Month: February 2024

Were new Renton apartments part of a Ponzi scheme?

Written by Randy Corman 3 Comments

I was surprised to see an article in the Seattle Times today featuring a photo of one of Renton’s newest apartment buildings under a headline that included the words “Ponzi scheme.”  The Seattle Times story (behind a paywall) describes the far-reaching bankruptcy of  Bellevue firm iCap and their associated LLCs, including Colpitts Sunset LLC which developed the Sunset Terrace Apartment building in Renton Highlands.

Seattle Times iCap bankruptcy story features a photo of the Sunset Terrace Renton Apartment building overlooking the climbing pyramid at Sunset Neighborhood Park

 

The painful bankruptcy has apparently come as a shock to many investors, who believed that they were loaning money at a fixed interest rate to help build needed housing, and that the loans were safely secured with substantial equity in real estate.

Instead, iCap, Colpitts Sunset LLC, and their other inter-related business holdings have apparently been operating in the red for many months, and have allegedly used new investor cash to cover interest payments to past investors.  This realization has led some investors to file a lawsuit against iCap, and even describe the arrangement as a Ponzi scheme, although the authorities have not called it that at this point.

The lawsuit filing describes the complex nesting of LLC’s that form iCap, and provide some background regarding why investors could have believed these were safe investments.  There are people that have put significant savings into these companies, and have been severely hurt by this.

I’ve also attached the Colpitts Sunset LLC bankruptcy filing document, which includes a matrix of hundreds of creditors, investors, and tradespersons that might be left holding the bag for construction costs of the Renton apartments after the Colpitts bankruptcy.

While this is indeed a sad story for those who have lost their investment money or performed uncompensated work, I am hopeful the Sunset Terrace Apartments and their occupants will be okay.  Colpitts Sunset LLC had sold this apartment complex to new investors last July, around the time they filed their bankruptcy paperwork.  The new investors payed $44,000,000 for the building, and they seem to be doing a fine job of running it.

The details in the lawsuit suggest the apartments in Renton may have been completed in part with money investors thought was targeted at Senior homes in Kenmore and student housing at University of Washington, both projects that have apparently not even broken ground.  If this is the case, this sad situation is another unfortunate reminder about how hard it is to put the money together to fund needed housing in today’s expensive, high-interest-rate environment.

I’m not an attorney, and it is up to the courts to decide whether this was a fraudulent scheme or a case of desperate money managers working to keep a real estate enterprise afloat.  It’s grim news in any case.

Sunset Terrace was sold on July 25, 2023 to Olympia Hotel Group for 44 million dollars, per King County Records

 

 

King County purchases the former Renton Red Lion; future plans remain unclear

Written by Randy Corman 12 Comments

In my blog entry of November 30, I provided documents describing King County’s anticipated purchase of the former Renton Red Lion Hotel.  The documents show the County was choosing to purchase the damaged hotel  instead of repairing it to save cost.  Their future plans for the building and the site were not revealed.

That purchase was recently completed, and the questions have not been answered regarding their intended use for the property.

Here is a news story announcing the purchase.

 

https://www.connectcre.com/stories/king-county-buys-former-hotel-in-renton-for-36m/

Your voter pamphlet is with your ballot in this Renton election

Written by Randy Corman 5 Comments
If you vote in Renton, your King County Voter “Pamphlet” arrived with your ballot. It’s a single folded sheet of paper since there is only one item on the ballot.

 

Many of us wait until we’ve received our King County voter pamphlet, typically a stand-alone booklet, before sitting down with our ballot and voting.

But in this election, there is no reason to wait.  Open your ballot now, and you will find your voter pamphlet.  Since there is just a single item on the ballot, the “pamphlet” is a large page folded up inside the same envelope as your ballot.

The voter pamphlet in the ballot does not have the full text of the initiative, so I encourage voters to go to the online voter pamphlet which does have the full text.  That can be accessed here.

 

 

All Renton’s Mayors past and present urge “NO” vote on Initiative 23-02

Written by Randy Corman 3 Comments

Mayor Pavone has joined with Renton’s two retired Mayors, Denis Law and Kathy Keolker, in asking voters to reject Initiative 23-02.

They agree that higher wages could benefit our community, but feel that this is not the right legislation to achieve it.  They have co-authored and published the following letter with their specific reasoning and concerns.

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Renton voters have a decision to make on Feb. 13 on an initiative that is more heavy-handed than meets the eye. The catchy slogan fails to inform you that the initiative goes well beyond wages and creates new labor regulations the city will be required to enforce for every employer operating in the city.

As your current and former mayors, we urge you to read beyond the slogan before you cast your vote.

Why is this so important that the three of us are writing to you now?

The initiative requires a simple majority of those casting a vote to pass and, if passed, could only be altered in the future by another vote of the people. In other words, to make any change or improve the regulations it imposes, it will be expensive and slow, eroding the resilience of our community.

We can agree that wages being increased will help our community. We value thoughtful decision-making over locking ourselves into the flawed initiative process.

From the vantage point of the mayor’s office, we’ve seen our community survive through some of the most challenging economic times of our generation. The Great Recession and the COVID pandemic demonstrated the value of being nimble, responsive, and able to pivot quickly to sustain through crises. We were able to act, through city council action, to adapt regulations to economic conditions in support of our businesses and residents. We will have less flexibility in our toolbox if this initiative passes.

So what would be made law on top of a nearly $4/hour jump overnight that businesses will have to absorb?

The initiative would impose new labor regulations mandating that employers prioritize part-time employees by offering them additional hours before considering new hires or subcontracting work. This would be required to be documented by the employer and certified by the city and failure to comply involves penalties and fines. In addition to these stringent hiring regulations, the initiative establishes protections against employer retaliation and opens the avenue for civil litigation in case of violations.

Will this solve the affordability crisis? No. Will this protect our workforce? No. Will this new regulatory function cost taxpayer dollars? Yes. In short: We believe that instead of yielding positive outcomes, this measure will inadvertently cause more harm than good.

Increased costs to the consumer and closely regulated operating requirements enforced by city government is not the recipe for a successful business.

The notion that mandates impacting local small businesses and nonprofits should be decided at the ballot initiative is extreme and warrants rejection. Renton is not Seattle or SeaTac and if you look closely, their situations haven’t improved since adopting their wage laws, which were far different than what you are being asked to consider.

A better approach is possible by working together, as a community. Addressing wages as a singular issue, through the City Council, is possible. Continuing to work toward affordable housing options and workforce development and education is possible. Supporting our businesses to remain viable, employing more of our residents, and continued investment in Renton is possible.

Don’t sit on the sidelines. Vote no on Initiative 23-02.

Renton Mayors Armondo Pavone, Denis Law, and Kathy Keolker

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Note:  The complete text of this Initiative can be found on the King County Elections website at this link.