Pension fund buys hotel for $800 mil
Cocktail named after union's leader
A series of articles in a Florida newspaper newspaper have alerted us to a controversial investment by the United Association of $800 million from its pension fund into a financially troubled hotel in Hollywood, Florida. The staggering amount represents about 20% of the fund's total assets.
Local businesses and politicians are jumping for joy at the prospect of the new jobs and increased taxes the hotel, called the Diplomat will bring to the area. But many union members are angry at what they believe is a high risk gamble with their retirement funds. Said one member, "The union has no business investing other people's money in these bonehead projects". An appeal by a group of members to the US Department of Labor to stop the investment was rejected recently.
The hotel's operator has agreed to allow the Hotel Employees, Restaurant Employees Union to organize its workforce and has named a cocktail after the UA's President, Martin Maddaloni.
UA Local 787 MFD, based in Brampton, Ontario have been contributors to our web site.http://www.m-f-d.org/article/ua/f722wgucah6.php
[ 01-14-2002: Message edited by: news ]
What's really sick about this deal is that the Diplomat was originally foreclosed by a union pension fund and then shopped around to a bunch of unions with the UA winning the bid by buying the old Diplomat for about $40 million. Then the UA pension fund started the renovations and estimated the cost to bring the bill to $400 million. Delays and cost overruns saw the project costs skyrocket to $600 million. At that point the US Department of Labour (USDOL) had to become involved. Faced with the collapse of the project, which could have wiped out close to 1/5 of the entire pension fund, The USDOL agreed to let the pension fund pump another $200 million into the project. That hotel has the distinction of being the largest hotel project in Florida's history.
We're talking about nearly one-half billion US dollars in overruns. Where did the money go?
Did that fiasco scare off other unions? No. Their pension funds are scooping up nearby hotels and pumping millions into their restorations.
What a cockamamie scheme this is!
quote:
The hotel opened in 1958 and became a symbol of South Florida's golden age of glitzy nightlife, outlasting other resorts in Miami until it, too, fell on hard times and closed in 1991.
Are those "hard times" finished?
Does Hollywood Florida have a booming tourist industry or is this the official old-boys-club now?
Is the "Golden Age" returning to Florida?
How does a $40m hotel turn into a $800m "project" anyways?
Hmmm... let's see...
Martin Maddaloni...
quote:
The Diplomat was Maddaloni's vision, an all-inclusive luxury resort, including a country club, spa, marina and convention center that would reclaim the Diplomat's former place as the premier resort in South Florida.
And Maddaloni's fingerprints are all over it - from the Carerra marble he helped select, to the Maddaloni coffee (with Grand Marnier, Sambuca and Myers's Rum) available at the Tack Room Bar, to the name on Marty's Restaurant, the hotel's signature eatery.
Ego-maniac?
Penis-envy?
Betcha he drives a BIG SUV too! 
As shown by the more than $200m loss (as estimated by an independent appraiser who valued the atrocity at $587 million when complete), this guy's WAY out of his league.
quote:
'There's a lot of negative talk - I don't know why,' said Maddaloni
Apparently he's retarded as well. 
Looked like the Labor Dept. felt the same way:
quote:
Bought by the pension fund in 1997, the Diplomat has become a major concern for the Labor Department, which has never been confronted with a real estate deal of this kind involving pension funds.
I don't understand why the Labor Dept. let this one get as far as it did. Obviously, now, they don't have much of a choice but to finish it but... mind you they could cut their losses @ $400m instead of risking $800m+ on what's already proven itself a sketchy investment.
quote:
If successful, the Diplomat would enable the United Association to become developers and lenders -- "potentially a lot more than we were before."
I thought unions were hired to represent their members? Not compete with banks and venture capitalists? Like these morons have any relevant experience.
Damn it, there's just too much stuff here for me to roll my eyes at all at once...
EDIT: 
[ 01-14-2002: Message edited by: slek ]
Hey, it's a monument to the biz-partner unionists. Think about it slek, it's all so fitting: A big garish, ultra-lux pod where they can flee to escape the tiresome demands of their members. A warm, comfy haven where they can do deals and get pissed with company guys and politicians. A place where they can feel like big wheeler-dealers and get waited on by union members! SUV's? Those are for their executive-asses and other bag carriers. The big kahuna's drive Lincoln's and Caddies.
Look at it this way. Florida is full of tacky theme parks and this is just another fantasy island: It's Biz-U-Land.
Whazzzamadda wit dees guys? Don't dey eva heard of a Propco thingy ways of doin dees tings? Yoose don't buys da hotel in da name of da union, yoose loans money to yoose frens and dey buys da property. Then when da money goes pffft!, youse says, "so sorry, bad man F*&^% up and lose da dough. Betta luck next time."
Hey, if you book in from now to March, you can get up to $50 US off green fees at the Diplomat Hotel course. TeeBone can get a Machine Head on the course for as little as $132.50 US per round. That's $211.56 in Canadian funds.
Unfortunatly, TeeBone can't offer the same good deal for the UFCW Machine Heads at their winter executive board meeting. Those guys will have to pay the going rate.
[ 01-16-2002: Message edited by: weiser ]
Jeff Shields of the Sun-Sentinel has reported that the US Labour Board has OK'd another $200.000.000.00 to finish the Diplomat. Their reasoning is that it makes more sense for them to finish it than have it be a write-off. I guess I can see that but what I can't see is why to this point, no-one has been held accountable. Surely the Labour Board isn't going to let Madaloni off the hook. We may as well hang a sign on the front door "come one and come all, pilfer our pension fund.....please!"
I have spoken to Jeff Shields in the past and I contacted him and asked him if he felt that there would be anyone hauled up on the carpet for this fiasco. He said that he didn't think that the Labour Board was finished with the UA yet but it required a lot of investigation.
I'm wondering how Pruette, the member who ran against Madaloni is doing with his election protest. Before the election he had gone to court to try and get access to the UA Financial Statements. Last I heard he still doesn't have them. Says it all doesn't it?
This Christmas. Local 787 slung a holly wreath around their very old web-site newsletter "Icebreaker" (this site has seen very little new news since it was used to slander the poor shmucks who decided to run against the establishment during the last election) and told the membership that they had finished paying the mortgage on the new office building. (This was the one built without any vote by the membership)
At the January Membership Meeting, the union officials gave the few members who attended some more welcome news....they are going to increase union dues! Seems they are running close to the line.
The question begs to be asked, "What the hell is happening to the money the members aren't paying for the motgage???"
