Learn from your Mistakes or Repeat Them

I often find myself wondering if there's anyone driving this bus.  First, in spite of completely failing to get Craig Mecham off the dime with his Sugar House pit, Salt Lake City has greenlighted Red Mountain Retail Group's mixed use redevelopment of the rest of that block and the one adjacent.  I'm no fan of the Granite Furniture Warehouse, but we don't exactly need another chain-linked hole in the ground on that block.  The City says this one is different because Red Mountain has all its financing in place.  Yeah, right.  Mecham said the same thing.  So did General Growth Properties with the Cottonwood Mall.  Show me the money.

Meanwhile, on the South End Sand Pile, R&B SunCrest has walked out of negotiations to take over the SunCrest development, claiming Draper is not acting in good faith.  What that really means is that Draper, to the shock of everyone, is not rolling over, taking R&B and Zions Bank off the hook, and agreeing to stick the already thoroughly ripped off citizens of Draper with the entire bill to fix that mess.  Bully for Draper.  Unfortunately, Draper has done little if anything to change the ordinances and procedures that made SunCrest possible in the first place, so it continues to permit time bombs and will be crisis hopping for awhile.

As an aside, I have to wonder about Zions Bank.  As a result of the SunCrest collapse, Zions ordered Draper to close its accounts and find another bank.  That's the sort of "take your ball and go home" behavior one expects on a playground, not from a major financial player.  It could be a blessing in disguise for Draper, though.  Zions has taken some serious hits in the last year, from having to pull off-book garbage back onto its books to having to take over busted banks at the FDIC's "request" to seizing crap collateral like SunCrest.  There's only so much that any business can absorb.  Maybe it's good that Draper moves on.

Welcome Aboard the Real Estate Sag Wagon

Everybody knows residential real estate is going through a rough patch.  Mortgage applications are down to their lowest level since December 2000 (I guess people who've just seen their savings go "Poof" and whose jobs may do the same at any moment aren't interested in taking on 30-year obligations.).  Now the other shoe is dropping: commercial real estate.  Retail of course is a train wreck, with store after store going dark, and now Mervyn's announcing it will be liquidated by the end of the year.  Now developers are shocked, shocked to find that office space is overbuilt (Tenants can play musical chairs downtown at will, and 222 and City Creek aren't even built yet.  And Sandy and Cottonwood Heights are going great guns.  Some people are just easily surprised.)  (As an aside, Craig Mecham continues to use the downturn as an excuse for why there is still a hole in Sugarhouse.  Odd thing is, though, he claims he's going forward with the retail space and is just putting the condos on the back burner.  And Frank Gray, SLC'c community development director, is buying it and giving him more time to come into compliance.  Who says there's only one born every minute?).  The real estate market is a mess, it's getting messier, and it isn't suddenly going to pull out of this power dive any time soon.  Every fundamental (supply, demand, financing) is bad, and if you think the MOAB(Mother Of All Bailouts) is a magic wand, you need to sit down with a nice, big cuppa joe and wake up.

"Mr. Mecham, Fill Up This Hole"

Well, everyone's least favorite swimming hole in the making, the Mecham pit in Sugar House is back in the news. The City wants Mecham to fill that hole by Winter. Mecham's first line of defense is that he's being singled out when there are other projects out there that are out of compliance. His second line is that he's finding financing harder to get than he expected.

First, I can't think of a project out there that's as big a mess in as bad a location as Mecham's. It's prime real estate that two years ago was one of our prime, independent shopping districts, and it's been nothing but a chain link fence and a hole in the ground for months, including this entire construction season. So, no, he isn't being singled out. Even if he were being singled out, his argument is about like telling the cop who pulls you over for speeding, "Hey, you can't ticket me. Other people are speeding too." Good luck with that.

Second, financing is always a gamble on projects like this. Mecham isn't Don Trump; he can't snap his fingers and make it rain money. Even Trump can't do that any more. This problem was completely foreseeable a year ago when he knocked the block down, and even before then when he evicted all his tenants. This isn't even the first time he's made this excuse. He said the same thing back when the City was imposing some frankly reasonable restrictions on his demolition permit.

Sorry Mr. Mecham, I can't sympathize. Either clean up your mess, or sell that property to someone who can.

Sugar House Sour

In the interest of full disclosure, my office was in these buildings until Mecham Investments booted me out so it could make its big hole in the ground. Nothing I'm reading in the paper this morning surprises me.

Craig Mecham (aka The Great Developer) has a hole in the ground that half of what's left of Sugar House could fall into, and apparently isn't going to do anything about it. At least the City is stepping up, threatening to take the performance bond and fill up the hole itself. I hope the bond covers the cost, but I'm thinking it might not.

Oh, and Mecham is hinting that, due to the downturn in the real estate market, he's having to rethink the project. Boy am I shocked. If he's just going to leave a mess there, I think the City really ought to step up, fill and landscape the hole, and use its status as a creditor to toss the project into bankruptcy, where it can be sold to someone with the wherewithal to finish it. Unless the City wants the center of Sugar House to be a full block of urban blight.