CSI Representations.  This Congregation Shearith Israel analysis purports to show that a “Revised As of Right CF/Residential Development” is unprofitable, as a necessary condition to justify  variances for their proposed New Building. Contrary to the CF (Community Facility) in the title, it contains no such facilities; it consists of only two luxury condominiums as though they were built in mid-air, in a totally self-contained building.

As explained on the right, the slice of the New Building covered by the analysis is burdened with an imaginary $12,347,000 Acquisition Cost forcing the ‘paper development’ to lose money.

The Project Financials Column replicates the figures submitted by Freeman Frazier Assoc. in a letter dd 8 July ’08 on behalf of the Trustees of Cong. Shearith Israel.  In the BSA context, Investment means Equity, and the general Return on Investment is Return on Equity.  However, the basis for the $12,347,000 Acquisition Cost, has not been explained even though specifically requested  by the BSA Chair Srinivasan.

How to Convert Profit into Loss The project looses money because the ‘developer’ must pay $12,347,000 for the right to build two condominium units that he can sell for $11,940,000 after spending another $8,350,000 on construction.

The question is, of course, how much are development rights really worth?  As a practical matter, the rights are worth whatever a developer is willing to pay.  From a developer’s financial point of view, he can be expected to pay whatever amount will yield a reasonable return upon sale of the developed property for its intended use, after paying all costs, constrained by his risks.  In fact, that is how it can be determined, as described on the “Alternative Analysis” page.

The Magically-Appearing $12,347,000.  Where did the figure come from?  It is a rigged amount unrelated to the building being analyzed.  It was also used in another CSI analysis that ‘proves’ that the development preferred by CSI is barely profitable, and is therefore the minimum building that produces a reasonable return. 

Its use here is an amount paid by the developer, CSI in this case, to the property owner, CSI in this case, for the right to construct condominiums  at a price to be paid to CSI on property already owned by CSI. 

[See Wall Street Journal article, Page D3 on July 16, 2008 describing the criminal indictment of Rabbis Weisz and Zigelman for their involvement in a financial scheme that similarly involved phantom transactions in a charitable cause.]