Downtown Condo Sales
Posted by Jeff Pruitt - 7/29/08 @ 9:59 pm - Filed Under Featured, Local Politics
Yesterday the mayor was quoted on WOWO as saying he thought Barry Real Estate will have 30 condos sold by the end of the month. This was the developer’s goal in order to keep the project schedule and they reiterated it before city council. WANE also quotes mayor Henry about the 30 condo mark:
Henry said the developers had a goal of having 30 people put down payments on a condo by the end of the month, and he thinks they are close to meeting it.
What I have heard, and what hasn’t been reported, is that many of these (allegedly the entire top floor) were purchased by a single buyer at a discount. This would allow the developers to keep their schedule and move forward with retail portion which already has interested parties.
However I do not believe this block of condos will be allowed to be rented out as it’s my understanding that most of the units must be owner-occupied and there are strict covenants about rental units. Obviously selling 30 individual condos is vastly different than selling a large chunk to one buyer.
I would expect an announcement on the condo sales very soon and hopefully they will tell us how many individuals have purchased condos. I guess I would be quite incredulous of reports that they went from 5 condo sales to 30 in such a short time.
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I fully appreciate Mayor Henry’s interest in promoting the project for momentum if nothing else. Is it safe to assume that the mayor and his wife are paying full price for their condo? Any discounts provided could be construed as campaign contributions, kick-backs, or quid pro quos. The timing of his announcement with the deadline looming warrants full disclosure.
The end of the month is tomorrow. What will likely happen is someone or some group/LLC will come up with $30K ($1K/condo down payment) for the purposes of being able to say that all the condos are under contract. Certainly the next question should be with whom are the individual condos contracted? That will certainly smoke out if they are simply propping up the condo sales to move forward, or if in fact there are 30 folks interested in a small/expensive downtown pad on Jefferson with a Ballpark.
Certainly if someone or some group wants to speculate on the condos to sell later and facilitate the development, there’s nothing wrong with that. However, this approach to move things along strikes at the fundamental claims made by the HS supporters to promote the project.
I won’t be surprised if we soon hear the Mayor and other supporters of HS blaming any lack of success of the project on, “the Bush economy”. It’s only a matter of time.
I am sure that the price paid by Mayor Henry will be in the recorder’s office when the sale is finalized.
Fred- So you think that the economy has NOTHING to do with it? Interesting. If you read the newspapers I am sure you have noticed that home sales are down nationwide…..why would you ever think that would NOT impact a Condo development?
Jeff,
I gave this some more thought.
Does it matter if a single buyer bought a block of condos?
The ONLY thing that should matter to taxpayers is that the project can move forward. The hows and whys are the issue of the private developer.
As I recall, the stated reason for the delay is that selling “x” number of condos allows for a better financing package for the developer.
there is no difference to the taxpayer…
Kevin,
I didn’t say anything about the effect of the economy on condo sales, what I said was I expected it would be used as the primary cover for the fact that the condos have not moved as anticipated.
You have not disappointed me.
It’s a pricey boutique market and very small number of units that have been available for some time. I’d suggest there may be more at work here than simply the economy, which indeed may be A factor.
The issue with one person buying a block of units is that only 25% of the 62 units may be rented out at any time.
It seems conceivable that one person could control all of the possible rental income for The Harrison.
Kevin,
Scott’s point is well-taken; namely a subsidized project like this should be carried out to the taxpayers expectations. I doubt taxpayers would be happy if all the rental units were owned by one individual.
Also I’m certain the number of condos bought by individuals would matter to a bank. They will want to diversify their risk as much as possible and having one person own so many of the 30 units would put them in a precarious situation.
Hypothetically, the developer could sell them to a shell corporation and then use those sales to get their financing although I’m not suggesting that’s what has happened here.
Fred,
On a heavily subsidized project like this the details of the transaction should at least be transparent.
The condos were supposedly being built to put people downtown. If one person/ organization owns them and they can’t sublease, doesnt this defeat the original purpose of the building?
My guess is that the project will be successfully built but will fail at spurring downtown revitalization.
Were any of the Hardball Capital guys or Tom Henry seen on the Grassy Knoll?
It is interesting to note the newspaper was quick to state the $1K down payments “were refundable”.
Buy now, bale later?
There is a difference- the $1k fees were for “holding a spot”.
They have moved past that and are now taking true down payments. Henry posted $15k- to the best of my knowledge, that is NOT refundable.
Jeff-
Refresh my memory- how much subsidy is “The Harrison” getting?
Here’s why it matters:
The financing for H.S. is not complete at this point. Anyone who says otherwise does not understand F.W. politics. There will be more add-ons, and the perceived sucess of the project to date will be used as a justification for these added expenses. If somebody with a vested interest in H.S. puts up $30,000 to give the false impression that the project is more successful than it really is, they may end up receiving far more than this amount in return.
And Kevin, as to your question about how much subsidization the project has received so far, nobody can really answer this question because of the dishonest manner in which this project was pushed through.
Although I was against H.S. and I am still weary about the future costs of it, I will admit that it is looking pretty good at this point.
Setting at the front window of Gyros restaurant gives a great view. A few days ago, I suggested to one of the employees there that they should put in an outdoor patio to capitalize on the growth of H.S. He informed me that they already have designs drawn up for this.
Kevin,
They did get a $20 million property tax abatement. Also, I’m not sure how one can separate the various subsidies given the 3 parts (hotel, stadium, condos) since all are intertwined into one project…
Step right up the auctioneer said
Downtown condos, a thousand a head
But as he lowered his gavel
The plan began to unravel
People’d rather live in the suburbs, instead.
Amen, Power to the people!
In answer to Mr. Knuth’s question, I’ll give this answere going only from recollection. Corrections will be wecomed by me.
Hardball/Barry has received, or will receive the following assistance or subsidy for the condo portion of the project:
1. Land valued at ( or acquired at an approximate cost of) about 2 million for free or a nominal payment.
2. Demolition and removal of existing structures at City expense.
3. Site preparation and environmental remediation (if any) at City expense.
4. 5 million in Indiana State Tax Credits, which are transferrable at a very slight discount to face value- which means they have an immediate value of only slightly less than 5 million.
5. Property tax abatement valued at 20 million over 10 years- estimated present value of 10-12 million or more given front loading of abatement.
6. Minimum of 1 million in sidewalk and streetscape improvements.
7. City agreement to widen Jefferson to create parking/delivery lane in front of the Harrison, negating the need for Barry to create on site space for delivery trucks for retail and moving trucks for residential.
Mr. Knuth,
The power of the people in Fort Wayne is
sharing the Harrison Square investment!
Hope the Private Investors keep up their end.
The Public of Fort Wayne is mad as hell!
Give Fort Wayne residents a reason to trust this project. Really can we all take it to the bank.
Does anyone know anything definite as to the issue of leased units in the building? Not what one has heard or thought, but definitely the fine print regarding this issue? The reason I ask is if you remember, Barry Real Estate bristled when Mayor Henry asked them to reconsider not offering leased units. The idea was quickly squashed by BRE and Mayor Henry backed down immediately.
Stephen,
Scott Spaulding’s comment above says that only 25% of the units can be rented. Now I’ll let him speak for himself but I’ve always found his knowledge of the details on Harrison Square to be top notch…
I overlooked his comment. Thanks.
“However, this approach to move things along strikes at the fundamental claims made by the HS supporters to promote the project.”
Fred,
What are the fundamental claims that you reference?