The whole argument for the ballpark was that it was going to be the catalyst for the city’s economic development. As a matter of fact, most politicians, if not all, have embraced the lie that the ballpark is generating economic growth in downtown El Paso. The fiction is being led by quotes of “just look at the downtown property sales and development.” Unfortunately, the rhetoric is devoid of facts. I’ll be the first to admit that I do not the factual numbers of actual development and its effects on the tax base because frankly it is too difficult to put together an intelligent assessment on information that is extremely difficult to acquire. However, as with anything, we just need to look at the anecdotal evidence to get a macro picture of what is going on.
As you may have noticed in the latest edition of the El Paso Inc. weekly, River Oaks Properties is auctioning off its downtown portfolio. Robert Gray’s article reports that River Oaks Properties, one of the largest El Paso shopping center developers, has “put its entire portfolio of Downtown property” up for auction.
In March, that same portfolio of downtown properties were put up for sale by River Oaks. When Gray reported the listings in El Paso Inc., he wrote that the company was ridding itself of the downtown portfolio that its founder, Gerald Rubin, had been compiling since the late 1960’s because of “declining rents and vacancies.”
The whole basis for the argument for the ballpark was that El Paso needed a signature focal point to attract downtown redevelopment. The argument went along the lines that El Paso’s conservative public policy had allowed the city’s center to decline because of lack of investment at the core of the city. Keeping in mind that Gerald Rubin had been putting together his downtown portfolio through the “neglectful” years it should make sense that he would be one of the strongest advocates for the ballpark as the needed catalyst for downtown, if it were working.
Instead, what has happened is that Rubin’s company is ridding itself of all of its downtown properties.
The proponents of the ballpark swindle will argue that Gerald Rubin is capitalizing on the interest in downtown and trying to sell his properties at a profit. That will surely be the rhetoric.
Yet if you look closely, River Oaks has embarked on developing on the outskirts of the city.
I have never met Gerald Rubin; however, all of the indications are that he is an astute businessman who has proven his ability to make money.
If the genesis of downtown redevelopment is on the horizon then why abandon his downtown portfolio?
Rubin has shown that his real estate portfolio is an investment for the long term. In other words, he develops properties not for the quick flip but to create recurring revenue streams for his company year after year. From my perspective, there are only two reasons why a major landholder like Rubin would first attempt to sell his portfolio as one bundle and then offer it up for auction – a need for cash or dumping an unprofitable investment that is a drag on the bottom line.
It is possible that River Oaks may need cash flow for its aggressive land development on the outer rim of El Paso or because of, as yet undisclosed cash flow problems. Either way, if the ballpark has proven itself to be such an economic engine then why would an astute businessperson not recognize it and capitalize on it?
The political rhetoric and the useful idiots will likely respond that he is capitalizing on it by quickly flipping his properties for a quick buck. The problem for this argument is that Rubin has proven he is in it for the long haul and more importantly, it makes no business sense to sell the properties as a whole when selling them individually maximizes the profits. That is, unless, the divestment of the portfolio is to get rid of a bad investment as painless as possible.
Neither the city nor River Oaks are going to be forthcoming about the economic impact of the ballpark in downtown El Paso. If the ballpark has been the economic development driver that the politicians espouse then the city would happily be issuing press releases and public comments with facts to back them up instead of nebulous look at the “millions” coming into downtown. River Oaks, for its part, does not want to admit a mistake or incur the wrath of the city government upon itself and therefore will remain quiet.
Unfortunately, the inconvenient fact is that one of El Paso’s largest property developer is abandoning downtown. This comes at the heels of the late 2013 controversy involving unhappy shareholders at the dismal returns on their investments in the Borderplex Community Trust.
As you might remember, with much fanfare, William Sanders sold shares in the Borderplex Community Trust in 2007 at $10.00 a share with a minimum investment of $100,000 to capitalize on the downtown revitalization that was expected from the future downtown renaissance.
In 2013, the unhappy shareholders were offered $7.90, about 20% less than their investment, to liquidate and get out of the REIT. Clearly, the promised downtown redevelopment was not happening and the returns; according to some media outlets, was about 3% on their investment. So much for the downtown renaissance the taxpayers were promised.
The individuals who invested in the REIT did so because of the promised downtown economic reissuance and yet they were looking to liquidate at a loss. It did not happen for them and now River Oaks is sending the clear message that the ballpark has been nothing but an additional economic drain for El Paso.
Don’t worry, the useful idiots will tell us how wonderful the ballpark fiasco has been for the city. Too bad the taxpayers can’t live in the same fantasy world the useful idiots and their enablers live in. River Oaks has emerged from the fog, let’s see who else does in the near future.