By now everyone in Indy has heard about the fire that destroyed the downtown development known as "The Cosmopolitan". This project, backed by Flaherty and Collins, was a $37m retail/apartment development slated to open in May of this year.
Recently an arrest has been made, and Brandon Burns, a 23 year old homeless man, has been charged with arson in the incident.
http://www.indystar.com/article/20090326
Does anyone else smell the bullshit surrounding this entire affair?!?
I am not the type to wear the tin foil hat, or scream conspiracy from the rooftops, but come on! Let's take a look at some facts, shall we?
Flaherty and Collins Financial Woes
Most Indy natives have no idea what "210 Trade" is. For those that don't, it is a mega-project in Charlotte, NC being developed by Flaherty and Collins. Or, at least it was...
http://www.bizjournals.com/charlotte/stories/2008/06/23/story2
http://charlotte.bizjournals.com/charlotte/stories/2008/06/23/daily15
http://charlotte.bizjournals.com/charlotte/stories/2009/01/05/story3
Since mid-2008 the residential apartment portion of the project has been at a complete standstill, since the developers have attempted to file lawsuits against the construction company, the Ghazi Co. Over a year later, Ghazi has completed much of the retail portion, and yet Flaherty and Collins are still attempting to bicker and drag Ghazi through court. Any idiot can see the reasoning behind the attempted lawsuits. Flaherty and Collins realized the market was flopping, and they had gotten in over their heads. They attempted to switch lenders from US Bank to Corus, and failed to secure the financing to complete the project. So they did what anyone would.....delay the project for a few years and sue the construction company over ridiculous items such as being shorted on parking spaces!
The "Other" Fire
Strangely enough, a short while after the Cosmopolitan burned, there was a fire at another Flaherty and Collins property, Dakota Ridge Apartments. This time only the clubhouse was damaged. This was over 8 miles from the Cosmopolitan development, in a completely different part of the city. So, I am supposed believe that a man who has been homeless since 2005 just all of a sudden decided to target a fancy development company for arson? And, then hot-footed it 8 miles across town with his handy gas can to maliciously burn another one of their properties for good measure? Doubtful.
The Convenient Timing and Missing Pieces
According to news sources, the security had been pulled from the Cosmopolitan in February, and the sprinkler systems were due to be inspected and turned on within weeks. Nice timing homeless guy!
Also, I happened to pick up a few apartment guides a couple days before the fire. There were multiple listings for Flaherty and Collins apartments, but none for the Cosmopolitan. Strange. I would love to know what the occupancy percentage was for their pre-renting.
So why start the fire? Why burn down your own project?
Someone made this argument on a local news site:
If you buy an item for 10$ and smash it on the ground, usually insurance only pays you a fraction of its value, and you lose money.....like when they total a car. So their is no reason to burn your own building, right?
Well, that's not exactly how it works in real estate development. Developers put up a small portion of the overall cost to build the projects, and lenders finance the rest. If the developers cannot get the property to become viable financially the lenders heavily penalize the developer. So, what better way to avert a pending financial fiasco than with a little bonfire?!? The site was fully insured, so Flaherty and Collins are set, the lender/bank is set, and only the insurance company feels the major sting.
Here's a little better analogy than the one from the other site:
I buy a brand new Escalade when I get a new job. A short while later I get fired for not doing my job so well. I can't really now afford the new car, so I hire a bum to "steal" it and drive it into the river. Problem solved! Now I don't have to keep digging into my already empty pockets to pay for something I can't afford. I am out some down payments and some interest, but overall I am back to square one, and owe much less than I would had I kept the car and continued spiraling into debt. This analogy isn't perfect, but it outlines the fact that Flaherty and Collins were not trying to make a ton of money off of insurance, they were trying to jump ship before they were completely under water.
Now, let's review what we got so far.
The accusations are that a random homeless man burned down an empty apartment complex in an attempt to intimidate his girlfriend....who didn't live there. He unknowingly did this to a floundering development company which was hemorrhaging money, at an over budget and probably under-rented apartment community, and he did it in a one month window of time in which there was no security or fire suppression systems available at the apartments. He was also stupid enough to leave a full can of gas only a few blocks from the scene. Days later he, or in an even more unbelievable coincidence, or someone else set fire to another property miles away....which also happened to belong to the aforementioned failing development company. He then bragged to his friends, who turned him in. Oh yeah.....there was a reward.
www.wishtv.com/dpp/news/crime/Cosmopolitan
Yeah, that sounds perfectly sensible. Errrr....not.
It's okay though, because the highly trustworthy and honest developers have promised to rebuild on the site, just like they promised that 210 Trade would be "back on track". Oh wait, it isn't.
http://www.bizjournals.com/charlotte/stories
Guess I wouldn't hold your breath on the Cosmopolitan being rebuilt anytime soon.
