Harrison Square condo sales floundering
Posted by Mike Sylvester - 8/29/08 @ 1:02 am - Filed Under Featured, Local Politics
Everyone reading this blog knows that I ardently opposed Harrison Square. I spoke at public hearings, City Council meetings, and wrote several editorials for the local newspapers concerning Harrison Square not to mention blog posts concerning the project.
In the last few months I have not said much about the project. I have just sat on the “sidelines” and watched it falter.
Up until a couple of weeks ago we were told that everything was on schedule and that ”The Harrison” would be completed by June 1st, 2009 as agreed upon in writing by the City and the Developer.
Recently Greg Leatherman was quoted in the Journal Gazette as saying that it is now likely that “The Harrison” will not be completed as agreed upon. In other words, it will not be in service for opening day as was repeatedly promised by the Developer and various City officials.
According the the media there is one reason and one reason only that construction on “The Harrison” has not begun and that is that the Developer has not been able to secure financing.
Late last year Councilman Don Schmidt asked the Mayor’s office for financial statements showing the financial capacity of those involved with the project. This was discussed with the Mayor’s Administration at a City Council meeting and they told Councilman Schmidt that he would not be allowed to see financial statements for those involved. Councilman Pape got involved and argued against the need for City Council to see any financial statements. I watched this exchange in person and I was quite irritated that Councilman Schmidt (At the time President of the City Council) was rebuffed.
Now ”The Harrison” will likely not be completed on time because the Developer cannot secure financing…
If the Developer had a large amount of money they were willing to invest into “The Harrison” financing would be easy to obtain; however, they seem to want to incur a lot of debt and not invest a lot of their own capital. This would have been good to know late last year when Councilman Schmidt tried to determine their financial capacity.
In my opinion there are several reasons why the financing for “The Harrison” is not in place:
1. Those involved in the project are attempting to finance a significant portion of “The Harrison” rather then pay for it outright.
2. The “subprime” meltdown has caused banks in the US to write off huge losses in their loans. This has forced banks to carefully analyze all new loans. I think this is a good thing because in the past it was too easy to borrow money; however, in the short run this is going to slow new construction since less loans will be approved.
3. Part of the loan process involves getting real estate appraisals on the property in question. The bank loaning the money wants to ensure that the real estate involved is worth enough to cover the loan in the event of foreclosure. This means that the property will need to be appraised and that its fair market value needs to be high enough to support the loan. The condos are supposedly to be sold for between about $140,000 and $350,000. Real estate appraisals rely heavily on comparable properties in the same geographic areas. There are no comparables in the immediate area and I imagine it would be difficult to get real estate appraisals to support the financing.
4. One way to make the loan easier to obtain is to have a large number of the condos already sold. We were all told how easy this would be by official after official last year. I also asked several local realtors and all of them thought that it would be relatively easy to sell the first 62 condos. Apparently they were wrong. According to various press outlets between 5 and 12 of the 62 units available have been sold at this point. For some reason no one seems to want to release exactly how many of the condos have been sold.
We are in a tough real estate market nationally and that is certainly making it more difficult to sell the condos and to obtain the financing. The current real estate problems started in early 2007 and have only gotten worse. There is no doubt that this has made things hard for “The Harrison.”
That being said, our elected officials need to plan for the worst and hope for the best.
I sincerely hope that a lot of important lessons have been learned in this process!
Mike Sylvester
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7 Responses to “Harrison Square condo sales floundering”
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So Mike…when are you and the rest of us that felt the same way about Costaplenty Square going to get together and have this “I Told You So Party”?
You can almost HEAR the nails being hammered into the coffin…can’t you?
B.G.
THE ROLE OF CITY GOVERNMENT ISN’T IN THE DEVELOPMENT BUSINESS! Would all those who really believed that there would be 62 condos full of happy Wizards fans hooting and clapping from their Harrison balconies please raise their hands?
The whole project’s madness; a pathetic, totally-lacking-in-imagination attempt to DO something with a downtown riddled with empty office space, and no amenities.
Why would anybody want to live downtown? The whole appeal of urban living is the ability to walk or take public transportation to most places one wants or needs to go; in Fort Wayne’s case, that’s impossible. Even if one could force oneself to eat out every single meal of every single day, it’s still necessary to shop for things like laundry detergent and toilet paper.
Mayor Richard sure left us all stuck with a whole bunch of stupid projects-in-progress. The “Renaissance” debacle in the Hanna-Creighton neighborhood has “Sub-Prime Mortgages” written all over it. Not as “In-Your-Face” as “The Harrison” or even maybe the Kitty Hawk fiasco, it’s still one huge waste of money. Who in their right mind will pay $150,000 for a house that is surrounded by neighbors in the $5,000 to $25,000 range? The only answer is “Ignorant borrowers steered that way by outfits like “NeighborWorks”, the primary players of which are now facing federal indictments for fraud, corruption & flat-out greed.
How they all keep on getting away with it sickens me. Why are we all so helpless? We had a mayoral candidate whose mantra was that he would change all this, and look how we’re letting him be crucified.
“We had a mayoral candidate whose mantra was that he would change all this, and look how we’re letting him be crucified.”
Sorry, he climbed on his own cross. His advisors drove the nails! The legal system will dig the hole and raise it upright.
John Colgate, perhaps you can tell us why a reasonably intelligent person would do that? (”Climbed on his own cross . . .etc, etc . .”)
To date, I haven’t heard any motive(s) ascribed to these heinous crimes that were allegedly committed. I would really appreciate it if you could help me out with this. Thank you.
Time will tell, if Harrison Square Stadium, Retail Shoppes, Parking Garage and
Downtown condominiums will be a wise
politically mandated city investment.
Time will tell, if Harrison Square Stadium, Retail Shoppes, Parking Garage and
Downtown condominiums will be a wise
politically mandated city investment.
I think accountability of the sale of condos is
indeed part of the entire HS package. Is this what the City agreed too? I thought so.
I think I remember that particular Council meeting. Pape said financial statements for the developer were not necessary simply because we had never required them before. Schmidt pointed out that the City had never invested this much money with a private developer before, so that made the situation different. Seems like Schmidt’s was the more logical of the two arguments.
That was also the same meeting where Schmidt pointed to the fact that the city was selling land to the developer for less than we had paid for it. He asked if this was a subsidy (of course it was). The guy at the table stuttered for a minute, then Leatherman jumped up from the audience and gave that drivel about how this price difference was used to pay for equipment loss and moving expenses.
My point is, H.S. supporters were intent on pushing it through regardless of the cost, much of which is probably still hidden. And you can be sure now that we’ve already invested lots of money, that excuse will be used to justify throwing more money at it to keep it from failing.
To misquote Disraeli “There’s lies, damned lies, and then there’s Harrison Square.”