By Adam Pagnucco.
Last week, Bethesda Beat reported that County Executive Marc Elrich was seeking a developer to partner with the county on redeveloping White Flint, an area that has fallen far short of its potential over the last decade. That sounds like a good idea except for this: Elrich said in a public forum just three days before that maybe the county should not partner with developers at all.
Yes, dear reader, you read that correctly!
Elrich was a panelist at a forum held by the Housing Association of Nonprofit Developers on affordable housing on March 9. In response to a question from the moderator about the difficult economics of affordable housing, Elrich said this:
Part of me wonders whether we ought to be looking at not partnering with developers but just partnering with construction companies, where basically, here’s the – I want to build a building. What’s the price? I modified my own house, I have lots of experience in this. But I also did three tenant conversions in Takoma Park while I was a council member in Takoma Park and, you know, we took – there was no developer involved. We just looked at what’s the cost of the building, the units, what’s the cost of bringing in repair, and we dealt with it as a straight up transaction and we took anybody out of it who was going to take money out of the project in addition to the costs of just doing the physical work. And you know, it may be that we look more toward builders on a contract basis rather than developers. Because then I don’t have to deal with their rate of return.
You can see this at 1:25:37 of the video below.
Let’s remember that this was said not on a street corner or in a restaurant but during a forum for developers. One can reasonably assume that many of them heard the county executive loud and clear.
These remarks are problematic for two reasons. First, they fail to recognize what developers actually do. They don’t just oversee construction contractors. They analyze market economics; hire architects and engineers; design the project; obtain financing; go through land use, transportation and environmental reviews; negotiate with the community; market the property and/or hire agents to market it; manage the property or hire a property manager (if they continue to own it) and more. Construction contractors tend not to do those things, because if they did, they would be… developers. Eliminate developers from project development and who is going to do all of the above? County bureaucrats? Good luck in saving any money that way.
Second, it is totally banana cakes to publicly say that the county is looking to partner with a developer in White Flint and then to wonder out loud – in front of developers – whether the county should be partnering with developers at all. That’s right, developers, you are invited to partner with an elected official who believes that maybe you should not be on the project. Who is going to take that deal?
Anyone want to place any bets on when White Flint gets done?