Q&A
Project profit margins and financial feasibility
0:40:18
·
3 min
William Wallace IV and David Rosenberg discuss the financial feasibility of the project, emphasizing tight profit margins and the challenge of making the project work with union labor and pension funds. They express reluctance to share specific profit margin numbers publicly.
- Project has extremely tight profit margins
- Funded by AFL-CIO Housing Investment Trust (union pension dollars)
- Any reduction in units makes the project financially untenable
- Developers aim to make the project financeable by the housing investment trust
- Specific profit margin numbers not shared publicly, but proformas shared with city agencies
Crystal Hudson
0:40:18
And are you willing to share with us the profit margin that you need in order to pursue this project?
William Wallace IV
0:40:23
Let me adjust that.
0:40:26
As I indicated, we're being funded by the AFL CIO Housing Investment Trust, the pension dollars of these hundreds, and in the city, 1000 of union members with the reduction that has already occurred.
0:40:41
Not the additional reduction with the 36 units, it sounds diminutive, but it's not.
0:40:47
The project didn't work.
0:40:49
Which was why we indicated we'd have to withdraw.
0:40:52
We've been able to creatively find a way to make the project work with union labor, with union pension funds, with union operation, any reduction.
0:41:08
Thank you, William.
0:41:09
Any reduction makes the project financially untenable.
0:41:13
There is an extremely tight profit margin but we cannot pencil red moving forward with the development that doesn't work.
0:41:23
So whatever the profit will be, it will be extremely nominal.
0:41:28
Right now, we need to move forward as a developer, which is in a way kind of ironic that the roles have changed.
0:41:35
We call the spokesperson for the working class.
0:41:38
We are the ones trying to get union members to work.
0:41:41
And so we are trying to stay in this game and show it can happen with the political will of the council.
Crystal Hudson
0:41:48
So is that a no then that you wouldn't be willing to share with us the profit margin you need?
0:41:52
Because I hear what you're saying, but what I'm trying to get at is if there are specific numbers and are you willing to share what those numbers are so that we can also be creative in offering solutions.
William Wallace IV
0:42:03
Great.
0:42:04
Yeah.
David Rosenberg
0:42:04
So we're happy to talk.
0:42:07
Generally, that talk about margins in particular is in a public forum, but we can talk about it.
0:42:13
But I think, as Wallace said, it's not about a particular target at this point.
0:42:18
I think we're past the point of this being profit development, right, massively profit development, one that anyone would look at today and say, I want to do this.
0:42:27
As much as this is a we've never been doing this for many, many years, and it's now about putting together what's left.
0:42:32
And the real thing is putting this project in the black, where it is financeable by the housing investment trust, where they can look back to they have a fiduciary responsibility to their pensioners and they say that this is a sound investment a good place to put the money.
0:42:47
And as long as we can find a place where that works, then we can make the development work.
William Wallace IV
0:42:52
And we've also shared all of those proformas and iterations with the city already.
0:42:57
We met with Nate Bliss.
0:42:58
We met with HPD.
0:42:59
We met with HDC.
0:43:00
None of them work.
Crystal Hudson
0:43:02
Okay.
0:43:02
So maybe you can share all of that with the city council too that'll be
William Wallace IV
0:43:05
They all penciled.
Crystal Hudson
0:43:06
We are a separate entity from all of these.
0:43:08
We have, as you'd mentioned,
William Wallace IV
0:43:10
all pencil red.
Crystal Hudson
0:43:12
Okay.
0:43:12
We're just it's helpful to have the same information that you're referencing if we can have it.
0:43:18
And so that's why I'm asking the question.
William Wallace IV
0:43:19
Absolutely counsel.
