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The long and short of this fiasco is  the YVHA 's budget is not large enough to "buy", in the form of a director, the expertise necessary to be successful in the real estate development business and  absent that ability they are only suited for management and rent collecting and  so far as I know, none of the board members has that expertise either. Scott: you are right. Stop before they strike again.
The editorial board should stay in the newspaper business. Even if the YVHA doesn't default would anyone seriously want them borrowing more money after this debacle? Their reputation being ruined to prevent further borrowings is the least of that entity's problems. They should have "walked" or theatened to 5 years ago. Doug
Monger is right !!
Please join the discussion in the commentary on the editorial page of the Pilot...9/23/12
Please join the discussion on the commentary on the editorial page in Sunday's paper..9/23/12
Amen----It will be interesting to see how the City, County & YVHA handle this debt.....will the City & County step up and pay it off because of "perceived" liability?...they seem to be headed in that direction since it appears no attempt was made to get out of the obligation so far....at least 2 board members were definitely against defaulting at the last public meeting. They said that YVHA's reputation would suffer and they would never be able to borrow money again. The inability to borrow would be a good thing in my view for reasons that are now obvious.
I'm glad to hear you are following this up in that aspect. Sounds like the law is fairly clear.
With regard to the need of experts, I think when orgs such as this get into the development business it definitely needs that sort of expertise. The development side of the real estate business is the most profitable but also that with the greatest risk; no surprise there.There are plenty of experienced developers who are no longer around because of misjudgements of the depth and length of this last market. And, as in every boom, there are folks who were are in for the first time and are carried along. Most generally get culled when the downturn hits. It happens every time. This time the boom was the best and longest and the bust worse than I've ever seen.There were those who knew this couldn't last and got out because they had the experience to foresee it. Not all of them,of course, but my point is that you have practically no chance to pick your proper entrance and exit without having lived in that environment for a lengthy period of time and preferably have survived a bust. That's the great educator. Experience isn't the "end all" of the business but crucial for success.
The real problem would be to get the level of expertise necessary given the budget that is available to the YVHA. I think it would likely take their entire income from the City and County to achieve that and ,even then, that person would be looking over his/her shoulder for a development opportunity. I believe the developer that built the affordable housing south of town took that route; I'm sure he worked for the authority but I don't know in what capacity. Even the program of granting money for downpayments/2nd mortgages requires higher than normal capacity of knowledge in that field from its director. If the authority sticks to running properties like Fish Creek Trailer Park then you need only management experience which is less demanding and therefore less expensive and obviously less risky. Too bad the YVHA didn't have enough experience to know its limits.
sorry about the typo "lost cost housing" instead of low cost
I have not been a fan of deed restrictions for all and more of the reasons you mention. I'm unaware of YVHA's role in that.
A down payment/second mortgage program would yield market interest rates to offer a chance of ongoing cash flow. The risk is having to take over payments on a first mortgage and for that reason I'm skeptical of an organization like this watching their "downside". To be run properly it needs to be run by people versed in the business. Since the real estate market is so depressed I would think someone who is competent in this field could be found; at least until the next boom.
Overall I wonder if this approach of setting up an organization is truly workable in the long run. It needs attention from experts in the field every day all day and they are hard to find. I'm beginning to think tha SBS would be better off using simpler ways although I haven't thought about it long enough to have any concrete ideas. Tax policies ? Redevelopment areas for lost cost housing? I'd love to hear some ideas from all
When interviewing for the board position I was asked about how they could create cash flow. I said I thought the second mortgage scenario could work if properly done. Now I wonder.
I talked with Michael Schrantz yesterday at the Pilot and asked if they were looking at this story strictly from the firing of Mr. Krawzoff. He assured me that they were looking at this at the editorial board level and that would include the allegations made by Mr. Krawzoff. Their timing would be somewhat restricted due to legal considerations; he promised to keep me informed. They have asked the Authority board to "waive" the 90 day rule that evidently applies to the time limit for the Authority to maintain copies of meetings; exactly what limits to what type of meetings, I am not sure. He said that they would interview the auditor to whom Mr Krawzoff refers. Overall, I was pleased with the level of interest he expressed on behalf of the Pilot. We should all stay tuned; I would not like to see this get lost since they have leveraged a quasi-government entity into a money losing proposition that disproportionately effects those they were supposed to help. Think Fannie Mae and Freddie Mac. Not good. Note that approximately $120,000/yr of the $168,000/yr, in total, given to the Authority by the City and County is spent on interest on the loan which is currently at least $500,000 "underwater".
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