Wednesday, July 23, 2014

TFP Column: Toledo - Real Estate Entrepreneur

(Contrary to all logic and reason, I have decided to put new material up on this blog, but only in the form of the columns that I have done for the Toledo Free Press.  This is done for the benefit of those with time to waste, who likewise do not spend their time reading the website of this award winning weekly newspaper, and I will go back and add efforts that were published earlier this year.)

This particular effort was published on 07/21/2014.
When the story broke that the City of Toledo might become its own landlord, I immediately offered my services to Toledo Free Press Editor-in-Chief Michael Miller:

“Permit me the time to carefully gather and analyze the facts and figures involved with this situation and I will deliver to you the finest effort that I’ve ever done for the Toledo Free Press.”

Oh sure, setting the bar this low makes the goal far too easily attainable, but I could not let that deter me.

I spent countless hours over endless columns of figures that made little sense to me and would likely have made the most dedicated IRS auditor catatonic. I tirelessly dedicated myself to interpreting market trends that even Donald Trump would find all but impossible to decipher.

Half blind from lack of sleep, nerves jumbled from too much time attempting to live on a diet of coffee and Snickers bars, and terrified by the implications of the material that I had thus far digested, the answer struck me in the wee hours of the morning when I least expected it, like the lightning bolt that struck the jackass in “Sergeant York” (which seemed a strangely appropriate metaphor).

Of course the city should not be permitted to become its own real estate agent and purchase One Government Center. The logic was as simple as it was brilliant; the reasoning as inarguable as it was definitive.

Oh, it was not about decades that showed an unblemished record of abject failure in real estate market speculation under every administration in Glass City history. Such a conclusion could be reached almost intuitively, and a more satisfactory form of closure was required. Speaking of history and failure, however, neither was it about the State of Ohio’s documented history of minimal maintenance over the 30-year-plus history of the building that had aged this 22-story structure far beyond its years and likely put it in a state of disrepair capable of creating one of those “catastrophic and unrecoverable spins” a la Tom Cruise “Top Gun.” (Similar personal experience in the case of my own structure had taught me more than a few tragic lessons in this regard.)

It probably should have been, but wasn’t about the volatility of the Downtown Toledo real estate market during an economic recovery that remains shaky, and where the only ones still apparently making any money are the carpenters putting plywood up in the windows. This is is Toledo (“where you will do better”), where even experienced and savvy gamblers like Larry Dillin and the Chinese, playing their cards close to the vest, have feared to go ‘all in’ with what would normally appear to be winning hands in games like Southwyck or the Marina District.

It wasn’t even about the fact that even by using Common Core math principles (where 2 + 2 = 5 for some values of 2), the numbers never seemed to work out. Even if purchasing the property at a cost of $1, by the time the city completed a “property flip” on this facility that meet all of the current building codes and ADA requirements, it would likely exceed the existing current estimate of $7 million. Add in the consequences of Toledo’s liveable wage, the labor overruns that come with any government project and the inevitable yet-to-be-discovered costs that will only come to light when the project is too far along to turn back on, the real costs of Toledo’s “This Old House” fixer-upper may not only exceed the worst nightmare from this PBS show, but in a worst case scenario could conceivably approach the original $61 million construction cost.

But all of this can be set aside as not being the real reason that Toledo should not become a real estate agent and buy this building. That, in fact, was something that I only discovered late into my research.

As many of you know, government overreach is at an all time high in this nation, with bureaucratic encroachment at every level of government occurring against a largely disinterested electorate. Government in this nation is more powerful, more intrusive and more dangerous than it has even been in its history. The real reason, therefore, that the city should not be permitted this move is … the Blazers.

Government simply cannot be allowed to add to their already formidable arsenal of weapons, the power imbued in those hideously colored, horribly tacky real estate blazers. Equipped with these polyester stormtrooper uniforms, what chance has even an aroused citizenry against them?

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