Jump to content

Astrodome To Be Turned Into A Movie Studio


Subdude

Recommended Posts

. . . and you're confusing causation and correlation. Did you even go to college?

Let's get a few things clear. 1) My treatment of inflation is proper, provided that the discount rate is appropriate. 2) I do not provide any warranty of my discount rate; the Sports Authority is in trouble and any new issuance of debt may be on terms that are not favorable to the public. Adjust it however you will, the deal only looks bad at 0.1%, and I'll break it down in a moment. 3) I invite you to plug anything I've said so far into Google and to see if it comes up on any other websites than this one. Have fun.

Here's the quick breakdown: At a mothball cost of $2 million per year, $88 million worth of 2010 dollars aren't spent until Year 44 (assuming that it doesn't get redeveloped with private money first). Is it any wonder that the discount rate has to be 0.1% for the deal to go bad? But not for a single year at the tail end of the analysis, even the acknowledgment of the validity of the concept of the time value of money invalidates the argument that demolishing the Astrodome saves taxpayers money.

I can't really say your treatment of inflation is improper per se, because you completely did not treat inflation. You ignored it altogether. You plugged the wrong numbers into your formulas. Garbage in, garbage out.

Earlier you told us we could fund 45 years of maintenance for a mere $35.5 Million in 2010 dollars (post #217, check it out). Now, you seem to have stumbled into the reality that your calculations were fundamentally flawed and have admitted that the cost of mothballing for 44 years will be $88 Million in 2010 dollars.

You in fact proposed mothballing it forever, but 44 years proves my point quite well. Now, you are again trying to glide by the fact that at the end of your 44 years of mothballing we still have a decrepit stadium that will need to be addressed/demolished/refurbished. Your mothballing proposal(even if only for 44 years rather than in perpetuity as you first suggested) costs exactly the same amount as demolishing it now. At the end of the 44 years, we would then get to spend another $88 Million (in 2010 dollars, perhaps 2-3 times that amount in 2054 dollars) to accomplish what we could do now.

Cost to demolish and replace with the plaza now (in 2010 dollars): $88 million.

Cost of TheNiche's proposal (in 2010 dollars): $176 million (and somehow you are going to fund parks and the restoration of bottomlands with the "savings" you've achieved over demolishing it now)

Keep in mind, I am not a proponent of demolishing the dome. My initial and current response is that we are basically committed for at least $88 Million. If there is any chance that the contribution of that $88 Million towards enabling a private development scheme to come to fruition, we should be eagerly offering it up.

I would probably prefer continual mothballing to demolition, personally. But let no one be confused - continuing the mothballing is NOT a route to saving money.

Edited by Houston19514
Link to comment
Share on other sites

Interesting.

Note, that the Reliant Park people have been clear that the $88 Million estimate is for demolition and replacement with a plaza, water features, etc. The media may have not understood or made that clear.

Any idea what was included in that $6 Million for Texas Stadium? They did actually mention that it would be a lot more expensive than the demolition of Texas Stadium because of the close proximity of Reliant Stadium and Reliant Center.

Out of curiosity, I started looking around. Demolition of the Seattle Kingdome 10 years ago cost $9 Million. Not sure what all was included in that price either. (i.e., was that just the implosion, or did that include haul and restoration of the land to flat surface, or did it also include the creation of parking lots (which I believe is what replaced the Kingdome).

I didn't even see the water feature noted. There's several million right there. A bit off tangent perhaps, but why the hell do we need a plaza and "water feature" in an area that no one will see except secondarily to the event going on in the stadium? No one visits the stadium or Reliant Center to hang out. They go to pay admission to see the game or exhibits. I suppose the Rodeo people might like something for the throngs to look at, but the Rodeo and McNair...the 2 groups opposing redevelopment of the Dome...can pay for plazas and water features. If the Dome needs to implode, we should only pay for dynamite and dump trucks.

Back to demolition, I cannot imagine rubble removal not being included in the cost. And, while the stadium and Center are close (Texas Stadium sat alone in a field), they aren't THAT close. Demo of downtown buildings occurs within feet of other buildings routinely. These structures are upwards of 200 feet from the Dome. Let's say it cost double the Kingdome demo, that's $18 million, leaving $70 million for niceties. Whether intentional or not, the $88 million figure is misleading.

Link to comment
Share on other sites

This math fight is fun and all, but really, why can't we find some way to capitalize on the structure? Why should it stand if it's never going to be used again and costs money, regardless of the exact formula used to estimate the costs? I'm a fan of preservation, but frankly Niche, I'm surprised you'd advocate keeping the structure without a definite plan for it. "Because we may one day find a use for it," doesn't sound like the results of the practical cost/benefit analysis you typically apply to most situations.

Link to comment
Share on other sites

I would probably prefer continual mothballing to demolition, personally. But let no one be confused - continuing the mothballing is NOT a route to saving money.

You can dispute my assumptions all you like; the formula-based conclusion that demolition is a waste of taxpayer money is not so sensitive that it could not withstand unreasonable criticism. Do you want to use the perpetuity formula (which is useless for nearly any practical purpose except a British consol issued hundreds of years ago)? You can't get more fiscally conservative than that.

At $2 million per year for Harris County to mothball the Astrodome in perpetuity at a discount rate of 3.5% (with no accounting for any likelihood that it will ever be redeveloped or occupied), the present value is $57.1 million. The discount rate has to be 2.3% or lower in order for it to stop making sense to spend $2 million per year--each year--literally--forever. The theoretical sum of all outlays would be an infinite quantity of dollars; and yes, that makes sense.

It saves the taxpayers money because a claim to resources represented by a dollar today has more value than a 2.3% larger claim in the successive year. They could reinvest the difference between the cost of demolition and the present value (or just consume it outright) and do better for themselves.

And yes, inflation is dealt with (and then some) under those assumptions. And no, it doesn't matter that I'm talking about 2010 dollars, because whatever a 2055 dollar is worth, it'll be worth just as much less to Harris County as it's worth to their constituents, their employees, or contractors/vendors that maintain the dome.

This is the furthest realm of fiscal conservatism; it's absurd. Nobody would ever calculate it this way for any practical purpose...but I just did because your criticisms are absurd.

Can we move on, now?

EDIT: Actually, let's not move on just yet. As part of its coverage of the issue, Swamplot linked to a comment I made last year where I ran the calculation based on figures that I'd seen in a Chronicle article. Upkeep was estimated at $600,000. This would be your cue to defend a $2 million annual upkeep cost as a reasonable assumption.

Edited by TheNiche
Link to comment
Share on other sites

Back to demolition, I cannot imagine rubble removal not being included in the cost. And, while the stadium and Center are close (Texas Stadium sat alone in a field), they aren't THAT close. Demo of downtown buildings occurs within feet of other buildings routinely. These structures are upwards of 200 feet from the Dome.

I would imagine that the structural members supporting the Astrodome would require explosives that are an order of magnitude more powerful than would be necessary to take down an old office building. That probably has something to do with it.

EDIT: According to Swamplot, which cites my memory from last year, where I had cited a Chronicle article from before that, the cost of straight demolition was previously estimated at $30 million. Note that I'm still using the total Plan A costs because I think that the Astrodome itself provides at least as much aesthetic value as a sterile plaza.

Edited by TheNiche
  • Like 1
Link to comment
Share on other sites

You can dispute my assumptions all you like; the formula-based conclusion that demolition is a waste of taxpayer money is not so sensitive that it could not withstand unreasonable criticism. Do you want to use the perpetuity formula (which is useless for nearly any practical purpose except a British consol issued hundreds of years ago)? You can't get more fiscally conservative than that.

At $2 million per year for Harris County to mothball the Astrodome in perpetuity at a discount rate of 3.5% (with no accounting for any likelihood that it will ever be redeveloped or occupied), the present value is $57.1 million. The discount rate has to be 2.3% or lower in order for it to stop making sense to spend $2 million per year--each year--literally--forever. The theoretical sum of all outlays would be an infinite quantity of dollars; and yes, that makes sense.

It saves the taxpayers money because a claim to resources represented by a dollar today has more value than a 2.3% larger claim in the successive year. They could reinvest the difference between the cost of demolition and the present value (or just consume it outright) and do better for themselves.

And yes, inflation is dealt with (and then some) under those assumptions. And no, it doesn't matter that I'm talking about 2010 dollars, because whatever a 2055 dollar is worth, it'll be worth just as much less to Harris County as it's worth to their constituents, their employees, or contractors/vendors that maintain the dome.

This is the furthest realm of fiscal conservatism; it's absurd. Nobody would ever calculate it this way for any practical purpose...but I just did because your criticisms are absurd.

Can we move on, now?

EDIT: Actually, let's not move on just yet. As part of its coverage of the issue, Swamplot linked to a comment I made last year where I ran the calculation based on figures that I'd seen in a Chronicle article. Upkeep was estimated at $600,000. This would be your cue to defend a $2 million annual upkeep cost as a reasonable assumption.

Oh my goodness, Niche. You are so far in over your head on this one it is almost sad to watch.

One post you tell us that it will take $35.5 Million in 2010 dollars to maintain the dome for 45 years.

Then you stumble into the accurate statement that it will take $88 Million (2010 Dollars) to maintain the Dome for 44 years.

Now you are telling us it will take only $57.1 Million (2010 dollars) to maintain the Dome in perpetuity!!! Hilarious mathematics, my man.

Once again, you have completely failed to account for rising costs. When you compare to either of your earlier calculations (even the earlier flawed ones), this one should not have even gotten past the giggle test.

And now you are trying to tell us that it does not matter what a 2055 Dollar is worth? You are too much. If you indeed have an economics degree, you should get your money back.

As I've demonstrated in earlier posts, your flaw is in your input. In the case of the demolition costs, you cannot determine the 2010 value of a payment to be made in 2055 by discounting the 2010 cost of the project to be paid for. You have to discount the 2055 cost to be paid for. Hence, the approximate 2010 present value of the cost of demolition/plaza construction in 2055 is $88 Million.

Likewise to determine the present value of a stream of payments that will be required to fund maintenance for 44 years, one does not plug in the 2010 payment. One has to estimate the rising costs, then discount the $2 Million per year payment stream after adjusting the payment stream for inflation. When you discount that inflation-adjusted payment stream, you will come up with an approximate present value of, $88 Million for 44 years of maintenance.

Again, your claim to be saving the taxpayers money recognizes the growth in the value of the money by investment, but it utterly fails to account for the increased costs of inflation. While you are correct that your discount rate provides more dollars, you are ignoring the fact that more dollars will be required each and every year due to inflation. Your calculations (except the one outlier where you stumbled into accuracy all assume steady payments of $2 Million per year (in the case of the maintenance) with no adjustment for inflation. That's a quick and easy way to bankruptcy.

I saw that $600,000 number on Swamplot as well. But it seemed to be from a random non-authoritative source making an estimate. The $2 Million number comes from the people actually writing the checks. Significant numerical adjustments could be made reducing both the demolition estimates and the maintenance estimates we are using. But, honestly, unless you get a basic understanding of present value calculations, it hardly seems worth the effort.

By the way, good Google find on the British consol. If nothing else, Niche, you've still got your Google skills.

  • Like 1
Link to comment
Share on other sites

Oh my goodness, Niche. You are so far in over your head on this one it is almost sad to watch.

One post you tell us that it will take $35.5 Million in 2010 dollars to maintain the dome for 45 years.

Then you stumble into the accurate statement that it will take $88 Million (2010 Dollars) to maintain the Dome for 44 years.

Now you are telling us it will take only $57.1 Million (2010 dollars) to maintain the Dome in perpetuity!!! Hilarious mathematics, my man.

Once again, you have completely failed to account for rising costs. When you compare to either of your earlier calculations (even the earlier flawed ones), this one should not have even gotten past the giggle test.

And now you are trying to tell us that it does not matter what a 2055 Dollar is worth? You are too much. If you indeed have an economics degree, you should get your money back.

As I've demonstrated in earlier posts, your flaw is in your input. In the case of the demolition costs, you cannot determine the 2010 value of a payment to be made in 2055 by discounting the 2010 cost of the project to be paid for. You have to discount the 2055 cost to be paid for. Hence, the approximate 2010 present value of the cost of demolition/plaza construction in 2055 is $88 Million.

Likewise to determine the present value of a stream of payments that will be required to fund maintenance for 44 years, one does not plug in the 2010 payment. One has to estimate the rising costs, then discount the $2 Million per year payment stream after adjusting the payment stream for inflation. When you discount that inflation-adjusted payment stream, you will come up with an approximate present value of, $88 Million for 44 years of maintenance.

Again, your claim to be saving the taxpayers money recognizes the growth in the value of the money by investment, but it utterly fails to account for the increased costs of inflation. While you are correct that your discount rate provides more dollars, you are ignoring the fact that more dollars will be required each and every year due to inflation. Your calculations (except the one outlier where you stumbled into accuracy all assume steady payments of $2 Million per year (in the case of the maintenance) with no adjustment for inflation. That's a quick and easy way to bankruptcy.

I saw that $600,000 number on Swamplot as well. But it seemed to be from a random non-authoritative source making an estimate. The $2 Million number comes from the people actually writing the checks. Significant numerical adjustments could be made reducing both the demolition estimates and the maintenance estimates we are using. But, honestly, unless you get a basic understanding of present value calculations, it hardly seems worth the effort.

By the way, good Google find on the British consol. If nothing else, Niche, you've still got your Google skills.

Frustrated though I assure you that I am with your troll-like behavior...I'm not going to make this personal. I've addressed all of your criticisms; they are unfounded. If anybody else doesn't understand by now, they are welcome to ask for clarification.

To this point, I've been the one that has proactively offered up calculations for our consideration. I invite you to submit some scenarios of your own that attempt to compare mothballing to Plan A in present value terms. If I am wrong, then show me right.

The $2 Million number comes from the people actually writing the checks.

Who? What checks? From what entity? To cover which costs? Might that be including debt service, which would be an unrecoverable sunk cost for the purposes of this analysis?

Link to comment
Share on other sites

I think it would be cool to keep the dome and do what the renderings above demonstrate.

one option I didn't see considered, but it fits Houston perfectly, demo and turn the dome area into a parking lot, you can get a return on your demo costs over about a million years, especially when you account for inflation....

also, if they make it with that permeable pavement it will be eco friendly too.

(to be fair, I have heard the $2million dollar estimate as well on NPR, no idea where they got the number though).

Edited by samagon
  • Like 1
Link to comment
Share on other sites

So, here ya go. You get to vote...on the pretty pictures.

http://www.reliantpark.com/feedback/

If you want more data, the slideshow with the costs (slide 42) is here

http://www.reliantpa...ide_Show_SM.pdf

They are missing Option 4. Poke out the skylights fill the inside with rich loam, seed it heavily, and regularly water. Ch-ch-ch-Chia-Dome!

Link to comment
Share on other sites

Frustrated though I assure you that I am with your troll-like behavior...I'm not going to make this personal. I've addressed all of your criticisms; they are unfounded. If anybody else doesn't understand by now, they are welcome to ask for clarification.

To this point, I've been the one that has proactively offered up calculations for our consideration. I invite you to submit some scenarios of your own that attempt to compare mothballing to Plan A in present value terms. If I am wrong, then show me right.

It must be fascinating living in the Alice in Wonderland world of theNiche, where up is down and down is up, where ignoring another's statements means they didn't happen, where "your troll-like behavior" is not "making it personal", where changing the subject is addressing criticisms, and where words mean only what theNiche chooses them to mean, nothing more, nothing less.

For the record, here is a brief recap:

-- First, theNiche told us that, rather than spend $100 Million (the number being bandied about at the time) to demolish the dome and replace it with green space, we could just mothball the dome AND build, e.g., another Discovery Green.

-- I pointed out that such a plan assumes that mothballing the Dome has zero cost.

-- theNiche denied assuming zero cost (even though his stated plan indeed did assume zero cost; anyone can look at the number and see that); but then justified it by assuming, with no evidence or quantification, that the cost of maintenance is "not huge" but that, somehow adding in the costs of maintenance did not effect the "gist of things." (Never mind that if you have fully allocated your pot of money to building a new Discovery Green, the fact that some of that money instead has to be used to maintain the Dome, by the laws of mathematics changes the gist of things.)

-- I then pointed out that Harris County has been basically doing less than what theNiche called for in maintaining the Dome for the past 10 years or so (less, in that there has been no power-washing and parts of the exterior are rusting...) and that according to the folks running the place, it is costing us $2 Million per year. I further stated that: "For an accurate comparison of the cost of your proposal, we would have to calculate how large of a fund would be required to provide $2 Million+ per year in perpetuity. I'm thinking the amount required to fund that annual expenditure will be not much less than the $88 Million cost for demolition and replacement with green space/major water feature etc. In short, it really makes no financial sense to continue spending money merely maintaining a structure with no intention to ever use it." (Never mind my posts such as this, theNiche proudly pronounces in his most recent post that HE is the only one who has posted any calculations and invites me to offer up alternative comparison of mothballing to plan A in present value terms... Never mind reality, Niche, it's not important.)

-- Then theNiche tells us that the present value of maintaining the Dome for 45 years is $35.5 Million.

-- I point out that his initial proposal would actually require the maintenance of the Dome in perpetuity, not just 45 years. But even assuming we only maintain it for 45 years, I point out... then what. We still have a Dome. Do we then tear it down? I point out that with the current demolition plan of $88 million, the present value of a demolition 45 years from now will be approximately $88 Million, meaning his maintenance and deferred demolition plan has an actual present value cost of $124 Million, not the $35.5 Million he claimed (another presentation of alternatives and calculations proactively presented by someone other than theNiche. Pesky reality again.) I did not even bother at this point to correct his flawed present value calculation for 45 years of maintenance; it didn't seem sporting.

-- Then theNiche tells us that the present value of $88 Million spent in 45 years at a 5% discount rate is $9.3 Million, not the $88 Million I had (proactively) presented.

-- True but completely irrelevant. I pointed out that his calculation would provide $88 million in the year 2055 for a project that would, by that time, cost much more than $88 Million. TheNiche's calculations foolishly assume that one could accomplish in 2055 the exact some project for the exact same nominal dollar amount as the project would cost us in 2010.

-- theNiche's response: change the subject. ramble on about "the rule on inflation", which discount rate he chose and that a 3% rate would actually be more realistic (completely oblivious to the fact that a 3% discount rate would actually weaken his argument, not strengthen it.)

-- I again pointed out that his calculations in fact did not deal with inflation and that his calculations would provide us with $88 Million in the year 2055 to accomplish a project that would cost much more than that in 2055 dollars, and AGAIN posted my shortcut calculation that the Present Value of the 2055 cost to perform the demolition and green space project would be approximately $88 Million.

-- theNiche's response: tells us that his treatment of inflation is proper. (Never mind that he has not treated inflation at all, as I have repeatedly demonstrated.) Then he allows that at $2 Million per year, $88 Million in 2010 dollars will last 44 years.

-- I point out that in effect (although he didn't realize it), this is saying that the present value of the maintenance expenditures for 44 years is $88 Million, not the $35.5 Million for 45 years he had told us before.) and again point out the the correct present value of the 2054 cost of demolition/green space is another $88 Million, so that the present value cost of theNiche's proposal (even with shortening it to 44 years, rather than perpetuity) is $176 Million vs. the cost of demolition/green space now of $88 Million (Note the proactive presentation of calculations that, in theNiche's alternative reality only HE has done, . . . that pesky reality again.)

-- Then theNiche continues to ignore my criticism of his calculations and implausibly presents a THIRD calculation of the present value of maintenance, this one an attempt at calculating the present value of the cost to maintain in perpetuity. Hilariously, it is some $30 Million LESS than the present value of the cost of maintaining the dome for 44 years. He again states, without evidence or support, that inflation is dealt with in his calculations. Oh, and theNiche tells us that it does not matter what the dollar will be worth in 2054.

-- I then point out his three wildly divergent present value calculations for maintenance, and point out again that he has completely failed to account for rising costs and AGAIN explain the flaw in his calculations: "As I've demonstrated in earlier posts, your flaw is in your input. In the case of the demolition costs, you cannot determine the 2010 value of a payment to be made in 2054 by discounting the 2010 cost of the project to be paid for. You have to discount the 2055 cost to be paid for. Hence, the approximate 2010 present value of the cost of demolition/plaza construction in 2054 is $88 Million. Likewise, to determine the present value of a stream of payments that will be required to fund maintenance for 44 years, one does not plug in the 2010 payment. One has to estimate the rising costs, then discount the $2 Million per year payment stream after adjusting the payment stream for inflation. When you discount that inflation-adjusted payment stream, you will come up with an approximate present value of, $88 Million for 44 years of maintenance."

-- theNiche's response: Well, those who have followed theNiche's antics for a number of years will not be surprised to learn that he responds by continuing to ignore the well-founded criticisms of his calculations, declare that he is the only one who has offered up calculations to be considered, that he has addressed all my criticisms and declares them unfounded and challenges me "if I am wrong show me right", laughably ignoring the fact I've done so several times, but here, once again, is the short version.

The cost of plan A (demolition and green space) in 2010: $88 Million.

Annual cost of maintenance: $2 Million

theNiche's proposal (as revised): Maintain the dome for 44 years, then tear it down.

Shortcut calculation of the present value cost of 44 years of maintenance: $88 Million.

Shortcut calculation of the present value cost of accomplishing Plan A (demolition and green space) in 2054: $88 Million.

Total present value cost of theNiche's proposal: $176 Million (vs. $88 Million for Plan A).

In his last flailings, theNiche was trying to confuse matters by throwing out alternative numbers. So let's run with some alternative numbers: theNiche suddenly wanted us to use $600,000 as the annual cost of maintenance and some lower number for demolition and greenspace. (It does not really matter what number we use for the demolition/greenspace costs, because the relative calculations come out about the same; so let's just go with the bare demolition cost of Texas Stadium: $6 Million.

In that case, the cost of the new Plan A would be: $6 Million

PV cost of 44 years of maintenance: approximately $26,400,000

PV cost of Plan A in 2055: $6 Million

PV cost of theNiche's plan: $32,400,000 (vs. $6 Million for the 2010 cost of Plan A)

Any way you slice it, maintaining the Dome for 44 years and then demolishing will cost FAR more than demolishing it now, both in present value terms and in total nominal dollars. It is an inescapable fact of mathematics.

For those interested in the shortcut pv calculation I am using, let me explain: In order to calculate the Present Value cost of a project to be done 44 years in the future, one first has to calculate what the project will cost, in 2054 dollars. (This was the flaw inherent in all of theNiche's calculations; a flaw I repeatedly pointed out and he never acknowledged, let alone addressed or proved unfounded). To estimate the 2054 cost, we have to apply an expected inflation factor. Once we have that number, we can plug it into the present value calculator. To calculate the present value we have to use a discount rate. In order to do a semi-conservative, reliable calculation, your discount rate is going to have to be fairly close to the rate as used in the calculation of your inflation multiplier. Thus, you use the inflation factor to ramp up your number to 2054 dollars and then use very nearly the same number as your discount to ramp the number back to 2010 dollars. Hence the shortcut: The PV cost of a project to be performed 44 year from now should be pretty close to the actual cost of the same project today.

I apologize for the long post, but I like to keep things factual and honest.

Edited by Houston19514
Link to comment
Share on other sites

Can the Astrodome become the movie studios, but keep the other plans shown in the renderings (hotel, festival plaza, etc.)? Overall, I think that would be the best idea.

The movie studio concept is included in plan C I believe. It just wouldn't be the whole building.

By the way, there is a bunch more information available on Reliant Park's website

Edited by Houston19514
Link to comment
Share on other sites

It must be fascinating living in the Alice in Wonderland world of theNiche, where up is down and down is up, where ignoring another's statements means they didn't happen, where "your troll-like behavior" is not "making it personal", where changing the subject is addressing criticisms, and where words mean only what theNiche chooses them to mean, nothing more, nothing less.

For the record, here is a brief recap:

-- First, theNiche told us that, rather than spend $100 Million (the number being bandied about at the time) to demolish the dome and replace it with green space, we could just mothball the dome AND build, e.g., another Discovery Green.

-- I pointed out that such a plan assumes that mothballing the Dome has zero cost.

-- theNiche denied assuming zero cost (even though his stated plan indeed did assume zero cost; anyone can look at the number and see that); but then justified it by assuming, with no evidence or quantification, that the cost of maintenance is "not huge" but that, somehow adding in the costs of maintenance did not effect the "gist of things." (Never mind that if you have fully allocated your pot of money to building a new Discovery Green, the fact that some of that money instead has to be used to maintain the Dome, by the laws of mathematics changes the gist of things.)

-- I then pointed out that Harris County has been basically doing less than what theNiche called for in maintaining the Dome for the past 10 years or so (less, in that there has been no power-washing and parts of the exterior are rusting...) and that according to the folks running the place, it is costing us $2 Million per year. I further stated that: "For an accurate comparison of the cost of your proposal, we would have to calculate how large of a fund would be required to provide $2 Million+ per year in perpetuity. I'm thinking the amount required to fund that annual expenditure will be not much less than the $88 Million cost for demolition and replacement with green space/major water feature etc. In short, it really makes no financial sense to continue spending money merely maintaining a structure with no intention to ever use it." (Never mind my posts such as this, theNiche proudly pronounces in his most recent post that HE is the only one who has posted any calculations and invites me to offer up alternative comparison of mothballing to plan A in present value terms... Never mind reality, Niche, it's not important.)

-- Then theNiche tells us that the present value of maintaining the Dome for 45 years is $35.5 Million.

-- I point out that his initial proposal would actually require the maintenance of the Dome in perpetuity, not just 45 years. But even assuming we only maintain it for 45 years, I point out... then what. We still have a Dome. Do we then tear it down? I point out that with the current demolition plan of $88 million, the present value of a demolition 45 years from now will be approximately $88 Million, meaning his maintenance and deferred demolition plan has an actual present value cost of $124 Million, not the $35.5 Million he claimed (another presentation of alternatives and calculations proactively presented by someone other than theNiche. Pesky reality again.) I did not even bother at this point to correct his flawed present value calculation for 45 years of maintenance; it didn't seem sporting.

-- Then theNiche tells us that the present value of $88 Million spent in 45 years at a 5% discount rate is $9.3 Million, not the $88 Million I had (proactively) presented.

-- True but completely irrelevant. I pointed out that his calculation would provide $88 million in the year 2055 for a project that would, by that time, cost much more than $88 Million. TheNiche's calculations foolishly assume that one could accomplish in 2055 the exact some project for the exact same nominal dollar amount as the project would cost us in 2010.

-- theNiche's response: change the subject. ramble on about "the rule on inflation", which discount rate he chose and that a 3% rate would actually be more realistic (completely oblivious to the fact that a 3% discount rate would actually weaken his argument, not strengthen it.)

-- I again pointed out that his calculations in fact did not deal with inflation and that his calculations would provide us with $88 Million in the year 2055 to accomplish a project that would cost much more than that in 2055 dollars, and AGAIN posted my shortcut calculation that the Present Value of the 2055 cost to perform the demolition and green space project would be approximately $88 Million.

-- theNiche's response: tells us that his treatment of inflation is proper. (Never mind that he has not treated inflation at all, as I have repeatedly demonstrated.) Then he allows that at $2 Million per year, $88 Million in 2010 dollars will last 44 years.

-- I point out that in effect (although he didn't realize it), this is saying that the present value of the maintenance expenditures for 44 years is $88 Million, not the $35.5 Million for 45 years he had told us before.) and again point out the the correct present value of the 2054 cost of demolition/green space is another $88 Million, so that the present value cost of theNiche's proposal (even with shortening it to 44 years, rather than perpetuity) is $176 Million vs. the cost of demolition/green space now of $88 Million (Note the proactive presentation of calculations that, in theNiche's alternative reality only HE has done, . . . that pesky reality again.)

-- Then theNiche continues to ignore my criticism of his calculations and implausibly presents a THIRD calculation of the present value of maintenance, this one an attempt at calculating the present value of the cost to maintain in perpetuity. Hilariously, it is some $30 Million LESS than the present value of the cost of maintaining the dome for 44 years. He again states, without evidence or support, that inflation is dealt with in his calculations. Oh, and theNiche tells us that it does not matter what the dollar will be worth in 2054.

-- I then point out his three wildly divergent present value calculations for maintenance, and point out again that he has completely failed to account for rising costs and AGAIN explain the flaw in his calculations: "As I've demonstrated in earlier posts, your flaw is in your input. In the case of the demolition costs, you cannot determine the 2010 value of a payment to be made in 2054 by discounting the 2010 cost of the project to be paid for. You have to discount the 2055 cost to be paid for. Hence, the approximate 2010 present value of the cost of demolition/plaza construction in 2054 is $88 Million. Likewise, to determine the present value of a stream of payments that will be required to fund maintenance for 44 years, one does not plug in the 2010 payment. One has to estimate the rising costs, then discount the $2 Million per year payment stream after adjusting the payment stream for inflation. When you discount that inflation-adjusted payment stream, you will come up with an approximate present value of, $88 Million for 44 years of maintenance."

-- theNiche's response: Well, those who have followed theNiche's antics for a number of years will not be surprised to learn that he responds by continuing to ignore the well-founded criticisms of his calculations, declare that he is the only one who has offered up calculations to be considered, that he has addressed all my criticisms and declares them unfounded and challenges me "if I am wrong show me right", laughably ignoring the fact I've done so several times, but here, once again, is the short version.

The cost of plan A (demolition and green space) in 2010: $88 Million.

Annual cost of maintenance: $2 Million

theNiche's proposal (as revised): Maintain the dome for 44 years, then tear it down.

Shortcut calculation of the present value cost of 44 years of maintenance: $88 Million.

Shortcut calculation of the present value cost of accomplishing Plan A (demolition and green space) in 2054: $88 Million.

Total present value cost of theNiche's proposal: $176 Million (vs. $88 Million for Plan A).

In his last flailings, theNiche was trying to confuse matters by throwing out alternative numbers. So let's run with some alternative numbers: theNiche suddenly wanted us to use $600,000 as the annual cost of maintenance and some lower number for demolition and greenspace. (It does not really matter what number we use for the demolition/greenspace costs, because the relative calculations come out about the same; so let's just go with the bare demolition cost of Texas Stadium: $6 Million.

In that case, the cost of the new Plan A would be: $6 Million

PV cost of 44 years of maintenance: approximately $26,400,000

PV cost of Plan A in 2055: $6 Million

PV cost of theNiche's plan: $32,400,000 (vs. $6 Million for the 2010 cost of Plan A)

Any way you slice it, maintaining the Dome for 44 years and then demolishing will cost FAR more than demolishing it now, both in present value terms and in total nominal dollars. It is an inescapable fact of mathematics.

For those interested in the shortcut pv calculation I am using, let me explain: In order to calculate the Present Value cost of a project to be done 44 years in the future, one first has to calculate what the project will cost, in 2054 dollars. (This was the flaw inherent in all of theNiche's calculations; a flaw I repeatedly pointed out and he never acknowledged, let alone addressed or proved unfounded). To estimate the 2054 cost, we have to apply an expected inflation factor. Once we have that number, we can plug it into the present value calculator. To calculate the present value we have to use a discount rate. In order to do a semi-conservative, reliable calculation, your discount rate is going to have to be fairly close to the rate as used in the calculation of your inflation multiplier. Thus, you use the inflation factor to ramp up your number to 2054 dollars and then use very nearly the same number as your discount to ramp the number back to 2010 dollars. Hence the shortcut: The PV cost of a project to be performed 44 year from now should be pretty close to the actual cost of the same project today.

I apologize for the long post, but I like to keep things factual and honest.

An unbiased recap will demonstrate how a quick 'back of the envelope' calculation gradually became more complex as new assumptions were added, challenged, tested to their extremes, justified, and challenged again.

Your summary of "my plan" is disingenuous. I do not call for preserving the Astrodome until Year 44 and then tearing it down. That's just one scenario that I evaluated to try and demonstrate the properties of a present value analysis, since the numbers for that year made the conceptualization of present value easier to digest. And I honestly don't think that finding private money to do something with it will be the least bit difficult in such a large span of time.

Your re-interpretation of my analysis confuses an example of the wrong way of calculating present value for the right way. Present value is not equal to the sum of all payments made in 2010 Dollars throughout the life of a project. That is not a shortcut. Your big bolded statement is unsupportable and false.

The explanation that followed your big bolded statement is revealing in the sense that 1) you have either understood present value the entire time and have merely been wasting our time instead of trying to put the issue to bed right off the bat, or 2) that you either learned something from the master B):P or took my advice and researched the issue. The problem with it is that your conclusion that inflation nullifies the discount rate is that it is not supported by long-term historical investment data. Additionally, TIPS bonds (which are U.S. Treasury-backed securities with a principal amount that automatically adjusts with inflation) can and are able to be auctioned at positive interest rates.

Your shortcut theory only works if people, investors, and nations are willing to forgo a unit of consumption today for the very same unit of consumption in some number of years. But at that point we're talking about hording, not investment. And even if that's what is going on in the global capital markets right now, it is not a reasonable expectation that this will be a decades-long phenomenon. Do you disagree with this criticism, and if so, why?

The 45-year present value analysis that I presented earlier revealed that if there is even a 0.1% positive difference between the nominal discount rate and the average annual inflation rate, Plan A (under your $2 million annual cost assumption and our mutually agreed-upon assumption that the aesthetic benefits of the extant Astrodome are at least as much as the proposed plaza) cannot possibly be the financially optimal choice. And even then, I think that 45 years is an excessively conservative assumption for how long it might take for private capital to be able to do something with the structure. Do you disagree with anything I've said in this paragraph?

  • Like 1
Link to comment
Share on other sites

The movie studio concept is included in plan C I believe. It just wouldn't be the whole building.

By the way, there is a bunch more information available on Reliant Park's website

If they can do this, then this would be really nice. I imagine a movie studios could bring in a lot of "movie" type conventions for Reliant Park. But, what will all this expansion at Reliant Park mean for the GRB? Isn't there suppose to be another convention center hotel across from the Hilton? Oh, and if we were to host the World Cup in 2018 or 2022, Reliant Park is looking like a great place to have the International Broadcast Center.

Edit: And I think all of that science stuff would work better with NASA/JSC. Move that stuff over there and put the movie studios in the Astrodome.

Edited by Trae
Link to comment
Share on other sites

Before the topic shifts from the focus of my question, does anybody know the answer? Sorry to be so pushy!

I have no idea. But I would assume that option 3 is the same as option C.

Edited by mfastx
Link to comment
Share on other sites

An unbiased recap will demonstrate how a quick 'back of the envelope' calculation gradually became more complex as new assumptions were added, challenged, tested to their extremes, justified, and challenged again.

Your summary of "my plan" is disingenuous. I do not call for preserving the Astrodome until Year 44 and then tearing it down. That's just one scenario that I evaluated to try and demonstrate the properties of a present value analysis, since the numbers for that year made the conceptualization of present value easier to digest. And I honestly don't think that finding private money to do something with it will be the least bit difficult in such a large span of time.

Your re-interpretation of my analysis confuses an example of the wrong way of calculating present value for the right way. Present value is not equal to the sum of all payments made in 2010 Dollars throughout the life of a project. That is not a shortcut. Your big bolded statement is unsupportable and false.

The explanation that followed your big bolded statement is revealing in the sense that 1) you have either understood present value the entire time and have merely been wasting our time instead of trying to put the issue to bed right off the bat, or 2) that you either learned something from the master B):P or took my advice and researched the issue. The problem with it is that your conclusion that inflation nullifies the discount rate is that it is not supported by long-term historical investment data. Additionally, TIPS bonds (which are U.S. Treasury-backed securities with a principal amount that automatically adjusts with inflation) can and are able to be auctioned at positive interest rates.

Your shortcut theory only works if people, investors, and nations are willing to forgo a unit of consumption today for the very same unit of consumption in some number of years. But at that point we're talking about hording, not investment. And even if that's what is going on in the global capital markets right now, it is not a reasonable expectation that this will be a decades-long phenomenon. Do you disagree with this criticism, and if so, why?

The 45-year present value analysis that I presented earlier revealed that if there is even a 0.1% positive difference between the nominal discount rate and the average annual inflation rate, Plan A (under your $2 million annual cost assumption and our mutually agreed-upon assumption that the aesthetic benefits of the extant Astrodome are at least as much as the proposed plaza) cannot possibly be the financially optimal choice. And even then, I think that 45 years is an excessively conservative assumption for how long it might take for private capital to be able to do something with the structure. Do you disagree with anything I've said in this paragraph?

Yes, I disagree with quite a lot of it, but more importantly, I've actually calculated the numbers, using your preferred numbers and assumptions.

1) My summary of your plan is not disingenuous. It is your plan to continue maintaining for X years followed by the magical appearance of a fully private scheme for the dome that is disingenuous. Given that we've been looking for a private sector plan with private sector money for 10 years without success or anything close to success, I think we can pretty safely say that the chances of a fully-privately funded plan for the Dome is not going to happen. Not with a sufficient degree of likelihood to bother calculating. Therefore, for planning purposes, the necessary, not disingenuous, end-game of theNiche Plan is demolition, or as I said in earlier posts, maintaining in perpetuity.

2) I have indeed understood present value all along and have demonstrated as much. It is you who thought that the present value of 88 Million 2055 dollars was even a relevant number. Further, I acknowledged that there will be some difference between the inflation factor and the discount rate, but as I stated, I would not expect it to be a large difference. The existence of the difference is why I called it a shortcut. Calculations follow showing various differences between the inflation rate and the discount rate. None of them, from a .1% difference to a full 2 percentage point difference show a result in which theNiche Plan is financially preferred to Plan A (immediate demolition).

3) The 45 year present value analysis you presented earlier was fundamentally incorrect, as I have repeatedly demonstrated. Nobody cares what the Present Value is of 88 Million 2055 dollars. It could not possibly be less relevant to this discussion. Putting that aside, let's take a look at your statement that even a .1% difference between the discount rate and the expected inflation rate. Earlier you told us a discount rate in the low 3's would be most appropriate. I do not disagree with that (HOORAY for agreement!) So let's use a 3% discount rate and, then a 2.9% inflation rate. Let the calculation begin:

$88 Million in current cost adjusted for the expected annual inflation rate of 2.9% will be approximately 309,570,000 in 2054 dollars. Then we apply the 3% discount rate to that to come up with the 2010 present value = approximately $84,318,000. That is the Present Value of the 2054 cost of demolition. Note my shortcut answer of "close to $88 Million" is several orders of magnitude closer than your calculation of $9.3 Million. Further note that, when added to the 44 year cost of maintaining the Dome, Plan A is financially far better than theNiche Plan. So your statement that even a .1% positive difference effectively makes your plan financially superior to Plan A is clearly and demonstrably (and in fact demonstrated to be) false.

Let's try it with a larger difference between the discount rate and the inflation rate. Let's try a 3% discount rate and a full percentage point lower inflation rate (rather than the .1% we tried above) for a 2% inflation rate. The 2054 cost of demolition will be approximately $210,325,000. Applying the 3% discount rate gives us a 2010 present value of approximately $57,286,507.05. Then we have to add the cost of 44 years of maintenance: $2 Million per year, inflation adjusted for 44 years, discounted back to present value with theNiche's preferred discount rate of 3%: almost $70 Million. Total 2010 present value cost of Plan A: $88 Million. Total 2010 Present Value cost of theNiche Plan: approximately $127 Million. If my calculations are incorrect, I am open to correction.

Let's try an even bigger investment premium over the inflation rate: 4% discount rate and a 2% inflation rate. That would give us a 2055 cost of demolition of $210,325,000 and a 2010 present value of $37,447,598.21. The present value of 44 years of maintenance using these numbers: $58,131,000. Total present value of theNiche Plan: approximately $95.5 Million. Present value of Plan A: $88 Million.

How about a 3% discount with a 1% inflation rate: The 1% inflation rate will lead to a 2054 cost of $136,340,000. Applying the 3% discount rate gives us a 2010 PV of: $37,135,000. The present value of 44 years of maintenance using 1% inflation and a 3% discount rate: $56,744,000. Total 2010 PV cost of theNiche Plan: $93,879,000. Total 2010 PV cost of Plan A: $88 Million.

Where have I gone wrong with these calculations?

Edited by Houston19514
Link to comment
Share on other sites

Before the topic shifts from the focus of my question, does anybody know the answer? Sorry to be so pushy!

Actually, I think there is the possibility of incorporating the movie studio into either Option 2 or 3 (and the Reliant Park website refers to them by numbers, not letters.

EDIT: The master plan seems to only mention the movie studio in connection with Option 3. (I thought I had read somewhere that it could be part of either Option 2 or 3.)

So to be safe, just vote for Option 3. That's the coolest option anyway, if we can find a way to pay for it...

Edited by Houston19514
Link to comment
Share on other sites

Upkeep is expensive. Just running the AC all the time is expensive. But here in H-town if you don't run the AC then your just inviting mold and a bigger problem.

By the way, someone wrote in the Chronicle last Sunday the best use for the dome: pick it up and set it down on the big oil leak in the Gulf.  Kill 2 birds with one stone. 

Link to comment
Share on other sites

  • 6 months later...

per bidclerk.com

est. start date: Nov 2011

status: conceptual (downgraded? from Design, per bidclerk)

Description: Site work, renovation and new construction for a mixed-use development in Houston. Preliminary design plans call for the renovation of an existing sports and convention center complex. Construction will include a 1,000-room hotel, convention facili...

Link to comment
Share on other sites

  • The title was changed to Astrodome Hotel?
  • The topic was unlocked

Join the conversation

You can post now and register later. If you have an account, sign in now to post with your account.

Guest
Reply to this topic...

×   Pasted as rich text.   Paste as plain text instead

  Only 75 emoji are allowed.

×   Your link has been automatically embedded.   Display as a link instead

×   Your previous content has been restored.   Clear editor

×   You cannot paste images directly. Upload or insert images from URL.

Loading...
×
×
  • Create New...