The stated numbers in earlier messages in this thread suggest that Civico earned about $8-$12 million in profits from Oriole Landing. If true, it still does not necessarily imply that we were ripped off as a town. It might have been that we needed to provide the $1 million forgivable loan to make it such that the *expected* profits at that time were high enough to build. First, the profits need to be as high as the developer could have earned elsewhere. Second, there’s an ex-ante ex-post problem. After building, real estate prices in Massachusetts increased dramatically, implying that the profits that they ultimately earned may be much higher than the profits that would have been reasonably anticipated. All that said, it’s still good basic economic practice to get many developers to make competing bids.
>*From Civico’s own documentation (link below), they estimated the total >*development > cost per condo was $351K (including acquisition costs). This means that it > would have cost them ~$21M to complete the 60-unit development. Considering > the $1M loan and the sale price of $32M, Civico made ~$12M in only 4 years > on a $20M investment, in addition to any rents collected. 60% return on > assets seems pretty profitable to me. This doesn’t even include the benefit > they would have gotten from any leverage. > I am not comparing the project itself to the Winchester project. What I am > pointing to is that Winchester was able to negotiate a deal with Civico > that includes a $1.5M payment from Civico to the town, as well as other > concessions like more affordable units and extra parking. Winchester was > able to negotiate this because the project had to go through town meeting. > In fact, the first time, it failed the vote, and only passed on the second > round after these concessions were made. > I would like to repeat what I said in my first post: I am not against > redeveloping the mall. What I do continue to find troubling is that we are > being pushed into rezoning the mall through HCA, because a developer said > that they would not go through town meeting. Rezoning the mall through HCA would eliminate our ability to vote on the > project and extract concessions from developers. Additionally, we have been > told we would apply for public grants to benefit private developers. > Let’s learn from the experience of Winchester and not eliminate the > strength of our town meeting process. Ben
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