Lafayette Building's top two floors subsiding?

**Novine** · July-22-09, 11:01 AM

"The DEGC knows that demolition will cost 1.4 million. From the DEGC's standpoint, it's a waste of time to consult with an engineer when they know that the engineer is not going to come back with a cost of mothballing the building for less than that."

That's DEGC economics for you. Spend $1.4 million to get zero dollars in return. I wouldn't deny that mothballing the Lafayette would exceed the cost of demolition. But that's just a short-term perspective. Over the long-term, the city will capture more value from the Lafayette as a building versus a pile of rubble. Run the numbers Kraig. Show us how demolition and new development in 10 years, which seems like a realistic timeframe for this site, versus mothball and rehab in 10 years compare.

**kraig** · July-22-09, 11:09 AM

Originally Posted by Novine

"The DEGC knows that demolition will cost 1.4 million. From the DEGC's standpoint, it's a waste of time to consult with an engineer when they know that the engineer is not going to come back with a cost of mothballing the building for less than that."

That's DEGC economics for you. Spend $1.4 million to get zero dollars in return. I wouldn't deny that mothballing the Lafayette would exceed the cost of demolition. But that's just a short-term perspective. Over the long-term, the city will capture more value from the Lafayette as a building versus a pile of rubble. Run the numbers Kraig. Show us how demolition and new development in 10 years, which seems like a realistic timeframe for this site, versus mothball and rehab in 10 years compare.

It would depend on the type of new development or rehab. You see Novine, things that don't exist yet are sometimes considered unknowns. Let's go with the knowns, which would be the cost of demolition vs mothballing. I believe PQZ already gave those numbers 1.4 million vs 4 million. Run that.

**ghettopalmetto** · July-22-09, 11:24 AM

Kraig,

I didn't ignore the issue of repair. The truth is that NOBODY knows what it will cost to repair the Lafayette building until a Scope of Repair is established. In order to do that, you need an architect and engineer to conduct an evaluation of the building. Are you seeing how this works?

The fact is, you are in no position to determine if the building is "too far gone". NOBODY can make that decision, let alone a lay person such as yourself, until some numbers are obtained in order to conduct a feasibility study.

It's these pre-ordained conclusions by unknowledgable people [[like George Jackson) that are precisely what is so aggravating about the development environment in Detroit.

**kraig** · July-22-09, 11:10 PM

Originally Posted by ghettopalmetto

Kraig,

I didn't ignore the issue of repair. The truth is that NOBODY knows what it will cost to repair the Lafayette building until a Scope of Repair is established. In order to do that, you need an architect and engineer to conduct an evaluation of the building. Are you seeing how this works?

The fact is, you are in no position to determine if the building is "too far gone". NOBODY can make that decision, let alone a lay person such as yourself, until some numbers are obtained in order to conduct a feasibility study.

It's these pre-ordained conclusions by unknowledgable people [[like George Jackson) that are precisely what is so aggravating about the development environment in Detroit.

I know I'm just a lay person and all. But, I really have to question your ability. Any engineer worth his salt can tell that the Lafayette Building is going to cost more than 1.4 million to repair. If you're honestly saying that you can't tell that just by looking at the building, you need to go into a different field. You aren't cut out for engineering.

**ghettopalmetto** · July-23-09, 07:00 AM

Kraig,

Nowhere did I write that repair would cost less than $1.4 million. I acknowledged that a cost estimate for repair doesn't exist at this time. For all I know, it could be $5 billion, or $5, or anywhere in between. The truth is, no one knows for sure, because the lazy bastards at DEGC are too lazy to find out. Now who's being dishonest?

An engineer knows not to claim as fact any information that he doesn't know for certain. Maybe you'd care to share your life-cycle cost analysis of the Lafayette Building with us?

**Novine** · July-23-09, 12:10 PM

"Since I'm sure this is the question you're waiting for, I'll give it to you."

I'm not looking for a question. I'm making the point that there's no buildings out there that won't cost more to rehab or be mothballed than torn down. Using your "DEGC Math", every building is going to be a candidate for demolition because it's always cheaper to destroy than to fix up, if one is intent on looking at nothing beyond those numbers.

**kraig** · July-23-09, 07:14 PM

Originally Posted by Novine

"Since I'm sure this is the question you're waiting for, I'll give it to you."

I'm not looking for a question. I'm making the point that there's no buildings out there that won't cost more to rehab or be mothballed than torn down. Using your "DEGC Math", every building is going to be a candidate for demolition because it's always cheaper to destroy than to fix up, if one is intent on looking at nothing beyond those numbers.

In other words, you couldn't come up with any. Money is invested to make more money, not to put yourself in a holding pattern. If there's serious interest in developing a building like the Lafayette, then by all means, the DEGC should go for it. But right now, two floors have collapsed and there's a tree growing inside of it. When's a good time to tear it down? After it falls on some people while Charlie Leduff is filming another segment of "Hold the Onions"?

**kraig** · July-23-09, 07:06 PM

Originally Posted by ghettopalmetto

Kraig,

Nowhere did I write that repair would cost less than $1.4 million. I acknowledged that a cost estimate for repair doesn't exist at this time. For all I know, it could be $5 billion, or $5, or anywhere in between. The truth is, no one knows for sure, because the lazy bastards at DEGC are too lazy to find out. Now who's being dishonest?

An engineer knows not to claim as fact any information that he doesn't know for certain. Maybe you'd care to share your life-cycle cost analysis of the Lafayette Building with us?

If the people at the DEGC know that the building will cost 1.4 million to tear down and they know that the cost to repair and mothball the building is more than 1.4 million. Why would they hire an engineer to point out the obvious?

Experts are hired to tell clients what they don't know or are unsure of. Everyone that's posted on this thread, even us lay people, know that the building is going to cost more than 1.4 million to repair and mothball. Hiring an engineer to confirm the obvious is a waste of time and money.

**Huggybear** · July-23-09, 10:51 PM

Originally Posted by kraig

If the people at the DEGC know that the building will cost 1.4 million to tear down and they know that the cost to repair and mothball the building is more than 1.4 million. Why would they hire an engineer to point out the obvious?

Good point - and one that's been lost here.

If any known single aspect of a project pushes it past the point of economic viability using all available economic development tools, you don't need to look to any of the unknowns - because at best they will not affect anything.

A similar situation is this: you bought a new car - and now you want to sell your old car. Its blue book would be $400 - but the engine is trashed. If it costs $2,000 to replace the engine, would you really hire a mechanic to look at the suspension and the tires? I don't think anyone would argue that it would be a rational conclusion to scrap the car. You could conceivably "mothball" the car until at some point in the distant future it became valuable, but all that time, you will have been paying to garage it and performing some ongoing maintenance to keep it running. You may never recover the money spent to keep it in salable condition, particularly if it's decades before its value increases sufficiently. This is precisely PQZ's point.