Another voice: Avoid ready, shoot aim development strategy

April 4, 2012

I am against this proposed Naito hotel and cable park development.

I have had nearly 30 years' experience providing development and investment advice to hotel and amusement park companies. My clients and their investors included Walt Disney Enterprises, the amusement park subsidiaries of Taft Broadcasting, Universal Studios, Hotel REIT Companies, hotel operators such as Holiday Inn, and other related companies.

I think this project entails too much risk for the investors and the community. The proposed hotel and cable park development highlights the conflict between a short-term "ready-shoot-aim" development-at-any-cost spirit, and a long-term vision for our community:

1. an owner of an asset trying to maximize the cash flow in an overly risky way, with the encouragement of single-issue advocates in favor of ("world-class") development without regard for risk;

2. a community that has: (a) an attractive waterfront; (b) an opportunity to address the one-sidedness of our current riverfront development goals; and (c) "assets" in the form of the ability to delay and/or deny development.

As I understand it, the land asset owner will lease the land to a building developer/owner that, in turn, would give operating control to another related entity. The land asset owner would have no operating control, but would be subject to the operational risk of losing the total value of the asset.

The cable park facility introduces additional cash flow risk to the owner/operator due to the way it increases the seasonality of the overall development and requires a different demographic as a customer base. It also betrays a heightened fear of failure on the part of the developers.

Because of the substantial risk to the community of the operational failure of the project, as a condition of any project approval, the developer should be required to purchase a "development failure" bond; i.e., create a source of funds to return the site to a pre-development condition when the project fails.

A relatively speedy resolution to this development proposal would be: The community votes to purchase the land asset at a substantial discount to the current market value. The "discount," as a tax shelter, would free up additional cash for the land asset owner, and/or could become an additional saleable asset.

The Net Present Value of returns to the land asset owner would be enhanced due to the increased certainty of the returns. The community would regain control of the area to be treated in the "world-class" way we created the waterfront park.

The community has been blessed with river-oriented open space that addresses the recreational access needs of both locals and visitors. Why not consider adding to that open space?

Think about what will be left when the cable park iron rusts and the buildings are "Google-d up". Our community, the river, the river front. We are a "world-class" place to live now, and proud of it.

Ted James lives in Hood River.

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