Breaking Down Bankruptcy: GGP

Sorry folks, did you miss me? Think back . . . decades ago you too were approaching the end of your last semester of college. You were busy right? Well its good to be back and discuss the finer points of bankruptcy law. I'm not an economist or even an economics major but as a journalist, I have the benefit of calling on the knowledge and wisdom of economics professors.

I spent my weekend in correspondence with Joe Pomykala, a professor of economics at Towson University who specializes in bankruptcy law. Hopefully after reading this, you will have a better understanding of the intricacies of chapter 11 bankruptcy in relation with General Growth Properties.

Chapter 11 bankruptcy allowed GGP to freeze it's debt of $4 billion and avoid interest payments to its creditors. Additionally, all legally binding contracts such as leases and labor contracts which exist outside of said bankruptcy can be accepted or rejected at the company's discretion.

While in bankruptcy, GGP may take out new loans which must be paid before the existing debt which are referred to as DIP (Debtor In Possession) loans. The interest rates for said loans are substantially lower than those of the company's existing loans.

Next, GGP develops a restructuring plan to reorganize and streamline it's operation, which creditors vote over. Creditors are usually paid less than the original contract allows. However the creditors should receive payment equivalent to the sum negotiated under chapter seven liquidation.

It should be noted that creditors of the preexisting debt may not necessarily receive cash as payment. In some cases, creditors receive stock in the restructured company. The bakruptcy and restructuring process may take as much as two years to complete. When asked if the process seems unfair, Pomykala says it is legalized theft.

GGP Files For Bankruptcy

Just in from WBAL radio AM 1090, General Growth Properties, the Chicago based developer has filed for bankruptcy.

"Our core business remains sound and is performing well with stable cash flows. We believe that chapter 11 is the best process for restructuring maturing mortgage loans, reducing the company's corporate debt, and establishing a sustainable, long-term capital structure for the company," said Adam Metz, chief executive. [Steve Goldstein, Marketwatch.com]

GGP currently has more than $25 billion in debt to pay off. On Wall Street, shares of the company closed at $1.05 Wednesday, tumbling 97 percent over the last fiscal year.

GGP has said in a statement that it has secured a commitment for $375 million in bankruptcy financing from Pershing Square Capital Market, the hedge fund group that owns more than 25 percent of the company.

On a more local level, the company will continue to operate, though under increasing scrutiny from Howard County government and residents. I do not believe their current financial predicament will affect the company's plans to redevelop Town Center.

I've called GGP in Columbia and Chicago, still no quote regarding the bankruptcy filing. I've just made contact with Greg Hamm. I will obtain a quote from Hamm sometime after noon. I'll post quotes and more information as it becomes available!

-The Gonzo Journalist-

Cy Paumier On GGP: Uncut!

The last part of my interview with Cy Paumier focused on General Growth Properties. This portion is insightful to say the least and I feel that podcasting it will benefit the public. Click HERE to listen.

Do you agree with Cy Paumier's opinions on General Growth Properties? What are your opinions after hearing this portion of the interview?

Cy Paumier

Go to any of the village centers and look around . . . what do you see? Most likely shops and concrete and bricks. Who worked on planning and designing those village centers? Cy Paumier did.

Paumier grew up in Canton, Ohio. He says growing up in Canton was somewhat similar to Columbia in the sense that the town had a concept of a village center and a black population close to 20 percent. Paumier received his bachelors in Ohio in landscape architecture. From there he went to Harvard for his masters in urban design.

By the time he was working on Nun's Island in Montreal, he heard about Jim Rouse and Columbia through the press. He moved into Bryant Woods in 1969 and went to work for the Rouse Company as land planner.

"The people that moved here in the early years were obviously pioneers in the sense that they knew they might be living next to an African American family or somebody else, some other nationality. So you didn't move here unless you were prepared to be a part of an integrated experience with people of all backgrounds. And I think that made for a rather exciting community. "

In 1972, with the economy in recession, Paumier left the Rouse Company and joined Land Research/Design International with several friends and former Rouse Company employees. LRD worked on The Woodlands among other projects. In 1976, LRD rewrote Columbia's zoning ordinance, mandating that no more than four town houses could be built in a row.

While on the topic of housing, Paumier comments that of all the townhouse developments in Columbia, his favorite happens to be the one where Elizabeth Bobo lives, in Harper's Choice.

So what hasn't worked in Columbia and what has? In Paumier's opinion, cul-de-sacs.

"Maybe the one thing that didn't work as well was the Cul-De-Sac which at the time everybody thought was God's gift to the city planners. But it turns out its probably safer to live on a Cul-De-Sac but it also doesn't help to encourage a sense of community because you don't get any linkage.”

Symphony Woods, he says was never fully realized because there was no real plan in mind for the open space area, no paths, no amenities, nothing but Merriweather Post Pavilion to draw people in and nothing after to keep them.

"No one's ever really cared enough about it to do a plan, CA hasn't been encouraged, nobody in the community has been saying we ought to create a great park there. So along comes General Growth [Properties], General Growth's got a couple hundred acres that they've got to develop right? They've got all the land in the world to develop, why don't they just focus on what they own. I mean they don't have to start taking CA's land . . . its crazy!”

Paumier agrees that 10 percent of the trees in Symphony Woods are dead and need to be removed. Sunlight, he says, is the key to a great park. With all of the trees, dead or alive, there isn't enough light getting through to make Symphony Woods a functioning park. Part of his plan is to remove the dead trees and install paths and a central water feature. He wants to see the woods become a children's park.

On the brighter side, Paumier says the education system has worked, the diversity has worked and the village center's he helped design still work.

"I think the neighborhood village concept is the single most important concept and to the extent that all but maybe one or two of the village centers are working.”

Q & A With Greg Hamm

I First met Greg Hamm at the March 5th public hearing for ZRA-113. I had seen him before at other hearings nestled in the back with his cadre but had never approached him. When I informed him of my intentions he agreed to do the interview. I'm thankful for the opportunity.

Inside General Growth Properties is a labyrinth of meeting rooms, offices and corridors. I set up the GL-2 in a large conference room lined with window panels taller than most men, overlooking the lake front. Despite what I've been heard about Hamm in previous interviews, I find him to be affable, conversational and highly intelligent.

In fact we a sort of philosophical discussion after the interview in which I found Hamm to be a classicist. In the unfortunate event that GGP does go under, I have no doubt he will find a job teaching the love of wisdom to eager college students.

(Left) Bankruptcy Concerns ::::: (Middle) Debt To Pay ::::: (Right) Barbara Russell

(Left) 10 Year Phases ::::: (Middle) Keeping The Vision ::::: (Right) Housing Units

(Left) Night Life ::::: (Middle) Business Strategy

A Conversation With Barbara Russell

"You ran into people wherever you went, except the mail box (laughs), never at the mailbox! When I would go shopping at the Giant in Wilde Lake, it would take me literally hours to get out of there, not that I was shopping so much but you know you'd have a conversation in every isle, in isle four with Helen and you know that's how it was with everybody. You'd go to the grocery store and you'd spend an eternity there because you met everybody you knew and you just had conversations."

One summer day in 1967, Barbara and Charles Russell were driving down Route 29 from Baltimore to visit friends in Rockville when they noticed the do not enter sign near the development of Columbia had been removed, so they entered. In July, they moved in, become two of the first 100 residents in Columbia.

"There was almost nothing in Columbia at the time, there wasn't even a village center. In fact, when we drove around there were these little muddy circles and we asked somebody what they were and they said oh those are going to be cul-de-sacs. And we said what the heck are cul-de-sacs?"

At the time, the Russells had followed their jobs at the Social Security Administration from California. Before moving to Columbia, they had lived in Woodlawn and even had to get married in Washington D.C., because it was illegal for an interracial couple to marry in Maryland.

"When I married Charles, my family was dead set against it and they felt and told me that they thought that I would forever be living on the fringes of society and my children."

Russell says that for most of the early residents, Columbia was their first experience in an integrated community. She recalls the day an older couple moved into the apartment above them. They mistook Charles for the maintenance man, requesting that he help them move in.

"So he did, he helped them move their stuff upstairs and when he was all finished he said let me introduce myself, I'm your neighbor Charles Russell, from the apartment down below."

42 years later, Russell thinks things have changed, that after James Rouse stopped driving the Rouse Company, the bottom line took the wheel instead of the vision. In her mind, the biggest problem of early Columbia was public transportation. When asked about current problems, she spoke about General Growth Properties.

"GGP is not giving anything to the county, it just wants the density and zoning changes worth billions and is not agreeing to pay for the costs of infrastructure to pay for affordable housing, to pay for cultural amenities, its not, it doesn't want to pay and hasn't promised to pay and hasn't agreed to pay for anything. And now it can't afford to pay for anything. And so it would be in my mind, a real rip if you will off to the taxpayers, to allow them to do that without any of the trade offs."

Emily Lincoln's Vision

Emily Lincoln says that in the early days, some realtors sold homes selectively based on race and put sold signs on homes until they could sell to a diverse buyer in a sort of forced integration.

“I'm sure that the house we bought was one of those houses because it was already up and it was appeared sold but the sales person said oh it just fell through and I think I could get you this house.”

Lincoln has been an associate broker with Remax for 40 years. She first heard about Columbia in October of 1969, while working for a Missouri senator. Her husband spent his lunch hours searching for a house.

Like many early residents, the Lincolns moved to Columbia for the affordable housing. In November, they bought one for $18 thousand and moved in the day after Thanksgiving.

“People come here now largely for the schools, although I think a lot of minority people come here for the acceptance for the welcome that they have and the feel. I always notice mixed couples white man and black woman or the reverse would be very comfortable here.”

Bring Back The Vision

Lincoln is a staunch supporter of General Growth Properties and their plan to revitalize downtown Columbia. That's why she started Bring Back The Vision, a volunteer organization that educates the public about the new 30 year master plan.

“I think what we need is exactly what GGP is offering, which is a downtown that's walkable, where you can go from Symphony Woods to the mall to the lake front if you're willing to do that much walking. Where you can go and shop and sit outside and have coffee and wine with friends and that's what we miss and that's what we don't have and that's what we're not going to have unless people get behind GGP and it's effort. Stop seeing it as the greedy developer.”

Lincoln has a message for prospective residents. Participate and look ahead to all that Columbia can be. There can be so many wonderful cultural opportunities she says.