METRO Buys Land To Sell To Developer At Later Date

[wakester]

Chron story

Helping the process along. Although this is sure to get the Anti-Metro crowd excited.

[musicman]

already a thread started earlier today

here it is.

Edited April 5, 2007 by musicman

[desirous]

Yes, I read the article, but I still have to ask: why the hell is Metro buying land?

[nmainguy]

Before I was even into the second sentence, I knew part-time council member and full time radio talk show host Berry would slither out from under his rock to demonize the whole concept. Lucky for us he will soon be expunged from public life. But never fear! musicman and his faithfull side-kicks CDeb and aftonag will take up the anti METRO banner and keep us all educated with the assitance from our favorite little rhinestone! Could fun be any funner? I think not...

Now I have to go and brow-beat my SO into taking out the compost. So many important jobs yet so few qualified to do them...perhaps our little scamp Mikey will be available in the near future?

[Trae]

connections.

I see a lot of people are getting icons. Editor is putting in group icons.

[musicman]

Now I have to go and brow-beat my SO

sounds like a demon to me!

[Guest danax]

Topic merged with "Metro buys Midtown tract, and developer buys time".

This is a creative idea and might've been something Midtown TIRZ could've championed and funded.....but they're more interested in buying 3rd Ward real estate to try to keep it from looking like Midtown is supposed to look.

It just dawned on me that one of the reasons I like living in Houston is that it's so wacky.

[musicman]

This is a creative idea and might've been something Midtown TIRZ could've championed and funded.....but they're more interested in buying 3rd Ward real estate to try to keep it from looking like Midtown is supposed to look.

now THAT was funny! LOL

[txland]

Looks like the sales price was $57.60 a foot which is not too bad of deal for Metro by any means.

[Houston1stWordOnTheMoon]

Ah since they have all this excess money to buy up land and hold it for a developer, that should mean they dont have to raise bus fares. If they can buy land to help a developer, surely they can back off raising bus fares which will help out the poor people and students that are dependent on them for mobility. Mobility is thier primary function,no?

[Highway6]

Metro can't hold proxy tract tax-free, officials say

[ricco67]

I'm with Redscare on this one initially in which helping it protect a private developer's investment for a few months in the hopes of turning into an increased amount of revenue down the road is problem a very smart thing.

Reading the the article in today's Chron made me second guess myself on this topic. Will Metro Paying taxes on this give the same cost/benefit ratio for future (I think it will), but will it be at the cost at some current projects (Enforcement/upgrades/etc).

[lockmat]

I've been stinkin busy at work, but I just wanted to get my two cents in about this before the day begins.

I think this is great news. As soon as I saw it, I was happy. I'm glad they're taking the lead.

[IHB2]

I'm with Redscare on this one initially in which helping it protect a private developer's investment for a few months in the hopes of turning into an increased amount of revenue down the road is problem a very smart thing.

Reading the the article in today's Chron made me second guess myself on this topic. Will Metro Paying taxes on this give the same cost/benefit ratio for future (I think it will), but will it be at the cost at some current projects (Enforcement/upgrades/etc).

according to the article METRO is paying $64/ft for land appraised at ~$36/ft in 2006. METRO Real Estate dude Mason says METRO's purchase will accelerate the appreciation of that parcel, and, presumably, nearby land.

if the thought of a tax-supported govt. agency purchasing private property with your money to drive up the taxable value not only of that property but of other privately owned properties nearby doesn't bother you, I can only assume you've never paid property taxes in this state.

[Double L]

I think that financially within the cost/benefit ratio this plan works and if the plan works...do it.

However the spike in the ground that keeps this whole thing together is whether or not they're able to sell the land back. If that part of the deal falls through and we're putting taxpayer money into owning taxed land as the interest is rising on the land then this entire deal will lead to a lot of lost money and that risk might not be worth it if there is a non-taxing entity that can do the same for this company.

[ricco67]

I think that financially within the cost/benefit ratio this plan works and if the plan works...do it.

However the spike in the ground that keeps this whole thing together is whether or not they're able to sell the land back. If that part of the deal falls through and we're putting taxpayer money into owning taxed land as the interest is rising on the land then this entire deal will lead to a lot of lost money and that risk might not be worth it if there is a non-taxing entity that can do the same for this company.

that's one of the things that I''ve been quite concerned about. it is my hope that Metro is able to cover their losses if something goes down badly. On the other hand, the land is something that could become an asset down the road if they're stuck with it.

[Houston1stWordOnTheMoon]

according to the article METRO is paying $64/ft for land appraised at ~$36/ft in 2006. METRO Real Estate dude Mason says METRO's purchase will accelerate the appreciation of that parcel, and, presumably, nearby land.

if the thought of a tax-supported govt. agency purchasing private property with your money to drive up the taxable value not only of that property but of other privately owned properties nearby doesn't bother you, I can only assume you've never paid property taxes in this state.

This is a good post. METRO hoping they will make a profit or break even is a stupid gamble with my tax dollars.

[musicman]

This is a good post. METRO hoping they will make a profit or break even is a stupid gamble with my tax dollars.

OUR tax dollars!

[Houston1stWordOnTheMoon]

OUR tax dollars!

I would have said "our" but there are some here that dont mind this wreckless use of thier tax dollars, like you and i do

[HiRiseObserver]

This is a good post. METRO hoping they will make a profit or break even is a stupid gamble with my tax dollars.

METRO needs to be taken down about three notches. This is as good an issue as any to start that process.

[TheNiche]

Let's see now. METRO buys the property, and takes it off the tax rolls for a year. Lost tax revenue $200,000. Developer gets his variances and permits and buys the property back. Back on tax rolls. Lost revenue $0. Developer builds $100 million mixed use development. ADDED tax revenue $3,000,000 PER YEAR.

I suppose my answer to your question is....umm....no.

Nope. When government does what the private sector would otherwise do, it just crowds out private investment rather than adding to it. Likewise, when a government agency incentivizes a developer to build in a given location that otherwise would not have been financially feasible, the new taxable improvements will only absorb demand that otherwise would've gone to taxable improvements of about the same value elsewhere in the market. For TIRZs, management districts, and other small taxing entities, that approach may make sense, but for METRO, it probably does not (unless the development really does have a big impact on revenues associated with ridership, and you'll have to forgive me for my doubtfulness).

The only redeeming point about this from a fiscal perspective is that it might put upward pressure on nearby land prices. But is that because there's a new development next door or is it because other property owners know that they've got a shot at getting the same sweet deal? And besides, given that all this is happening independently of the greater economy and the amount of value placed on the sum total of Houston-area land, METRO is only influencing the spatial characteristics of land values, but are not adding significant value overall.

But again, all this doesn't mean that METRO shouldn't subsidize housing near transit stops...it just needs to do so uniformly, predictably, and in a way that... Oops. In addition to my folly on the Houston Airport System in another thread, I made another mistake yesterday: when METRO makes predictable subsidies, land values adjust so that landowners capture the subsidy that was meant to help developers, thus resulting in one successful project followed by basically no net change in anything except for distorted land values.

In their efforts to encourage development near transit, they should remain as secretive as possible and view this story in the Chronicle as a major blow to their efforts because now the land prices around there are going to rise anyway in anticipation of METRO assistance, and to what extent is entirely unpredictable at this point. And if METRO opts not to provide assistance and doesn't make that decision very well known to prospective land buyers and developers, then the land prices will be stuck at a level above which development of affordable and desirable real estate products becomes extremely difficult or impossible, and land just ends up sitting there or being used for 'disposable' retail uses, like CVS, self-storage, car washes, etc.

[ricco67]

METRO needs to be taken down about three notches. This is as good an issue as any to start that process.

Gee, From the posts you already put down, you seem to be quite Anti-Metro.

That's just a feeling.

[editor]

Notice Michael Berry's true colors shine through?

"Metro has completely lost focus," Berry said. "They're supposed to be in the business of moving people, and instead they want to be real estate developers."

I have no problems with transit agencies and other quasi-public "authorities" developing real estate. Often they're the only ones willing to put long-term planning into projects because they're not beholden to Wall Street shareholders. I've seen lots of projects where transit agencies have taken crappy pieces of otherwise worthless land and transformed them into thriving developments. Here's a good example from Hong Kong's MRT (Metropolitan Rapid Transit):

International Finance Center includes the tallest buidling in Hong Kong. MRT has probably a dozen similar projects around that region. They make a ton of money on their real estate investments and guess what they do with the profits? They plow them BACK INTO THE SUBWAY which is why they're sparkling clean, run on time, there's another train every 90 seconds, and are dirt cheap.

Sure, the MRT is in a communist country. OK, fine. Here's an example from the United States:

Remember this? The WORLD TRADE CENTER? A project that took a crappy deilict corner of Manhattan and transformed it into the center of the financial world. And who did it? The Port Authority of New York and New Jersey.

Public agencies have the ability to wait out market swings, because they'll keep going after some real estate tycoon has long died. Imagine being able to buy a surface parking lot in downtown Houston. You probably won't be able to build a skyscraper there in the next 5 years because the demand isn't there. But what if you could wait 20 years? 50 years? 70 years? That's something a public agency can do that a private developer can't because it's always focused on the next quarter results for the shareholders.

I see no reason that Houston Metro can't be involved in real estate, especially if the money is used to improve/expand service and to keep fares low.

[Houston1stWordOnTheMoon]

I will never sign off on this mess. They have spoiled it for me with that dumbass proposal to raise fares. If they have so much excess money to venture into realestate, they should forget all together about raising fares.

Again this isnt NYC and certainly not HKG. We are not locked in land wise. Theres plenty of room for expansion. Theres no need for METRO to venture into something like this especially when it isnt air tight. Too many what if's and maybe's involved.

[marc]

I don't think you can compare a for profit corp. to METRO. METRO uses public funds (via sales taxes & grants) to provide mass transit to houston.

Keeping in mind that 1860's-1890's RR was including public funds for its expansion, which is why historians have such a field day with THAT situation in American history.

I know where you are coming from- BUT......let me play Devil's Advocate for a moment.

So, METRO provides mass transit in Houston. Yes. BUT, Houston could eventually spread 100+ miles from NSEW, so the cost of transporting masses of people accumulates to billions. It only stands to reason that METRO would invest in real estate closer to the Houston cluster and involve themselves in a collective vision of urbanizing the inner Houston area to make mass transit profitable.

Makes sense to me. Any thoughts???

m.

[Montrose1100]

I'll end up judging METRO based on what eventually happens to the land they purchased.

[musicman]

Again this isnt NYC and certainly not HKG. We are not locked in land wise. Theres plenty of room for expansion. Theres no need for METRO to venture into something like this especially when it isnt air tight. Too many what if's and maybe's involved.

You hit it right on. I will go out on a limb and say that we will never approach the level of density that hong kong and NYC have now.

[Guest Marty]

Another example of government expanding.

[musicman]

I know where you are coming from- BUT......let me play Devil's Advocate for a moment.

So, METRO provides mass transit in Houston. Yes. BUT, Houston could eventually spread 100+ miles from NSEW, so the cost of transporting masses of people accumulates to billions. It only stands to reason that METRO would invest in real estate closer to the Houston cluster and involve themselves in a collective vision of urbanizing the inner Houston area to make mass transit profitable.

Makes sense to me. Any thoughts???

m.

I can understand your point however do you understand that METRO does not have the money to make an appreciable difference in the density of houston? it would be just too expensive and the money they do have should be used for transportation purposes only. i laugh at your statement "mass transit profitable"

Edited April 7, 2007 by musicman

[editor]

I will never sign off on this mess. They have spoiled it for me with that dumbass proposal to raise fares. If they have so much excess money to venture into realestate, they should forget all together about raising fares.

Again this isnt NYC and certainly not HKG. We are not locked in land wise. Theres plenty of room for expansion. Theres no need for METRO to venture into something like this especially when it isnt air tight. Too many what if's and maybe's involved.

Being locked in has nothing to do with it. Most of the new MRT developments are on other islands. Contrary to popular belief, there's lots of available land in Hong Kong (and Hong Kong SAR is more than just one island). Also, New York wasn't nearly as dense as it is today when the PANYNJ started the WTC back in the 60's. The land that eventually became WTC was virtually worthless. And the fill from the project became Battery Park City.