DEFAULT IS NOT IN OUR STARS, BUT IN OURSELVES: Part 17 — Loan On Me: Bay City State Theatre Pledged “Virtually All Its Assets” To Secure $800,000 Bay County Growth Alliance Short-Term Gap Funding (What The Hell For?)
You’d think an attorney would be a little smarter than to equivocate with such B-list ambiguity.
In a story published February 23, 2024 in Bay City’s fish wrapper, an attorney representing the Bay County Growth Alliance skated around the simple (and previously established) facts of the Alliance’s financial relationship with the wobbly State Theatre.
“The principle has not been repaid,” Charles Hewitt said in the story. “It’s an interest-only loan. Interest payments have been made. The maturity date is next year, so it has to be paid in full in June 2025.”
(It is unclear how long Hewitt has represented the Growth Alliance.)
Hewitt “could not disclose what the regular payments were and if they were current”.
Could not…or would not?
A SHORT HISTORY OF AN $800,000 COMMERCIAL MORTGAGE
The first installment of this series of news reports was published under the headline “Default Is Not In Our Stars, But In Ourselves”. Inspired by this quote from Cassius in William Shakespeare’s “Julius Caesar” (“The fault, dear Brutus, is not in our stars, but in ourselves, that we are underlings.” ), the headline implicitly conveyed my opinion that the state of the State Theatre happened because the people of Bay City allowed it.
Not all of them, but enough of them.
In the first installment of this saga, published on December 19, 2023, I queried Christopher Girard, Bay City’s 6th Ward Commissioner, about the genesis of State Theatre’s sudden financial instability.
That report revealed the State Theatre had not filed its required IRS Form 990 reports for the fiscal years ending December 31, 2021 and 2022.
However, the State Theatre’s restated IRS Form 990 for the calendar year ending December 30, 2020 (filed on November 2, 2022), the “Unsecured notes and loans payable to unrelated third parties” showed an outstanding obligation of $975,506, with total liabilities pegged at $1,013,940.
That assertion was later contradicted in a January 17, 2024 report.
In late December 2023, I requested from the City of Bay City the State Theatre financial documents “mandated by the June 19, 2017 Maintenance and Management Agreement For Wenonah Park”.
This paragraph jumped out: the $800,000 loan was “collateralized by virtually all of the Theatre’s assets”.
The State Theatre in effect gambled its entire net worth on an $800,000 loan for renovations to the City of Bay City’s Wenonah Park Band Shell.
Now that you have the history, let’s move forward.
FINANCIAL FIASCO
The State Theatre’s very last year-end financial report, issued on October 12, 2022, was a revision of the fiscal year ending December 31, 2020.
There is no financial information after that 2020 filing — none.
Yes, that’s a shocker! You’d think someone (other than yours truly) would have noticed that and questioned the Growth Alliance’s mouthpiece about the delinquent financials.
In that 2020 report, issued by Andrews Hooper Pavlik PLC, the Bay Growth Alliance transaction is described (see below).
The $800,000 “gap financing” loan was doled out to the Theatre in 2020 in three installments:
July 1, 2020: $400,000
July 15, 2020: $285,000
August 24, 2020: $115,000
Interest-only payments were due quarterly beginning October 1, 2020.
When I sought to pry an answer about this issue from Chris Girard back on December 13, 2023, I got the old Hoboken hustle.
If the State Theatre does file a bankruptcy petition within February, it will likely seek to get out from under the obligation to repay the Bay Growth Alliance whatever eye-watering sum it owes.
As Hewitt stated, the loan’s “maturity date is next year, so it has to be paid in full in June 2025.”
The Growth Alliance got hustled by the hustler.
So where are those delinquent financial reports, eh?
Dan Dimitroff, I’m waiting to hear from you!
BTW, what is the “Art Shell” in Wenonah Park?
