Claiming to be a matchmaker that put Canandaigua Finger Lakes Resort developers together with lenders that financed the revival of the long-stalled waterfront project, a New England commercial financing broker accuses the project’s developers of stiffing it out of a $370,000 consulting fee.
Planned to include a 109-room Hilton Tapestry hotel, 44 condominium units, boat slips, a conference center and other amenities, the lakefront project launched in 2014 but was halted less than a year later, leaving a skeletal shell of the five-story project until it was revived last summer.
While the project lay dormant, a contractor owed nearly $3 million hit its developers with a mechanics lien in 2017, ultimately obtaining a judgment of foreclosure and sale that nearly saw the project’s prime lakefront property sold off last year. This spring, Canandaigua Finger Lakes Resort LLC partner Robert Murphy announced that a new financing deal was in the works and said the project would resume, with completion expected within 13 months.
According to a court complaint Exeter, N.H.-based InnoVestus LLC filed last week in federal court here, InnoVestus introduced the Canandaigua project’s developers to Acres Capital LLC, the lender that this year provided the $37 million bridge loan that made it possible for Murphy to revive the long-stalled project. InnoVestus claims it worked continuously with Murphy during the lakefront development’s four-year hiatus.
Murphy says he has been aware that communications between his lawyers and InnoVestus have taken place over the past few months, but he was not aware that the New Hampshire firm had filed a court complaint. Its claim is meritless, he believes.
InnoVestus states in the complaint that it was first hired by Murphy to negotiate a deal for Acres Capital to finance the Canandaigua Finger Lakes Resort project in 2014. Talks between Acres and Murphy culminated with Acres sending Murphy a term sheet proposing a $30 million bridge loan. But for reasons not outlined in the New Hampshire firm’s court brief, Murphy and partner David Genecco turned the deal down.
After that, “InnoVestus maintained communication with Acres on behalf of Canandaigua Resort in an attempt to salvage the former deal Acres provided and/or to consummate a financing solution for Canandaigua Resort with Acres as a funding source,” the court brief states.
When the project stalled in 2015 as a result of the $2.8 million mechanics lien, InnoVestus claims, it helped the Canandaigua Finger Lakes Resort partners reach out to other lenders. Then in early 2018, Murphy and Genecco, who were out of cash and planned under pressure from the foreclosure judgment to arrange a sale of the project’s prime lakefront property, inked a new consulting contract with InnoVestus calling for Canandaigua Finger Lakes Resort to pay InnoVestus a $300,000 fee and extra money if it was able to connect the partners with a buyer. As part of its search for a buyer, InnoVestus states, it again contacted Acres, providing details of the Canandaigua project’s status and asking if Acres knew of any parties that might be interested. Acres knew of no buyers, but a year later it agreed to front the $37 million bridge loan.
InnoVestus apparently played no direct role in negotiations that resulted in the Canandaigua Finger Lakes Resort project obtaining the bridge loan this year.
“I was not aware of (InnoVestus),” says Michael Manikowski, an Ontario County economic development specialist who was privy to talks concerning the project’s financing arrangements last spring.
However, InnoVestus maintains, the Canandaigua Finger Lakes project owes the six-figure fee under a provision of the 2018 consulting agreement that calls for the project to pay the greater of 1 percent of the transaction amount or $50,000 if a sale or financing deal results from InnoVestus’ efforts.
Whatever the outcome of the dispute between the Canandaigua development and the New Hampshire firm, Ontario County eagerly awaits the Canandaigua Finger Lakes project’s expected completion in the first quarter of 2020, Manikowski says. A hotel and conference center situated on the north shore of Canandaigua Lake in the village of Canandaigua is a needed feature that would greatly help boost tourism and bring jobs to the county, he adds.
Just such a venue, the Inn on the Lake, was in operation until recently. Built in the 1970s as a Sheraton-flagged hotel, the Inn on the Lake was acquired, remodeled and renamed in the mid-1990s by a group including Constellation Brands Inc. chairman Richard Sands. Now run by two Sands family members, the lakefront hotel and conference center was demolished last year to make way for a new hotel, events and conference venue to be known as the Lake House. It also is planned to open next year.
Will Astor is Rochester Beacon senior writer.