Yuan Xiaohona, host Mayor Mike Bell, and Wu King Hung listen to a translation of remarks by Mr. Wu at a dinner at Real Seafood in October during which ties were strengthened.A grin and a firm handshake can get you far in American business. Flattery and Chinese poetry sometimes go further.
PHOTO COURTESY OF THE TOLEDO MAYOR'S OFFICE Enlarge
PHOTO COURTESY OF THE TOLEDO MAYOR'S OFFICE Enlarge
In October, Mayor Mike Bell was toasted by his own dinner guests — two Chinese real estate developers whom he had spent months trying to convince to invest millions in Toledo, which would help the city fill a revenue gap in its 2011 budget.
The mayor had met with Wu Kin Hung and Yuan Xiaohona during his trip the previous month to China. On their reciprocal trips to northwest Ohio, the Bell administration treated the pair to a private Toledo Symphony performance and a guided tour of the Toledo Museum of Art.
It was during a meal at the Real Seafood Co. restaurant attended by Mr. Bell's parents, his top staffers, and several local businessmen that their relationship reached new levels.
Before everyone, Ms. Yuan, chairman of the company now attempting to buy the city-owned Docks complex for $2.15 million, announced that Mr. Bell would be "adopted" as part of her family and that they are "now brother and sister." The other principal, Mr. Wu, recited for the mayor a poem he had written. His Chinese rhyme was translated into English by a Beijing-born intermediary who's been integral to the Toledo-China relationship.
"A lot of the poem had to do with things he had seen in Toledo," recalled dinner attendee Scott Prephan, the initial catalyst for the evolving deal and a longtime friend of Dean Monske, Toledo's top economic development official. "He was talking about how amazing Toledo was and how wonderful that is … and also how close he felt to Dean and the mayor."
In the four months since that dinner, Mr. Wu and Ms. Yuan have formed an American firm called Dashing Pacific Group Ltd. to purchase the struggling Docks restaurant and entertainment complex and potentially spend millions toward a larger endeavour: buying and developing the sprawling and long-stalled Marina District on the Maumee River in East Toledo.
But unlike with most deals involving the sale of city-owned property, the public and councilmen have been told little about the two prospective investors, their past projects, or where their money comes from.
"They're nervous because they've never done a development project outside of China," said Mr. Prephan, a real estate developer with offices in Perrysburg who stands to collect a $107,500 broker fee from The Docks sale. "They prefer to be under the radar until they get more comfortable with how you do things."
While the Chinese are getting comfortable with Toledo, Mr. Monske said he and the mayor already trust them. The two investors, whom Mr. Bell has called his "Chinese partners," wired $100,000 last month into an escrow account held by Louisville Title; as of Friday, that amount was up to $699,980 toward The Docks' purchase price.
"So far the money's flowing and they've done everything they've said they're going to do," said Mr. Monske, Toledo's deputy mayor of external relations. "These are just incredibly warm and nice people and we have no reason to believe anything other than what we've been told."
Yet, Mr. Monske acknowledged that the city did not investigate and cannot prove Dashing Pacific has the desire and means to successfully operate The Docks and make a multimillion-dollar investment at the Marina District.
The deals evolved from the city's relationships with two key intermediaries: Mr. Prephan and Zhixin "Simon" Guo, a prominent deal broker between Chinese and American businessmen who once translated for former Secretary of State Henry Kissinger while in China.
All but two of the 12 Toledo councilmen voted in favor this month of selling The Docks to the investors.
Council President Wilma Brown said she isn't concerned about investigating the Chinese pair or dissecting the relationships that led them to Toledo.
"We don't ask those questions about anyone else," Ms. Brown said. "Saying we need to know about their portfolio or where their money comes from is ridiculous. I am sure all the clothes I am wearing were made in China, so it's nice to know that some of that money we have sent over there will be coming back to Toledo."
But Councilman Lindsay Webb, who joined D. Michael Collins in voting against The Docks purchase agreement, said council should have asked more questions about Mr. Wu and Ms. Yuan.
Similar to early warnings last month from U.S. Rep. Marcy Kaptur (D., Toledo), Ms. Webb said Mr. Bell should proceed with caution. She said she suspects the investment could include Chinese state money.
"The Chinese government has its hands in all matters of commerce, so you can assume at some level they have their hands in this deal," Ms. Webb said.
Zhixin ‘Simon’ Guo, left, is a prominent deal broker between Chinese and U.S. businessmen who once translated for former Secretary of State Henry Kissinger in China. Mr. Guo is a key intermediary with Toledo officials.One public-policy specialist said that cities selling assets should learn as much as they can about prospective buyers and their track records.
"When cities are cash-strapped, I think it's easy to just rush through the process and sign a deal so you can get that cash infusion, but it is important to have proper oversight, to have all the facts, to make sure that it really is a good deal for the city and the public," said Shahrzad Habibi, a director at In The Public Interest, a Washington think tank that focuses on the potential "risks" of privatizing public assets.
When city councilmen aren't told the same information about a deal that administrators have, "it does compromise their ability to provide meaningful oversight," Ms. Habibi said.
Before the 10-2 vote on Feb. 8 authorizing the sale of The Docks, Councilman Steven Steel asked Mr. Prephan for the resumes of Mr. Wu and Ms. Yuan. Almost two weeks later, the documents have yet to be produced.
"I don't know if they thought after the vote it was not pertinent anymore, but I am still interested," Mr. Steel said. "I want to see what developments they have done, what their history is, and what types of businesses are in their buildings."
A voice of caution
Former Mayor Carty Finkbeiner, who for years pushed for the Marina District to be developed through Larry Dillin, the creator of Levis Commons in Perrysburg, is suspicious of the Chinese investors and the fast pace they are seemingly pushing for a sale.
"I would not want to trust the future of any piece of major real estate, especially waterfront in the heart of downtown, on a firm I did not know about, know of the quality of their work," Mr. Finkbeiner said. It is unclear precisely how much city officials know about Mr. Wu and Ms. Yuan.
Initially, Mr. Monske said the two wished to remain anonymous. Later he insisted that neither he nor the mayor had business cards for either Mr. Wu or Ms. Yuan and did not know much about their business history or even the names of their China-based companies.
Last week, however, Mr. Monske and Mr. Prephan together recounted a meeting in Mr. Wu's modest Shenzhen office, during which the Toledo delegation watched a PowerPoint presentation on Mr. Wu, his company, and the firm's accomplishments.
"I haven't seen his bank statement, but I think he is very well to do," Mr. Prephan said.
Both Mayor Bell and Mr. Monske said they were made more comfortable with the investors' business abilities after Mr. Guo in China pointed out Mr. Wu's skyscraper in Shenzhen, a city situated north of Hong Kong.
"‘Right there, that's Mr. Wu's building' " Mr. Monske recalled Mr. Guo telling the group in Shenzhen during the September trip.
Mr. Monske conceded that he did not know Mr. Wu's exact role with the building, whether it was owner, developer, or manager. "We were getting a whirlwind tour of the city and Simon simply says, ‘That one right there — Mr. Wu's,' " Mr. Monske said.
The mayor dismissed conspiracy theories about the source of Dashing Pacific's money and said he wouldn't care even if the money was proven to be Communist government financing.
"I have no reason not to trust them" Mr. Bell said. "They actually put some money into an escrow account, which is an example of good intent. What more credibility do you need? There are people here in this country who could not do that."
Mr. Bell said he turned his hopes to the Far East after watching both the mayoral administrations of Mr. Finkbeiner and Jack Ford fail to find domestic developers who could build the Marina District.
The first piece of the Chinese-Toledo connection fell into place three years ago during a seminar on China at the Toledo Club, which Mr. Prephan attended.
Through one of his companies, Mr. Prephan had once tried to broker outsourcing arrangements for American companies to China. A speaker at the Toledo Club meeting was an associate of Mr. Guo and mentioned his abilities to Mr. Prephan, who eventually invited Mr. Guo to visit Toledo.
Early last year, Mr. Prephan and Mr. Guo went to a chief executive officers' conference in New York, where Mr. Prephan was introduced to Mr. Wu. That meeting included about 43 chief executive officers from China who were visiting the United States to learn about investment opportunities.
Toledo officials said the value of Mr. Guo's business contacts in China was instrumental to Mr. Bell and the delegation while there.
They also noted Mr. Guo's impressive resume: He is former general manager for international markets for Qwest Communications and Asian markets for MCI and co-founder of the Chinese chapter of Chief Executive Officers Club Inc., a multinational nonprofit organization.
"He has all the contacts. He makes all this happen," Mr. Monske said.
While in China, Mr. Prephan and Mr. Guo introduced the mayor's delegation to Mr. Wu. City officials chuckled last week recalling how Mr. Wu seemed to appear at almost every stop they made during the 11-day trip. The itinerary was planned by Mr. Guo and Mr. Prephan.
"Who is there to greet us in the airport but Mr. Wu, two of his staff, and his son Jimmy, wearing a tuxedo T-shirt because he wanted to ‘dress up' for us," Mr. Monske recalled, adding that the men exchanged high-fives. "It was great — it was like college buddies."
The city and Dashing Pacific have not set a closing date for the sale of The Docks. There is also no development plan yet for the 125-acre Marina District. However, the investors did send artist renderings of Asian-style commercial and residential buildings.
Mr. Monske last week said he is convinced Mr. Wu and Ms. Yuan want the Marina District even though they haven't conducted a market study for profitability.
And Mr. Prephan said the investors envision a regional-draw attraction for the site, but he stopped short of saying whether they intend to compete head on with suburban mixed-use developments such as Levis Commons in Perrysburg and the Shops at Fallen Timbers in Maumee.
"They want to write a check tomorrow and buy it now," Mr. Monske.
For years, city leaders lamented the glacial pace of development prospects for the Marina District.
Now, Mr. Prephan said he has to temper the Toledo enthusiasm coming from across the Pacific.
"They're probably interested in moving faster than what I think they should move on it, based on doing proper due diligence on the property," he said.
Contact Ignazio Messina at: email@example.com or 419-724-6171.