The frustrating real life story of a mixed-use loan (that didn't happen)
“The system was designed to prevent me from accidentally getting involved in something that I wouldn’t have wanted, a mixed use building.”
Ian Rasmussen is an attorney, certified planner and an urbanist from New York City. He's also a board member at Strong Towns.
And once upon a time, Ian and his family tried to purchase and renovate a mixed use building in Dobbs Ferry, NY. This podcast is all about the frustrations of a really intelligent and sophisticated person attempting to do something rather straightforward -- and needed -- and being stymied at every turn.
Listen to the full episode
Transcript
Charles: Hi everybody! This is Chuck Marohn and welcome back to the Strong Towns Podcast. I have got probably the most requested guest we've ever had on. He's not going to believe that, but I have the closest thing that Strong Towns has to a renaissance man, Ian Rasmussen, on the phone with from New York. Ian, welcome to the podcast.
Ian: Thank you Chuck and I am absolutely flattered. I don't believe you for reasons of lacking notoriety and planning wealth alone, but it was a most gracious welcome.
Charles: You have a cult following, I think is what it is.
Ian: I would love to go to sleep each night thinking I had a cult following.
Charles: Well, the last time you and I chatted on the podcast was from your place in Forest Hills. You are no longer living in this beautiful little place in Forest Hills. You are living somewhere else and I want to take our audience on that journey because the things we're talking about this week on the blog ... You live this. You actually tried to finance some mixed-use development and it didn't go so well. Talk about the first move you tried to make out of Forest Hills.
Ian: Okay, so to say it didn't go so well is a very polite way of saying it.
Charles: It's a Minnesota way of saying it.
Ian: The story that follows ... This is actually the first time I'm telling it in full. The story that follows is an extremely painful one that involves things not working out the way I'd planned, losing a lot of money. I have since moved to a new place that I'm very happy in, but I think it would be sort of misguided to say that this story has a happy ending. Nonetheless, I think it's very illustrative of sort of what can happen to those who try to take on a well-established mortgage system and try and do something differently. With that I will begin the cathartic retelling of this long and tawdry tale.
Charles: Oh, please do.
Ian: Okay. My wife and I were looking to buy our first home. At that time, we actually owned our apartment already. We were looking for something to grow into. My daughter was, I think, about six months old at the time. My wife and I have been city-dwellers for about the last decade or so. If we were going to move into a smaller town outside the city, which was mostly motivated by quality of school systems and affordability ... I don't know how much listeners know about ...
See I mean if you live in New York City you can't actually buy a single-family home whether or not it's detached or a row house. You can't buy something like that for less than a million dollars in any neighborhood. We were going to move outside the city, only we never had this dream of the backyard and the barbecue and the driveway, the prototypical Levittown. Levittown, itself, being only a few miles from where I grew up.
I had noticed I had to go back to that. Instead what we were looking for was something that provided urban living, which I would define as centered around walking and biking to all of your daily needs, having access to transit, and then only driving when you absolutely have to. We were looking for that experience with scale-to-town. In addition to that, my wife being very economically savvy, I had figured that we should get a property that had some kind of rental income. We were actually inclined to find a building where it would either have some kind of commercial use or it would have more than one residential unit. In the beginning we would occupy half the building, and then in time make a decision about growing into the rest of the building.
Charles: The standard type of mixed-use building that for hundreds of years, thousands of years, people around the world have used, right?
Ian: Yeah. It's so funny because you think about so many American downtowns in varying degrees of health from the lively to the deserted. There is a sense in which I think many people don't actually want to live downtown, but what I was bargaining for was having to either park on the street or in a parking lot that I did not control a block from my house. I would not have had a backyard, and I would have had an obligation to shovel a sidewalk in front of my ten-inch doors.
That was fine with me. Like I said, I was never in the market for the backyard and the barbecue. Incidentally, not to spoil the end of the story here, I ended up in the single-family home, but my home was on a corner and I still had no backyard.
Charles: Right.
Ian: It happened to be totally by chance that in the beginning of 2014, my wife and I were at the dinner party of a very close friend known to many of your listeners I think. His name is Patty Steinshnyder. He lives in the charming Westchester Hudson Valley Village of Dobbs Ferry, New York. Like so many other people lying in bed by the twilight of an iPad searching on Zillow, we find a building.
It was basically a ground-floor store, a couple of apartments upstairs, and very reasonably priced by our measure. We had gone to see this building ... Actually had been turned onto a second building that was a little larger, but it had some potential for having more units in it, and eventually make an offer on this building. Like I was saying here before we started, I've written down a bunch of the different milestones in this process and a lot of the different numbers as far as our income and how much the building was going to cost. Then in an effort to sort of anonymize the data, I've multiplied the amount into even numbers that are not exactly what's in play.
Charles: Right. Give us a sense of what we're talking about proportionally for things. Yeah, that makes sense and I respect that. Can you describe the neighborhood that this building would have been in?
Ian: The address was on Main Street, and this was a Main Street in the best way possible. Restaurants, bars, shops, residential stuff upstairs, plenty of convenience retail, which I mention because it indicates that there were actually living in the downtown. By comparison to some other towns, sometimes you'll be downtown and it'll almost, in effect, feel like the town has substituted a mall for an actual downtown.
This wasn't that. There wasn't like a J.Crew or a Banana Republic on the corner. This was restaurants, delis, convenience stores, realtors, things like that...