A developer wants to revitalize downtown. He has bought a falling down building (once the largest industrial building in the world, covering 60 acres) and is putting in shops, restaurants, and 600 condos. Sounds like the best of all possible worlds for everyone. But…
He needed parking. The city built a new garage nearby. He cut a deal with the city in 2003 to pay 200 grand a year for 400 spaces to be reserved for his project. But the project won’t be finished until 2008 but he has been paying since 2003. He has also run out of money and needs an injection of cash, Oh and they have discovered asbestos in the old building.
Now what?
Here’s what I think — At a minimum, the city should forgive the payments until the development is up and running. It seemed like a good deal at the time, and Mr Developer who was trying to woo the city to get approvals and the like probably felt it was money well spent. However this project seems like a perfect brownfield development that will mean a lot to the community.
But then what do I know? Most people living in this little New Hampshire town probably would be just as happy if the place remained as it is.
JVH
3 Responses
Looks like he would have been betteroff saving that money and the interest it would have generated to finance an Automated Parking Structure for the development. He would have had 15% of the complex paid for already, plus it would add to the revitalization of the downtown area with the introduction of new technologies.
Why bother with the details. You forgot to mention:
1. The City does not own the lot (the regional transit authority does-big difference as it is not controlled by the City);
2. The public sector has given this developer enough already. The developer owned the lot on which the parking garage was built. The developer sold the lot to the regional transit authority so that they could build a commuter rail facility/parking garage on it. The developer is paying a fee only to cover maintenance costs for the 400 spaces. This is likely less than the annual property taxes and insurance that he paid on the vacant lot before he sold it to the regional transit authority. The developer received: (a) market value for the lot at the time of sale; (b) a guarantee to use all of the spaces he lost by selling the lot–he only needs to pay to maintain them; and, (c)an asset nearby, the new commuter rail stop, which has tripled the value of his initial investment (I doubt that he could have put in condos without the proximity to commuter rail).
Most, if not all, would agree that the developer made out pretty darn well. The public sector has given him enough already. Forgiving this parking payment will make no difference in the outcome of this development. The dramatically faltering real estate market is doing him in.
I love the blog and have subscribed to it for a year. Keep up the great work…just don’t dumb down the scenarios you present. As you know, the devil is always in the details (some of which, admittedly, are not always obvious).
Jon:
Great points — too bad the local press left out some of the details. However, I do stand by my original premise. Governments and developers need to work more closely together to make a project successful. In too many cases the relationship is adversarial.
JVH