfrey scenario to continue to try to use our money to bring his new friends to town.
The present nationwide financial disaster may just turn out to have saved taxpayers in lil ole Ogden some financial heartache in the form of Gadi Lesham and Ernest Health and Suart Reid and several other wanna-be millionaires whose interests were being put ahead of Ogden citizens by the Mayor.
Last fall we toured the new U. S. Foods facility on west 31 st street. If I remember correctly it was about 500,000 square feet and would employ 200 people. Imagine if someone had spent the last nine years trying to attract more of this type of business, remember all the hooping and hollering when a 3 man snowboard company came to town?
Another question- anyone know what's up with the indoor snowboard park that was supposed to open last month?
Bill
You wrote: "One thing the Council should seriously look at is the elimination of the whole ecconomic development department"
Boy O boy you sure got that right. Doesn't seem like there is going to be a heck of a lot of new development around here for a while. I figured out one time that the so called "Economic Development" department with all the high priced "managers" and their helpers were costing the tax payers of Ogden around a million bucks a year. That is money coming straight out of the city budget, not from some monopoly RDA money. The million was for a number of highly inflated salaries, a bunch of worker salaries and lots of perks like fancy cars and gold plated insurance plans. Seems it can pay real nice to be a friend of Matts.
So I can see where the city could save a million a year right off the bat by getting rid of all this dead weight that has absolutely no value in the current economic crisis, and did nothing but run us into a zillion dollars worth of debt in the past good times.
ozboy youre wrong.
your million dollar number is way way too low. the citys total revenues for 2008 per the recently published financial report were just under $74 million and the community and economic development departments budget was just under $26 million. the community and economic development department single handedly consumed 33% of the total city revenues. now you know why our city services are so terrible.
in comparison with other city's in the state like layton and bountiful during the good economic times these citys only committed between 10 and 12% of their bugdets to community and economic developments per the utah taxpayer association.
the ogden city administration is out of control when it comes to business development projects and unless the city council shuts them down our taxes are going to go through the roof in the next couple of years and if the city council doesnt shut them down we could be looking at bankruptcy.
Disgusted
How does that $26 million break down?
I was only considering salaries and perks, and that was about 2 years ago.
DNA DNA DNA Will pony up the money to save our great O town!!!
All we have to do is get BIG ASS decals slap them on all city cars trucks and snowplows (if there are any left) then all the profits that come from the wonderful fun loving geigers will flow into our city !!!
ozboy
got to get to the office but its all in the financial report. for an overview of the big picture look at pages 108 and 109 in the report.
hint look at report page numbers not the acrobat software page numbers because the two differ.
the numbers show the combined city and rda spending. if you ever doubted the citys responsible for the rda debt - dont cause we are - see page 48. just as susie van hooser said.
oh btw godfrey is writing off another $6 million of rda debt owed to the general fund - see pages 56 and 57. interseting too is the fact that two of the rda projects that he is writing off are rda projects that are healthy viable and performing. one he is writing off more than the remaining balance of the loan - see page 70 in conjunction with page 57.
got to go.
OK, if I look at pg 65 I see the Rec Center bond at $22,400,000? How much is the city bringing in lease payments? What was the total cost to build and how much do we subsidise as taxpayers for the kiddyland, Golds and Fat Cats?
These are hard real questions that can be easily answered if we have accurate data that the city council should demand.
What city money are going to Boyer for the junction condos and retail currently going in?
I like to see real competition and private enterprise come back to ogden city.
Why doesn't the Standard ask the hard questions and then research them as to accuracy? BDO funds were suppose to go for Ogdens streets, sewer, sidewalks for all the citizens not just to benefit a few acres downtown.
What will it costs us
on page 71 it states that the value of the asset is $23 million but the tenant will only pay $694,800 a year for 20 years for a total lease payment of $13,896,000 over 20 years. The city note for this project "rec center 2005 series c" bond is due in full in 20 years at $21,760,000 - read on page 64.
the difference in the bond amount and the now asset value of $23 million is the accrued interest since the bond was taken out and/or added cost over runs. these are the only explainations i can come up with.
so we built it for $23 million and locked in a lease that only nets $14 million so by my math we are locking in a $9 million dollar loss right out of the gate. im sure the administration would site that added sales tax revenues would make up the difference but as we are seeing now that was more than a risky assumption.
another example of godfreynomics.
Thanks disgusted, any way we can track sales tax revenue since that would be the only way we can assume the money they are bring back to the city coffers.
Since parking is free do we add in the upkeep of the parking terrace and security?
So they are a private business, subsidized by the city to at least $9M over 20 years, their books are closed to the public, and they stay closed on Sunday when tourists are drawn into the city to spend money.
Can I get a $70k job a year to loose money for the city?????
What will it cost us
sales taxes for 2008 were down from the prior year - page 116. next year will most likely be even lower.
Hey guys, it's worse than that.
Neilson, the Golds Gym guy, set up a separate llc that holds that 20 yr. lease. He in turn sublets the building to himself, Fat Cats and the Mexican restauant. Unlike his sweet fixed 20 yr lease with the City, he can raise those rents as he feels. The details of the subleases are none of our business being it's private enterprize. Even funnier than his percieved 9 million windfall over 20 yrs is, all the equipment is owned by Ogden City and all maintainence and related expenses are the obligation of the City. Thus the City redoing the Flo Rider after about a year of operation. People can't believe it but if a treadmill breaks and it's on the inventory list, the taxpayer must replace it.
These are the type of deals the ecconomic development folks have been putting together, and exactly why I say can the whole lot of them.
Why are they posting the Jun 2006 report? Where are the current figures?
The 2008 report is linked in the right sidebar, Curious 1, under "Government Toolkit."
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