Government Hill subdivision tanks

January 27, 2009 at 5:15 am | Posted in politics, Uncategorized | Leave a comment
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I said I was going to stop reading the ADN LTE section — but a promise to yourself is pretty easy to break:

City shouldn’t make taxpayers pick up tab for its foolishness
The interaction between the City of Anchorage and developer Marc Marlow is a good example of how the finances of the nation got where they are today. It appears the city sold Marlow development property worth $3.5 million for a half-million down and a note for $3 million.
Then he used the already encumbered land as collateral to borrow another $4.2 million from a bank. He improved the property with streets and utilities.
Now that the bank has foreclosed, the property must sell for at least $7 million for both the city and the bank to recover their funds.
This type of “leveraging” has made millions for developers, but when things go sour, it is the taxpayers who bite the bullet. Now the city is considering paying nearly $7 million to buy back a property it sold for half that, before the streets and utilities were put in.
Doesn’t it sound a little foolish to spend $7 million to recover the $3 million you sold the property for?
And why didn’t the city arrange things so that it would be the primary repossessor in event of default? It seems no one learned much from previous mishaps, such as the saga of the old McKay building.
I do not believe the citizens of Anchorage should bail out the developer or the bank. The city is in line to recover whatever the sale brings over the amount owed the bank. A lawsuit may add to that amount, if needed. Any money lost has to be credited to lessons learned, and the city should be held more accountable to those of us who provided said money.
— Don Neal

OK, well, yeah — it is foolish to throw good money after bad, but it also sounds like the muni is damned if they do, and damned if they don’t.  This is kind of a big project to go south, and it makes one wonder if bank failures are around the corner?

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