Monday, July 10, 2006

What is 100% off-setting?

So, people walked away from the table because some of us wisely pointed out that "100% offsetting" sounded good, but wasn't very pragmatic. The good Alder Zach Brandon promised to give us an example of what this would look like in real life . . . that never happened . . . I believe the good alder walked away from discussions as well . . .

Regardless, we've come up with a system to provide unlimited "offsets" (previously called incentives) to the developer to make sure they get all the revenue they think that they should. (Yes, I had to swallow hard on that one and I'm hoping I don't live to regret it like the compromises that we are currently correcting like the Zach Brandon Equity Model and the Zach Brandon Point System.)

The problem is . . . now that we have a system that will take a few more tweaks, what does it mean to be 100% cost-offsetting? Does the bottom line always have to equal zero? If the developer is getting $5,124.76 more in "offsets" do they give us a check? What if it is $156,789.43? Or what if it is $1,973,569.93? Does it matter what the size of the project is? Is it different for a project with 12 homes or 1200 homes? It's not any more clear now than it was last April.

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