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Community Corner

FASNY: A POWER-BALL TICKET

October 2, 2013

Dear Mayor and Council members,

When you buy a lottery ticket you wish for a huge pay-off in terms of a change in economic circumstances.  Exotic travel, luxury houses and fast cars.  The certain reality of your lottery ticket purchase is that you are going to lose your money.  No reasonable person plays the lotto expecting to win.

You, as Council members, from time to time are presented with development projects that promise substantial benefits and rewards.  Like a lottery ticket, developers promise fantastic rewards and benefits at little or no cost.  FASNY has behaved in the time honored tradition of a typical developer beginning from the time of their Ridgeway Country Club property purchase.   

The Mayor and Common Council wear many hats and that's what makes the job interesting:  leading a holiday parade,  implementing constituent's ideas such as the Take It or Leave It Shed and trying to decide the future of the railroad station.   Some roles are immediately rewarding and others are tough.  Trying to decide whether a large development is right for the community is tough.

In many ways, trying to decide whether a development fits in the community is similar to the role an investment manager plays in deciding whether a project is right for their fund.  Your investors are the residents of White Plains.  You are the investment managers who decide whether proposed development projects are suitable for your investors and should be permitted.  This is not a stretch.  Financial investment proposals as well as significant public development projects involve benefits, costs and risks.

Interestingly, Mischa Zabotin wears many hats: international banker,  chairman of the board of FASNY and development point man.  His day job involves evaluating financial opportunities.  He requires high quality information on benefits, costs and risks in order to make smart decisions.  His decisions are yes or no.  It is inconceivable that he would entertain a proposal where the measures of benefits and costs shift almost daily.   A project with these features would represent excessive risks for his investors and organization.

In the case of evaluating FASNY's proposal, it would be advisable that the Mayor and Council members assume the skepticism of an investment banker.  It's a difficult job sifting through much of the developer's ready supply of public relations fluff and questionable consultant facts.  Because of the difficulty of sifting the wheat from the chaff in any development project, it is incumbent that you only choose projects where the benefits outweigh the costs by an order of magnitude and risks are minimal.   You have a responsibility to approve only the sure bet and not allow a developer to shift costs to the Gedney neighborhood and greater White Plains.

Developers seldom trumpet the real costs and risks associated with the project.  Why would they?  This is why you will hear from private equity investors and investment bankers that they will only bet on a sure thing.  They avoid as much as possible making uninformed, risky and uncertain decisions on projects.  So should you.

Council must say no to projects that tout grandiose benefits, make unrealistic promises and do not fit with the local community.  Starting to sound familiar, starting to sound like FASNY?  Think conservancy, mandatory busing and traffic jams.  The Council should not play lotto with the FASNY development project.  White Plains cannot afford to risk the well being of its citizens.  White Plains cannot afford to lose.

Thank you,

Anne M. Casey, M.D. and Charles Diamond, Ph.D.  (Economics)
39 Hathaway Lane

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