Draper Boom

In case you've had your head stuck in the sand, the prison move is a done deal.  The Draper site will be abandoned, and in a display of petty vindictiveness and short-sightedness on an effectively criminal level, The Powers are moving it to the airport (There's brilliance for you.  It isn't enough that everyone flying into or out of the principal airport in the state already has a comprehensive view of Jersey-grade industrial blight; now they'll get to see our leading growth industry as well.).  And the yokels who herd Draper down the sheep path are licking their chops.  700 acres of loose land.  It will look like the Oklahoma Land Rush.  And having learned nothing from the Sandcrest, er Suncrest Debacle, Draper will not make sure there is adequate infrastructure, performance bonds, or even a way for the schools to handle the influx.  The fun just never stops.

Boise County Files Chapter 9

As reported by the Idaho Statesman, Boise County, northeast of Boise up Highway 21 through Idaho City and Lowman to the pass over to the Stanley Basin, has filed for Chapter 9, municipal bankruptcy. It seems they screwed up a land use decision, the developer sued them and won a multi-million dollar judgment, and the county come anywhere close to paying.

There are several lessons to be learned from this. First, there are a lot of stupid people on the Interweb Pipes. The Statesman story was apparently linked to a bunch of right-wing websites (Drudge, Free Republic, Town Hall, etc.), and the knee-jerk comments started pouring in from folks who apparently hadn't even bothered to read the article (See comments by Ron Reale, Mark Babb, Christopher K, Teddy Kennedy's SEARCH+RESCUE, Joe Astroturf, Jack White, and golden_elixir for the most egregious examples.), screaming about how liberal Boise deserves this (First, Boise is not liberal, except in Idaho. Second, this is Boise County, not Boise City. Get a map, people.) and how this county was bankrupted by public unions (The Koch Brothers really have their meme rolling, here. You might want to check just how unionized Boise County is. Then check whether any union members caused the loss of the lawsuit.). With "civil" discourse at such a level, it's no wonder nothing is getting accomplished in this country.

Second, municipal bankruptcy is a world of its own. One of the commenters (johnnydoughey) asks a decent question: He thought you couldn't get discharged for liability for an illegal act. Well, there are illegal acts (criminal) and illegal acts (civil penalty). Municipalities can't be convicted of the former and can be excused for more of the latter than private people can. The developer's attorneys have already promised a 921(c) motion for dismissal for a bad faith filing, but I doubt the court will grant this (I wonder if the commenters who are currently complaining about the federal court entering the judgment will also complain about the federal bankruptcy court providing protection from that judgment. They're both exercises of federal authority, after all.). It remains to be seen if the county will come up with a viable plan, though.

Third, if you're going to be in local government, please learn how to make land use decisions. At issue here was a teen treatment facility that the county put so many conditions on, it was economically unfeasible. The conditions themselves, frankly, weren't the problem. Most of the conditions had to do with assuring adequate infrastructure back there in the hills. The problem was that the county had already approved other, larger developments back in those hills that required most of the same infrastructure but had applied no such conditions. In other words, the county was trying to charge all the infrastructure costs of several developments to one development, a constitutional no-no, and that was also discrimination against a special needs facility, a Fair Housing Act no-no. On top of that, county staff and elected officials were apparently advising the opponents on how to build a record to block the development, also a constitutional and FHA no-no. The developer filed suit for damages and nailed the county good.

Folks, if the city slickers are coming to your corner of Hay Seed World to make a quick flip on your cheap land, lawyer up and do what your lawyers say. I guarantee the developer has and is mapping out every move you can make. The Boise County commissioners didn't listen when the Boise County attorney said they were screwing up. The Boise County commissioners didn't listen when the attorneys for the Idaho Counties Risk Management Program (the counties' insurance pool) said they were screwing up and (SURPRISE!) the Program has denied coverage. Locally, Draper didn't lawyer up when it was reviewing SunCrest, and it will be dealing with it forever. Bluffdale didn't lawyer up on the one-acre zoning lawsuit and ended up losing an FHA case (It should consider itself lucky the developer wanted the development and not damages, or else we would have had a Chapter 9 here in South Valley.). Whether you're in private business or public office, it's never a good idea to be your own legal counsel.

Speaking of SunCrest...

...Zions Bank is suing Draper for $25 million for interfering with its development.  Even though you can't get anyone to buy up there because you can't get any financing up there because no geotech engineer will sign off up there because the whole thing is slumping.  Talk about drinking funky Kool-Aid.  Draper scewed up, all right; it screwed up when it greenlighted that turkey in the first place.

Not-So-Jolly Mt. Holly

Things have ground to a complete halt for the big, pretentious Mt. Holly development in Beaver County. My that's a shock. How the bottom line on that ever penciled out is beyond me. Now Chad Johnson, one of the county commissioners who greenlighted the project, says he always had doubts about whether it was feasible. Here's the deal, Sparky. One of your jobs as a public official is to protect the public. That includes making sure there aren't a bunch of dead, half-finished developments in your jurisdiction. That means you need to make sure there is a way to get the development across the finish line before you approve it. Come look at Draper if you want to see the results of local government being asleep at the switch for 10-20 years.

Un-Development

Well, as if Draper's problems with Suncrest going bankrupt with vast scads of infrastructure either incomplete or falling weren't bad enough (although Zions Bank, the principle creditor, looks like it's about to buy the project and complete it, though we'll see just how completed it gets), it also has a growing collection of unfinished houses people are walking away from. Draper is talking about an ordinance punishing walk-away owners and developers, but that's yet another example of too little too late. Draper (and several other communities) neds to get smart and start building the safeguards into the planning at the beginning of the project. We'll see if that ever happens or if we'll just have good-old-boy procedure forever.

Meanwhile, out on the West Bench, Salt Lake County wanted to practice that kind of planning, and Kennecott took its ball and went home. Kennecott has scrubbed its massive development on the West Bench, opting for a couple of smaller developments. It seems Kennecott wanted an upfront guarantee of permits for 200,000 houses. The County said, "No way, too many contingencies over too many years for us to sign off on the whole thing up front." Frankly, I think the County is right. There are a lot of things that can go wrong with a big project over time. Draper gave developers a free rein, and the results are not pretty. Taxpayers should not have to bail out developments, and governments should make sure that doesn't happen.

Suncrest Going Downhill

Well, not physically. At least not yet. Financially is another matter. It has defaulted on $58 million in loans from Zions Bank, and on Friday it dived into Chapter 11. The developer is shopping the project, and Zions says it will continue to fund it (Little choice there. Unless the development is built out, it won't come close to securing the loans.), so the homeowners up there don't have to worry about those issues for now. They should worry, though, about the causes of the bankruptcy.

The recent real estate downturn had an impact on SunCrest, but it isn't what sank it. SunCrest is embroiled in a series of lawsuits arising from the fact that the whole thing is built on a sandpile. There's a reason there are sand and gravel pits all around Traverse Ridge (There's a fault line up at the east end, too, but I'm not going there right now.). But the project was greenlighted anyway, and the inevitable result was a pile of lawsuits over deteriorating streets, inadequate water retention and drainage, and whether the houses themselves will one day come slaloming down the hillside. Default and bankruptcy loomed from the start.

Over 20 years ago, as the houses went marching up the benches in the Avenues and Olympus and Canyon Coves, people talked blue-lining (setting an arbitrary "do not build" mark at a certain elevation). I told them not to bother because such restrictions always get tossed out in court. What was needed was an engineer putting his liability insurance behind the geological stability of a project. That and bonding would have stopped the riskier projects or at least provided funding for fixes. Wasn't done, though, and now the bench communities are finding that Yeats was right and things really do fall apart.

I seem to recall a parable about building your house on sand.