Miss Manners, the 1920s bible of Victorian etiquette for polite society, is quite clear on the subject of money.
"Never discuss money at the dinner table or in public, and especially not with strangers. Discussion of the ~`haves' and `have-nots': those who have met with fortune and those who have encountered financial difficulty, is not a topic for ladies and gentlemen," the book intones, strictly adhering to the Gatsbyesque maxim that if you must tell people what you're worth, you're clearly not worth enough.
It's an opinion J. Fife Symington III would seem to share.
Symington, born to wealth and bred to respect such social refinements, says his financial condition is not fair game for conversation. And the few who dare publicly broach the subject are viewed with the same disapproving eye he might normally reserve for dinner guests who drink from the finger bowl. It's simply not cricket.
Ironically, the same developer who shies away from financial questioning has been unwilling to make his business expertise the foundation of his campaign for governor. "What Arizona needs right now is a business mind," Symington told reporters as he kicked off his campaign. "The state needs a man who can provide experienced, professional fiscal management to pull it out of its economic crisis. I am that man."
While Symington is proud of his record as a real estate developer and believes his entrepreneurial spirit can revive Arizona's moribund economy, he adamantly refuses to answer inquiries about the details of that record. He responds to questions about his financial affairs--what his projects are worth, how they are faring in the market, whether his companies pay taxes--with petulance.
"I do development and I do politics. They're two separate things, and I try to keep them that way. And that's it," Symington says, dismissing the issue with a curt wave of the hand.
Symington wants it both ways--to run on the basis of a record he refuses to reveal. So far he has gotten away with this have-the-cake-and-eat-it-too style of campaigning. The state's largest daily newspapers have all but ignored the question of Symington's finances, preferring to take at face value his assertion that "everything is all right." Symington's pitch--that the proof of his success is visible on the city skyline--has apparently sold well on the political market. Six weeks before the election, he is the favorite over opponent Terry Goddard.
"I have built something," Symington says. "I can see, everyone can see, what we have built here just by looking around." It is a record that he says stands in stark contrast to that of Goddard, who has spent most of his adult life as a professional politician, insulated from the risks and Darwinian eat-or-be-eaten rigors of private enterprise.
For Symington, the difference between himself and Goddard is just that simple. While he has been out on the front lines of business, in good times and bad, wheeling, dealing, taking risks and producing a tangible product, Goddard has remained hiding inside the ivory tower of government, playing political parlor games.
But nowadays, his critics say, it is Symington who is hiding. And they claim it is a sense of fear, rather than a distaste for what he calls the "public striptease" that he says politicians are forced to perform for prying media, that prevents him from discussing his financial affairs.
The developer has built a high stonewall around the record of his financial situation, and as he moves into the final weeks of this prolonged campaign, he continues to crouch behind the parapets. But while we are denied the complete, unobstructed view of his business record--blocked by Symington's intransigence, legal barriers to private financial records and an unwillingness on the part of many in the Arizona business community to discuss the affairs of the man who may be the next governor--there are cracks and peepholes in the masonry through which we can see parts of the overall picture. Taken together, these vignettes paint a portrait of the developer's business life.
And that picture, combined with his continued refusal to dispel the persistent rumors of financial duress, points to one conclusion:
Fife Symington is in trouble.
Determining how much trouble is difficult. Some political and economic analysts say he is merely undergoing a series of minor financial setbacks brought on by a tough market and untimely decisions. Others speculate that the former Vietnam fighter pilot, who maintains that his business acumen will bring the state out of its "economic nose dive," is spinning wildly into a plunge of his own, as his real estate and development empire--battered by blows from a depressed market and weakened by poor management--literally comes apart beneath him.
Here is what we know:
* One of Symington's properties, the Missouri Court office complex at 16th Street and Missouri Avenue in Phoenix, was foreclosed in October after the building's investors (led by Symington, who was co-managing general partner of the project) defaulted on a $1.9 million loan. Several of the project's limited partners blame Symington for the building's failure and say that the developer sacrificed them to minimize his own losses and bolster his most ambitious project--the Camelback Esplanade. One partner accuses Symington of threatening to slap them with expensive and time-consuming lawsuits if they told their story.
* After the Missouri foreclosure, Symington proclaimed that all his other investments were "okay." Yet only a few weeks later, another Symington property, the Scottsdale Centre, also slipped into default when Travelers Insurance Company--which provided a $23.5 million loan to build and manage the complex at 7373 North Scottsdale Road--filed suit against Symington and his partners. Travelers claimed it hadn't received a loan payment on the property since August.
Symington, who acted as the property's general partner and leasing agent, said he and his partners refused to make payments on the borrowed money--which was accruing interest at the rate of $8,000 a day--to force Travelers to the "bargaining table" to renegotiate the loan.
The decision to build the sprawling office complex, which Symington broke ground on in 1987--after it was apparent that Phoenix was entering an economic downturn and would be saddled with a glut of office space--was what one national financial analyst calls a "clear miscalculation on Symington's part."
* Large blocks of the highly touted Mercado--a project subsidized so heavily by the city, state and federal governments that one Phoenix planning official says "a child should be able to make it profitable"--remain vacant. The current tenants border on a state of revolt, frustrated by broken promises they say Symington made to promote the facility. Worried they may not survive another year, some of the businesses are desperately planning their own promotional events in an effort to lure customers to the complex. First Interstate, which holds a $1 million loan on the project, is rumored in financial circles to want out of the development and to be merely postponing its demands on Symington until after the February 26 election.
* Federal regulators are suing Symington's company, claiming the developer failed to disclose the presence of leaking gasoline-storage tanks on one of the properties he manages, located at Third Street and Fairmount Avenue in Phoenix. The leaking tanks contaminated the surrounding soil on the property. It is, his critics say, a disturbing revelation for a man who attacked Goddard on his environmental record and who speaks of the need for businesses to own up to their environmental responsibilities.
* In total, Symington's eighteen Valley development projects and business ventures have $200 million in outstanding loan debt. His properties are so heavily mortgaged that one national real estate observer concludes that they are "probably upside down," or saddled with greater debt than their actual value. Included are three loans totaling $127 million for construction of the Esplanade, including the Ritz-Carlton Hotel and two office and retail towers.
All this Symington has described as "much sound and fury over nothing." Debt is a routine risk of doing business, and he has done pretty well, he says, amid the perils of Arizona's real estate bust. "The real estate system is always based on leveraging," he says. "The point here is we're taking private risk. Truly, it is my business and my business alone."
Isn't that an understandable and defensible position? After all, we subject those who seek to hold public office to an almost never-ending parade of indignities, probing into the most sensitive areas of their private lives without regret or apology. Why not let Fife Symington keep at least his checkbook balance hidden from media dissection? His defenders add that while Symington may be enduring a financial storm, he is certainly no worse off than any other developer in the depressed market.
Maybe so, but other developers aren't running for governor, nor have they made a successful business record and unreproachable business ethics the litmus test for political office. Symington has. And so, it would seem that he owes the public an answer to at least one question: If you say the state needs a shrewd businessperson to revive it, and you claim to be that person, why won't you prove it?
Symington insists that the $200 million debt figure would seem more reasonable if viewed in context of how much his assets are worth. But he refuses to release that information.
MDSDMDNMInstead, he makes an optimistic pronouncement that "all that debt is a sign we're alive and healthy."
"The question you should be asking," Symington has said, "is how have I remained standing through this real estate depression."
Critics aren't as lighthearted about the situation. They raise the possibility that Symington's debt and entanglement in a complex web of partnerships and investments place him in a position so tenuous that he will be forced to spend all his energies during the next few years--years he has promised voters will be spent on solving state problems--engaged in salvaging his ventures. They even raise the possibility that a sitting governor of Arizona could face bankruptcy while in office.
But perhaps more disturbing than all the doubts about his fiscal management abilities is the highhanded manner in which Symington has refused to shed light on his dealings. Numerous requests to his office for an interview to discuss his business affairs have gone unanswered and lead to a concern that stretches beyond his abilities to manage the state's budget.
Should a candidate who refuses to discuss issues that are clearly relevant to his fitness for office be entrusted with the state's top job? Will the governor's office under Symington revisit the days when those who asked the "wrong" questions got branded as nonpersons, exiled by a regal governor with no tolerance for those who persistently probed areas not to his liking?
The primary question remains: Does Fife Symington preside over a relatively healthy real estate empire? Or is he sitting on top of a financial house of cards, teetering under the weight of bad investments and crushing debt?
The bottom line is that he won't tell us. And that fact is as significant as the question itself.
THE INVESTORS IN the Missouri Court project don't want their names to be known. Like so many others caught up in the whirlwind surrounding the campaigns of both Terry Goddard and Fife Symington, they are worried about offending the man who could be Arizona's next governor. But unlike the rest of the partisan crowd, who are engaging in the usual election-year political pussyfooting, the eight peopleMD120 who acted as Symington's limited partners in the development of the Missouri Court office building have an extra reason to be cautious. According to one of the partners, the investors fear that if they tell their story, Symington will sue them.
They are primarily small investors who risked their savings and pension incomes--about $250,000 in all--in a building project with a financial heavyweight who they believed would develop and manage the facility successfully. They don't have multimillion-dollar backers, a wealthy family or other developments to fall back on. What they do have is a bitter memory of Fife Symington, and a story he doesn't want told--a story the investors say paints a picture of the developer as a cutthroat businessperson who masks a lack of loyalty behind a professed need to make "tough financial decisions," a person who, to placate his billionaire Japanese backers, sold the smaller investors down the river.
The sole tenant at Missouri Court, a three-building "garden campus" office complex, was the architecture firm Cornoyer-Hedrick, Symington's longtime personal architects and the designers of the complex. The firm moved into the buildings soon after they were completed in 1981. According to the limited partners, it was a happy arrangement. "Cornoyer-Hedrick had designed the facility for themselves and were pleased with it," one limited partner says. "We were comfortable because Symington was a partner we trusted to manage the place. He was very reputable, very personable, and we felt we could trust him to look out for our best interests. He told us he would."
All was well until early 1989, when Cornoyer-Hedrick spokespeople suddenly announced they were moving out of the complex because it no longer "suited their needs." Their new home? Symington's Camelback Esplanade, the twin-towered "world-class" development at 24th Street and Camelback.
Symington signed Cornoyer-Hedrick to a lease giving it 25,000 square feet of office space--the entire fourth floor--of the first eleven-story office tower at the Esplanade. Cornoyer-Hedrick would not comment on the terms of the lease, except to say that the move was a "very good deal."
The move, in July 1989, came at precisely the moment that the financial community was deluged with rumors that Symington's Japanese partners in the Esplanade, the Shimizu Land Corporation (whose Tokyo-based parent The angry investors, sensing that Symington had lured the architects out of Missouri Court with a tantalizingly sweet deal, confronted the developer and demanded to see the terms of the lease he was offering Cornoyer-Hedrick. Symington balked.
"He told us that we wouldn't be seeing the lease, and that if we pressed this question, or brought up this situation publicly and made a big deal about it before the election," one investor says, "he would hit us individually with slap suits. I don't have time or the money to fight the bottomless jar of lawyers that Symington could sic on me to file nuisance suits."
"All this may not be illegal. Hell, he might even consider it good business. But it sure is unethical in my book. And it shows that you don't need a mask and a gun to hold somebody up. And that's why I'm speaking up.
"If people knew how he did business, they would see why he shouldn't be governor."
Is this just sour grapes from hard-luck investors who lost a boatload of cash in the ongoing decline of the Phoenix real estate market? Maybe. But the limited partners make a compelling case against Symington, one which neither the developer nor Cornoyer-Hedrick will comment on.
"Look," another investor says, "Symington had a clear conflict of interest in representing our interests when he was directly benefiting from moving Cornoyer-Hedrick over to the Esplanade . . . He was acting in his interest, not ours."
Symington, who personally held only a one-half percent share in the project, did come out on top. He lost his minuscule share when the property went into foreclosure, but that was after he had collected a management fee for several years and had the opportunity to use the property as a tax write-off. And in the end, he got another paying tenant for the floundering Esplanade, assuaging the Japanese in the bargain.
"This project was sold to us as an effective project, not as a tax shelter for Symington, or as a safety valve for the Esplanade," an investor says. "Symington says the bad real estate market killed it, but that's not true. He was the one who pulled the switch."
If Symington did shuffle Cornoyer-Hedrick off to the Esplanade in an effort to make his flagship project appear more prosperous, it is easy to see why. During a recent weekday during the breaks and more than $1 million in improvements. In addition, the teamsters provided long-term financing through pension funds. The largest tenants include a state agency (the downtown campus of Arizona State University) and a city-supported daycare center.
As one Phoenix planning and development official puts it, the Mercado is "so subsidized it's unbelievable. Symington has every possible break, from every possible governmental entity, that a developer could want. It is probably 75 percent subsidized. It is such a sweet deal for him . . . I mean, this is pure candy.
"But he still can't lease the place up. What does that tell about him?"
To some of the Mercado's merchants, who say they are disappointed that Symington has failed to deliver promises to attract customers to the project, it tells them what they already know.
Although afraid to speak openly, because they say "the last thing we need is more trouble than we've already got," Mercado tenants privately say they are worried that if turnout at the development continues at its anemic level, they may not be able to survive the year. Some are closing their shops early on a daily basis, because they say they know the Mercado will turn "quiet as a graveyard" after the lunch crowd returns to downtown office buildings.
"We are getting some conventioneer business, but overall the place is deserted much of the time," one prominent Mercado tenant says. "We were promised better management and more promotion to avoid this scenario. But Symington has not delivered."
The only real promotional event to be held at the Mercado was Symington's campaign kickoff, a none-too-spectacular affair that merchants say did little to compensate for lack of attention paid to the fledgling development. Mercado merchants say they were promised a "gala festival" to coincide with the long-awaited grand opening of Arizona Center in November, but it never took place. Frustrated by Symington's inattention and sagging pedestrian flow through the project, the tenants are taking matters into their own hands, planning a weekend open market, with artisans, peddlers and musicians, in an effort to lure people downtown. But they do so grudgingly. "This wasn't supposed to be our responsibility," a shop owner gripes.
Others feel the developer has hurt Barron's Laing scoffs at this dismissal of the foreclosures as inconsequential. "If anybody has anything foreclosed, it is an embarrassment," he says. "Symington had two projects that clearly didn't work. He deluded himself and the investors who lent money. It's certainly a black mark on his record. It isn't a little thing."
But surprisingly, there are those who think that developers like Symington really don't care what their batting average is--as long as they get plenty of chances at the plate.
TO UNDERSTAND Fife Symington's approach to business, one must first understand how a developer thinks about making money.
Real estate insiders say the "Symington model" for developments is a simple one: Get a big-money partner, so that you are forced to sink only 5 to 10 percent of the needed money into the deal yourself. As the developer of the project, 5 percent of the project's gross will be yours as a developing fee. Then get the management contract, which can easily generate $500,000 per year in income.
Under this plan, common to Symington projects, the developer isn't directly responsible for the bulk of the debt in each project and doesn't live or die by the overall success of the development. Instead, Symington makes most of his money off the fees earned from actually organizing, building and then managing and leasing the buildings. As a result, if a project goes under, Symington may not sustain that much actual damage, because he assuredly has another project in the works to take its place, which will generate another development and management contract . . . and so on. One financial analyst put it this way:
"Look, if you put the political considerations aside, the actual business concerns of a Symington are a lot different than they may first appear. It's the cash-flow game. So what if one project goes down? If a developer has two more ready to go, he can get those contracts and keep himself liquid. And so what if they go down? He'll have four more next year to keep his heart beating.
"Greed does drive our country. Guys like Symington really make their money by being the middleman."
This interpretation of Symington's business approach is both a defense and a liability to the gubernatorial hopeful. If he is merely the facilitator of development, using other people's money in most instances, then fears that he is personally saddled with millions in debt that may drive him into bankruptcy are probably unfounded. But his method of exponential development--building, cutting losses and moving on, surviving by growing--is the kind of philosophy that experts agree contributed to the sinking of the Phoenix economy in the first place.
Laing says that "Symington is the perfect Phoenix developer."
"I've always viewed Symington's projects as classic Reagan-era development," he says. "I've always had the feeling that the projects were all a facade, an engine for consumption. Fancy hotels, office buildings, and the like are not productive assets.
"Symington says he has produced 2,000 jobs in this state. But what kind of jobs are they, really? Short-term construction jobs, maybe a few bellhops, some clerks in his stores. But he hasn't produced real long-term employment opportunities."
The ex-Merabank official, now a private financial analyst, says the "developer's mentality" is Symington's political Achilles' heel.
"He may be off the hook financially on many projects because it is somebody else's money, so he's protected," the analyst says. "I think a lot of his projects could be in debt for more than they are worth, but if he really has to, he can walk away.
"The question is not whether that is appropriate for a developer, but whether that is a style we want in a governor. After all, if a publicly funded deal goes south, one can't just walk away from the bills, now can they?"
Critics charge that Symington is indeed walking away from the bills in the Scottsdale Centre project by refusing to pay debt service until the lender, Travelers Insurance Company, is forced to renegotiate the loan.
Symington has defended the move on the grounds "that it is a good and supportable business decision."
"This is what companies do to restructure their projects. You have to force the lender to the bargaining table," he says. But in the lexicon of the average person, who is unable to "force" his creditors to renegotiate his debt, the practice may translate into "deadbeatism."
"When Symington built the Scottsdale Centre," another analyst says, "rational minds would have said this isn't needed now. The market was sagging . . . . But Symington is of the old school, where you just keep building and tell yourself, `We'll grow out of this decline.'
"That's the old way of thinking; it doesn't apply anymore. And he is paying the price for it now."
Laing agrees that Symington's financial woes at the Scottsdale Centre are the product of too much optimism and outmoded thinking.
"He clearly was too bullish on the market, and it was a clear miscalculation," he says. "He has always been of the school that the problems that began showing up in the Phoenix economy a couple years ago were temporary. He thought we were just in another post-World War II cycle of rise and decline.
"He thought there would be plenty of need for office buildings when the economy came roaring out. But it didn't. Guys like Symington were, and are, wrong."
WHEN WILL WE KNOW the truth about Symington? Is he the business whiz kid who can utilize patented free-enterprise cure-alls to work wonders on the Arizona economy? Or is he just another developer who bit off more of the juicy early 1980s Phoenix economy than he could chew, and is now watching his empire go from boom to bust?
If Symington maintains his silence, the answer may not come until after the election. His creditors have an interest in waiting until after it has been decided whether Symington will be governor to pressure him for outstanding payments that he may have accumulated. If he wins, they may decide that a powerful friend on the ninth floor of the State Capitol's executive tower is more important than a prompt payment schedule. If he loses, they may come tumbling down upon him at once--treating him as they would any other hard-luck builder in what has come to be the Death Valley of development.
"Everyone is sitting on the sidelines, wondering if he might be governor," a Republican party official says. "Because if he is, there will be some pie to hand out, and his creditors may want a piece." Is there a danger of a financially strapped Governor Symington yielding to pressures from creditors who want some favors from the chief executive? "That's a character question," the GOP source says, "that voters will have to determine for themselves."
In any event, when it comes to creditors seeking payment, Symington may be effectively "judgment proof." He has shielded himself through a multitude of partnerships and corporations, and has placed most of his earthly possessions in his wife's name, thus ensuring that if he is ultimately held liable for a financial disaster, complainants probably will not be able to recover much through the courts. It's as unlikely that he will be reduced to pauperism as it is that another developer who reached for the sky with projects built with other people's money--Charles Keating Jr.--will be seen on a downtown street corner hawking pencils.
The only judgment Symington has to worry about is to come from the voters. It is a race, one Republican politico says, to see if the developer can make it to the February 26 finish line with his lead intact before the public demands to know more than he has so far been willing to tell.
"Whether Symington is broke or not," the pollster says, "he can keep dodging the question only so long.
"Eventually he'll have to answer."
end part 3 of 3
One of Symington's properties was foreclosed in October after the building's investors defaulted on a $1.9 million loan.
Symington's Scottsdale Centre slipped into default when Travelers Insurance Company filed suit against Symington and his partners.
The decision to build the sprawling office complex was what one national financial analyst calls a "clear miscalculation on Symington's part."
CJ: must use the following pq. Thanks. DJB
The Mercado's current tenants border on a state of revolt, frustrated by broken promises they say Symington made to promote the facility.
CJ: must use the following pq. Thanks. DJB
"If people knew how he did business, they would see why he shouldn't be governor."
CJ: Here's another great pullquote above.
"We were promised better management and more promotion to avoid this scenario. But Symington has not delivered."
CJ: Ideally, let's use this one, too. DJB
"Symington could potentially be busy for the next two years working with his personal finances."
CJ: must use the following pq. Thanks. DJB
It's as unlikely that Symington will be reduced to pauperism as it is that Keating will be seen on street corners hawking pencils.
