One of the largest rhetorical weapons in the arsenal regularly wielded by proponents of repurposing or demolishing the Astrodome over the last several years has been a brutal financial factoid regularly drawn into arguments over the Houston landmark’s future. How much money in maintenance and debt-service costs have county taxpayers had to spend just to keep the retired sports stadium around and rotting? Why $2.4 million or so each year, claimed news report after news report after editorial after news report. Like the once-record-breaking 642-ft. clear span inside, it was just one of those things people who were paying attention knew.
But that figure isn’t accurate, Harris County’s budget chief now says. And at a meeting called by Judge Ed Emmett this week, Bill Jackson tried to set the record straight: First, he said, the Astrodome is “essentially debt free“; all but 5 percent of outstanding debt payments connected to the facility stem from work done in 2002 and 2003 — after the Dome had been retired from professional sports — to prepare the larger park for the Texans to use it. (The total amount of that remaining debt, according to a Houston Chronicle recalculation earlier this year, is $6 million.) Using the accounting principle of “first in, first out,” this means that all debts attributable to the Dome itself have now been paid for, Jackson said.
How about maintenance and insurance costs, then?
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Now Down to $171K a Year, Give or Take?
COMMENT OF THE DAY: HOW MUCH HOUSE YOU CAN AFFORD “. . . Affordable is in the eye of the beholder.
My brother wants to buy his first house, and I explained it to him thusly: To see how much house you can afford, NEVER start with one of those mortgage calculators. Instead, do the following: Evaluate your month to month finances. Figure out how much you can comfortably spend on housing every month, using your own situation of debts, expenses, etc. Multiply by 2/3 to see how much you can pay on a mortgage (the remaining 1/3 is escrow fees to cover required insurance, taxes, etc, which the mortgage calculators leave out.). THEN go to the mortgage calculator and work it backwards to see what price range you should be in. This will be your threshold for affordability. You will then probably want to knock off 10 or 12% and give that number to a realtor (this way if they show you something over your price range that you like, you can still go for it).
That said, on a macro scale, the affordability indices do have merit. Large corporations use the data to help determine where to locate offices. Federal and State governments use them to help determine who gets housing dollars. But it is important that we not treat those numbers as gospel for what we, individually, can afford in terms of housing.” [ZAW, commenting on Where Houston Ranks for Affordability; The Rise of Bicycle Commuting] Illustration: Lulu
A CROWDFUNDING CAMPAIGN TO KEEP THE WICHITA ST. MYSTERY HOUSE UNDER RENOVATION FOR ANOTHER 30 YEARS OR SO A former city librarian is channeling the don’t-stop-the-renovating spirit of Charles Fondow in her bid to raise enough funds to purchase the seminal Houston DIY-contractor-hobbyist-visionary’s remarkable former home in Riverside Terrace. “Help us raise the funds to buy it outright so we can complete the additions in our own time,” writes Virginia Verner in the promotional copy for her crowdfunding effort on website GoFundMe. Keeping the whir of power tools going appears to be one of the goals: “Current plans are to repair necessities first, inhabit the front house, and over time work to complete the unfinished bits. Events for repair and recreation will become a fixture in this abode.” The homeowner Verner hopes to replace in the 4,861-sq.-ft. expansion and renovation project at 2309 Wichita St., just 5 houses east of the Hwy. 288 feeder, worked consistently at his creation for 31 years before passing away in 2011. Perhaps paralleling the sincere, hardworking, but perenially underfunded Fondow, Verner has set the fundraising goal for her effort at $150,000 — the exact asking price for the property, which appeared on the market last Friday for the first time since its foreclosure in 2011. No mention is made how renovations might be funded after the acquisition. As of this morning, the website indicates she’s received pledges for 0.1 percent of her goal. [GoFundMe; previously on Swamplot] Photo: HAR
CROWDWATERING, CROWDGOBBLING SUCCESSES Crowdfunding efforts for 2 separate Houston ventures featured on Swamplot last month have achieved their fundraising goals. Rebecca Masson tells Swamplot that “Fluff Bake Bar will happen,” after a campaign on Kickstarter brought in $53,580 in donations. But Masson says she’s “still in talks” with the landlord about the new Midtown retail sweet shop she’s planning; location details won’t be announced until there’s a signed lease. Meanwhile, $3,035 brought in from a campaign on YouCaring means 20 new trees donated to Meadowcreek Village Park by Trees for Houston will have enough water to drink for 2 years. Got concerns about what the trees will drink after that? The campaign still has 9 days to go before it closes. Map: Meadowcreek Village Civic Club Beautification Committee
COMMENT OF THE DAY: HOW CROWDFUNDING MIGHT CHANGE THE LOCAL LANDSCAPE “I actually really like the idea of crowdsource funding for real estate. The real estate market is too frequently weighed down with the plodding work of the institutional investors and REITs. Anything that steps slightly outside of the box is tossed before renderings are even drawn. While industries like consumer electronics and automobiles race to deliver the next and greatest new thing to customers, the real estate industry seems to be forever stuck in doing the same crap over and over as long as it makes the predicted return. If done well, crowdsourcing could potentially offer up some real innovation in real estate and shake up the ‘monkey see, monkey do’ work of the established actors in the industry. And if people lose their shirts, they will only have themselves to blame and cannot hide behind some big name REIT or investment bank.” [Old School, commenting on Headlines: ’380 Agreements’ for the East End; Real Estate’s Crowdfunded Future] Illustration: Lulu
HOW TO PAY FOR THE CYPRESS CREEK GREENWAY PROJECT The Houston Parks Board, needing funding for the 40-mile Cypress Creek Greenway, commissioned a study that concluded that the Cypress Creek Greenway needs funding. Apparently, the creek that runs between IAH and Hwy. 290 is the only one of the 10 waterways involved in that 100-mile interconnected greenway plan that hasn’t identified where it’s getting its money; that’s where the study comes in. The Magnolia Potpourri’s Crystal Simmons explains: “Because [Harris County] funds are wrapped up in other projects, the study suggested creating a fundraising vehicle dedicated to generating funds specifically for the greenway’s planning, design and construction.” Now there’s an idea! And if that doesn’t cut it? “[L]ocal advocacy organizations including the Bayou Land Conservancy, the Houston Northwest Chamber of Commerce and the Cultural District have volunteered to continue publicizing the project.” [Magnolia Potpourri; previously on Swamplot] Photo: Cypress Creek Greenway Project via Facebook
COMMENT OF THE DAY: A LITTLE 411 ON THAT 2010 $6 MILLION 380 SOUTH OF I-10 “For the record, the Ainbinder 380 Agreement did not include drainage detention, they simply tied into existing storm sewer systems — there were no ‘improvements.’ The road was widened at the expense of a tree-lined sidewalk. The sidewalk was ‘abandoned,’ which means ‘is no longer in existence.’ There are no street tree wells and/or no ROW accounted for to plant shade-bearing street trees. The removal of $250K worth of mature Live Oaks resulted in a transfer of this public amenity to Walmart’s parking lot. Yes, that’s right. Public trees were allowed to be replanted on Walmart’s parking lot.
And, oh yeah, the four-sided intersection has just two pedestrian signalized crossings. Yes, you can’t actually safely cross on two sides because there are no lights and markings. Why? Because PW&E missed it and the developer didn’t end up having to pay for it. The ‘bridge improvement’ is the biggest boondoggle of them all. Ainbinder wanted to pave it and area civic orgs fought them. Turns out, after coring was performed on the bridge, that the dead load was far greater than known AS A RESULT OF previous paving. That was the second load limit drop. So, Ainbinder window-dressed and spent 380 monies for cosmetic treatments — changing out balustrades and painting A BRIDGE THAT WILL BE TORN DOWN. That is an absurd waste of taxpayer money.
Unlike other 380s, the Ainbinder 380 had next to no specifications that ensured deliverables. There were no clawback provisions to ensure public return on the investment. Once the money is awarded to the developer, they can strike or change line items and they still get full payment. The development doesn’t even have to perform to produce new taxes (not just poached taxes), it can be a miserable failure and they still get paid.
The folks that were championing this development are now trying to pretend the public infrastructure results were worth $6,000,000 of public money. Guess what? You were wrong then and you’re still wrong now. The proof is right there for everyone to see. Own it.” [TexasSpiral, commenting on Headlines: Getting to the Washington Heights Walmart; Learning Lessons from Hurricane Ike]
COMMENT OF THE DAY: THE ONLY NUMBER I NEED “For me, as someone who routinely buys, restores, and holds these types of property for the long term (including a property right across the street from this one that is roughly the same age / type of construction), the only thing that I consider when determining value (and this a pretty standard / typical metric) is CAP rate.
Specifically, I use the CAP rate at current rents and expenses to determine what it is worth today . . . and I calculate a projected CAP rate after renovations to determine what it will be worth with higher rents.
The CAP rate is just a simple calculation for the rate of return on your cash in the deal. If you are simply buying a property and continuing on as is, the CAP rate is the return (from cashflow) on your down payment. If you are planning to upgrade the property the CAP rate is the rate of return on your down payment + carrying and renovation costs . . . based on the new rents.” [Jared M., commenting on The End of Another Almost Afton Oaks Apartment Complex?]
COMMENT OF THE DAY: HOW TO KILL REDEVELOPMENT PROPOSALS FOR THE ASTRODOME — WITHOUT EVEN TRYING “So, a private group (Astros) comes to the County and gets tons of public funding to build the Astrodome. But, now, if a private group has a great idea to repurpose the Astrodome, they cannot suggest that it be paid for with any public funds or let the tax payers consider their ideas for use with public funds. Only the great wise elders of the County Commissioners who have sat on their hands for over a decade on this issue can propose a solution for the Astrodome that involves the use of public funds. The ballot measure had better have a ‘none of the above’ option.” [Old School, commenting on Headlines: League City’s Red-Light Cameras Go Dark; ‘Guerrilla Gardeners’ Bombard Midtown with Wildflowers; previously on Swamplot]
CITY COUNCIL TO DECIDE WHETHER DOWNTOWN HOTEL REDO WILL RECEIVE FEDERAL DOUGH Houston Politics’ Mike Morris is reporting that city council will vote today to decide whether it will loan Pearl Real Estate up to $7.4 million toward the $81 million renovation and redevelopment of the 22-story slipcovered 1910 Samuel F. Carter building at Rusk and 806 Main St. What does Pearl have in sight? A JW Marriott. (It’d be across the street from BG Group Place.) Last summer, explains Morris, the city applied for U.S. Department of Housing and Urban Development money that would be passed on to Pearl and ultimately paid back with interest — or that’s the idea, anyway. This kind of deal went off without a hitch in 1998, when the Rice Hotel paid back their $4.8 million right on time. But the city’s been kept waiting before: “In early 2005, it came to light that the Magnolia Hotel (which had gotten $9.5 million in 2002) and the Crowne Plaza (which had gotten $5 million in 2000) had never made a full payment to the city on their loans.” Though by 2012, Morris adds, those loans had been repaid. [Houston Politics; previously on Swamplot] Photo of 806 Main St.: Swamplot inbox
COMMENT OF THE DAY: WHY DON’T SCHOOLS LEASE? “HISD needs to get out of the real estate business and set themselves up as a 40 year build to suit lease with AA credit and 10 year options to the end of time, thus allowing private development to be holding the bag in year 41 if the neighborhood has turned and students have migrated elsewhere.
Oh, they haven’t? Still top notch? Great, we renew, and will again in 10 years.
Hell, the deal would/could even include mandatory capital infusion from the developer (or assigns, sells) upon exercise of option!
Why am I not in charge? I welcome people to explain the downside of this idea, truly. I’ve been unable to see it, myself.
Oh, and if the peanut gallery tries saying that there would be a developer on the planet who wouldn’t jump on a 40 year lease commitment build to suit with an HISD guaranty is just lying. If HISD defaults on the rent, first of all we should all be stocking up on shotgun shells and bottle water, but more over IF they default the developer has permanent debt, favorable loan terms, and can easily shop the market to backfill with any number of learning institutions who would be licking their chops to get that deal.” [HTX REZ, commenting on Third Ward Residents Protest HISD Proposal To Close Historic School]
COMMENT OF THE DAY: IMAGINING A HOUSTON TEARDOWN FINANCING FUND “Cool place. And could be bought with payments less than rent in the area. I wish lending were easier. I think this place would have a better chance of being saved. This will likely have to be bought unfinanced due to its condition, which means wrecking ball.
I’d love if there was a fund of sorts, funded by people that want these places saved. Then home buyers could borrow from this fund when bank financing was otherwise not available. That would give the people that want to save these places a way to put their money where their mouth was while not having to directly buy and rehab themselves. A bonus would be an actual return on their cash vs the .1% they get in a bank.
Dreaming, I know . . .” [cody, commenting on Peeling Away a Richmond Place Spanish Colonial Bungalow]
A LITTLE ELECTION DAY MUD-SLINGING IN SPRING A $58 million bond measure to reimburse developer DR Horton for utility and road construction on 400 soon-to-be-developed acres just south of The Woodlands and east of Gosling Rd. is expected to pass in today’s election by a mere 2 votes. The couple expected to account for the winning margin just moved into the area in a trailer they’ve parked in a clearing. And, yeah, they’ll be the only people allowed to vote on the measure. Does this sound like a strange picture in an elective democracy? It’s the normal course of events for establishing municipal utility districts on empty land. 659 MUDs are currently active in the Houston area; since 2009, 88 new ones have been established statewide. [Houston Chronicle] Photo of Willow and Spring Creeks: Northampton MUD
UNBAKING A LONELY STRIP CENTER SPOT Saddled with a “terrible” location — a lonely strip center on Barker Cypress Rd., halfway between Katy and Cypress, year-old Ranch Bakery is taking to Kickstarter to raise funds to — break its lease? No — start up a food truck, explains owner John Homrighausen. It’ll be a souped-up delivery truck with “a giant pair of longhorns for the front & a horn that plays ‘The Eyes Of Texas,'” he promises. The spot at 5431 Barker Cypress is good for his catering company, Homrighausen explains, “but an unfortunate one for a retail store.” He hopes to lure fans of kolaches and Big John’s King Kong Ding Dongs to donate a total of $19,965 towards the effort by the end of the month. [Kickstarter, via Eater Houston] Photo: Ranch Bakery
COMMENT OF THE DAY: COOL DEVELOPMENTS NEED WACKY BUCKS “There’s plenty of eccentric millionaire money around. I guess they are just more private that they used to be? (My husband’s boss keeps bars of silver in his basement, for example.) Or, they prefer to spend their money on credit default swaps than cooky real estate schemes. C’mon rich people! Do something interesting.” [anon, commenting on Comment of the Day: A Different Kind of Money]