Finance

Greed is mostly considered the root of all evil, trampling upon the lives and fortunes of us all. We also commonly use it as an excuse for our own futility. As a society we have attempted to counter the perceived evil of greed with the perceived virtue of altruism. We seem to have forgotten that there is really no such thing as a free lunch and indeed the state of our world amply proves just that. Our altruistic ideal overlooks the simple fact that without greed we would all still be living in caves and be greedily scrabbling tooth and toenail for enough to eat. The rural farms, mines, and fisheries, together with the layout,construction and governing of our communities, are prime examples of the workings of virtually uncontrolled greed. Greed, as a fundamental force of Nature is indeed an evil when its use results in harm to others and such evil is indeed is rampant in our world.

In reality however, the aphorism "If we can harness the horse of greed, it will pull our wagon to wherever it is we want to go" is abundantly true. How might we fit that harness to that greedy horse in order to direct it to where we want it to go? Simply either supply it with more of the treats upon which it feeds or dog race it after a phony rabbit.(careful with that last - those greedy graspers are rarely unwary). We must, however, be very careful as to what we load in that wagon and where we select for its destination. We will indeed suffer whatever consequences result. Symptoms of policy neglect and lack of vision are exactly my colleague Peter's melluva hess results which surround us on every side today.

Funding Options

Since it serves us to engage in long-term thinking about what our communities are to become - if only to house the fourfold increase in population that is coming and to create a desirable environment for our great-grandchildren - we need to consider the sources of financing for the kind of urban redevelopment projects discussed thus far.

Condemnation of private property for "public good" is a process that is currently used by officials to obtain land and or property for development. Nevertheless, this is a perfect example of short-term thinking, employing single-project, here-and-now planning horizons. The way it works is that property owners holding land targeted for redevelopment are commonly offered lower than market or equity values for their property, leaving it up to the owner to enter an expensive, adversarial process with his/her community in order to obtain equity and justice from the process. The end result often amounts to legally mandated robbery regardless of the circumstances of money, good sense, historical homestead ownership, or any other consideration. This political process has forced removals in some jurisdictions by calling "economic progress" a public good, and permitting developers to show elected officials that, rather than properly (but not popularly) raising taxes, they can hustle more dollars out of some blue sky development on yours or my property than will ever conceivably become available from either of us.

These processes should assure property owners in areas selected for new urban village projects that planning must accede to the area and financial limitations imposed thereby. It would also assure potential lenders that the loan burden is shared by many responsible owners and, given the size and requirements of such substantial undertakings, will have full community backing for their required civic projects within the multi-use complex. It would also permit a developer to include within the area of his proposal cherished landmark sites, accepting that his footprint building area would be reduced by the square footage occupied by an existing heritage facility, but recognizing project values are increased by its proximity.

There are many established means to raise funds for building projects. Competition for the often lucrative proceeds from these ventures is so fierce that those lenders have created a bewildering array of options. While it is common for prudent financiers to require substantial equity from the borrower, even that requirement in the case of perceived public need, becomes waived or substantially reduced with the aid of governmental guarantees. No doubt further modifications in that marketplace will occur when these very substantial Community Urban Village (CUV) finance packages become available, although the current five to fifteen billion dollar Las Vegas entertainment projects seem to pave the way for just such entrepreneurship..

Initial public stock offerings (IPO) are certainly possible finance vehicles, although rather small compared to current corporate market offerings for seemingly much less worthy public goals. Another method that seems certain to become a starting point will be the Tax Free Bond (TFB) which, in order to conserve tax liability payments, has the attractive feature of reducing financing interest to almost absurdly low, often deferred payment schedules for these money instruments. Another substantial source might be Naming Rights. I certainly do wish I had the economic power to name the first of these urban villages for my parents. If this new approach to land use is found to be as profitable as envisaged, rest assured that money would not be a serious hindrance to its realization.

Power of the Many

Illustrating the point of money availability is a delightful story that took place a decade or so ago concerning the Snowbird Corporation in Little Cottonwood Canyon outside of Salt Lake City , Utah. Snowbird built one of the very first vacation time-share condominiums, naming this 159-unit lodge "Iron Blosam" (the name for a misspelled hard rock mine formerly in the area). Snowbird's developer retained title to the land underneath the lodge in order that he or his heirs would re-acquire title to the construction in the year 2025. The condominiums became quite popular for year-round vacation use, but the temporary owners became restive at the idea that their tenancy was time limited and that the resale value was constantly being diminished. The Iron Blosam Owners' Association, with its 7950 weekly units, tried to begin negotiations for the purchase of the land beneath the building, but since the condominium owners were all smallholders, they were viewed with barely concealed contempt by wealthy Snowbird shareholders. The Owners' Association persisted, and eventually the bar was put exceedingly high, with the demand of an impressive $3,000,000 for less than an acre beneath the rural building (well over $80.00 per square foot!). The Owners' Association repeatedly attempted to negotiate a more reasonable price but was rebuffed. Finally, the Association Board put the purchase issue to the condominium owners in a vote, which passed resoundingly. The bank was quite nervous, never having financed a deal with so many owners on such a project type, but finally agreed to a miserly 66% loan at the very highest interest rate the law would allow. The required 34% cash equity was taken from the Owners' Association furniture replacement fund, the loan was consummated, the deal was done, Snowbird got its gold, the title was transferred, and the loan and the furniture fund, together with some $700,000 in incidental costs, were repaid within days! It then became the turn of the bank and the seller to become just not but a little bit impressed. Howard Dean 2004 Presidential Candidate was alerted to this phenomenon at the beginning of his candidacy at the Alta Club in Salt Lake City and apparently used his own modification of it to great political effect.

The moral of the story, of course, is that relatively modest sums from a great number of focused people can quickly add up to substantial amounts of money as we all learned, or should have learned in the 2008 Presidential Election cycle. You can perhaps see how this financing tale demonstrates a powerful financing tool, and how it might relate to our quest for exciting, livable, walkable, convenient communities. Catch this vision and let us together put those amenities we want into our own magnificently beautiful, ecologically useful backyard estates! To paraphrase George Washington, "Let us build for the ages so that in times to come our grandson's sons and their sons in turn may properly and proudly exclaim, Come look and see what our fathers have built for us!"

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