Wednesday, January 4, 2012

Developers: Donít whine when market drops

In exercising their free will to assume the risks of a speculative real estate investment, developers and banks typically enter agreements and apply signatures to related documents, thereby agreeing to the terms identified in those documents. They, not officials or citizens of cities like Hailey, own these decisions and associated liabilities. It is irrational to blame others for poor decisions motivated by greed made during a period of "irrational exuberance" characterized by debt-fueled malignant growth.

How many of us wish we had not applied our signature to certain documents?

The value of something is only what someone is willing to pay for it. So the "appraised" value of anything is entirely subjective. It is simply an opinion, not a fact. Any evidence supporting an opinion at one particular point in time is completely irrelevant at some other time. This reality is a product of the dynamics of a free market.

In Hailey, we've seen examples of developers and banks volunteering to participate in that free market, and apparently now that the bubble has burst, they want to attempt to persuade the courts that they are somehow victims. In playground nomenclature, they are simply being "crybabies."

A decision by the Hailey City Council on a revised annexation application by the owners of Quigley Ranch will be made early this year. This application is simply a request that citizens of Hailey subsidize the bailout of a failed real estate investment. The Hailey Planning and Zoning Commission wisely recommended that the council deny this revised application. The annexation of Quigley was a bad idea three years ago when the council rejected it. It is a much, much worse idea today.

I encourage citizens of Hailey to email or call members of the council regarding their upcoming vote.

William F. Hughes


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