Redevelopment has no business in partnership
November 9, 2007
Regarding the former Wal-Mart building until recently owned by Max Baer Jr.: He purchased the building as an investment and sold it for a nice profit. That’s the private enterprise system, and profit is not a dirty word.
The new purchaser has an empty building. However, he has a prospective lessee, but the lessee wants major improvements done to the building before he signs a lease, an element of the private-enterprise system.
At this point, the new owner obviously cannot, for whatever reason, attract a conventional lender to finance the intended improvements. So he turns to the city and enlists the support of the director of downtown redevelopment for his project.
What’s wrong with this scenario is that 1) the redevelopment authority should never become involved in a proposed business venture that has no track record of success at this proposed location. A conventional lender would require this location to have a history of success as to this proposed retail venture. And 2) most important in my opinion, one achieves success in our private enterprise system for a variety of reasons, not the least of which when you have your own money in the project/venture along with an experienced conventional lender as your partner, you are damn well going to do everything in your power to achieve success, defined in large measure as making a profit.
A conventional lender will never invest their funds in a project or venture if they themselves do not have experience and confidence within their bank to draw from. Our city redevelopment authority has no business partnering itself with this project.
Ask the questions 1) Is this the type of speculative business venture that we want to invest in, given the reality of retail business failures throughout this country? 2) What happens if both the building owner and the lessee go into bankruptcy? Will the redevelopment authority (city) then become not only a challenge to our conventional lending community, but to our real estate industry as well?
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P.S. To Supervisor Robin Williamson: The owners of our Carson Nugget promised to build a parking garage for downtown Carson City. This would be a great project for redevelopment of downtown Carson City. Or let’s help Sierra Pacific Power Co. relocate its power substation from downtown. Stay focused – these would deserve greater attention than your retail discount-clothing store project.
• Clark Russell is the owner of the Carson Station Hotel Casino in downtown Carson City.
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