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Run-up to auction of Channelside no cakewalk

Control of Tampa’s Channel District entertainment complex goes up for auction Wednesday through a bankruptcy court in Delaware, offering hope of a new start for the nearly vacant venue.

The list of bidders, according to documents filed Friday, includes Tampa Bay Lighting owner Jeff Vinik; Port Tampa Bay, owner of the public property that includes the complex; and a partnership that has been at odds with the port — Liberty Channelside LLC, a joint venture of the firms Liberty Group, owned by hotelier Punit Shah, and Convergent Capital Partners, owned by developer Santosh Govindaraju.

Together, the two men are pursuing in court a separate effort to gain control of Channelside Bay Plaza, appealing their rejection by the landlord, Port Tampa Bay.

The confrontation between the two interests has transcended the usual legal wrangling in its language and intensity, pitting the port’s seven publicly appointed commissioners against partners who specialize in rescuing distressed properties — “finance guys,” Govindaraju said in an email to the Tribune. “We have thick skin and are not politicians.”

One example of the confrontation: Port officials scolded Liberty-Convergent for a lack of “decorum” and making threats during negotiations in May 2013.

For Convergent, a company that boasts $500 million in acquisitions during the past five years, Channelside represents “one of our smaller acquisition targets,” Govindaraju said in an email this month.

But Channelside Bay Plaza is a property with significant public interest, positioned as it is ­— among the cruise ship docks, the booming Channel District residential district and the busy Forum sports and concert arena — to help the resurgence of downtown Tampa.

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Shah and Govindaraju are partners in pursuing Channelside and a $20 million Aloft hotel project downtown, but court records and interviews with former business partners show the two men have different ways of doing business.

When port officials rejected their bid for Channelside last year, Shah and Govindaraju sued. They claimed, among other things, the port’s action harmed their reputations. They are still pursuing damages.

The lawsuit prompted port Commissioner Peter Allman to question publicly whether the port or any other public entity “should be doing business with companies whose dominant negotiating style is to use litigation as a means to get more favorable business terms for themselves.”

City officials say their work with Shah over the Aloft has been professional and respectful, as was their work with Shah over a proposed hotel on city land in Ybor City. Correspondence about the Ybor City property between Shah and Bob McDonaugh, the city’s economic development director, is polite and even-tempered.

Govindaraju’s business history, on the other hand, is marked more by confrontation — including foul language and threats of bodily harm, according to records from port officials.

This month, in a foreclosure auction, he lost Walden Pond, a problem-plagued mobile home park off U.S. 19 in New Port Richey that made headlines when its tenants were evicted and when a tropical storm flooded the property. More than $70,000 was still owed on the property to New Port Richey.

Govindaraju also is accused of breach of contract in an ongoing suit by a former business partner, anesthesiologist and pain-management specialist Vipul Kabaria, involving a New Port Richey town house project.

While Govindaraju’s project with Kabaria was coming apart, Govindaraju and his Convergent Capital bought a loan funding Marbella Terrace, a Temple Terrace town house project begun by Tampa surgeon Alexander Rosemurgy. Govindaraju then quickly foreclosed and took over the project.

In an email Thursday, Govindaraju noted that he obtained court judgments against both Kabaria and Rosemurgy.

“We have a great legal system that allows us to solve our disputes in court,” Govindaraju said, “and the judgments speak for themselves.”

Govindaraju said his company turned around Rosemurgy’s failing Marbella project to the benefit of Temple Terrace. He said other turnaround projects have benefitted communities across Hillsborough and Pasco counties: Aloft downtown, Emerald Greens country club in Carrollwood, the St. Moritz apartments near the University of South Florida, and the private Academy at the Lakes in Land O’ Lakes.

“These are things that matter,” Govindaraju said in an email Friday. “Details of frivolous litigation and comments from failed doctors turned real estate developers does not affect the city, nor is it news.”

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Kabaria’s pending case involves The Reserve at Sea Forest, a half-finished town house-style condo development off Green Key Road among the mangroves of coastal Pasco County.

A decade after Govindaraju and Kabaria began developing the project, 28 of the planned 54 units are finished. The rest of the land stands empty behind the community’s gates.

The development lies at the heart of a 730-page lawsuit Kabaria filed June 17 in Hillsborough County Circuit Court against Govindaraju and his family.

According to Kabaria and court records in Pasco and Hillsborough counties, Kabaria met Govindaraju and his father, Raju, an accountant and owner of Reliance Consulting LLC, about 15 years ago through another member of Tampa’s Indian community.

In the lawsuit, Kabaria says Santosh Govindaraju broke their agreement about how the project would operate and later misled him about the development’s finances so he would invest more money in it.

Ultimately, Kabaria’s $500,000 investment in The Reserve wasn’t enough.

In October 2008, lender Fifth Third Bank began foreclosure proceedings, saying Govindaraju leased the town homes without the bank’s approval. The bank won a final judgement for a $6.5 million loan balance and $100,000 in interest and fees.

In the end, Kabaria’s attorney says, his client lost his $60,000 initial investment, the $500,000 he put up as the foreclosure threatened, $240,000 to settle a personal guaranty with Fifth Third, thousands in taxes on income he never saw, and as-yet uncounted lawyer fees.

Kabaria’s initial suit, filed in 2012, was suspended as the two sides tried to reach a settlement.

When that failed, the Govindarajus won dismissal of the suit this year, and Kabaria refiled with more evidence this month.

Kabaria declined to comment for this story on specifics of his lawsuit.

In a response filed Friday to Kabaria’s latest legal action, Govindaraju rebuts the allegations and calls Kabaria “a disgruntled 50 percent owner of an unsuccessful two-member company.”

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At about the same time Santosh Govindaraju was facing foreclosure by Fifth Third in New Port Richey, he was filing his own foreclosure against Marbella Terrace LLC, a company surgeon Rosemurgy had created, he said, to set up his children in the real estate business.

The Rosemurgy family planned to build a 92-unit town house project along the Hillsborough River in Temple Terrace.

Rosemurgy said Govindaraju visited the development in 2008, but Rosemurgy thought he was a prospective homebuyer. Govindaraju returned later to say he had bought Rosemurgy’s multimillion-dollar mortgage from Regions Bank.

Rosemurgy said the announcement took him by surprise since he hadn’t fallen behind on payments. He said he opened his books to Govindaraju.

“It would be impossible to be more of an open book than I was,” Rosemurgy said last week.

In November 2008, Convergent Capital Partners foreclosed on Marbella. Govindaraju invoked Rosemurgy’s personal guaranty and won a $6.8 million judgment against him — a sum Rosemurgy said he couldn’t pay.

“It was ugly,” Rosemurgy said. “When he was done, there was nothing left.”

Through Convergent, Govindaraju has continued to develop the property, selling to builders including Beazer Homes and to private buyers. Public records show some Marbella units selling for about $180,000.

Rosemurgy, 61, said the stress of dealing with Govindaraju caused his health to decline. He said he had two heart attacks before his dealing with Govindaraju was over.

“The stress is something I would wish only on my worst enemy,” he said.

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In negotiations over Channelside Bay Plaza, the discussion turned so contentious at one point last year that law enforcement got involved.

It occurred soon after a closed-door meeting between the port and Liberty Channelside. The meeting prompted port attorney Charles Klug to write a letter to Shah and Govindaraju saying negotiations would end if the meeting participants could not stick to rules of decorum.

“These include no harsh or foul language during the negotiations and not threats to or against any of the participants,” Klug wrote. “The (p)ort will not tolerate such statements or threats.”

The partners, through Shah, struck a conciliatory tone, saying they were “committed to and passionate about” Channelside.

By contrast, Govindaraju soon after asked for a meeting with Troy Manthey, owner of the Yacht Starship dinner cruise operation at Channelside.

The two met in the Oxford Exchange restaurant. As Manthey recounts the meeting, Govindaraju’s manner turned so bizarre that Manthey warned port officials, and they later contacted the Hillsborough County Sheriff’s Office.

“Santosh Govindaraju was calling them (port officials) ‘arrogant pigs,’ ” according to a statement Manthey gave to a Hillsborough sheriff’s deputy. The sheriff’s report also says Govindaraju remarked in other business dealings with adversaries that he “cuts their heads off.”

The deputy’s report lay dormant until February when it came to light after Shah and Govindaraju sued the port over Channelside.

Govindaraju eventually wrote an angry email to Manthey.

“Troy, did you really report this?” Govindaraju said. “Where did you grow up? I am a Hindu, a vegetarian, a graduate of the most elite educational program in the world. … I don’t make threats I am way to(o) experienced of a general to make a threat, that’s for the notices … I have a memory of an elephant, like the ones I worship … People often think I am an easy target until they see that power lies in the soul of those who have real courage.”

Manthey said he did not respond.

Two days later, Manthey said, Govindaraju emailed him again with a single sentence: “You passed my test.”


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Twitter: @kwiatrowskiTBO

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