Auction Over: Baltimore City Cuts Itself a Deal
Baltimore City's auction of The Senator Theatre is over, and the way I see it, they cut themselves an unauthorized deal on Tom Kiefaber's property. Nobody I talked to foresaw that the City could set the minimum bid at less than the amount owed on the note on The Senator, or bid less than that approximately $950K themselves. I didn't know either of those things were even legal, especially given their fiduciary responsibility as trustee to try to maximize the auction sale price, and the fact that they claimed they were holding the auction to clear the debt on the theatre. Yet they did set the minimum bid lower and bid less, walking away with The Senator for a literal steal of $810K.
I assume they will now try to collect the rest from Tom Kiefaber, unless perhaps there was a higher reserve price that was not met and which the city will now consider paid off. It was not clear in the chaos that was this auction. If anyone knows, please enlighten me.
The auction was fishy from the beginning, with auctioneers from Alex Cooper auctions showing up early and immediately causing concern, but probably through no fault of their own. At least one person associated with the auction company appeared in my opinion to be clearly uncomfortable with their company being associated with such a tainted auction, and I heard when he assured Tom Kiefaber that they are a reputable company. No one was doubting that. They were just doing their job, however, when they were hired by the city to handle this property, they likely had no way of knowing what a corrupt process it was going to turn out to be.
First the auction company told us that the city might change the minimum bid after the beginning of the auction. Given that Kim Clark had said on record in public that bidders would have to bid $1 million dollars to outbid the city and buy the theatre, this came as quite a shock. Even then, I was thinking they would raise the maximum bid to prevent anyone from buying it, not lower it to cut themselves a deal.
Next, we learned that although there had been an agreement between the city, the auctioneers, and theatre management weeks ago to have the auction inside the theatre, they were going to move the auction outside at the last minute.
There was quite a commotion as the city tried to move the auction outside and Tom Kiefaber tried to get them to stick to their original agreement and hold the theatre in the air-conditioned theatre with a sound system, rather than outside in the heat on the sidewalk where there was no sound system and nobody could hear. Eventually, the auction started outside.
The city started the bidding at $750K, well below the published minimum bid that came out of the mouths of city officials, and well below the amount of approximately $950K owed on the note. There was a large crowd and no loudspeaker system. There were multiple shouts from the crowd of "I can't hear you," directed at the auctioneer. At least two people who said they planned to bid were so confused that they were still standing inside when the bidding started, and were brought outside by Tom Kiefaber. One or two other bidders bid it up to $800K, before being outbid by the city at $810K. The auctioneer seemed to rush through the process.
At the end, there were multiple shouts of "it was rigged," as well as tears and anger from members of the public who showed up to witness the auction.
The city does not yet officially own the theatre, as the auction still has to be ratified, which I hear will take approximately 45 to 60 days. Meanwhile, Tom Kiefaber is still the owner.
More later when I have a chance to process all this, upload some video, and find out more about what this all means.
Please note that this blog noted months ago, before the city's steering committee made their apparently pre-determined decision that The Senator could not be a non-profit, that it seemed that the city was trying to take The Senator from Tom Kiefaber and hand it over to some crony, in what seemed very likely to be a rigged process. That appears to be exactly how it's playing out. I'm not a psychic. I'm just doing my own investigation here. The dots are not that hard to connect.