Morning Read: Hearings probe marketability of Big Tupper resort
In April, NCPR looked in-depth at the question of whether the Adirondack Club and Resort project in Tupper Lake is economically viable, or feasible. We found significant skepticism within the business community.
The hearings now underway in Tupper Lake — part of the Adirondack Park Agency’s review — are now focusing on this question and there has been a flurry of interesting coverage.
Leading the way is Jessica Collier at the Adirondack Daily Enterprise, who notes in her reports that green groups are questioning the marketability of the vacation homes, and the fact that prices for the properties have been raised significantly despite the recession.
Writing for Denton Publications and WNBZ, George Earl notes that critics of the project are also questioning whether the developers are basing their project on sound economic estimates.
These hearings come at a time when there are still significant reports nationally that the housing market remains seriously crippled by the recession.
Experts speaking on behalf of ACR’s developers, however, maintain that high-end buyers can still be found with enough cash to invest in the resort.
Check out the articles above and leave comments below. This is an emotional issue, so please be courteous and thoughtful, as always…
The point of free market decisions is that they are made by those taking the risks. If the development group is risking their own money I don’t honestly understand why any government entity would be reviewing the business side of this development at all. Environmental impacts, yes, social impacts, yes,, zoning impacts, yes, even cultural impacts yes, but the business of this development should only be the purview of the owners. If they fail they fail millions of businesses fail every year and millions succeed it is the basis of our system.
Well stated Mervel. If no one takes a risk then we can be sure no vacation homes will ever be sold. If I understand it correctly there may be some risk to of public funds, that would be my only real concern were I still living in Tupper.
Mervel wants to know why government cares if the plan is economically viable. The reason is that projects like this involve expansion of infrastructure which will still have to be supported even if the project is a bust. Government cares because a bust on that scale leaves the community is in worse economic shape than it is now. All those other impacts you list are not separable from the the success or the failure. You can’t just assume that if the project fails and a majority of the development goes unsold, that those other things will just hum along unaffected by the failure to the project. Just as the community may be positively affected by the success of such a project, it will surely be negatively affected by its failure.
I share the skepticism of those who question the marketability of these luxury homes. What is there about Tupper Lake and/or this project that will make it more attractive to buyers than Lake Placid where one can already find lots of property on the market? Or Old Forge? Just the other day I picked up a copy of a glossy free magazine full of Adirondack properties for sale including many luxury homes/second homes. Are high end Adirondack homes selling so fast that builders are having trouble meeting demand? Somehow I doubt it.
This looks like a boondoggle to me and it seems silly to build it. If I were a Tupper Lake taxpayer I’d be ticked if a single dime of mine went towards this project.
That said, if the developer and the taxpayers of Tupper Lake want to pour their money into this, and all environmental concerns have been addressed (which I thought was what the APA and the green groups were supposed to be focused on, rather than economic analysis), I say let them. I thought it had been empirically proven around 1990 that central planning is a bad idea.
But all businesses in the end fail, they all end; some sooner some later, new businesses start up it is the nature of life, the normal business life cycle of birth and death. Are we saying that if you can’t say for sure that you will succeed in business for some time into perpetuity, you should not be allowed to open at all?
This seems to me beyond the reach of what government should be involved in, how can you prove that you are going to be a business success, you can’t, this type of review seems to me like maybe just a way to stop the development regardless. If these units are not viable than investors will not invest their money and the thing will not get built, we should let the investors make that decision about their own money.
From what i heard of yesterdays hearings there were documents found through FOIL from Franklin County IDA that show that the head of the IDA has never heard of the type of PILOT the ACR is requesting. Nor has thier Bond counsel in NY city. They had never heard of the type of PILOT the ACR is requesting and questioned its legality. In the APA application it states that the project is not economically viable without the PILOT. They may now have to sink their own $$$ into this longshot rather than rely on taxpayer subsidy to make it fly. Good Luck.
Once the expert paid witnesses are done testifying and the record is turned over to the agency for analysis and a decision, who at the agency has any background in financial analysis? The agency is environmental analysts and wetland biologists etc., not people with training and experience in financial analysis. If they were to deny the permit on any of these grounds the agency will probably end up with yet another lawsuit to deal with.
Good comments thus far. I agree with Mervel in principle, but once the developers went down the road of requesting a PILOT underwritten by a public entity, the financials were bound to be reviewed by some gov’t entity. And as it should.
At that point any idea of “laissez faire” development went out the window. That’s not to say, however, that it’s up to the APA to determine the financial success of this project. I find that a bit odd. I would have assumed that the IDA, its board, the Franklin County Legislature and its attorney, would review the financials and then decide whether the PILOT should be offered. A process very similar occurred recently in Jefferson County regarding the Gallo Island wind farm. I suppose the ACR is an example of the additional red tape a developer encounters whenever they propose a development within the Park.
“I agree with Mervel in principle, but once the developers went down the road of requesting a PILOT underwritten by a public entity, the financials were bound to be reviewed by some gov’t entity. And as it should.”
I agree. Do you really think they have the expertise to make such a call? Also, I don’t think they have much information regarding the PILOT so that will have to come later assuming they get that far.
Clapton has a good point, if this is really a public venture not a private one well the price you pay is that you are now under the governments thumb.
Paul, 2:04 pm. The APA has lots of information on the “proposed” PILOT. The developer has filed many pages of documents showing how it will supposedly work. They also now have many more documents from the IDA via FOIL that the developer witheld in the discovery process. Those documents could well be the undoing of the PILOT. See the article in todays Adirondack Daily Enterprise.
Paul,
Was the economic services unit of the APA disbanded or something?
I’m not sure what it is you are looking for in terms of financial analysis.
In addition to that unit, the board itself is comprised of several people who have extensive experience in very complex business and economic endeavors.
Dave if this unit has some folks with a financial background then good. What do they do most of the time? APA review rarely includes financial aspects. If I want to build a house that I can’t afford and may have to abandon half finished then there is nothing preventing me from doing it. In fact many many permits are issued for future projects that in the present are not affordable (boat house permits are a good example). What I was thinking about were some staff that have even a bachelors degree in business. Tell me more about the eco services unit?? The board may have some good experience but the review is done by staff. The board just shows up once a month.
“The Economic Services Unit is staffed by the Agency’s Special Assistant for Economic Affairs who provides critical expertise in real estate market and financial feasibility analysis, economic and fiscal impact analysis, economic development planning, and organizational development to permit review and local government services.”
Dave, thanks. It looks like he has his work cut out for him on this one.
Dave, Forget about my last comment.
It looks like the “economic services unit” of the APA currently has NO staff. The person listed on the APA website that fills this position retired from state service in August of last year, see link below with more info:
http://www.adirondack.org/steve-erman/
Projecting $38 million in sales per year … funny! Just like in North Creek, everyone wants to buy over-priced real estate that isn’t on a lake.
I think if I pick up my copy of Adirondack Life and look at the real estate ads I could probably buy every property advertised for $38 million and probably all of them are lake-front.