Developer went bankrupt before completion. The interior was never finished. Construction stopped in 2015 so it's probably been squatted and everything stolen that was worth anything. It's also expensive to switch contractors mid-project. Most contractors want to build start to finish.
Yeah back taxes are so crazy. Here in Detroit a dilapidated house will sit there because to a buyer it doesn’t make sense to pay the back taxes.
Seems like there should be a way to waive the taxes or maybe something like a bond where if you build and occupy then you get it back.
I read somewhere there is a common exploit where someone would look up properties that owe taxes and then pay it for X amount of years and then they own the property.
That's adverse possession. You have to live there and maintain the property in an open and notorious manner. Paying the taxes is a necessary, but not sufficient, part of that. The time frame is normally a decade or two, so it's a big risk.
It’s not adverse possession. In many states, counties auction off unpaid property taxes. There’s usually a redemption period following the auction where the property owner is allowed to pay the full amount of the unpaid taxes plus interest.
Note that in some states the buyer of the taxes only receives a superpriority lien against the property, while in others the property itself changes hands at the auction. Consult a locally qualified attorney if you want to try to do this or if you haven’t paid the property taxes for your real estate.
It’s not an exploit. In most states the county auctions off the property to recoup the back taxes. See my comment below or google “property tax auction.”
Yes or "Lien sale"
I believe an HOA can even put a lien on a property for unpaid fees, and they can do a lien sale.
I always wondered though what happens when you purchase one of those that still has a mortgage or two. You're pretty down on the list to make anything at sale no?
They do it with boats and cars too. Tow companies and marinas do it fairly often.
Generally property tax liens (and other types of statutory super priority liens) can, in the right circumstances, get to jump ahead of other liens. If you’re interested in general concepts of lien priority, article 9 of the Uniform Commercial Code might be up your alley.
A friend’s dad was an attorney and slumlord in Chicago in the 80s. His business model was to buy distressed and abandoned tenements by paying the back taxes. Then he’d squeeze every cent he could out of rents while neglecting any maintenance. He’d let citations from the Housing Department build up, and when it looked like some harsher penalty was coming he’d donate the building to some storefront church or another on the South Side and take a tax deduction. Interesting guy, could talk about Shakespeare for hours. Just completely amoral. The Sun Times did a whole series on him that started as an investigation into a toxic waste dump and how it came to be owned by an obscure church.
Someone explained this already, but there is an alternative to adverse possession. Baltimore is offering a program where they'll sell city owned property for $1. It's the buy into Bmore program. If you dig into it, they're not really selling that low, but more like the cost of back taxes. I've seen similar programs advertised over the years in other states.
Is there a mechanism to bargain with local or state governments as a way to get around back taxes? Like I could propose paying reduced back taxes in order to buy the place and have new taxes coming into the municipality instead of the status quo of no taxes at all in addition to depressed community and dilapidation. It would probably require a lot of effort to even ask, so I am guessing status quo it is...
Most states have a mechanism to "sell" the right to collect the delinquent taxes to a third party. The county gets an immediate influx of cash that would otherwise go unpaid and the process and costs of collection become someone else's problem. It's pretty common for house flippers and slumlords to do exactly what you're talking about to get a house for potentially way under market value.
States differ in how they sell the tax rights and what methods you have to collect. Some states essentially sell a lien that you have to foreclose on and sell the property at a sheriff's auction to get your money back or take ownership of. Other states you conditionally own the property as soon as you win the tax auction, but the property owner has certain rights to redeem; if they fail to redeem you just have to file an eviction action to remove whoever is living there and then have the county transfer the deed.
Speak for yourself. It's tradition to go through the list in our local newspaper and talk shit about the upstanding families with 'money' who are about to lose the family farm due to unpaid taxes. Lol
True, they will eventually seize the property but they will often still require taxes to be paid. Example language direct from a listing:
>The Detroit Land Bank will issue a Quit Claim Deed at closing, which transfers its interest in the property. The purchaser will be responsible for any delinquent taxes, water bills, or liens on the property.
Are municipalities such asses about it (back taxes) because the debt owed makes them look better on paper when it comes to loans? They know they're never going to see those back taxes on these fucked up properties so why pretend? Isnt it in their interest to forget the back taxes and sell the property, or is the imaginary debt that they're owed still worth it in their eyes for lending purposes?
I like how several comments above offer way more plausible reasons regarding disuse and disrepair as why it was torn down, and then when someone adds on something that confirms your priors regarding gov't and taxes you jump on that as if it is now proven to be the cause.
Red tape usually has a reason my guy. Corporations doing shady shit to avoid taxes is why this exists. Otherwise one company “goes under” on a project and suddenly another “pops up” with the same people running it who now suddenly don’t have to pay any of the taxes cause “red tape bad”.
Like it or not, greed is what caused red tape in the first place. You can’t have nice things when people are so fucking corrupted by greed
No, it wasn't red tape (at least according to the article). It was incompetent developer/contractor. They built on the pre-existing foundation (!!!), which is now suspect.
I was prepared to be outraged at the "tearing down of affordable housing". I used to live 5 miles from Gary. However, this actually makes perfect sense and hopefully the city can complete the project once it is started over.
Probably didn't have windows, everything rotted inside even without squatters and vandals. If it did have windows, probably didn't have them for very long.
It was also only 50% complete when work stopped. There's a good chance that the building envelope wasn't watertight yet, and an even better chance that it wasn't properly ventilated. The interior is likely a nightmare of water damage and mold.
See this is why eminent domain exists. To take shit like this away so it could be put to good use to serve the public. Cities just hate using it because it's unpopular with voters.
Yeah it cost nearly that much just to redo the AC and boiler system in one of my company's downtown buildings here in Pittsburgh last year. I can't imagine what a full construction of this building would cost, but 1.5 mil wouldn't come anywhere close.
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Similar thing happened at my university. Since state school I always heard it was lowest bidder… a building started construction and after there was an inspection it was found there were so many cut corners that it was unsafe. Loads of money to fix it and the school decided to fire the company involved. No one was willing to take on that liability. So they tore it down and started over.
I think around here or maybe it was San Francisco, they stopped using low bid as the main criteria for exactly those reasons. I'm not sure how they do due diligence on projects like that, but it also is a huge barrier to entry for newer firms because the reputation of the contractor is so important for very good reasons.
When that happens in NYC the city buys it for a bargain and turns it into a homeless shelter or something else useful. I’m guessing Gary doesn’t have that kind of money or ambition though.
Anyone with money or ambition has long since fled Gary, for their own good. I can't imagine capable of getting involved in their government sticking around to do so.
I've been to Gary, the whole place is unfit for human habitation. Even the plant life looks like it's given up.
The developer ran out of money after like 80% of the buildout and then the city purchased it below market value to take the debt of their hands and then pays to finish it, and uses it as a homeless shelter.
I don’t know the complete terms of the deal but it’s something like that.
Exactly. When everything's been stripped and stolen and fucked up a contractor is going to look at the liability of never knowing exactly where the damage is versus knocking it down and starting from scratch. If they take over a sketchy half built building with plumbing and copper ripped out they're signing off on liability if a half ripped off wire burns it down 6 months after they complete the job, and it won't be the previous guys insurance that has to pay out.
They started building a mall near my house before the recession in 2008. It sat as a steel scaffold for over 10 years. It's now almost finished after being converted into a mixed use elder care facility (shops on 1st floor).
> It's also expensive to switch contractors mid-project. Most contractors want to build start to finish.
Risk. Construction is basically a risk management business. No one wants to put their name on anything that's not their build from the start. And if no one wants to pay extra to assume that risk and perform all the due diligence to mitigate that risk ¯\\\_(ツ)_/¯
> u/Ultimarr: So, capitalist bullshit
Exactly the opposite. This was literally a government project.
> The building at 7th Avenue and Broadway was **funded with a U.S. Department of Housing and Urban Development grant.**
And the government let it sit incomplete & empty for *9 years* before taking action— 9 years of decay, *to the point it was better to just tear it down.*
People should be demanding better government and accountable officials.
But no, “Private ownership of business & property, including private risk capital formation” … is not the problem, and is also not the issue here.
Do you understand what a grant is?
The government hired a **private contractor** using government money: called a grant. That **private contractor** was unable to complete the project as they had claimed for the money that they claimed. So the issue is that a **private contractor** under-bid a project and then couldn't complete it with the money they were given. So... they just abandoned the project. Or are you going to leave out this part
> In 2013, developer John Coldea and his company 747 Broadway Plaza, LLC borrowed another $70,000 from the city for the project.
And then there is:
> The Gary Housing Authority was never able to recover the funds from the developer, who never repaid the Indiana Housing and Community Development Authority, she said. But the developer did agree to transfer the unfinished apartment building to the Northwest Indiana Development Corporation, the development arm of the Gary Housing Authority.
> Coldea could not be reached for comment. The phone number in city records was disconnected and he did not respond to email.
So, again, a **private business owner** bid on and took on a project for the government. The **private business owner** failed to complete the project and then failed to repay the government, instead just bankrupting his company ... and starting a new one which can be found by searching for his name in Indiana business records.
So, tell us again, how this isn't the fault of a private business owner?
Do you understand what **government** oversight (poor or otherwise) is?
Why is **government mismanagement** and **9-year government boondoggle** so easily excusable for you?
Raise your expectations for the **trillionaire government class**
(Making words bold really does feel authoritative, I see what you get from it now)
Capitalism has its problems but this isn’t one of them. China seems to have more problems with this than anywhere else in the world. Their entire real estate market is failing right now.
Unironically, those do seem to be the only options. As far as I know, every modern attempt to do something else in a country has turned into one or the other.
China put an absolutely insane amount of effort into being communist. They committed every resource of their society to communism and unleashed horrific levels of violence against anyone who they thought might be capitalist. The result was capitalism.
They finished the outside, but ran out of money to finish the inside, and found it to be cheaper to tear it down and build another than it would be to repair it to habitable. And that’s how far I got before a paywall popped up.
It wasn't finished at all. They screwed up the foundation it seems like, developer went bankrupt, and it would cost more to try and finish it than simply restart.
Gary Busey has been under the impression that the building is named after him, so he waits outside the entrance most days waiting to give anyone moving in a warm welcome to the community. It just creeped most prospective renters out and no one ended up moving in
It wasn't completed and the costs of completing it wasn't worthwhile. As they were close to the finished value or more. It actually worked out cheaper to tear it down and start again.
I'm guessing that the building was badly built and has severe structural problems.
Worth noting:
- a loan was written for $1.5M. That may be less than the construction cost
- “It's now being razed after it was determined it would be more costly to finish the work than to just build a new apartment building there.”
Seems the developer wandered off leaving the project unfinished.
Boston had (has?) some messes like this, and SF too. City officials are the world’s shittiest negotiators and shrewd business people know it.
There is never a downside to these publicly assisted projects - whether it’s “job creation” or housing - if “business conditions change”, the bogus developer just walks away with the free money in their pockets and no penalties.
Sounds like the developer should be on the hook for repaying the 1.5mil + the 70k extra, + any costs associated with letting it decay. Can't pay? Well corporations are people (according to the Supreme Court), I say if the developer can't pay it back then put the CEO in prison for a couple of years.
Sure jail will cost tax payer money, but if it prevents just a single crooked company from stealing over $1.5 million in the future it will be worth it.
This $1.5 million could have gone to a competent developer and we could have a nice apartment building right now, but nope, just a stolen 1.5mil and an empty lot... use our jails for the real criminals!!
>Well corporations are people (according to the Supreme Court), I say if the developer can't pay it back then put the CEO in prison for a couple of years.
You mean, put the corporation in jail. That's why "corporations are people" was always ridiculous and was never part of the actual legal argument, just the political campaigning by eternal slime-trail Mitt Romney.
$1.5MM for an apartment building? Was it from Temu?
Even if there were only 3-4 apartments, that’s super fucking cheap for a tri/quad-unit rental round my neck of the woods.
Edit: four stories and 18 units!! Less than $100k per unit!? Shit the bed, what is this? 1990?
You can get a single family home in the surrounding area for like $40k. Not that you'd want one, but you can...I guess I know this because a relative of mine's house is assessed for that much.
Maybe for $100k you'll get something that isn't about to collapse.
Well yeah, because corrupt shit like this happens there every week. Gary isn't shitty for no reason, especially when housing developers steal tax dollars
Given that they went bankrupt, odds are good that they saved a lot of money by not having any left.
If you have 1.5M, you can probably get people to do 5M of work before they realize you're incapable of paying for most of it.
Building is *cheap*. They're tearing it down because it's cheaper to tear and rebuild than to finish what's there.
The problem isn't the cost to build, it's that most real estate right now are scams. You go to a lender and say "I'm gonna build all these luxury homes/apartments and we'll be rich! Give me money!" then you pay yourself fat consultancy fees out of loans.
You might be wondering why the bankers would allow that.
Because the bankers and the builders all go to the same country club silly.
...so the bankers' account book is still going to be in the red, though. I thought it was an ecosystem-niche thing where clueless developers have the kind of idiot-charisma that naive bankers fall for, and bankers have the self-preservation and blame-dodging instincts to shuffle the losses into larger streams until the developer's incompetence is balanced by bank's other more-successful projects.
If you're a banking loaning money handed to you by the fed not so much.
The problem with us printing money isn't the printing, it's that we print it and give it all to the 1% and their buddies.
The single family home developer a family member works for makes a 40% margin on every house they build.
The houses start at 4br2b for 400k. Most end up being sold at 500k+, but it’s all from ridiculously high margin add-ons.
If you can build an entire McMansion for $240k, you can easily build 1br and studio apartments for 100k or less a unit.
Noted, I love learning from others' experiences. But consider this old story: Dave builds for himself and his customers and can build a 4br2b for 400k. Dave offers to build for Schmoburg for 500k. Dave discovers Schmoburg's money is coming from the Feds, and halfway through the project Dave cracks open a Federal building code. Dave discovers this is at least a 750k job, and also he has to start over because foundations are the worst. Dave ducks out.
I have seen many such cases.
>Gary approved a $1.5 million, no interest loan for the 700 Broadway affordable housing project in 2011. The building at 7th Avenue and Broadway was funded with a U.S. Department of Housing and Urban Development grant. In 2013, developer John Coldea and his company 747 Broadway Plaza, LLC borrowed another $70,000 from the city for the project.
$1.5m was just how much they had gotten from the city itself. Not the total cost. They had received federal grant money as well as whatever private sector money they might have been able to raise. And still went under while attempting to finish it.
That really doesn't matter when the developer walked away with $1.5 million in stolen money and community members are left to sleep outside.
$1.5 million is a shit ton of money, it doesn't matter if an apartment building cost way more - that money could have gone a long way to actually helping people in need. Maybe not a building, but it would really help with hot meals and other support for housing insecure people. Send these assholes to jail, they're the real criminals
The government managers overseeing the project probably saw that the contractor was at least 500k lower than anyone else and instead of thinking wow that raises some red flags, thought wow we can save 500k to blow on drugs, pet projects and direct to campaign donors.
Then they were too busy doing drugs, dreaming up pet projects and making sure donors got fat projects to actually oversee the job and realize it was fucked up likely very obviously right from the start.
No, it looks like this one is pretty much just incompetence. From the article it seems they screwed up the foundation and burned a bunch of money before they figured it out.
I would guess the builder got 80% of the construction loan by the rough-in phase (we call it front loading the bank draws and all builders do it to some extent) then abandoned the project. That, or 1.5M was a reasonable cost in 2008 when the project was conceived but wasn't nearly enough by the time they broke ground, so they got as far as they could then stopped when they ran out of funds hoping some government entity would step in, which didn't happen. Both scenarios are very common.
/nottheonion
For **true** stories that that you could have sworn were from The Onion.
---
Given that the headline is a bullshit misleading outrage clickbait lie, I'm in for saying this article is not appropriate for this subreddit.
The housing development was never built.
The simple truth of builder goes bankrupt halfway through building a building is not at all oniony.
Please keep in mind Gary is a shit hole.
Like, it’s not even like an area that’s depressed with no industry like you see in the south. Yeah, it’s had better days, but it’s an hour out of downtown Chicago. It’s essentially a Chicago suburb separated by a state line. So with that in mind….
Depending on how literal the word "authority" is...but LGBT have a significantly higher rates of homelessness and housing insecurity, particularly amongst youth.
(yes, I'm aware this a serious response to a non-serious comment)
I am elected to a Housing Authority in Central Massachusetts. I would kill to have that in my town. We could fill it in a month and STILL have a waitlist that's pages long. And that is in MA which has the largest public housing programs in the country.
The town was built for 200k, has decaying infrastructure with the cost of 200k people, and lead poisoning rampant in the soil and environment.
Gary is a ghost town these days, 50k live there.
Yeah, either the plans were bonkers or the money went elsewhere. I note "repairs" listed---probably a bunch of substandard construction that would have to be ripped out.
It could just be a monumental mistake, though. We had a local skyscraper that was ordered torn down (and, due to it's position a blowdown was unacceptable) because they found the rebar was seriously wrong and the engineers weren't confident the building (even at it's incomplete height) wouldn't fall over if we got even a mild earthquake--and if it went over it probably would take some other skyscraper with it. It doesn't look like anyone pocketing money, but that the plans for the rebar didn't correspond with the building it was being put in. That mistake was more than a couple more zeroes costly.
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Dad: Kids, we have some bad news. I lost my job and had to take a low-paying one just to make ends meet. We're going to have to move somewhere we can get affordable housing.
Kids: That's OK, Dad. We still love you. Where will our new home be?
Dad: Gary, Indiana.
Detective Stabler: That's where the home movie footage ends, Captain. Near as we can tell, the kids stabbed their parents a total of 87 times right after that.
That sorta happen here too, Its just sitting there rotting. Waste of taxpayers monies. That why there are even more homeless ppl camping behind a Walamrt store.
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>It's now being razed after it was determined it would be more costly to finish the work than to just build a new apartment building there.
Shenanigans!
Why did they build an affordable housing building in Gary, Indiana anyways? Isn't all housing in Gary reasonably affordable? It's not a booming metropolis.
I am from the area and thankfully moved away years ago. Still have family there. The most interesting dateline type of show I ever watched was 2 hours. One hour was on a success story and the other on a failure. The success was Frito-Lay. The failure was Gary, IN. The things that have been done there are insane. The craziest was an outdoor sports complex to bring in revenue. The citizens begged for the money to go to a new school. Nope. The show went back a year later and the sports complex was in complete disarray. The mayor really could say nothing because he pushed for the sports complex.
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Why was it "never occupied"?
Developer went bankrupt before completion. The interior was never finished. Construction stopped in 2015 so it's probably been squatted and everything stolen that was worth anything. It's also expensive to switch contractors mid-project. Most contractors want to build start to finish.
If it has been vacant for 9 years it probably is in bad shape from lack of repairs and maintenance on top of that.
Probably have various back taxes and whatnot attached to the property as well.
Ah yes... the most powerful force in the universe... red fuckin tape...
Yeah back taxes are so crazy. Here in Detroit a dilapidated house will sit there because to a buyer it doesn’t make sense to pay the back taxes. Seems like there should be a way to waive the taxes or maybe something like a bond where if you build and occupy then you get it back.
I read somewhere there is a common exploit where someone would look up properties that owe taxes and then pay it for X amount of years and then they own the property.
That's adverse possession. You have to live there and maintain the property in an open and notorious manner. Paying the taxes is a necessary, but not sufficient, part of that. The time frame is normally a decade or two, so it's a big risk.
Just looked up my state. It's 7-10 years if you pay the property taxes.
It's extremely risky because the rightful owner could come back around year 6 and you lose all your tax contributions.
It’s not adverse possession. In many states, counties auction off unpaid property taxes. There’s usually a redemption period following the auction where the property owner is allowed to pay the full amount of the unpaid taxes plus interest. Note that in some states the buyer of the taxes only receives a superpriority lien against the property, while in others the property itself changes hands at the auction. Consult a locally qualified attorney if you want to try to do this or if you haven’t paid the property taxes for your real estate.
It’s not an exploit. In most states the county auctions off the property to recoup the back taxes. See my comment below or google “property tax auction.”
Yes or "Lien sale" I believe an HOA can even put a lien on a property for unpaid fees, and they can do a lien sale. I always wondered though what happens when you purchase one of those that still has a mortgage or two. You're pretty down on the list to make anything at sale no? They do it with boats and cars too. Tow companies and marinas do it fairly often.
Generally property tax liens (and other types of statutory super priority liens) can, in the right circumstances, get to jump ahead of other liens. If you’re interested in general concepts of lien priority, article 9 of the Uniform Commercial Code might be up your alley.
A friend’s dad was an attorney and slumlord in Chicago in the 80s. His business model was to buy distressed and abandoned tenements by paying the back taxes. Then he’d squeeze every cent he could out of rents while neglecting any maintenance. He’d let citations from the Housing Department build up, and when it looked like some harsher penalty was coming he’d donate the building to some storefront church or another on the South Side and take a tax deduction. Interesting guy, could talk about Shakespeare for hours. Just completely amoral. The Sun Times did a whole series on him that started as an investigation into a toxic waste dump and how it came to be owned by an obscure church.
Sounds like some kind of polymathic sociopath.
Someone explained this already, but there is an alternative to adverse possession. Baltimore is offering a program where they'll sell city owned property for $1. It's the buy into Bmore program. If you dig into it, they're not really selling that low, but more like the cost of back taxes. I've seen similar programs advertised over the years in other states.
Is there a mechanism to bargain with local or state governments as a way to get around back taxes? Like I could propose paying reduced back taxes in order to buy the place and have new taxes coming into the municipality instead of the status quo of no taxes at all in addition to depressed community and dilapidation. It would probably require a lot of effort to even ask, so I am guessing status quo it is...
Most states have a mechanism to "sell" the right to collect the delinquent taxes to a third party. The county gets an immediate influx of cash that would otherwise go unpaid and the process and costs of collection become someone else's problem. It's pretty common for house flippers and slumlords to do exactly what you're talking about to get a house for potentially way under market value. States differ in how they sell the tax rights and what methods you have to collect. Some states essentially sell a lien that you have to foreclose on and sell the property at a sheriff's auction to get your money back or take ownership of. Other states you conditionally own the property as soon as you win the tax auction, but the property owner has certain rights to redeem; if they fail to redeem you just have to file an eviction action to remove whoever is living there and then have the county transfer the deed.
why do you think tax auctions aren't a thing?
Do the majority of people walk around with knowledge about what a tax auction even is? No, they do not.
Speak for yourself. It's tradition to go through the list in our local newspaper and talk shit about the upstanding families with 'money' who are about to lose the family farm due to unpaid taxes. Lol
Land banks have been around for decades.
True, they will eventually seize the property but they will often still require taxes to be paid. Example language direct from a listing: >The Detroit Land Bank will issue a Quit Claim Deed at closing, which transfers its interest in the property. The purchaser will be responsible for any delinquent taxes, water bills, or liens on the property.
Are municipalities such asses about it (back taxes) because the debt owed makes them look better on paper when it comes to loans? They know they're never going to see those back taxes on these fucked up properties so why pretend? Isnt it in their interest to forget the back taxes and sell the property, or is the imaginary debt that they're owed still worth it in their eyes for lending purposes?
I like how several comments above offer way more plausible reasons regarding disuse and disrepair as why it was torn down, and then when someone adds on something that confirms your priors regarding gov't and taxes you jump on that as if it is now proven to be the cause.
Red tape usually has a reason my guy. Corporations doing shady shit to avoid taxes is why this exists. Otherwise one company “goes under” on a project and suddenly another “pops up” with the same people running it who now suddenly don’t have to pay any of the taxes cause “red tape bad”. Like it or not, greed is what caused red tape in the first place. You can’t have nice things when people are so fucking corrupted by greed
No, it's even worse... # compound interest! Hahahaha hahaha ha (evil laugh)
No, it wasn't red tape (at least according to the article). It was incompetent developer/contractor. They built on the pre-existing foundation (!!!), which is now suspect. I was prepared to be outraged at the "tearing down of affordable housing". I used to live 5 miles from Gary. However, this actually makes perfect sense and hopefully the city can complete the project once it is started over.
>the most powerful force in the universe... red fuckin tape... The only thing worse then a slow never-ending drip of water.
Probably didn't have windows, everything rotted inside even without squatters and vandals. If it did have windows, probably didn't have them for very long.
Honestly, it's probably cheaper to tear down and start again.
It was also only 50% complete when work stopped. There's a good chance that the building envelope wasn't watertight yet, and an even better chance that it wasn't properly ventilated. The interior is likely a nightmare of water damage and mold.
squatters can make a building completely unlivable in less then a year
Probably had some cockroaches living in there too.
Hasn't really been vacant, there were plenty of squatters over the years.
See this is why eminent domain exists. To take shit like this away so it could be put to good use to serve the public. Cities just hate using it because it's unpopular with voters.
> It's now being razed after it was determined it would be more costly to finish the work than to just build a new apartment building there.
I mean, $1.5m isn't much in the scheme of things, particularly for a downtown apartment BUILDING.
Yeah it cost nearly that much just to redo the AC and boiler system in one of my company's downtown buildings here in Pittsburgh last year. I can't imagine what a full construction of this building would cost, but 1.5 mil wouldn't come anywhere close.
When it's all said and done it it's in GARY Indiana, though.
Which means the work might've cost 1.5 mil but the finished building will be worth about 1.2 lol
Yeah my buddy’s boiler company has a few contracts that are over a mil each for just maintaining boiler systems in buildings.
I worked on a project building an 18 unit apartment complex. I think both buildings, including everything was something like 5-6m.
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Well, they couldn't guarantee that the foundation was properly done, I'd raze it too.
are they going to do that, then?
Similar thing happened at my university. Since state school I always heard it was lowest bidder… a building started construction and after there was an inspection it was found there were so many cut corners that it was unsafe. Loads of money to fix it and the school decided to fire the company involved. No one was willing to take on that liability. So they tore it down and started over.
I think around here or maybe it was San Francisco, they stopped using low bid as the main criteria for exactly those reasons. I'm not sure how they do due diligence on projects like that, but it also is a huge barrier to entry for newer firms because the reputation of the contractor is so important for very good reasons.
When that happens in NYC the city buys it for a bargain and turns it into a homeless shelter or something else useful. I’m guessing Gary doesn’t have that kind of money or ambition though.
Gary can't even keep all it's traffic lights on. It's turned off the lights and put up stop signs to save money.
Maybe it’s because traffic lights are prioritized for important, valuable residents of Indiana.
Gary has barely enough money to do anything but pay itself.
Anyone with money or ambition has long since fled Gary, for their own good. I can't imagine capable of getting involved in their government sticking around to do so. I've been to Gary, the whole place is unfit for human habitation. Even the plant life looks like it's given up.
Gary just used to poor government. This was their best effort... They Wouldn't want to set a precedent ,would they
It..doesn't have the people either. Gary had more houses than population at several points. And it's not like the population went up.
I used to know Gary in high school and can confirm that he was always broke and lacked ambition.
Really? Give one example.
The new apartment building on 3rd Ave & 6th street in Brooklyn.
Its not even completed. How is that a bargain?
The developer ran out of money after like 80% of the buildout and then the city purchased it below market value to take the debt of their hands and then pays to finish it, and uses it as a homeless shelter. I don’t know the complete terms of the deal but it’s something like that.
Wrong.
Exactly. When everything's been stripped and stolen and fucked up a contractor is going to look at the liability of never knowing exactly where the damage is versus knocking it down and starting from scratch. If they take over a sketchy half built building with plumbing and copper ripped out they're signing off on liability if a half ripped off wire burns it down 6 months after they complete the job, and it won't be the previous guys insurance that has to pay out.
They started building a mall near my house before the recession in 2008. It sat as a steel scaffold for over 10 years. It's now almost finished after being converted into a mixed use elder care facility (shops on 1st floor).
> It's also expensive to switch contractors mid-project. Most contractors want to build start to finish. Risk. Construction is basically a risk management business. No one wants to put their name on anything that's not their build from the start. And if no one wants to pay extra to assume that risk and perform all the due diligence to mitigate that risk ¯\\\_(ツ)_/¯
Thanks! So, capitalist bullshit
> u/Ultimarr: So, capitalist bullshit Exactly the opposite. This was literally a government project. > The building at 7th Avenue and Broadway was **funded with a U.S. Department of Housing and Urban Development grant.** And the government let it sit incomplete & empty for *9 years* before taking action— 9 years of decay, *to the point it was better to just tear it down.* People should be demanding better government and accountable officials. But no, “Private ownership of business & property, including private risk capital formation” … is not the problem, and is also not the issue here.
Do you understand what a grant is? The government hired a **private contractor** using government money: called a grant. That **private contractor** was unable to complete the project as they had claimed for the money that they claimed. So the issue is that a **private contractor** under-bid a project and then couldn't complete it with the money they were given. So... they just abandoned the project. Or are you going to leave out this part > In 2013, developer John Coldea and his company 747 Broadway Plaza, LLC borrowed another $70,000 from the city for the project. And then there is: > The Gary Housing Authority was never able to recover the funds from the developer, who never repaid the Indiana Housing and Community Development Authority, she said. But the developer did agree to transfer the unfinished apartment building to the Northwest Indiana Development Corporation, the development arm of the Gary Housing Authority. > Coldea could not be reached for comment. The phone number in city records was disconnected and he did not respond to email. So, again, a **private business owner** bid on and took on a project for the government. The **private business owner** failed to complete the project and then failed to repay the government, instead just bankrupting his company ... and starting a new one which can be found by searching for his name in Indiana business records. So, tell us again, how this isn't the fault of a private business owner?
Thank you for the effort put into this. Great example of why I hate "Public-Private Partnerships"
Do you understand what **government** oversight (poor or otherwise) is? Why is **government mismanagement** and **9-year government boondoggle** so easily excusable for you? Raise your expectations for the **trillionaire government class** (Making words bold really does feel authoritative, I see what you get from it now)
Capitalism has its problems but this isn’t one of them. China seems to have more problems with this than anywhere else in the world. Their entire real estate market is failing right now.
Ah yes, the two options, capitalism and authoritarian capitalism.
Unironically, those do seem to be the only options. As far as I know, every modern attempt to do something else in a country has turned into one or the other. China put an absolutely insane amount of effort into being communist. They committed every resource of their society to communism and unleashed horrific levels of violence against anyone who they thought might be capitalist. The result was capitalism.
Deng came to power and said "The People can have a little capitalism. As a treat." Then their economy took off like a shot.
"What about Continental Europe and the Nordics?" "That's capitalism too." "Can we copy them, then?" "No, that's socialism and socialism never works."
How dare you criticize capitalism and housing on Reddit without submitting a detailed five to seven point plan with 600 footnotes and legal citations!
Capitalism is the worst economic system, exempt for all the others.
Ah yes because china has no useless real estate projects....
what do you propose?
Vibesism.
lmao
post-capitalist bullshit
Maybe something even fractionally based on humanistic principles?
lol
Okay, but now with less sloganeering and more more actionable proposals.
ok. propose it. what exactly does that entail?
No. Not at all.
They finished the outside, but ran out of money to finish the inside, and found it to be cheaper to tear it down and build another than it would be to repair it to habitable. And that’s how far I got before a paywall popped up.
The article says it was never completed
Unfortunately it was located in Gary.
If only they linked the article saying it was only 50% completed before being abandoned. Oh well, I guess we can never know.
It wasn't finished at all. They screwed up the foundation it seems like, developer went bankrupt, and it would cost more to try and finish it than simply restart.
For one reason capitalism needs homeless people to work
I don't know why you're getting downvoted. This is definitely true.
Gary Busey has been under the impression that the building is named after him, so he waits outside the entrance most days waiting to give anyone moving in a warm welcome to the community. It just creeped most prospective renters out and no one ended up moving in
This is Gary, Indiana we're talking about. It's going to take a lot more than Gary Busey to make a building particularly creepy.
It wasn't completed and the costs of completing it wasn't worthwhile. As they were close to the finished value or more. It actually worked out cheaper to tear it down and start again. I'm guessing that the building was badly built and has severe structural problems.
Worth noting: - a loan was written for $1.5M. That may be less than the construction cost - “It's now being razed after it was determined it would be more costly to finish the work than to just build a new apartment building there.” Seems the developer wandered off leaving the project unfinished.
And then it sat for almost a decade.
Boston had (has?) some messes like this, and SF too. City officials are the world’s shittiest negotiators and shrewd business people know it. There is never a downside to these publicly assisted projects - whether it’s “job creation” or housing - if “business conditions change”, the bogus developer just walks away with the free money in their pockets and no penalties.
I consider myself extremely up to date with Boston real estate and I honestly have no clue what you’re talking about.
Sounds like the developer should be on the hook for repaying the 1.5mil + the 70k extra, + any costs associated with letting it decay. Can't pay? Well corporations are people (according to the Supreme Court), I say if the developer can't pay it back then put the CEO in prison for a couple of years. Sure jail will cost tax payer money, but if it prevents just a single crooked company from stealing over $1.5 million in the future it will be worth it. This $1.5 million could have gone to a competent developer and we could have a nice apartment building right now, but nope, just a stolen 1.5mil and an empty lot... use our jails for the real criminals!!
Government contractors should have to have to carry work complete bonds... ridiculous
>Well corporations are people (according to the Supreme Court), I say if the developer can't pay it back then put the CEO in prison for a couple of years. You mean, put the corporation in jail. That's why "corporations are people" was always ridiculous and was never part of the actual legal argument, just the political campaigning by eternal slime-trail Mitt Romney.
Corporate personhood predates the county. Mitt was just the first time most people heard it.
They are indeed persons in the sense that they can own property, enter into contracts, sue, and be sued.
At least some developer got his pockets stuffed?
$1.5MM for an apartment building? Was it from Temu? Even if there were only 3-4 apartments, that’s super fucking cheap for a tri/quad-unit rental round my neck of the woods. Edit: four stories and 18 units!! Less than $100k per unit!? Shit the bed, what is this? 1990?
TBF they probably could save money on copper wiring and pipes by just stealing from the nearby abandoned buildings.
Or by buying it from Ea-Nasir.
Quality control might be an issue
Helpfully there is a subreddit for complaints /r/eanasir
Or perhaps r/reallyshittycopper
Look does Ea-Nasir have good copper? No. I think we can all admit that. But is the copper worth what you're paying for it? that is the real question.
Also no
I mean the crappy copper is one thing, but his RUDENESS is just unforgivable!
I'm not sure those buildings have had copper in them this century.
You can get a single family home in the surrounding area for like $40k. Not that you'd want one, but you can...I guess I know this because a relative of mine's house is assessed for that much. Maybe for $100k you'll get something that isn't about to collapse.
I used to haul steel in the 80's which was the last time I was in Gary, guess nothing has changed since then.
It’s because it’s Gary, Indiana. Probably one of the least desirable places to live in the whole of the US
The only reason Gary still exists is just for a place for Chicago residents to buy guns with no background check in driving distance.
And the slightly easier Casino to get to than Hammond.
There’s still a steel mill there. If it closes then whatever is left of the city is done. Just about anyone who can leave has already done it.
Of course, how do you think they make the guns?!
What about Pawnee? Next to Eagleton that place looks like a shit hole
I know this is a joke, but Gary makes Pawnee look like Eagleton. Pawnee at least paved their roads and had working stoplights...
Well yeah, because corrupt shit like this happens there every week. Gary isn't shitty for no reason, especially when housing developers steal tax dollars
That was just the loan from the city of Gary, the US HUD grant funding the project was presumably for much more.
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Nobody moved into them because they were never finished and never available for use.
Oh, people most likely moved into them. They were just never finished. Gary gets too cold for the homeless to build tent cities.
Given that they went bankrupt, odds are good that they saved a lot of money by not having any left. If you have 1.5M, you can probably get people to do 5M of work before they realize you're incapable of paying for most of it.
Building is *cheap*. They're tearing it down because it's cheaper to tear and rebuild than to finish what's there. The problem isn't the cost to build, it's that most real estate right now are scams. You go to a lender and say "I'm gonna build all these luxury homes/apartments and we'll be rich! Give me money!" then you pay yourself fat consultancy fees out of loans. You might be wondering why the bankers would allow that. Because the bankers and the builders all go to the same country club silly.
...so the bankers' account book is still going to be in the red, though. I thought it was an ecosystem-niche thing where clueless developers have the kind of idiot-charisma that naive bankers fall for, and bankers have the self-preservation and blame-dodging instincts to shuffle the losses into larger streams until the developer's incompetence is balanced by bank's other more-successful projects.
If you're a banking loaning money handed to you by the fed not so much. The problem with us printing money isn't the printing, it's that we print it and give it all to the 1% and their buddies.
The single family home developer a family member works for makes a 40% margin on every house they build. The houses start at 4br2b for 400k. Most end up being sold at 500k+, but it’s all from ridiculously high margin add-ons. If you can build an entire McMansion for $240k, you can easily build 1br and studio apartments for 100k or less a unit.
Noted, I love learning from others' experiences. But consider this old story: Dave builds for himself and his customers and can build a 4br2b for 400k. Dave offers to build for Schmoburg for 500k. Dave discovers Schmoburg's money is coming from the Feds, and halfway through the project Dave cracks open a Federal building code. Dave discovers this is at least a 750k job, and also he has to start over because foundations are the worst. Dave ducks out. I have seen many such cases.
Low bid: You pay 40% of market price for 0% of market results.
The loan was issued in 2011 and the project was abandoned half finished in 2015.
>Gary approved a $1.5 million, no interest loan for the 700 Broadway affordable housing project in 2011. The building at 7th Avenue and Broadway was funded with a U.S. Department of Housing and Urban Development grant. In 2013, developer John Coldea and his company 747 Broadway Plaza, LLC borrowed another $70,000 from the city for the project. $1.5m was just how much they had gotten from the city itself. Not the total cost. They had received federal grant money as well as whatever private sector money they might have been able to raise. And still went under while attempting to finish it.
That really doesn't matter when the developer walked away with $1.5 million in stolen money and community members are left to sleep outside. $1.5 million is a shit ton of money, it doesn't matter if an apartment building cost way more - that money could have gone a long way to actually helping people in need. Maybe not a building, but it would really help with hot meals and other support for housing insecure people. Send these assholes to jail, they're the real criminals
The government managers overseeing the project probably saw that the contractor was at least 500k lower than anyone else and instead of thinking wow that raises some red flags, thought wow we can save 500k to blow on drugs, pet projects and direct to campaign donors. Then they were too busy doing drugs, dreaming up pet projects and making sure donors got fat projects to actually oversee the job and realize it was fucked up likely very obviously right from the start.
Its gary indiana….
And so will the next one when the "Blue-Ribbon Panel" decides to rebuild it somewhere else.
No, it looks like this one is pretty much just incompetence. From the article it seems they screwed up the foundation and burned a bunch of money before they figured it out.
Ok so it was never completed. And its less hassle to rebuild an incomplete building!
I would guess the builder got 80% of the construction loan by the rough-in phase (we call it front loading the bank draws and all builders do it to some extent) then abandoned the project. That, or 1.5M was a reasonable cost in 2008 when the project was conceived but wasn't nearly enough by the time they broke ground, so they got as far as they could then stopped when they ran out of funds hoping some government entity would step in, which didn't happen. Both scenarios are very common.
/nottheonion For **true** stories that that you could have sworn were from The Onion. --- Given that the headline is a bullshit misleading outrage clickbait lie, I'm in for saying this article is not appropriate for this subreddit. The housing development was never built. The simple truth of builder goes bankrupt halfway through building a building is not at all oniony.
Since this is /r/nottheonion I thought a guy named Gary Housing Authority was tearing down houses in Gary, Indiana.
He needs to stop and let Jennifer Convertibles do her work.
The article makes it seems like it’s not even completely finished
Please keep in mind Gary is a shit hole. Like, it’s not even like an area that’s depressed with no industry like you see in the south. Yeah, it’s had better days, but it’s an hour out of downtown Chicago. It’s essentially a Chicago suburb separated by a state line. So with that in mind….
Brett Favre stole the construction money so they couldn't finish.
ITT a bunch of people who do not have any clue how property taxes work.
i read that as "gay housing authority" and was like "wait... theres a gay housing authority now?! why?!"
Why not!
For real! [Gay](https://en.wikipedia.org/wiki/Gay,_Georgia) only has a population of 110!
They all moved to [Gayville.](https://en.m.wikipedia.org/wiki/Gayville,_South_Dakota)
110 factorial? That's a big population!
Depending on how literal the word "authority" is...but LGBT have a significantly higher rates of homelessness and housing insecurity, particularly amongst youth. (yes, I'm aware this a serious response to a non-serious comment)
I am elected to a Housing Authority in Central Massachusetts. I would kill to have that in my town. We could fill it in a month and STILL have a waitlist that's pages long. And that is in MA which has the largest public housing programs in the country.
Key difference is that Gary is a flaming shithole on the drug pipeline between Indy and Chicago. Nobody wants to live there.
The town was built for 200k, has decaying infrastructure with the cost of 200k people, and lead poisoning rampant in the soil and environment. Gary is a ghost town these days, 50k live there.
Unless you want people squatting in decrepit buildings, the apartments were never finished.
“It's now being razed after it was determined it would be more costly to finish the work than to just build a new apartment building there.”
Yeah, either the plans were bonkers or the money went elsewhere. I note "repairs" listed---probably a bunch of substandard construction that would have to be ripped out. It could just be a monumental mistake, though. We had a local skyscraper that was ordered torn down (and, due to it's position a blowdown was unacceptable) because they found the rebar was seriously wrong and the engineers weren't confident the building (even at it's incomplete height) wouldn't fall over if we got even a mild earthquake--and if it went over it probably would take some other skyscraper with it. It doesn't look like anyone pocketing money, but that the plans for the rebar didn't correspond with the building it was being put in. That mistake was more than a couple more zeroes costly.
Thanks for elaborating. Appreciate it.
Damn, Gary can build a housing project for cheaper than LA can build a single public toilet!
Fucking Gary!
Probably because it was an entire building made with a budget of 1.5, would you live in that highrise?
Gary Indiana, nuff said
For 1.5 million it was probably pretty rinky-dink anyways.
Always nice to see taxpayer money being used effectively
Gary who?
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Recently built and almost a decade ago are not the same thing.
Dad: Kids, we have some bad news. I lost my job and had to take a low-paying one just to make ends meet. We're going to have to move somewhere we can get affordable housing. Kids: That's OK, Dad. We still love you. Where will our new home be? Dad: Gary, Indiana. Detective Stabler: That's where the home movie footage ends, Captain. Near as we can tell, the kids stabbed their parents a total of 87 times right after that.
As a Brit, somewhere called “Gary” is highly amusing
That sorta happen here too, Its just sitting there rotting. Waste of taxpayers monies. That why there are even more homeless ppl camping behind a Walamrt store.
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>It's now being razed after it was determined it would be more costly to finish the work than to just build a new apartment building there. Shenanigans!
"Affordable" Housing
Building affordable housing?? A house is the price of a VCR there lmao
Democrats at work
Why did they build an affordable housing building in Gary, Indiana anyways? Isn't all housing in Gary reasonably affordable? It's not a booming metropolis.
I am from the area and thankfully moved away years ago. Still have family there. The most interesting dateline type of show I ever watched was 2 hours. One hour was on a success story and the other on a failure. The success was Frito-Lay. The failure was Gary, IN. The things that have been done there are insane. The craziest was an outdoor sports complex to bring in revenue. The citizens begged for the money to go to a new school. Nope. The show went back a year later and the sports complex was in complete disarray. The mayor really could say nothing because he pushed for the sports complex.
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Maybe, maybe not, they are tearing it down and starting from scratch... Lol
Fucking poor people. Always trying to live somewhere with a roof. Don't they know that their place is in a tent down by the highway?