Now that we have a quick guide to the projects proposed on TSPLOST, let’s take a couple posts to answer the basic questions on TSPLOST that will help us figure out exactly what we are voting for on July 31st.
Specifically, let’s try to answer these:
What is it? – What projects are involved and what money is being allocated where? (This will be a follow up to our Quick Guide)
How Realistic Is it? – Can the DOT pull this huge project off in the timeline? It doesn’t matter how cool it sounds if the DOT can’t pull it off . . .
What specific problems will be solved? – I know we all want to Untie Atlanta. How will these projects do that?
What happens if it doesn’t pass? – Do we sink into a traffic-choked oblivion? Can we try again next year?
Given our future hope and dreams for the city, is this the best course of action?
Alright. That seems like a decent road map (pun!) that should get us to a “yes” or “no.” Check back over the next week or two as we will try to answer these questions as thoroughly as possible and get some debate moving on whether TSPLOST will truly untie Atlanta traffic.
A Word on Sustainability
If someone tells you they’re a sustainability consultant, or expert, your reaction should be to ask, “in what industry?”
The reason I say this is because sustainability is not a profession with a defined industry, it’s a specialization. It’s similar to being a lean manufacturing expert or a talent acquisition consultant. They’re both specializations within larger industries i.e. manufacturing and human resources. Sustainability is a skill set within a large realm of thinking, much like creative writing would be to grammar. However, the realm that sustainability exists in is a strange mix of management consulting, environmental analysis, and politics. It’s tough to really pin down.
Sustainability has become a leviathan-like specialization because you can apply its principles to nearly everything, which is good. But, what makes it dangerous is that you can tie everything you analyze back to some life threatening environmental hazard. This is the sustainability marketing technique used to grab your attention and then reel you in. Everyone is worried about their health and well-being, so of course everyone worries about the world becoming uninhabitable. This is why I say most of what you hear coming from sustainability experts, most often entrepreneurs cashing in, is lies or damned lies. They’re just looking to get you worked up; ever heard of Al Gore?
It’s All Lies
Fossil fuels aren’t running out, the weather is different every year no matter what we do, and that Al Gore fellow is the only thing on this planet full of hot Green House Gas. That’s what you want to hear right? Well, all of those are all lies. Or are they? In fact, if you’re a sustainable thinker none of that matters. Are you confused yet? Good, because that’s exactly what I want.
Sustainability is just like statistics. There are lies, damned lies, and sustainability. Sustainability is an overly complicated opportunity cost methodology backed with statistical and environmental analysis, which is usually quite shoddy, used to confuse average people into feeling guilty so they spend more money. A common tactic used in sustainability is the butterfly effect.
“If you take that plastic bag from your grocer, you’re killing an endangered species in Namibia.”
You’ve either said something like this before or heard someone say it. Perhaps not to this extreme, but I bet it’s closer than you think. Arguing a point like my Namibia-Plastic-Bag-conundrum can be very effective if you’re dealing with an overly emotional audience, but in reality it’s almost impossible to actually prove. If you’re a statistician you’re familiar with the term “spurious relationship”. Just because two things are statistically related doesn’t mean they are causal. This is something sustainability speakers don’t want you to realize when they’re hammering home their point about how your poor choices are ruining the earth and more importantly our economy.
But, it’s not Sustainability’s Fault
There are two cold, hard truths here to consider: 1) We are terrible at global thinking and 2) we want all of our issues in life to be black and white. Neither are true.
We, as humans, are ill equipped for global thinking. Earth’s systems are far to complex for us to handle as individual thinkers. The reason climate change can’t be irrefutably proven is because climate models can’t predict all the factors affecting localized weather events. I use that example not to poke fun at climate scientists, but to illustrate that proving a butterfly effect is nearly impossible because Earth’s systems are so very complex.
All those things that happen outside our realm of understanding are called externalities. As an example, pollution is an externality in standard business decision making. We don’t really understand and can’t predict how pollution will affect a company’s ability to operate down the road. We can’t understand it, so we don’t use it in decision making.
So, Earth is difficult to understand and here’s the second truth. We like our answers to be 100% correct or 100% wrong. Grey areas are not our specialty. A former real estate mentor of mine had a great saying he used each time he entered a room to discuss a new deal with investors. This, for those uneducated, is that last place you want to be unsure of an outcome. He would say, “The numbers we’re going to show you today are incorrect and the financial result of this deal will not look like this. But, we’ve done our best to analyze the risk and we think we have a good one on our hands.”
And, he was right. The actual numbers never reflect our predictions because externalities are roughly impossible to predict (we don’t understand them, remember). He didn’t know it at the time, but that’s my favorite saying both for finance and also for questions of sustainability. He had a great understanding that life happens in the grey area.
Let’s recall my first proposition here. Sustainability isn’t an industry; it’s a specialization.
Perhaps a cleaner definition for sustainability is to say,
“it seeks to define and analyze risk associated with externalities to improve long term decision making.”
Like the premise that there is no such thing as a free lunch, sustainable thinking seeks to show how costs add up on a grander scale. There will always be winners and losers no matter how anything is produced and sold. Sustainability attempts to reduce the number of unforeseen future losses caused by the winners today (there’s no accounting for the damage caused by Charlie Sheen however.) It’s pretty much impossible, but it’s worth trying. Not all of sustainable thinking is a lie and in fact I think it represents a new wave of analysis for capital investment. The hoopla created by greedy greenies seeking to make a quick buck makes proving the validity of that a bit more difficult.
Keep reading here to learn more about what environmental risks should be considered to improve our understanding of investment and economic development.
So your community bank failed. Bummer.
And then the FDIC took over your commercial mortgage. Double bummer.
Now, you get a letter that says some LLC has purchased your mortgage. What next?
Well, I work for that LLC. My company is the controlling member of that LLC and my job is to work something out with you, Jim Borrower, that everyone can live with.
Ok, for the purposes of this article, I will assume that your mortgage has been purchased through a structured sale with the FDIC or has been transferred/sold to a loss-share bank. We can get into the difference between the two types of new owners elsewhere, but your position really doesn’t change much either way and I think the steps you should take are the same.
So here’s what you do:
Step 1 – Find the Buyer
The first step you should take is figure out who just bought your mortgage. Assuming your loan matures before 2030, you are going to have to deal with these jokers ( . . . me . . . ) sooner or later. So you need to know who you are dealing with. The fastest way to do that is to follow the headlines.
These sales with the FDIC are all public record, so eventually the FDIC will have it on their website, but it will take a while for them to update that. So you need to follow the headlines in a Google Alert like “FDIC Commercial Loan Sale” or “Commercial Mortgage Sale by FDIC.” The point is, you want to see the article that names the equity firm or bank that now owns your loan. Otherwise you will have to wait a couple months for it to enter public record.
If you don’t see it and get a notice that says that “Jim Bob’s LLC has purchased your commercial mortgage,” you should immediately hunt down that LLC through the secretary of state’s website. We will get into the details of the Sec of State searches later, but for now let’s just assume you know your way around that database and find out ACME Inc bought your mortgage. Great! Moving on . . . .
Step 2 – Weigh Your Options
As I see it, there are only six options available to you:
- Discounted Payoff
- Full Payoff
- Guaranty Suit
- File for Bankruptcy
I will describe each of these in detail in the next article, but I want you to start thinking about your options from both sides. We are an investor looking to maximize our returns and you are looking to have as little pain as possible in owning and maintaining this property. Where those two desires meet is where we will make a deal. Otherwise, you’re just wasting my time or I’m wasting yours. So this step is important. Know your options and have an idea of what will be suitable for both parties.
Step 3 – Call the New Owner
Assuming you want to make a deal (instead of being non-cooperative or just continuing to pay your loan into oblivion), now is the time to reach out. You know who we are, you know your options, you have all your paperwork organized, and now you need to reach out to the deal maker.
This may take some additional research.
You need to use company websites, LinkedIn, and your professional network to find someone at ACME Inc. Find someone and they can point you to the decision-maker on your loan. In our case, we have thousands of loans and dozens of asset managers. So there isn’t one guy to call for your loan. It could be any one of two dozen people that work loans every day.
Get to someone and let them guide you to the right person within ACME.
Step 4 – Keep your Head and Strike a Deal
We get paid to resolve loans and find solutions. We don’t get paid to hurt you. Calm the heck down and let’s make a deal happen. Yelling at me or trying to intimidate me just pisses me off and makes me call my attorney. Trust me when I tell you that you would prefer to deal with me than my attorney. In fact, you are legally liable for any legal fees I incur trying to chase down the money that you owe us.
So approach this person as an ally helping you wade though a tough situation. In my experience, people have watched too many crime dramas where they think the only way to negotiate with someone is to shine a light in their eye, yell loudly, and imply physical pain. Doesn’t work and it’s a waste of time. Save us both some time and let’s be grown-ups and work out a deal. I have 100 other deals that need my attention and I don’t have the patience to deal with screaming idiots.
You already have all your ducks in a row and a strategy in hand, so send in your paperwork, propose a resolution (including a timeline), and let the person think it over. If you do that, you’ve done most of the hard work for the gal anyway and she will want to work it out with you. The easier you make her job the better deal you will get.
Step 5 – Follow Up and Close
You can promise and talk all you want, but if you don’t deliver then you’ll get the wrath of the new mortgage-holder who has the right to pursue you (usually). So, once you’ve worked out a deal with her, check in every couple weeks to update on status and timing and close that bad boy.
Do everything within your power to close and, if all else fails, communicate more. I totally understand when someone is refinancing one of my loans and their refinancing lender needs another 15 days to close. That’s fine. Earth is probably NOT going to explode in 15 days. Just keep me in the loop and get it done. If you drag it out for 6 months, then I’ll just call my attorney. But I am reasonably patient when borrowers keep me in the loop with legitimate hold-ups. Again, I have 100 other borrowers to attend to and don’t want to spend too much time watching every move you make. I just want to know what’s happening.
Step 5 – Move On
Closed? Great! Wipe your brow, take a deep breath, and get back into the business of making money and out of the business of spending money. In fact, make some money off of me!
I just told you that I have 100 deals I am looking to move. Why don’t I move a few in your direction? There is always a deal to be had if you want to hold the property longer than we do or are more willing to invest in improvements or whatever. Your timeline and risk-profile are different than ours, so take a look at a couple deals and let’s see if we can get a few deals done!
That’s it. Be prepared, make my life easy, and keep your cool and we can all be friends. Remember, we are here to make deals and move loans, not hurt people. The only people who get hurt are the ones who scream, lie, and try to trick us. They get what is coming to them. You don’t want to be that guy. Be easy to work with and my first phone call on a great deal I need to move may be to you . . .
Today I ran across the UntieAtlanta.com site (link is here) and I think it’s a great resource to educate yourself about the TSPLOST vote coming up on July 31st.
It’s nice to have a quick and easy resource to show all of the projects and timing associated with this huge bill as I suspect most people are confused as to what exactly they will be voting for. My favorite part (and most educational) is the interactive map that places markers on all the projects and has brief descriptions of their timing and price.
As I mentioned before, there is no such thing as a perfect bill. There are parts that I agree with and parts that I disagree with. And I think it is important to point out the difference between doing “something” and doing the “right thing”. I know that action makes us all feel better, but action for action’s sake is a great way to go far in the wrong direction.
So my basic two questions for this bill are: 1) Is there more to like than dislike in this bill? and 2) Is this the right thing to do or just something to do to address our transportation issues?
I think the answer to #1 will tell me the answer to #2. And my answer to number one is actually very easy to figure out: Would I vote to send 1 cent out of every dollar I spend to go to fixing _______________? By breaking down TSPLOST piece-by-piece I can quantify how many of the projects I support and how many I oppose. If there are more that I support than I oppose, then I’m a “yes” on TSPLOST. If not, I basically have to figure out if the Beltline and other projects I view as crucial are worth all that money I don’t want to spend on the other projects.
And let me reiterate something I said last time.
WE NEED TO UPGRADE, IMPROVE, AND FIX ALL OF OUR TRANSPORTATION IF WE WANT TO CONTINUE TO GROW AS AN INTERNATIONAL CITY.
I don’t think that is open to debate. Atlanta will grow when people want to be here. People want to be here when they enjoy our quality of life. Our quality of life is highly tied to our ability to move in and around the city. Therefore transportation (along with water and eduction) is one of the crucial issues facing Atlanta in my lifetime. So, don’t think I underestimate the value of upgrading our transportation. And don’t think that I wish the suburban roads and transportation systems to fall into disrepair. I just want to make sure that this is the best long-term decision for our city before I throw my “yes” around.
So, enough explaining. Here are the projects and my vote on them:
Atlanta to Griffin Commuter Rail ($20,000,000) – No
SR 85 Improvements in Fayetteville ($5,900,000) – No
South Industrial Path in Fayette County ($1,210,000) – No
South Industrial Path in Fayette County ($1,150,000) – No
SR 85 Expansion in Fayetteville ($24,000,000) – No
MacDuff Pkwy expansion near Peachtree City ($6,400,000) – No
Bill Gardner Expansion in Henry Co ($27,000,000) – No
Widening SR 92 in Fayetteville ($15,900,000) – No
Improving SR 92 in Fayetteville ($20,000,000) – No
Widening 23/42 in McDonough ($44,000,000) – No
Widening SR 155 in McDonough ($48,000,000) – No
Upgrade SR 20/81 in McDonough ($11,000,000) – No
Widen SR 81 in McDonough ($27,000,000) – No
Widen East Fayetteville Bypass ($14,000,000) – No
Parallel Connector off Jonesboro Rd ($17,000,000) – No
Widen Fayetteville Rd in Jonesboro ($40,180,000) – No
SR 92 Connector in Fayette Co ($18,300,000) – No
Improve interchange at SR 74 and I85 ($22,500,000) – No
Roundabout at Hutcheson Ferry ($1,750,000) – No
Widen SR 78 in Riverdale ($22,200,000) – No
Redesign Tara Blvd ($102,170,000) – No
Improve Old Milton and 400 Interchange ($1,900,000) – No
Improve SR 92 at South Fulton Pkwy ($16,000,000) – No
Widening SR 85 in Forest Park ($34,150,000) – Yes
Widen Conley Rd at I285 ($28,500,000) – Yes
MARTA at the Airport ($7,160,000) – Yes
Widen Camp Creek Pkwy at 285 ($60,250,000) – Yes
Replace bridge over Camp Creek Pkwy ($3,500,000) – No
New Interchange at 285 and Greenbriar Pkwy ($36,400,000) – Yes
Improve Campbellton Rd ($1,259,900) – No
Improve I285 at Cascade Rd ($23,600,000) – Yes
Regional Traffic control on I20 in Douglasville ($19,000,000) – No
Multiuse Path in Douglasville ($2,210,000) – No
Realign SR 92 on west side ($49,000,000) – No
Widen Lee rd in Lithia springs ($18,900,000) – No
Widen US 78 in Lithia Springs ($20,000,000) – No
Improve intersections on Fulton Industrial ($7,500,000) – Yes
Improve MLK Dr near 285 ($3,000,000) – Yes
Improve west side 20/285 interchange ($149,000,000) – Yes
Improve Jonesboro Rd ITP ($7,395,000) – Yes
Improve I20 at Panola ($21,200,000) – No
Widen Panola Rd ($30,300,000) – No
Extend Hayden Quarry Rd in Rockdale ($27,000,000) – No
Widen Sigman Rd in Rockdale ($30,000,000) – No
Improve Commerce Crossing in Rockdale ($25,900,000) – No
Widen Flat shoals Rd in Rockdale ($11,400,000) – No
Improve Rockbridge Rd in Dekalb ($7,500,000) – No
Improve Glenwood Rd ITP ($5,000,000) – Yes
Improve Memorial Dr ITP ($738,750) – Yes
Peachtree near Spring ($434,875) – Yes
Improving Piedmont Ave ($3,604,908) – Yes
Bridge at Courtland St ($22,000,000) – Yes
Central Ave Bridge ($27,000,000) – Yes
Pryor St Bridge ($32,100,000) – Yes
MARTA Tunnel Rehab ($700,000) – Yes
Improve Edgewood Ave ($527,667) – Yes
Improve Auburn Ave ($643,750) – Yes
Improve Courtland St ($750,000) – Yes
Beltline ($165,952,132) – Yes
Beltline Midtown to Downtown ($435,940,345) – Yes
Donald lee Hollowell near 285 ($1,025,000) – Yes
Improve Joseph E Lowery ITP ($1,188,750) – Yes
Improve 14th at Howell Mill ($575,000) – Yes
Improve Boulevard near Ponce ($1,150,000) – Yes
Improve 10th to Monroe ($462,000) – Yes
Improve North Ave ($457,500) – Yes
Improve Ponce near Spring ($618,125) – Yes
Decatur to Clifton Corridor ($5,000,000) – Yes
Improve College Ave near Avondale Estates ($5,000,000) – Yes
Memorial Drive near 285 ($5,000,000) – Yes
Premium Transit form the NW to Arts Center ($695,000,000) – Yes*
Improve Spring St near Peachtree ($1,292,125) – Yes
River View Rd near South Cobb ($16,500,000) – Yes
Improve Howell Mill near I-75 ($512,500) – Yes
Improve Monroe Dr ($706,250) – Yes
Improve N Druid Hills Corridor ($25,000,000) – Yes
Clifton Corridor Rail Transit ($700,000,000) – Yes
Improve Northside Dr near W paces ($525,325) – Yes
Improve Piedmont Rd corridor ($612,000) – Yes
Improve Peachtree from Peachtree Dunwoody to Collier ($1,713,450) – Yes
Widen 360 in Paulding County ($30,000,000) – No
Improve Thornton Rd in Paulding ($43,000,000) – No
Improve S Cobb near 285 ($9,000,000) – Yes
Widening Windy Hill ($22,999,900) – Yes
I75 at Windy Hill ($77,000,000) – Yes
Cobb Parkway at Windy Hill ($93,000,000) – Yes
Windy Hill and Terrell Mill Connection ($14,000,000) – No
Hammond Dr at 400 ($33,500,000) – Yes
MARTA extension Sandy Springs ($37,000,000) – Yes
285 and 400 Interchange ($450,000,000) – Yes
Ashford Dunwoody Corridor Improvements ($5,000,000) – Yes
Improve Mt Vernon Corridor ($12,000,000) – Yes
400 from 285 to Spalding ($190,000,000) – Yes
Buford Hwy & PIB alignment ($25,000,000) – Yes
Spaghetti Junction Improvements ($53,000,000) – Yes
Trails on Hwy 29 in Lilburn ($1,850,000) – No
Widen Five Forks Trickum Rd in Lilburn ($10,400,000) – No
Intersection of US 78 and Hwy 124 in Snellville ($19,100,000) – No
Hillcrest Satellite Connector in Norcross ($19,900,000) – No
West Liddell Connector in Norcross ($39,300,000) – No
Cobb Pkwy and Barrett Pkwy in Kennesaw ($9,800,000) – No
McCollum Airport ($690,000) – No
McCollum Airport ($2,500,000) – No
Moon Station Rd in Kennesaw ($4,500,000) – No
Busbee Frey Connector in Kennesaw ($21,500,000) – No
Roswell Rd Improvements in Roswell ($20,000,000) – No
Atlanta St in Roswell ($20,400,000) – No
Holcomb Br interchange at 400 ($48,000,000) – No
Peachtree Pkwy and PIB in John’s Creek ($46,000,000) – No
Pleasant Hill Widening in John’s Creek ($11,600,000) – No
Abbotts Br widening in John’s Creek ($28,000,000) – No
Buford Hwy Widening in Duluth ($14,000,000) – No
Duluth Hwy widening in Lawrenceville ($38,400,000) – No
Walther Blvd and 316 in Lawrenceville ($10,600,000) – No
316 at Hi Hope Rd in Lawrenceville ($61,900,000) – No
316 at US 29 in Lawrenceville ($51,000,000) – No
Sugarloaf Pkwy Alignment in Lawrenceville ($296,000,000) – No
316 at Harbins Rd in Lawrenceville ($23,000,000) – No
Dacula Rd in Dacula ($10,000,000) – No
Widening lake Acworth Dr in Acworth ($29,100,000) – No
Rucker Rd in Alpharetta ($19,000,000) – No
Houze Rd in Alpharetta ($18,600,000) – No
Widening Old Milton Pkwy in Alpharetta ($37,000,000) – No
Widening Kimball Br in Alpharetta ($21,000,000) – No
Improve Buford hwy Corridor in Suwanee ($5,500,000) – No
Gravel Springs and I85 Interchange ($33,300,000) – No
Bells Ferry and Little River Br in Canton ($7,000,000) – No
Widening Hickory Flat in Canton ($70,000,000) – No
Widening another part of Hickory Flat in Canton ($70,000,000) – No
Widening a third part of Hickory Flat ($50,000,000) – No
Widening Cumming Hwy in Cumming ($40,000,000) – No
Widening Buford Dr in Buford ($4,100,000) – No
Widening another part of Buford Hwy ($28,000,000) – No
Clayton County Local Bus ($100,000,000) – No
GRTA Express ($128,000,000) – No
Gwinnett County Bus Service ($40,000,000) – No
I-20 East Corridor ($225,000,000) – No
I-85 North Corridor ($95,000,000) – No
MARTA Electric Power Rehab ($354,400,000) – Yes
MARTA Elevators and Escalators ($118,700,000) – Yes
MARTA Passenger Info System ($30,500,000) – Yes
MARTA Track Rehab ($5,600,000) – Yes
MARTA Systems Upgrade ($4,440,000) – Yes
MARTA UTC Infrastructure ($27,200,000) – Yes
Perimeter ITS ($1,000,000) – Yes
Regional Mobility Project for elderly and Disabled ($17,000,000) – Yes
Dang. 147 projects. We can get into how I voted and why a little later. For now, digest these projects a little. Go to the site and see which projects you like and don’t like.
Educate yourself and little and then let’s chat about this.
As a reminder, the way I determined my vote was by asking: Would I want to spend one cent of every dollar I spend on (insert project)?
So my answers are totally subjective and some are self-serving, but I will explain all of that later. For now, just look it over and tell me your initial thoughts below.
p.s. If you want to follow my list on the map, I went from South to North starting in Griffin and Left (West) to Right (East).
p.p.s. Big thanks to the hard-working team at Untie Atlanta! This is a very cool and interesting map that should help us all make a more-informed decision.
Everyone seems to have an opinion, so I might as well throw my hat in the ring.
I think I like T-SPLOST overall, but I think it may be short-sighted. I think it’s apparent that we as a city have some transportation and traffic issues. What I question is whether or not this bill is the BET solution to some of those problems.
I was reviewing the major projects in TSPLOST in the business chronicle and I was struck by how many of them focused on suburban projects. I have no problem with the suburbs and I grew up there myself, but the opportunity cost of spending hundreds of millions of dollars in the suburbs seems enormous.
95 out of 100 Gen Y workers (straw poll) are moving into the city limits (ITP). That’s millions of young people moving in-town as the future leaders and innovators in our city. That influx of people who live, drive, and work in-town is putting a huge strain on our aging transport and infrastructure.
Since Atlanta is a city built around the car, it’s imperative that we pay attention and create solid programs to address people moving into the city. If millions of people move into Rome or London or Paris, no big deal. The sidewalks are a little more crowded and RE prices rise to meet demand. But those cities were built around pedestrian traffic and you won’t see the same kind of gridlock that we deal with daily. In Atlanta, just about every person moving into the city is doing so with a car. So WE HAVE TO PAY ATTENTION TO COMMUTES.
For decades, Atlanta has been the poster child for urban sprawl and white-flight into the suburbs. Now that this trend is finally reversing and our best and brightest are moving back in town, why are we spending hundreds of millions of tax payers dollars on improving suburban transportation? Or, more to the point, why are we using money that we could use in-town on projects that make suburban living easier?
Again, I have no problem with the suburbs and I’m from Gwinnett County. I understand that we need to maintain our transportation system. If it’s about to collapse, let’s fix it. But I would certainly rather spend $100 Million on improving our pathetic MARTA system (paint job, anyone?) than broadening some suburban freeway to six lanes. Those suburban projects are not bad projects or bad ideas, but there is only so much money to go around and every dime you spend in the suburbs is a dime you could be spending in town.
Maybe the simplest way I could put it is:
Why are we spending so much money on our past (sprawl) at the expense of our future (in-town transit)?
And let me be clear on something. I am certainly not advocating that we abandon all transportation and infrastructure projects in the suburbs. The reason cities and counties have large budgets in maintenance is to keep the roadways safe and infrastructure current. If they can’t, then they need to find a way to reallocate the funds or people just need to move somewhere else. I just get bothered by the idea of Atlanta tax payers paying for Alpharetta roads. Maybe I’m old fashioned, but I think Alpharetta residents should pay for Alpharetta roads.
Much like people, bills are neither completely good or completely evil. There are good parts and bad parts. I LOVE the Beltline project and think it’s a great long-term investment for our city, but there are at least a half-dozen projects on this bill that I see as superfluous and costly to in-town residents.
So, the crux of the matter is that you have to convince me that the benefit of projects like the Beltline outweigh the superfluous spending on suburban projects. Show me why the good outweighs the bad in this particular version of the TSPLOST bill.
I am open to being convinced . . .
Alright, so we are creeping up on 150 posts for the site, we have multiple authors, and have integrated social media. Time for some housekeeping.
Item 1 – New “Sustainability” Page
The APJ has found a rising star in the sustainability arena here in Atlanta and we are pleased to announce the creation of a partnership on the APJ Sustainability Page. It will replace the “Listings” page (that is taking longer than expected to program but may return in the future). We will discuss everything from solar power to smart grid technology to waste management to new urbanism and beyond. If you have any suggested topics or areas of interest, mention them in the comments below and we will get on it.
Item 2 – Series
As we accumulate articles and posts on multiple topics, it makes sense to organize a few series that may interest the new reader. So, we will be creating a “Series” page that will be a constantly-updated page to display the latest posts on Careers in CRE, the Millenial Manifesto, CRE Websites, The Clean Slate project, and all of our other topics. If we miss one that interests you, let us know. Or if you have any suggestions for article topics, don’t be shy!
Item 3 – Don’t Know Much About History
It’s tough to know where Atlanta is going without knowing where Atlanta has been. We are about to start working on a recurring series on the history of Atlanta. We want to include everything from the Native Americans living around Peachtree Creek to Governor Lumpkin and Marthasville to the Terminus of the Western & Atlantic RR to integration to MLK to the Olympics to today. This town has some cool stories to tell and I think they are meaningful to all of its residents, particularly those who plan to shape its future. The structure and frequency of these articles are still up for debate, but I’m very excited about this and I think it should be fun.
Item 4 – Programmer Help
We have been looking for programmers or coders for the last few months to help us develop our Photo Gallery and Lunch Generator applications on the site. While we have found several qualified young men and women, we have yet to find a long-term partner to do either. We are going to keep scouring the interwebs and awkwardly approaching people at WordPress Meetups, but if any of the readers of this post have suggestions we would LOVE to know about it. A qualified lead is worth $50 to Buckhead Life for the first comer that gets us in front of a winner. Think about it . . .
Item 5 – Authors
We are looking for a rising star n the hotel industry and, really, anyone who enjoys writing about CRE in Atlanta. We pay for our posts and, while you’ll never get rich, you will have a lot of fun and will probably enjoy the bright young men and women who are already contributing to this site. If you are interested, email me at Duke@AtlantaPropertyJournal.com and we can chat about it.
Well that’s enough housekeeping for now. Going forward, feel free to reach out to me or anyone at the site and give us feedback on what you like, dislike, and just plain hate. We are here to provide interesting content for free to all the professionals in the commercial property industry in Atlanta. Anything we can do to make your life a little easier or more interesting, drop us a line and we will try to figure it out.
This article may come a little late to the game as Georgia has seen 100 banks (see: hyperbole) fail over the past few years and their borrowers have been left flapping in the breeze. But I wanted to put together a little to-do list for everyone who finds themselves in a situation where your bank has failed and you find your mortgage in the hands of someone else.
This will be a two part series. Part I will be how to deal with the FDIC. Part II will be about how to deal with the firm that buys your mortgage from the FDIC.
So let’s talk about the steps you should take when your bank fails and its assets are seized by the FDIC.
(By the way, I will be assuming for this series that you are an ethical and honest borrower who wants to pay back her debts. If that is not you, call your attorney. You are about the be sued.)
Step 1 – Perform
The old adage about the squeaky wheel getting the oil is true in your favor here. Pay your mortgage payments every month and no one will bother you. Chances are the FDIC is dealing with hundreds or even thousands of commercial mortgages from this failed bank along with all the other non-CRE assets it seized. Many of them have huge problems and loud borrowers. Let the FDIC deal with them and stay out of their way. You don’t want to tangle with the US government (for several reasons). Keep paying your debt and then follow these steps . . .
Step 2 – Organize
Sooner or later you’re going to have to come to a resolution on this loan. You need to have your paperwork in order. Start gathering your info now and get organized so that you’re ready when the times comes. At the very least, you should get:
- Personal Financial Statements for all guarantors (This shows your net worth and liquidity to satisfy the personal guaranty you signed)
- 3 Years of tax returns for all guarantors (More info for the personal guarantees)
- Property Rent Roll (How is the property performing?)
- Copies of all leases (When do your tenants roll?)
- Appraisal, Phase I Environmental report, or something showing info on the property (this is a good way to have basic photos and general info on the property even if it’s outdated)
Keep all of these documents stored electronically where you can access them quickly. That way when anyone asks for this info you can quickly email them everything they need.
Step 3 – Know Your Servicer
When the FDIC takes your mortgage, they will not have the capacity to handle all of the servicing responsibilities associated with it. Someone has to handle and process all payments. Someone has to handle all the monthly notices and paperwork associated with keeping your loan current. Someone has to track the performance of your loan. The FDIC can’t do any of that. They outsource it.
As far as I can tell, they use Situs, Midland, and KeyBank. All 3 are huge servicing platforms and all three have their pros and cons (I have worked with all of them). They will be your main point of contact on your loan moving forward so don’t go poking around the FDIC website looking for someone to call. Trust me . . . you wouldn’t want to talk to them anyway.
Step 4 – Crouching Tiger
Now that you are organized and know who you are dealing with you have one of two options. If your loan is maturing this year, be proactive. If not, just chill and keep paying. In Part II I will explain why you want to be proactive no matter when you maturity occurs after your loan is purchased by a third party from the FDIC. As long as your loan stays with the FDIC, I only suggest being proactive if you borrowed money that matures this year. You are about to become a non-performing loan and therefore a “squeaky wheel.” Your non-performance is your inability to refinance your loan upon the loan’s maturity. It’s known as “maturity default” and it is a technical default. You can be sued over it and your creditor will probably win in GA (FL is another matter for another day).
So, if you’re staring a maturity default in the face, do this:
- Get a Broker Opinion of Value (BOV) – Have a broker tell you what she thinks the property would sell for on the market
- Get a term sheet from a refinancing bank – Have a lender give you, in writing, the terms of a proposed loan to refinance the loan
- Call friends and family – Find out who has some cash to lend if you’re in a pinch
If you do all three of those, you have three good data points for possible resolutions of your maturing loan. You know what you’d get in a short sale from your BOV. You know what discount you’d need in order to refinance. And you know how much you could pay to a deficiency or to structure a deal with your money from friends and family.
I will get more into your possible solutions for a defaulted mortgage in Part II. For now, let me review the steps:
Step 1 – Perform. Pay your debt and fly under the radar.
Step 2 – Organize. Have all your paperwork in order for when push comes to shove.
Step 3 – Know Your Servicer. You can’t be a winner in this game unless you know all the players.
Step 4 – Crouching Tiger. Wait and be ready for your maturity.
Do all of that and you will have very few problems with the transition from your community bank to the FDIC. I can’t promise it will be pain free because you’re dealing with the same people who run the DMV and Post Office, but those steps will make it a smooth as possible.
Good luck and check back for Part II!
Equity markets: The S&P 500 fell 0.6% on the week. Initial relief over the status quo New Democracy party winning in Greece and optimism about a fresh round of stimulus from the Federal Reserve lifted stocks early in the week. However, when the Fed meeting on Wednesday led to little more than an extension of “Operation Twist” — the Fed working to keep interest rates low by swapping some short-term treasuries for longer-term treasuries — sentiment became more negative.
Rumors that Moody’s would lower the credit rating of many large banks along with a weaker than expected Philadelphia Fed manufacturing survey, combined with a bearish trading call from Goldman Sachs, knocked stocks down on Thursday, from which they bounced back somewhat on Friday.
Bond markets: The 10-year treasury yield rose 0.03% this week, from 1.64% to 1.67%. 10-year German bond yields rose 0.14% this week, from 1.44% to 1.58%. The “fear bid” in US and German government bonds was so intense in May and the early part of June that some of this impact is still being unwound. For the time being the intensity of the European crisis has diminished, though all parties agree that no long-term solution is on the near-term horizon.
Currency markets: The dollar rose 0.8% on the week. The Federal Reserve’s extension of Operation Twist was less than the market expected, giving the dollar a bid, and Thursday’s pummeling of equities along with fears over US bank ratings led to a flight to the greenback.
Interbank markets: 12-month LIBOR was unchanged on the week at 1.07%.
Next week: Summer has begun, which generally means less liquidity and the potential for more volatility if news breaks while investors are away from their desks on the beach. As mentioned last week, the news flow should be quiet, with the highlights of the US economic calendar being new home sales on Monday, consumer confidence on Tuesday, another revision of Q1 GDP on Thursday, and the Chicago purchasing manufacturers index on Friday.
It’s also the last week of the month and the quarter, so there could be some position squaring going on. The following month will be busy as Q2 earnings season kicks off and concern about how much the slowdowns in Europe, China, and the US have impacted corporate profits, so this should be a great week to get some rest before the real fun begins.
The Transportation Referendum from a Capitalist Planner’s Perspective
Can a 1 penny tax fix congestion in Atlanta?
Georgia voters are apparently being asked this question for the upcoming transportation referendum vote on July 31st. Asking voters that question infuriates me for two reasons. One, congestion isn’t a problem that can be fixed. And two, the perceived problem of congestion is shrouding the real issue, which is a question about the long term economic viability of Atlanta’s development patterns, i.e. how we build stuff.
Congestion is not a problem that can be fixed.
…At least not in the traditional sense. Congestion is unavoidable with dense urban development. Ask drivers in London, Paris, New York, San Francisco, and Tokyo. All of these cities have world renowned public transportation systems, yet they all suffer from horrendous traffic. Recently London introduced congestion pricing in an attempt to price drivers off the road during peak hours. It’s not a solution, but it’s a way to make it better. I repeat that you cannot ‘fix’ congestion.
If you’re looking for a problem to fix, consider mobility. Mobility is what a transportation planner is really concerned with, even though they can’t always say that correctly. What I described above, the London congestion pricing model, addresses mobility directly. Officials in London were concerned that mobility through the city was stifled during rush hour and they identified a solution. Price motorists off the road and onto alternate modes of transportation (rail, bus, bike, etc.) to improve everyone’s ability to get around. Not everyone is 100% happy, but, like solving congestion, that’s impossible.
I ask you not to vote for or against the Transportation Special Purpose Local Option Sales Tax (TSPLOST) based on whether or not you think it will fix congestion. It won’t. Atlanta will always be congested unless its overall economy collapses making it a city more like Detroit. What you should consider is whether or not you think it will improve mobility for residents and visitors of Atlanta. Easier mobility means everyone can get around cheaper and faster than before. Cheaper and faster transportation means more consumers. I’ll let you proceed to your nearest economics book to learn about demand side versus supply side economics to decide if you think more consumers is a good thing.
If the problem is mobility, how do we fix that?
…very simply. A long term shift, say 30 to 50 years, toward transit oriented development should do the trick.
Atlanta’s lack of mobility is derived from is history of leap frog development, which led to a massive amount of poorly connected suburban neighborhoods. If you’re curious about what leap frog development looks like you can drive North on SR 400 starting at Lenox road all the way up to Cumming. This style of development has happened in nearly every direction out of Atlanta, but North 400 is a prime specimen of the leapfrog effect.
Easily accessible land and low transportation costs made it easy to move suburban development farther away from the city center. It made for short term, easy profits so long as people kept moving outward. This type of development started post World War II and has been the American standard for how cities grow. Demand for transit oriented development has waxed and waned over the last half century. Over the last 2 decades, both baby boomers and younger professionals have started demanding well connected walkable developments. City governments are responding to the demands from developers to make it easier to create such places. Cities like Portland have introduced growth limits and Nashville has enacted a form based zoning code to guide density and require less zoning approval.
A transportation package isn’t the solution for the problems created by leap frog development. Any public transportation will be vastly underused and underfunded. As is the case with MARTA, low funding and wavering demand make for a very, very underutilized system that is a perpetual downward spiral. Public transportation doesn’t work with the low density. Low density suburban neighborhoods can’t create the ridership volume or the necessary tax dollars to support it. That is, unless special taxes are enacted to specifically address transportation needs. Using taxes to front the origination cost of the transportation projects will help guide development and create a better connected city. It’s what Washington D.C. did. While it’s not the perfect city, the downtown is revived from ghost town status and it’s drawing in talented professionals like moths to a porch light.
A combination of transportation funding and relaxed zoning codes regarding density and mixed uses can spur such a turn around. One alone won’t be successful.
I won’t delve into each project and how they could affect long term mobility and development opportunities. But, I’d suggest you do so. If you’d like to please visit The Atlanta Regional Roundtable to get a great look at what’s actually on the list.
After reviewing the projects on the list, sit down and consider whether or not they will improve safe, cheap, and easily accessible mobility around the Atlanta region. If you think it will help, vote yes, if not, vote no. Just try to avoid using congestion as your measuring stick because no one can answer that impossible question.
I just got back last week from my 5 year reunion at my alma mater. Apparently that’s a rare event as some of my colleagues who went to UGA, Auburn, Tech, etc couldn’t imagine pulling together 10,000 people for a reunion.
Luckily for us there were only 400 in my graduating class.
As nice as it was to catch up with my old teammates and classmates, it got me thinking. I realized how much I had learned in my first 5 years in commercial real estate that I hadn’t anticipated when I charged into the world with my Bachelor of Arts in Economics.
So, allow me to share 5 lessons I have learned in my 5 years in commercial real estate:
1. He with the best habits wins
I know I’ve touched on this before, but it really is true. Yes, there are big deals and huge strides made in every career, but I am convinced that the guy who sets out to create great habits for himself will end up “on top” on the long run. Your habits will catch up to you sooner or later. Will they boost you up or drag you down?
2. Financial success and intelligence are only loosely related
I’m using financial success as my measurement for success for the purposes of this point. It is amazing to me how much money was made between 2002 and 2007 by people I wouldn’t trust to handle $50. I know THAT time in our financial history may turn out to be an aberration, but it is staggering at times the amount of money made by stupid people. And commercial real estate is a self-proclaimed “B-student’s paradise.” Not that B-students are stupid by any means, but an industry that doesn’t claim to have A-students is, by definition, claiming not to have the tip of the academic sword (for better and for worse).
All of that is to say: intelligence isn’t as highly correlated with success in commercial real estate as I had thought. The richest people aren’t always the smartest people. Intelligence certainly helps to distinguish yourself and there is a certain baseline level of intelligence that everyone in the industry must have. But this ain’t rocket surgery.
3. There are very few truly creative people in ANY industry
I want to keep this statement broad because I have noticed that this phenomenon isn’t unique to CRE. I find that there are only a handful of truly innovative and creative people in any industry.
Taking a concept that worked well in Dallas and bringing it to Atlanta isn’t all that creative. It’s highly logical, but I would consider it par for the course. Even taking a concept from Dubai and bringing it here isn’t all that creative. All you’re doing is copying someone else’s great idea. True innovators create new products, reinvent best practices, and can reshape the entire CRE community. People like that are rare.
4. There is almost never black and white – only grey
I learned this from my time in private equity as we go through foreclosure and bankruptcy proceeding in GA and FL. According to the loan documents, our case is almost always cut-and-dry and in our favor. The borrower almost never has a strong case, legally. But borrowers do sometime win these cases.
If they get a borrower-friendly judge or jury and argue their sob-story well, they CAN win. In my mind, this is ludicrous because I can plainly read the loan documents that said “I will pay you back or you can take everything I own no mater what.” I don’t see room in there for much interpretation, but apparently I’m wrong.
This idea also plays into the “gut” or “art” part of our business. Anybody can run good numbers and spot a decently located property. The best of the best have this “gut” instinct to know when to pursue a property that is in that grey area between the black of “no” and the white of “yes.” They buy or sell when others are hesitant and they make a killing doing so. That is the grey area that I need to get comfortable playing in or I will be surpassed by those who are.
5. The best people in the business love what they do and would probably do it for free
You know these men and women. They love leasing retail space or building hotels or buying shopping centers. If they didn’t get paid to do it, they’d do it anyway. Their career is fun and fulfilling to them.
I think I covet that feeling more than any other in business. To know that you enjoy your role and look forward to performing every day is a gift that few of us receive. It has been my mission since shortly after leaving college to find that role for myself. As I mentioned in the header, people who find that role are not only the most fulfilled, but also are often the most successful. Work doesn’t seem like work to them. They are just having fun and happen to make money doing so. I hope you can find that role for yourself. Otherwise, you’re just getting up early every morning to collect a paycheck and you will have a perpetual feeling of swimming against the tide.
Those are just the 5 that stand out to me. Obviously, I have learned a great deal more about the financial and technical side of our business, but those 5 stand out to me as particularly poignant and meaningful to my career.
Has your experience been different? Did you learn different lessons than I did? Feel free to share in the comments.