Originally Posted by SeattleUte
Back to my Soviet analogy. This really is a planned economy type of thing. Typically, successful developers respond to an instinct for when and where a commercial project will return a profit. Ideally, they build it with borrowed money, lease it up, ideally when it's on the drawing board given the complexity and expense of TI's such as multi-plex and restaurant fixtures, which need to be amortized in the leases. Then because they don't want to be landlords (not their specialty), they'll sell the project to real estate investment trusts and other institutions who want a steady return on something solid. In this sceario the banks are re-paid in cash after earning a good return and everyone is happy, most of all the developer who made a killing. (As a class I've found real estate developers to be kind of crass, unrefined, and flim flam, which to me gives rise to a sublime irony that our great, majestic cities--the pillars of our great culture--are the brain children of these folks. I love capitalism and its manifold ironies.)
When things go wrong, however, the developer has to go through the agony of bankruptry, foreclosure, loss of credit rating, etc. Yes, he may have a corporation to hide behind, but more times than not the bank wants a personal guarantee, and even when protected by the corporate veil he emerges with his reputation in tatters and cannot be spared the agony of protracted litigation. It's a tough, risky business, and when developers get extremely rich, as they sometimes do, it's probably well earned.
My points are: First, no, the Church doesn't have $2 billion cash lying around; it's borrowing the money, and tithing won't be tapped into only if the commercial project is successful. Second, you can't make these types of projects successful just by throwing money at them. I've seen plenty of gleaming, empty, drafty malls in places like Oklahoma, Texas and Alaska where the developers guessed wrong and got killed or came too late and got crushed at the door when the economy softened (is that other mall at Second South going to take this lying down? Seems there's a lot of competition). The Church seems to be acting like local government here. Yes, there are examples such as the Riverwalk in San Antonio, downtown Baltimore and many others where the city injected resources and helped to make a dismal area bloom. But invariably it's a delicate marrying of private enterprise and risk taking and public incentivizing that makes it work.
Hoya and others here know the actual facts; I don't. Who will be the tennants? Most important, who are the anchor tennants? Is the Church selling municipal backed bonds? (ACLU, are you listening?) Is there a commercial lender? Is the temple being pledged as collateral? (This is giving me an idea for a great comic novel spoofing LDS utah culture.) Has anybody seen their pro formas, cash flow projections? Are their assumptions realistic? If law firms were publically traded I think James Cramer would be issuing a buy recomendation for the ones in SLC. Consturction contractors are notorious litigation predators. It will be interesting to see this unfold.
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