By New Times
By New Times
By Robrt L. Pela
By Robrt L. Pela
By Katrina Montgomery
By New Times
By Robrt L. Pela and Amy Silverman
By Katrina Montgomery
Fife Symington's partnership with Chicanos Por La Causa to build the Mercado retail and office center in downtown Phoenix was hailed by community leaders in 1986 as a visionary step that would help rekindle a deserted downtown.
Nine years later, the Mercado sits nearly empty. Symington, now governor, has filed bankruptcy, hoping to avoid fulfilling personal guarantees he and his wife made to six union pension funds as backing for a $10 million loan.
Here's what happened as the Mercado went from vision to disaster:
May 1986: Phoenix City Council approves a plan submitted by Symington Company and Chicanos Por La Causa, a nonprofit community group, to build the Mercado. Council sets July 1, 1987, deadline for Symington to secure financing.
June 25, 1987: Council approves an eight-month delay to allow developers to secure financing. Symington promises to show proof of loan commitment by July 17, 1987.
July 16, 1987: William Earle Miller, an investment manager for the firm Mitchell Hutchins Institutional Investors Inc., is contacted about arranging a long-term, $10 million pension fund loan for Symington's partnership. The pension loan would be used to pay off a short-term, $10 million First Interstate Bank construction loan.
October 15, 1987: Miller commits up to $11.1 million in pension fund financing to Symington's limited partnership. The partnership pays Miller a $10,000 fee for arranging the financing--a fee that later is alleged to be illegal. As part of the loan commitment, Symington pledges to use union labor to construct the project.
February 1, 1988: The U.S. Department of Housing and Urban Development approves a $2.7 million grant to the City of Phoenix, which plans to lend the money to Symington's Mercado partnership. Mercado developers pull permits to begin construction.
June 25, 1988: After months of delay related to federal approval of the city HUD loan, heavy construction on the 127,000-square-foot Mercado begins.
November 23, 1988: McMorgan & Company, a San Francisco-based money management firm, assumes control of union pension fund assets after improprieties in Miller's handling of pension funds are discovered. Those improprieties include the acceptance of improper payments for processing loans.
April 29, 1989: Miller is sued by union pension funds in U.S. District Court in Phoenix. The lawsuit charges he engaged in racketeering, violated securities laws and received unjust compensation while investing more than $250 million of pension funds in failing Arizona real estate projects.
August 25, 1989: Preleasing for office and retail space in the Mercado is slow. "It's empty, yes," says co-developer Pete Garcia of Chicanos Por La Causa.
September 14, 1989: Cost of Mercado rises to $15.3 million, from the initial cost estimate of $14.5 million.
December 1, 1989: Mercado holds gala grand opening.
March 24, 1990: Arizona State University announces plans to relocate its downtown campus to the Mercado, where all office space and one third of retail space sit empty.
May 5, 1990: Arizona's first Hispanic art museum opens in Mercado.
June 29, 1990: Symington personally guarantees repayment of a $10 million permanent loan provided by the union pension funds. His wife, Ann, also signs a guarantee, promising to repay the loan from any community property she shares with Symington. Symington submits a December 31, 1989, financial statement to pension funds stating the couple's community property, as of June 1990, is worth about $12 million.
July 10, 1990: Anchor tenant C. Steele's restaurant closes doors after failing to pay its Mercado rent.
February 26, 1991: Symington narrowly defeats Democrat Terry Goddard in run-off gubernatorial election.
April 27, 1991: Symington's first proposed state budget as governor includes a $432,000 appropriation that helps ASU cover its annual rent of $568,900 at the Mercado.
May 1991: McMorgan & Company officials and Symington hold heated discussions over Mercado loan-repayment problems.
May 31, 1991: Symington's personal financial statement is voluntarily submitted to McMorgan & Company The statement claims Symington has a net worth of negative $23 million--suggesting his estate has suffered $35 million in losses in less than a year.
June 14, 1991: Union pension funds amend racketeering civil suit against Miller to include the Mercado loan. The suit claims Miller violated federal pension fund law by receiving "a $10,000 loan-processing fee when the borrower (Symington's partnership) accepted the loan commitment."
October 10, 1991: McMorgan & Company notifies Symington that it is ready to foreclose on the Mercado and auction it. A trustee's sale is set for January 17, 1992.
November 1991: Resolution Trust Corporation asks the FBI to conduct a criminal investigation into Symington's role in the Esplanade development, which was funded, in part, by Southwest Savings and Loan. Symington was a member of the thrift's board of directors in 1983 when the thrift invested $30 million in the Esplanade.
December 16, 1991: RTC sues Symington and other officials of Southwest Savings and Loan, seeking $197 million in damages related to the thrift's failure. The government accuses Symington of receiving "millions of dollars of unwarranted revenue" related to the Esplanade.
December 24, 1991: Union pension funds file suit to remove Symington's partnership as managers of the Mercado. Symington files a counterclaim, alleging the pension funds have received money to cover delinquent loan payments and are blocking Symington from leasing property.
January 24, 1992: Trustee sale for Mercado canceled as union pension funds and Symington continue negotiations.
January 31, 1992: Symington submits a financial disclosure statement to the secretary of state that fails to include the value of his real estate projects.
February 4, 1992: Mercado project misses U.S. deadline to create 235 jobs, a condition for receiving a federally backed $2.7 million loan from the City of Phoenix.
February 7, 1992: Symington submits amended financial disclosure statement to the secretary of state, showing positive equity in his real estate projects. This disclosure comes eight months after Symington told McMorgan & Company he had a negative net worth of $23 million.