More on the topic of the CPC looking to sell a big chunk of their downtown holdings, in the form of an interesting financial revelation from Hawes Spencer at The Hook:
In the mid 1990s, says Spencer Connerat, who was a young banker at the time, he was fascinated when Jim Berry and Hovey Dabney– his bosses at Jefferson National Bank (now Wachovia)– began buying CPC shares for themselves. During 1996 and 1997, Berry and Dabney divided up shares as they became available, each purchasing blocks of shares ranging from 1,485 to 29,690 at prices of $1.00 and $1.05 per share.
[…]
According to our calculations, the per-share dividend just on the sale of the Water Street asphalt lot could be nearly $20.
The city sold off its three major parking lots, counting on CPC — masquerading as a non-profit — to provide for its parking needs and all the while CPC’s major stockholders appear to have known that the business was little more than a real estate investment for them, and that eventually that parking would turn into office buildings or condos.
The City of Charlottesville, duped by investors? Getouttahere!
So the people selling their shares did not know they were worth more than a dollar?
I’m confused by talk here about CPC masquerading as a non-profit and duping the city.
My understanding is that downtown business owners bought into CPC in order to secure downtown parking so that their businesses could compete with suburban centers like Barracks Road. And at least in recent years, they’ve charged for parking and generated a profit.
The creation of CPC probably felt like temporary self-preservation at the time, but now downtown is on its way to having enough gravity that people will come even if the parking isn’t as cheap and easy as in the suburbs.
Has CPC ever been anything but a tool to make money for its investors? Why do people think this is some kind of shady deal?
There would be nothing wrong with it if they hadn’t so self-consciously described their mission as being that of a non-profit for so many years. They’ve often said that they’re a non-profit in every sense other than their IRS filing status, existing solely for the public interest. So the city — and just about everybody — treated them as such, giving them every benefit that would never be given to the average private corporation.
For years I spoke of the CPC in glowing terms, holding them as an example of how corporations need not be non-profit in order to function solely for the public good. While on the board of the Charlottesville Downtown Association, in particular, I often had cause to hold up CPC as a shining example of what makes downtown great. Now I look like a moron. It’s my mistake for believing them. I should have known better.
My sense is that there has long been a group of well-known, and mostly well-respected, community pillars in Charlottesville who have traded on their business, civic and personal connections for personal enrichment.
This would seem like another example of that.
Thanks for explaining that, Waldo. I didn’t get it at first. Still, it would seem that if shares in the corporation had remained more diffuse (instead of becoming increasingly concentrated in a few hands over the years) there would not be the worry there is today. A relatively cheap and simple solution would have been (yes, my hindsight’s pretty good) for the City itself to have acquired a significant stake in the Corporation. It needn’t have been 51%; 20-30% probably would have sufficed to prevent a majority from “cashing out” at today’s high value.
Were the shares available for anyone to buy? Probably not.
The people who sold their shares to their downtown business buddies for a dollar might be upset about now.
Also upset might be other downtown business people who would have bought the shares if they’d been on the spot. Was this a fair deal? How much did the leaders’ talk of “nonprofit in all but name” snow the other shareholders? Yes, I am wildly speculating here.
I believe that the CPC bylaws stipulate a lack of profit. Alas bylaws can be ignored or changed without consequence.
This was a private business venture from the very beginning. These good ol’ boys had more money than the city anyway, and they neither needed nor wanted a handout. Sure, the parking rate was kept low, but that was done with the customer in mind – a noble action. The customer of: Charlottesville Hardware Co, or Keller and George, or the Jefferson-Lafayette Theatres, or National Bank and Trust Co., or Gilmore, Hamm & Snyder, or The Peoples Bank of Charlottesville, or Timberlake’s, or The Young Men’s Shop, or Citizens Bank & Trust Co., or Miller & Rhoads. Collectively, these original stock and bond holders were the genesis of the stockholders of today. Hovey Dabney presided over the company’s bond repurcbase in 1971. “Stock in lieu” was issued instead of the 6% per annum interest (10 years deferred) bondholders expected.
For example, it is understood that Charlottesville Broadcasting Co. became American Broadcasting Company, known as ABC. Disney bought ABC. Jefferson National and Central Fidelity Bank (also stockholders) became Wachovia. Does CVS now beneficially own old Standard Drug certificates? Does Bank of America own its predecessors’ stock? The supply of capital is almost endless, for meaningful progress to occur downtown. It would certainly be nice to be elected to the Board now, when there are so many available options.
Waldo is too hard on himself! There was a very well-dressed wolf in the downtown neighborhood; and, unfortunately, many were comforted an lulled by its soft, woolen coat. Curiously, the fangs were what intrigued this citizen.