Category Archive for: ‘CRE Politics’

  • Questions on TSPLOST

    Underground transit will cure what ails you!

    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.

    – Duke

  • Lies, Damned Lies, and Sustainability

    Look how fragile! Let’s spend a bunch of money and make it better!

    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 don’t recycle, this puppy will die. How do you sleep at night? Don’t you feel guilty and want to spend some money on sustainable stuff.



    “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.

    – Hunter

  • APJ Quick Guide to TSPLOST Projects


    Not sure if I want to vote “yes”

    Today I ran across the 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.


    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.

    – Duke

    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.


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  • Quick Thoughts on TSPLOST

    Is TSPLOST the best solution for our traffic issues?

    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?

    Can a fella get some light-rail?

    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 . . .

    Try it.

    – Duke

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  • Weekly Financial Markets Update – June 22nd

    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.

    – Earl

  • The Transportation Referendum from a Capitalist Planner’s Perspective

    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.

    Let me take you back to a simpler time.

    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.

    – Hunter

  • Financial Markets Update – June 15, 2012

    If Greece leaves the EU

    Equity markets: The S&P 500 rose 1.3% on the week. US economic data, such as it was (jobless claims on Thursday, Empire Manufacturing on Friday), was weak, yet there was renewed optimism on the Greek elections scheduled for Sunday. Additionally, the fear surrounding the disappointing Facebook IPO has finally lifted, with Facebook up 10.7% on the week, and Zynga rose over 10% on Friday.

    Bond markets: The 10-year treasury yield fell 0.06% this week, from 1.64% to 1.58%. 10-year German bond yields rose 0.11%, from 1.32% to 1.43%. As mentioned, here in the US the economic data was disappointing, there were several sovereign rating downgrades in Europe pushing people into treasuries, and lingering uncertainty heading into the Greek elections. The move in German yields is indicative of a short-term improvement in European sentiment.

    Currency markets: The dollar fell a little over 1% on the week, as improving European sentiment and rumors that the G-20 would step in with a big liquidity package if the Greek elections go poorly gave a lift to the euro which hurt the dollar.

    Interbank markets: 12-month LIBOR was unchanged on the week at 1.07%.

    Next week: Monday morning will be all about the reaction to the Greek elections. Markets want the pro-euro New Democracy party to win a decisive victory and look like they can form a governing coalition, so that they can work with European officials to keep the money flowing towards Greece as they continue to enact painful reforms. Should the nationalist SYRIZA party win, there will be concern of a disorderly exit of Greece from the Eurozone, in which case the question will be how much Germany and the ECB are willing to step in to provide liquidity should that scenario unfold.

    The US has a busy week as well, with several housing data points — the NAHB housing market index on Monday, housing starts and building permits on Tuesday, and existing home sales on Thursday. Additionally, the Federal Reserve meets on Wednesday, with everyone focused on if another round of policy easing is in the cards. The following week should be pretty quiet, so next week is when we should get all the action before the end of the month.

  • Millenial Manifesto: Sustainability


    Good spot for a shopping mall, right?

    To continue my rant on my generation of young men and women, I thought I take on a topic near and dear to all of us in CRE: sustainability.

    In my experience, I have found that many of the more shrewd investors in the commercial property market tend to think of sustainability as a marketing ploy or gimmick. On the other end of the spectrum, there are those who think that any commercial building with the slightest carbon footprint is obviously the work of the devil or evil corporate greed and wall street is trampling on main street, blah blah blah.

    Forgive me for not occupying something, but my feelings toward the environment aren’t quite so militant. I also don’t buy the stance of the first group who think sustainability is a fad that will die away like the pet rock. I think it matters, but it isn’t life or death.

    Perhaps the simplest way I can put my stance on sustainability is:

    I want to leave Atlanta better than I found it.

    Simple enough, right?

    Not so fast my friend. Everyone seems to have an opinion on the definition of “better.” Is a Silver-rated LEED Atlanta better than I found it? Well, yeah, but it’s not as better as Platinum LEED. So how much better do I want to leave Atlanta?

    Simple again.

    I will try to improve my city using sustainable practices as much as makes financial sense.

    I suppose I could build a shopping center out of hemp. That would be very “green” and “sustainable” and “environmentally conscious” of me. But I would also never be able to lease any of the space, I would lose the property to the lender, my investors would lose all their money, and I would get punched in the neck by a large Italian man. No, thank you.

    That may seem like a silly example, but my jest carries a simple truth: sustainability works to a certain point. Right now, that point is financial feasibility. If I lose money by implementing “green” retrofits or using sustainable materials to build, then there had better be one heck of an additional benefit or externality that I can quantify. Otherwise, I’m just losing money on my project so that fluffy bunnies can prance in this imagined utopia. Not happening.

    So, let me wrap this in a nice little package:

    I want to create and maintain sustainable properties and use sustainable practices to build buildings in Atlanta as long as it doesn’t bankrupt me or my investors.

    So, having made clear my stance, let me weigh in briefly on a few sustainable topics:

    Green Space – Heck yeah we should set aside some space to be green space! I don’t live in NYC, nor do I want to. Let’s keep some spaces for parks, keep plants around our buildings, try some green roofs, etc. I see no downside to this other than the opportunity cost of building an income-generating building on the space, but I never asked for a park on a pin-corner or even with street visibility. That’s where retail centers, office buildings, and apartments go. Put the green stuff everywhere else.

    Rain water – This seems so simple it’s stupid. It’s free water! Let’s keep it! Use it to water plants or grass or cool off hot stuff. I don’t care what it’s used for, just collect your (FREE) rain water and use it. It may take a while to figure out the most efficient way to collect and redistribute it, but it seems silly to waste even a single drop of water when perhaps the largest questions facing our children and their children is: Where will they get fresh water? (glares menacingly at Alabama and Tennessee)

    Motion Sensitive Lighting – Do I really need to justify this one? Why would you keep the lights on when no one is around?

    Low Flow Toilets, Showers, and Sinks – I can’t remember the last time I went into a bathroom and proclaimed “Wow, this would be one great restroom if only the urinals flushed harder.”

    Trees– I like trees. If I have to chop one down to build or renovate something, I will gladly plant another. Why not? They are cheap, look cool, make oxygen, and I can climb them

    I better plant some trees or Al Gore will turn the world purple

    and stuff.








    Electric Vehicles – I like the idea, but this won’t make sense for me until I can’t notice a difference in the performance of my Chevy Tahoe and the Chevy Leaf Tahoe. When the electric version can tow, haul, transport, and off-road as well as my gas-guzzler, then I’m a buyer. Until then, I will continue sending my paycheck to Shell every two weeks.

    Trash – We dig a big hole and dump our trash in it? Seriously? That’s the best we can do after 230 years of innovation? Are you kidding?

    Glass – Show me how your fancy double-paned, low-emittance glass will save me on the power bill. Give me a dollar amount. If I can say that I will hold the building for as long as it would take me to recoup the mark-up on that glass over the regular stuff, then I’m a buyer. If not, go fish.

    Solar – Money! I am a buyer when it becomes cost effective. I’m not going to use the sun to power the HVAC system in my office building if it costs me 5 times as much as my electric HVAC system. I’m told that with the advances in carbon research and nanotechnology, solar tech will become much more affordable and efficient over the next 20 years. Cool. Keep me up to date. In fact, I actively keep tabs on Suniva up in Norcross because of some of the cool solar tech they have been rolling out. But until it becomes cost effective, I’m just a fan from afar.


    Do you see the trend in these little musings? I use my brain (I have one, I promise). If it makes sense from both an environmental and financial perspective, I’m down. If not, try again later. I will always be open to new ideas and technologies and I hope that sustainable technologies evolve so that commercial properties only improve the local natural and human environment. Until then, I will keep one eye on the advances and one eye on the bottom line.

    – Duke

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  • Foreclosure and the Confirmation Process


    The Path of Confirmation

    Tuesday in RealTalk, Jim Jordan discussed the idea of a marketable title for a property post-foreclosure. I found the post fascinating and think all of Jordan’s posts are interesting, thorough, and great. It struck me that some readers may not be familiar enough with the foreclosure process to get the ins-and-outs.

    Some readers may not understand what a confirmation hearing is or why it affects title marketability.

    So I’ll take a few minutes to walk you through the basics.


    First, a note on audience. This post is meant to be a guide for those just beginning in the commercial mortgage process or those uninvolved with CRE finance. If you are a CRE attorney or an experienced creditor with years of experience in foreclosure litigation, this probably isn’t the post for you. Check out some of our other cool posts and check back tomorrow. If you are just getting to know the process or are a curious outsider, read on.


    Let’s start after the creditor has foreclosed on the property.

    It’s the first Tuesday of the month and the creditor just bought the property at the county courthouse in an open foreclosure auction. We will get into the foreclosure process later, but for now let’s just start after the creditor foreclosed.


    Let’s assume that we’re foreclosing on an office building that currently has a market value of $500,000 which you determined through a recent appraisal and several BOVs (Broker Opinion of Value). The commercial mortgage on the property is $1,000,000.

    Using those values, you foreclosed on the property and paid $500,000 at the county courthouse. Hopefully you can see that the borrower still owes you $500,000 since you exercised your right as the creditor to take the collateral at “market” value and still maintain a claim on the remaining loan balance. $1,000,000 loan, $500,000 property value, and a $500,000 shortfall to the mortgage balance.

    This is the borrower’s “deficiency” as the property value was deficient in satisfying the entire mortgage amount.

    Still with me? Fantastic.

    So now you own the property and have a claim against the borrower of $500,000.

    Now begins the confirmation process. Confirmation is simply the judicial process of “confirming” that you purchased the property at market value. This matters because creditors are often the only bidders on foreclosed properties at the county courthouse. In theory, a creditor could bid $1 for the $500,000 building, be the winning (and only) bidder, and then claim a $999,999 deficiency against the borrower. The creditor could basically rig the game to get the maximum claim against the borrower.

    In cases where the borrower is disputing the creditor’s claim of deficiency, there is a confirmation hearing to determine whether the creditor paid market value for the property. These hearings are simply legal court battles where the creditor claims it paid market value and the borrower claims otherwise. Often, an appraiser will testify that the appraisal she completed 30 days ago was an accurate portrayal of market value and the creditor’s purchase price reflected that.

    Back to the numbers.

    Let’s say the CBRE gave an appraisal of the office building at $450,000. The creditor paid $500,000. In that scenario, the creditor and appraiser would claim that the creditor paid more than 110% of the fair market value for the property. If the borrower claimed that this was an unfair market value, the burden of proof would be on her to prove both the appraiser and creditor wrong.

    Not an easy task, by the way. Borrowers don’t have much luck in that scenario (depending on the judge).

    If the appraiser had appraised the property at $800,000 and the creditor paid $500,000, the borrower would have a much stronger claim that the creditor was paying below market value. The creditor may have to reforeclose and pay “true” market value.

    You can see why this confirmation process is so important! It shows the creditor actually paid market value and that its subsequent claim against the borrower is legitimate. Any future legal proceedings between the creditor and borrower will then favor the creditor as it has gained a court ruling saying it has a true and valid claim against this borrower.

    The creditor will file for this confirmation hearing within 30 days of the foreclose sale and this confirmation time period is what Jordan is discussing in his post. His basic question is: Can you sell the property while you’re confirming your purchase of it?

    I will leave that opinion to his capable hands for now and weigh in later.


    For now, let me bullet point the confirmation process to review:

    •  Creditor purchases property at public foreclosure auction
    •  Credit files for confirmation
    • Borrower claims creditor paid something other than “market” value
    •  Creditor and borrower engage in legal hearing to determine whose claim has legal merit
    •  Creditor, Borrower, Appraiser, and sometimes Broker will testify in the hearing to establish the market value for the judge
    •  Judge weighs evidence and rules in favor of one party
    •  If in favor of the borrower, creditor must reforeclose the following month at market value. If in favor of the creditor, creditor has court-backed financial claim against the borrower.

    Any questions on the confirmation process? Does it make sense? Can you see why it is vitally important in litigious battles between creditors and borrowers?

    Leave any questions or comments in the Comment section below and I  will be happy to respond.

    – Duke

  • Random Thoughts


    Crunched for time early this week, so I will stay random.

    1. I realized this weekend that CRE pros are like actors. Just because you can make some money on a deal doesn’t mean you should take it. You want to be Daniel Day-Lewis, not Eddie Murphy. (Sorry Eddie! We cool?)

    2. I still need to be convinced that there is demand for a BILLION DOLLAR gambling complex in Norcross. It’s a cool idea, but Norcross? I’m from Gwinnett County, but Norcross? We’ll see.

    3. Shout out to DDR for the SetUpShop concept they have been experimenting with here in Atlanta! Basically it’s like co-working space for retailers (kinda), and apparently they are killing it with those favorable lease terms.

    4. Who’s jacked up about the Brookhaven cityhood vote? I’m ashamed to say that I have no opinion since I don’t know enough about the pros and cons. What a terrible resident I am. maybe I should write a post about both sides . . . .


    5. Decatur might as well be Macon. There is no direct way for me to get there from my home in Brookhaven or my office in North Buckhead. I know they have tons of tasty treats and may be the most walkable part of Atlanta, but I could get to the airport in 20 minutes and get on a plane to Dubai before I arrived in downtown Decatur.

    6. There has been some speculation that I am Duke Long‘s son. It is a fabrication. “The Duke” is my pseudonym that is used to preserve the liability of any of my employers or clients who disagree with my posts. My real name is Ron Mexico (and if you don’t get that joke then you ain’t from ’round here).

    7. By the way, if you haven’t checked out yet, do it. If you are under 40, it will get you jacked up about the future of tech in our industry. If you are over 40, you will probably be unimpressed and mutter something about face-to-face interaction blah blah blah.

    8. I’m only half kidding about the over 40 thing. I have found many boomers and older Gen X-ers embracing and encouraging technology as a medium to transform and streamline our industry. But I find still more in that age bracket who like to talk about walking to work in the snow, life before the internet, and reading proformas by candlelight. Personally, I love when people refuse to embrace tech changes. That clears the path for me to have an obvious advantage over them.

    9. I’m reading The Power of Habit and it’s pretty good. Look for a review in the next week or so, but after reading most of it I still submit that “He with the best habits, wins.”

    10. I just hired a virtual assistant to help manage my schedule and research tasks and she has already saved me a tremendous amount of time over the last few weeks. It’s amazing how much I can accomplish when I don’t have to focus on the stuff I hate (research, data entry, paperwork, etc.). She is selectively looking to add clients. So, if you are interested, post in the comments and I will hook you up.

    That’s your weekly dose of random, kids. Now leave Daddy alone and let me get back to causing trouble.

    – Duke

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