Rigged? You bet! But, In reality, economic game theory isn’t always a zero sum game for the victor when one side wins and another loses. The outcome can be a nonzero-sum that turns out badly for all. The Developer’s complicit politicians (Seiler, Roberts & Mckinzie) that ramrodded the 3-2 Bahia Mar vote at 3:30 am will soon realize there will be no win-win. Not even a win-lose. In the case of Bahia Mar, the outcome will be a negative sum game (lose-lose) because the Barrier Island pie is shrinking. If Jimmie Tate and his City Commission enablers (Seiler, Roberts and Mckinzie) succeed in developing Bahia Mar as a Rental Apartment Village, everyone on the Barrier Island, including the Bahia Mar proponents will lose. That includes hotels and property owners alike. (The next Update will explain how the hotel industry loses). The Bahia Mar Lessee is proposing to construct almost four times the number of Rental Units more than were rented in all of 2017 on the Barrier Island from 17th Street to Sunrise Boulevard. In fact, over the last five years, while the supply of residential units has been increasing, the demand has been shrinking. For the last five years in an improving economy: - Unit Sales and Rentals have been dropping. - Sales of units in new buildings are slow. - Days on the market have been increasing. - Average prices per square foot have been declining. The addition of 651 Bahia Mar (in effect government subsidized) Rental Units will undermine property values of ALL privately owned property in the area. Rental and Sale Units will both be negatively affected by the simple economics of supply and demand. Increased traffic will result as other previously approved and pending projects are completed. Significant traffic will also be caused by the projected 10-year construction project. Traffic congestion is cited as a major reason why prospective buyers and renters are opting not to buy or rent on the beach or move off the Barrier Island. Bahia Mar’s significant contribution to more congestion will, itself, contribute to the predictable decline in demand and the quality of life on the Barrier Island. Rents at the City-owned Bahia Mar, in effect, will be government subsidized because property tax assessments paid by the Lessee are less than privately owned properties. It is likely that the Lessee will also offer lower rental prices (e.g. free months) and other incentives to encourage faster or full occupancy. The City-Lessor, under the Lease terms, is paid on “gross revenues” and the Lessee is required to “maximize total revenues”, not net income. The public subsidy and favorable Lease terms will give a competitive advantage in the short run to the Bahia Mar Project over private landlords. In the long run, however, the dictates of the marketplace make it easy to predict the inevitable failure of the Bahia Mar Project. The cost of construction on the Barrier Island will be very expensive. The infrastructure upgrades will be complex (raising of the site and seawall elevation, construction of 3000 foot seawall, dock and promenade, and a massive subterranean garage). Work stoppages caused by weather and the Boat Show (which will also suffer) will result in delays and cost overruns. The proposed amenities will be expensive to build and maintain. Costly building staff, maintenance and insurance expenses will increase the total cost per unit to a level that will make it difficult to break even at the Lessee’s projected Rental Rate of $2.75 per square foot. At that Rental rate, and an average unit size of 1621 square feet, the average rent will be at least $4,500 per month. A stretch for the average renter in Fort Lauderdale. The average overall rental price per square foot on the Barrier Island is currently $2.04 per square foot. The Lessee is already heavily leveraged with 75% financing of its Lease Purchase Price from Blackstone. Another recent loan of $50,000,000 brought the Lessee’s indebtedness to over $160 million! Then there is the inevitable business cycle and downturn in the real estate market. When the prospect of the Lessee’s default looms, the City will be looked to for a Taxpayer bailout. A default of this size will seriously impair private property values on the Barrier Island for years just as happened in the downtown market building boom ten years ago. Only this time the default will occur on Public Property. If you own property on the Barrier Island what can you do? Do NOT vote for Bruce Roberts for Mayor. He took a lot of campaign money from the developers. He supported and voted for the Project and the next day Jimmie Tate endorsed Roberts for Mayor. In District 2 Vote FOR Steve Glassman who opposed the Bahia Mar Fiasco as a member of the Planning and Zoning Board. Sign and get others to sign the Petition Join us in supporting litigation to Save Bahia Mar.