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August 27, 2014

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Jon Ralston:

Michael McDonald’s city deal gets curiouser and curiouser

Michael McDonald, Feb 28, 2012.

Michael McDonald, Feb 28, 2012.

He doesn’t have any money. He doesn’t have any experience. All Michael McDonald has is one of the sweeter deals in development history with a local government.

When he obtained his no-risk deal with Las Vegas, perhaps presaging a “We love corporate welfare” plank at this weekend’s state convention, Republican Party Chairman (and former Las Vegas Councilman) McDonald signed a contract.

I know what you are thinking: The city actually made him sign an agreement? Who knew they were that formal at Roundheels Central?

Nevertheless, despite having no experience in development but plenty of experience in juice, McDonald scored a deal that included $4 million in city funds that only Bob Coffin opposed. But he had to sign a paper that said when the lease with the city was executed for the land, he had to come up with about $140,000.

I was curious where McDonald could come up with such a hefty sum, having emerged less than two years ago from bankruptcy, his house only saved by the generosity of developer/gambler Billy Walters, who purchased McDonald’s expensive home in a short sale and let the indebted ex-councilman stick around. But where would McDonald get that sum, which the contract said had to be paid “upon execution of the City Ground Lease ...”?

He didn’t. McDonald provided no check when he came to City Hall this week to sign the documents. I suppose a wink and a nod are fine with the Goodman II council.

Alas, some pesky staffers thought maybe the city’s new partner should adhere to the accord he signed. “It’s due now, and if it is not paid, the City Attorney’s office will have to look into the situation,” a city spokesman told me Wednesday afternoon.

A few hours after I made that situation public, at 5:43 p.m. on Wednesday (I saw the receipt), McDonald came to the economic development office and dropped off a check for $141,692.81. Paid in full.

Just not by McDonald.

This is where the story gets interesting: McDonald, when he made his pitch before the compliant council, introduced the man he vanquished in a council race 17 years ago as his “consultant” — none other than Frank Hawkins, who has had success with affordable housing projects in Las Vegas and clearly was brought in by McDonald for credibility. That is, he’s built something; McDonald, not so much.

Hawkins told the council he was merely a “consultant” and might invest in future phases of the development.

Indeed, the agreement was signed twice by McDonald under two LLCs, one called Vegas1-Decatur (the location) LLC and the other called Fightin’ Irish (the prospective developer is a Notre Dame fanatic).

According to the disclosures provided to the city, there are no other investors in McDonald’s LLCs. Just him.

Both entities were formed in February, according to the secretary of state’s website. Yet neither was on the check McDonald delivered to the city late Wednesday afternoon.

That check was from National Construction Providers Inc., with an address in Reno. Yes, not at Vegas and Decatur or even anywhere near South Bend. Reno.

Why? Once again the handy SOS website provides the answer. The company president is Luther Mack, a well-known Northern Nevada businessman, and its director is Frank Hawkins.

You know, the “consultant” who fronted for McDonald at the hearing, who is now fronting him the money to ensure his sweet deal doesn’t go sour. I suppose we should all thank Reno for doing its best to help with Las Vegas’ economic development. Very generous of our northern brethren, eh?

There’s nothing obviously illegal about this transaction, and only a real stickler would say McDonald should have paid in full when he executed the lease or that he actually agreed to pay the money, not his “consultant.” But you have to believe if there are any sane, sober folks on Stewart Avenue these days, they have to be wondering why the council went out of its way to lavish $4 million on a recently bankrupt man who has never built a thing in his life and is being financed by a Reno-based operation that his “consultant” directs.

Let’s call this what it is: This is Hawkins’ project — he presented it to the council, and he is, until the federal and city grants come in, the money behind it, too.

I remain puzzled: If indeed McDonald requires two LLCs and if indeed there are no other investors in those entities, why does Hawkins need him? Why didn’t the city just sign an agreement with Hawkins instead?

I am still trying to figure out exactly what McDonald has that made him worth $4 million of Las Vegas taxpayer money.

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  1. Comment removed by moderator. ALL CAPS

  2. The part I find interesting is these units are costing about 2 1/2 times per sq. foot to build then most single family homes.

    Since most of the money is coming from the government in many ways I would be interested in knowing why it is costing so much considering they don't have to buy the land?

  3. It's Las Vegas and Nothing is as it seems. Even Jon is not what he seems.