consultants are sandburs

Friday, October 26, 2012

With rental housing being today's housing bubble, one that could suffer market over-supply and a consequent bursting bubble effect, an older Crabgrass post is revisited.

Rather than repost the thing just follow this link. And think about it in the context of eight million city dollars at risk behind a secured institutional lender of over twenty million, on a high-risk rental where the quality of security in a David Flaherty personal guarantee is an unknown factor. Is Flaherty over-exposed by too many projects going on at once, at differing locales? Is that firm's capital spread too thin? Is it encouraging to see Flaherty using a Flaherty construction affiliate as general contractor, as I believe to be the case with the by-the-rails-rental, where this general contractor may be unfamiliar with ex-urban Minnesota winter construction practices? We wait. We shall see. We hope for the best, with city money at risk, such as it was committed by a council majority with two key operatives challenged on reelection effort, this election cycle. The decision to put the city in the position of being a secondary and arguably ill-secured creditor to Flaherty (behind his Pittsburgh institutional lender having a security interest first position re the rental property), was a decision to so participate where a key close vote was dominated by a troika, one of whom did not survive a primary election.

To gamble in this adventure was a decision made by a 4-3 vote, risk exists, and do we citizens really want any more of that kind of gamble? By November 7 we in Ramsey will have that question answered. However you vote on local issues November 6, please do hope the rental thing is a success. Taxpayer money is riding on that outcome. Not that I would ever have voted for such a gamble, but it is how history happened. Hope for the best.

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