The day after my plane touched down on American soil, I (1) unpacked my bags, (2) picked out a color for the grout of our new bathroom tiles and (3) sprinted up to the Coffee Emporium to meet a developer and cincyopolis reader for the first time who has been a big behind-the-scenes help on my commercial real estate education. His insights are particularly appreciated as developers typically don’t welcome questions from the general public about how their business is done, assuming all development is good development and eventually will benefit everybody.
Before we finished our first cup of java, he mentioned one particular post that had really bothered him, Is the Port Authority Catholic? in which I questioned whether or not it was appropriate for a public agency to provide conduit financing for private schools.
“I’m not even Catholic,” he said, “but why did you bring religion into it? If I hadn’t known you I would have thought you hated developers.”
Our conversation continued via email messages for several days after we hugged goodbye on Central Parkway.
Message 1 from my friend: “My opinion. Nothing but my opinion. Without any knowledge of the specifics or what the Port is there for or motives or handlers or anything: Every city needs a conduit lender to facilitate bonds. It is a basic requirement. I don’t use them so I don’t care, but someone’s simply gotta do it.”
Message 2: “I was also thinking about the “affluent school” comment regarding the schools that got bond financing via the Port. I REALLY don’t know much about it, but I do know that at the end of the day an entity on the other side has to guarantee the bonds – which means they need to be an investor that is comfortable that the entity, in this case a school, has the ability to repay the bonds. An investor decision. So I suspect that right or wrong and with or without the Port, affluent schools are more “investment grade” than non-affluent schools – total wild-ass guess (truly).”
Message 3: “Ahhh but I, as the disinterested and ignorant person would ask: the Port is a conduit bond lender, so is the public involved at all in the financing (hint: I have no idea).”
Message 4: ” Ps: the government or city is typically not con-signing or guaranteeing anything. Dunno just saying (as the Yin to your Yang).
What if the guarantor is a pension fund, with the Port just facilitating the conduit and managing payments for a fee? Dunno. Not smart enough to know!”
Other areas where my new friend took exception to my reasoning included (but were not limited to): my classification of jobs at hotels as “crappy” jobs, (“Not for the people working at those jobs” was my friend’s reasoned response) and reduced tax rates on vacant timber land in Indian Hill as he felt it promoted conservation and greenspace.
In my effort to compete for reader attention sometimes my headlines go too far. But my intent is always to provoke much needed messy conversation with lots of back and forth. As the above exchange with my developer-friend so clearly demonstrates, these are complex questions. Even professionals who have worked in the industry for decades do not have a clear understanding of the purpose of the Port Authority and yet we have granted a board of 9 politically appointed representatives the right to own land, issue bonds and even impose taxes on behalf of the city. We have a responsibility as citizens to ask fundamental questions about such a powerful public agency, one that started out as an obscure little entity to tackle sites with environmental problems and now intends to position itself as the 3CDC outside the urban core. Such large amounts of public financial support demand not just better understanding. We need to be part of the decision-making process regarding what this group can and cannot do. Otherwise decisions will be made by an elite group of powerful industry insiders with no direct responsibility to the voters.
Healthy democracies are based on open discussion of public policy and fair application of existing law in a transparent process. All of this complicated development stuff is “just opinions” but there’s one thing I know for absolute sure: We will make better decisions together as a community about commercial real estate development with a wider variety of perspectives represented. And I bet that’s something on which my new developer friend and I could agree without reservation.