Flaherty had a major fire delay of their flagship Cosmopolitan by the Canal project in downtown Indianapolis. See earlier posts, e.g., here, here, here.
Flaherty is in it for the money, which is what capitalism is all about. They live that paradigm.
However, Flaherty should be taking his profit-making risks with Flaherty-Indiana-bank money. Already Ramsey, in a quite questionable decision, has bonded to subsidize the profit-making of the Indiana interests.
What, by local ordinance can be easily prevented, would be the possibility of rental prepayments going into the Flaherty risk-capital pool, where if lost the loss would weigh on the families and individuals who reserved housing with no thought they were "investing" to fund profit-making by others, but instead were intending to put money into safe holding towards their securing needed housing on a promised schedule.
If all prepayments to reserve housing in situaitons where occupancy permits have yet to be issued are required to be placed in the hands of a neutral escrow holder, i.e., not put at risk by builder bootstrapping such cash for risk-taking purposes, Minnesota people just looking for a home will be kept less at risk.
In writing the thought, Flaherty people are not keen on transparency, allegedly having told at least one employee she "did not have to tell anyone anything" about her construction clerk job while her spouse served on council and had cast several key majority-making votes favoring Flaherty aims; so I cannot say I have any evidence either way of how money may be solicited from potential Minnesota renters, and then handled.
What is of record is the situation that happened in North Carolina and the suggestion here is that Minnesota people - Ramsey council people - making ordinance decisions in Ramsey should show an awareness and inclination to protect other Minnesota people, ones potentially moving to our town to rent, from any possible mischief with their money.
Not that mischief of that kind is happening, again there is no evidence of that; but the key is that ordinances can be passed to make such mischief unlawful, were it to happen.
Having been used so often, the saying is hard to pin to any particular individual although I believe Churchill was most famous for his having said, "If we do not learn from history we are doomed to repeat it."
So, how about a mandatory escrow ordinance in Ramsey, for any prepaid money for rental housing for which no occupancy permit has yet been issued? It begs consideration, and we have a number of newly elected council members who ran supported by Citizens for Responsible Government. It would be most responsible to protect rental prepayments via escrow, and government does at the local level have the power to deliver such a measure of responsible government.
It is a fair suggestion and one that Flaherty folks, in good faith, should not see as in any way threatening or objectionable to their funding their project in ordinary ways.
While the key article excerpted earlier on "The 210 Trade" project in North Carolina has now gone offscreen yielding a "404 error" a google =
flaherty "north carolina" "210 trade"
shows the story itself is still alive and well, online, with the first page of google hits yielding a Wikipedia post, this, this, and via linking from the Wikipedia item, this. Chapter 7.
That very last link, excerpted from its beginning, states
Updated: 11:01 p.m. Tuesday, Oct. 6, 2009 | Posted: 10:56 p.m. Tuesday, Oct. 6, 2009
Bankruptcy Filing May End Condo Buyers' Chance Of Recovering Money
CHARLOTTE, N.C. —
The developers of an unfinished condo project in uptown Charlotte which filed for bankruptcy told Channel 9 Eyewitness News on Tuesday that people who paid down payments for homes may not get any of their money back.
Flaherty and Collins's Charlotte arm, Charlotte FC, was developing 210 Trade but it filed Chapter Seven. It has to sell what it can to pay as many people as it can.
According to court documents, the company has about $197,000 in assets but owes more than $52 million.
Charlotte FC listed everyone it owes and the dollar figures.
People put down $20,000; $50,000; even $80,000 on condos. A local builder spent more than $6 million on the project.
We spent Tuesday night trying to figure out whether anyone will get their money back. It looks like they won't. Flaherty and Collins told us "...the likelihood of such a recovery is very slim."
We showed the paperwork to local bankruptcy attorney Richard Mitchell, who is not involved with this case. He said buyers can usually get their money back if it's been put into escrow.
We later found out that money from buyers at 210 Trade probably was not put into escrow.
Mitchell said it was like playing "Russian roulette."
They don't write story messages any simpler than that.
This page. 32 separate projects going on presently.
That's a lot. Two things could be argued. Multiple projects represent diversifying the portfolio, not all eggs in one basket. Or, spread to thin, dominoes in a row, one falls they all fall.
Which view is most true depends on how thinly capitalized each venture, how leveraged each and the total are, and whose money is being used in the 32 gambles.
In Ramsey, Flaherty is gambling with Ben Dover's money, that's been done by last year's council, and this year's council is stuck with it.
In North Carolina it was ordinary unsuspecting regular individuals and families whose cash was being leveraged, and then when splat happened, they all got hung out to dry.
By using a thinly capitalized local intermediary, of all things - and I believe there are two such entities at play, in Ramsey.
This firm should not, as a matter of sound public policy, be permitted to leverage tenant prepayment amounts to do the firm's gambling. Citizen money paid in up front should be forced to be placed with a duly licensed Minnesota escrow holder.
Given history, North Carolina history, doing anything but demanding as a matter of public policy that prepayments go into a protective escrow would be foolhardy.
Last thought - ask yourself, will this junk really rent - noting proposed pricing, and the comparable tiny square footages - good luck living on a postage stamp priced as they are:
Good luck renting that stuff, twelve years from now given normal wear and tear.
Close to the police station, that can be said in its favor.
NOTE: I could not easily get price/area display onto a single page. Sequential is good enough. Tiny. Pricy. End of story. If any reader creates a side-by-side, please email it to - email@example.com