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Originally Posted by YOWetal
Menard is so anti development and wouldn't be happy unless it was a park and public housing but here he makes a lot of good points. The Air Rights is a big risk if we see continued decreases in immigration and end up with a surplus of housing allowing them to walk away means we really can't book that $65 Million in any real sense. It's a pretty good speculative play on their part as the reverse could also be true with it worth a lot more than what they are paying.
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The air rights are a risk, sure, but are they really a big risk? They are a relatively modest piece of the puzzle. Sure, Mirabella could pay the deposits and walk away (still unclear if there would be an additional penalty for doing that), but is that really likely? They are a sophisticated developer - there is no doubt that their bid took into account changing market conditions. I think the risk of a delay in construction is bigger than the risk that they pay $6 million and decide to walk away with nothing. If they don't build, it's much more likely that they try to sell the air rights to another developer and recoup some of their investment (which would go well beyond the deposit paid to the City).
Even if they walk away, it's not like the City is out $65 million. They will just award the rights to another developer. Yes, the price would be lower, but the $65 million was much higher than anticipated in the first place. So the real risk is that we end up somewhere in the ballpark of the original projections for revenue from air rights. Not exactly devastating.
This seems way overblown to me - just a typical risk on a major project. Probably less costly and disruptive than the risk of a major subcontractor going belly up. That I would be more worried about, as it would definitely cause major delays.
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