Ascending Debt

Zimbalist On Polar Park

Atlantic Yards report



 Zimbalist says contingencies needed


The local news site MassLive.com, reported 8/21/18 how Zimbalist defended his advice, saying the key to the deal was development beyond the stadium, including market-rate housing, two hotels and 65,000 square feet of retail space.

From the article:
 "The main reason it pays out economically, unlike other places, is because there's a committed investment," Zimbalist said. "Very often that doesn't happen and the whole deal turns out to be economically wasteful."

Zimbalist also said he made conservative estimates about costs and revenues, and included a 5 percent contingency in the plan. 
 ..."Whenever you invest in anything, particularly a 30-year project, there's risk involved. Anyone who tells you otherwise is dishonest," he said. "The questions I always ask are whether the potential returns are worth the risk and if you have made contingencies to control the risk. And I think they have, and there's a potentially very large reward in economic and social terms for the city."



Love this


At the time, I also called for a second opinion from another sports economist, in that case Rod Fort of Washington State University (he’s now moved on to the University of Michigan, who noted this:

“I would never have undertaken this exercise. In essence, Andy is trying to forecast 33 years hence, and he’s forecasting housing markets, which there are other people spending all their waking moments on. 
What you see is assumption after assumption after assumption after assumption.”

 

Comments

Anonymous said…
A 5% contingency on what, a project that went 60-70% over budget. You call that being conservative.
Anonymous said…
Go to the link of the Masslive article, they actually did a decent job reporting back then. A summary, not in the order it appears in the article, is the project would not have survived politically unless it was revenue neutral so I made a financial model which was revenue neutral. I used a conservative 5% contingency but I am confident that my model works because the developer is going to build all these buildings. He gives himself a get out of jail card because he says over 30 years a lot of things can change. Zimbalist got paid and left, Augustus has left and we are still here paying the bill. Glad we has a 5% contingency.