Ready, Set, Garden!
at green garden gates of Oklahoma
Now that the requirements and the rough sketches of the building were nearly completed by the four partners, it was time to finalize the plans. There were two options; using a certified draftsman with the help of a local builder for the design or hiring a full service architectural firm for the project. The most economical method would be to enlist the help of a builder and a certified draftsman who were both familiar with local building codes and ordinances.
However, since our goal is to develop a set of plans that could be used to duplicate the buildings across the United States, the group felt they needed an architectural firm who was experienced in a national focus multi-store expansion for the business. The firm would help vision the buildings and site, draft the plans for the prototype buildings and consult with local building experts in each area to fine tune those plans to meet the local requirements.
John Banks arrived in Tulsa to spearhead the overall financing. His goal in getting the building funds was to get financing from a bank, lending agency, or investment group that understood this national reach and was prepared to commit to a rapid expansion.
John wanted also to secure a relationship with a local bank in the area for day to day servicing of each store account. With this local relationship, The company would be positioned to get knowledge of the community, be part of the community, and be made aware of local issues as they arose in the development of the store.
How did you find the major investment money for this very large multi-store project?
John Banks, as a nationally recognized successful investment banker, has done business with several of the Native American Indian Tribes of the United States. For the past fifteen years, many of these tribes had become immensely wealthy from their casino and entertainment ventures on tribal lands.
In 2000, all the tribes entered into a cooperative business venture, Native American Partners. They pooled much of their financial capital into this investment organization. A key goal of their mission with this partnership was to provide opportunities for meaningful and long term employment careers for the youth of their tribes.
After arduous negotiations, Native American Partners agreed to provide the entire funding commitment for the next fifteen years for the development of green garden gates. There would be short term low interest bridge building loans for each location that would roll into a long term low interest real estate loan after the projects were completed. Native American Partners would also provide low interest funds for operating capitol and lines of credit for each location for inventory and equipment purchasing. It was very important to John that all of the real estate and operating funds be gathered into one source with one group of decision makers. The Native American Partners group could provide that cohesive process.
There were conditions, if met by green garden gates, would result in principle reductions and further reductions of the interest rate charged for the funds.
What were the conditions?
First, the owners of green garden gates would agree to employ ten percent of the workforce in each store from Native American Indian Tribes, either residing on reservation lands, or living elsewhere in the area.
Second, green garden gates was responsible for developing and implementing a successful , meaningful training and mentoring program for these employees exposing them to all phases of the retail garden store industry. A representative from the tribes and a member of the green garden gates ownership would oversee the training and mentoring
Third, these Native Americans would be given priority toward a pathway to management of the stores when the opportunity was presented, if the Native American candidate’s qualifications equaled or exceeded other candidates applying for the management position.
Fourth, a member of the board of directors of the Native American Partners group would serve on the board of directors of green garden gates for the duration of the loans.
What additional incentives other than the loan were presented to green garden gates?
For employing each Native American Indian on a continuous basis in each three month intervals, a predetermined small fractional percentage would be reduced from the real estate loan interest rate. In addition, a reduction of the real estate loan principle owed in the long term loan would occur when green garden gates elevated a Native American employee to a full store manager in a location.
There would be no penalties for dismissing a Native American employee from green garden gates.
The owners believed that this association with the Native American tribes would be very valuable to the success of the company in several ways.
First, there would be adequate and readily available “seed” capitol for green garden gates to grow and expand.
Second, the tribes and green garden gates agreed that this employment in agricultural related careers for their youth would provide long term benefits to the future of lands management and other business ventures under the ownership of the tribes. Agriculture for the future was the mission of all the tribes and horticultural agricultural was the business of green garden gates
Third, green garden gates had an enthusiastically supported employment program for staffing their stores in any area of the United States because of the breadth and depth of American Indians throughout the country.
Fourth, other related agriculture ventures that could aid in the success of green garden gates were possible with this association with the tribes; such as greenhouses and growing fields of horticultural crops that would service the stores.
While the financing was being secured, Twyla was assigned to hire a local building contractor. She sought help from the local contractors association, viewed other projects of the candidates and checked references and professional backgrounds.
A good general contractor is the key for a smooth project or a disaster. Twyla looked for several attributes; the contractors work and attention to detail and the contractor’s history and relationship with the community and local sub-contractors.
She wanted a hand wringer, a worrier, a contractor who became engulfed in building green garden gates, who could get the subs out of bed and on the job after a night at the bar, who left no detail, no stone unturned in the building process. Twyla observed his personal habits, his financial stability, his demeanor, his neatness, his ability to solve problems quickly, and his ability to admit mistakes and moves to correct them.
Sixty days after the completion of the architects plans, the financing was secured, the general contractor was hired, the graders broke ground, and the builders arrived at the site.
Now that the materials were being dropped and the builders have arrived, it’s time to talk about the sleeper danger of the builders’ lien. A lien is a legal attachment to the property for money owed to a builder or supplier for work performed or materials supplied. A builder’s lien can cause havoc in keeping the financing flowing during the building process. A lien can stop work completely. Different states have differing lien laws. Generally, a lien can be filed in a court of law up to ninety days after the building service was performed or the material was dropped on the site.
Many building owners have been forced to pay for services or materials twice. There are lots of horror stories and it happens every day in building. The owner would pay the general contractor for those services and materials, but the general did not pay the supplier or sub-contractor. So guess who has to pay those guys, the building owner. The owner is stuck, with no leg to stand on. The owner just has to pay again.
“So things are going great. The building is going up and we are going to get it opened for the springtime. Every Friday, my general contractor gives me a list of the stuff for me to pay. I write him a check for whole thing. We meet one more time, I pay him for the last of the stuff. We shake hands on a job well done and he drives off waving at me.
Two days later I get served by a Deputy for a lien of 40,000.00 for the roof material. The next day it is 20,000 for the insulation. The next day brings more liens. By the end of the week, the liens total 72,000.00. He took this money and got out of town fast. I had a meeting with all the other owners who had their buildings done by the same guy. The owners in that room were forced to pay over one million dollars in liens. The guy was gone. The law refused to get him. We just had to pay again.
Here are some lessons that will avoid this danger
Keep all the building loan money in one place under the control of the local banker
Keep an accurate and up to day list of the sub-contractors and suppliers for the project
Release all funds only by approval and signature of both the banker and the owner.
Release all funds only when presented with invoices and wage draws
Assure that invoiced work was performed properly and the material was delivered to the site.
Call the sub-contractor and the material supplier to verify the amounts invoiced
Do not release funds for work to be done or work “in progress”. Pay only for half of the roof completed, not the promise to get the entire roof done in two weeks.
Do not pay the general contractor. Pay only the subcontractors or suppliers.
