Stimulus for some

Now seems like a terrific time to place more capital into the no-doubt soon to be booming indoor golf arcade business. 

After construction delays caused by money trouble at its corporate parent, work on the Drive Shack driving-range complex at the site of the former Times-Picayune building on Howard Avenue appears to be back on track.

The "golf-entertainment" venue, which is being built on a site owned by developer Joe Jaeger and partners, has been beset by difficulties since it was announced two-and-a-half years ago, the latest being a series of lawsuits by contractors demanding payment on overdue bills that had stacked up during the coronavirus pandemic.

But on Monday, Drive Shack's New York-based owner said it had sold its Rancho San Joaquin golf course, located in Irvine, California, for $34.5 million, giving it funds to continue work on the stalled $29 million New Orleans project as well as a mini-golf venture in Dallas known as The Puttery.

Seems a bizarre decision but, then, it is their money...

Wait, what's that?  Oh sorry, no, turns out that it's also public money.   (from 2018)

The developers who want to turn the former Times-Picayune building on Howard Avenue in New Orleans into a three-story indoor golf attraction received final approval Tuesday (Aug. 14) on a plan that basically freezes their property taxes for a dozen years.

The Industrial Development Board, which must sign off on such tax incentives, agreed to lock in land and building values for Drive Shack. The 62,000-square-foot, $29 million facility will include 90 golf ball hitting bays, a restaurant, bar, arcade and conference rooms. To the rear of the building, 183,000 square feet of artificial turf will cover the driving range. Plans call for 265 parking spaces on the property and additional off-site parking under the Broad Street overpass.

Still, who are we expecting will want to spend money on this amusement?  Even after (if!) we arrive at a moment when people generally feel safe going to crowded indoor venues again, will anyone even be able to afford it?  Maybe Drew Brees?  But we read here that he is already building his own private Drive Shack so I guess he is out. 

According to the breathless TMZ report, “Drew's new pad is coming with ALL the bells and whistles … from private access to a bar/lounge to a golf simulator room."

The likely answer is, a lot fewer people will be able to afford to pay for anything. And that in turn leads to a lot more fewer people able to pay for things.  And that can get... very bad. 

But as lockdowns have been lifted in most of the country and businesses have been able to reopen, that supply shock has waned, only for a new problem to emerge: weak demand. In other words, a supply shock has been replaced by a shock to demand.

Some of the weakness in demand is because we’re on the verge of a classic recessionary cycle: Since the stimulus payments to unemployed workers ended in July, people either have less money to spend or are worried about spending it, which means businesses have less revenue, which makes them cut back on hiring and investment, which means less spending.

One very simple solution to this would be to just give people money so they can buy things.  It's what you do when you want to.. stimulate.. the economy.  Is that what we want to do? Besides, given that we've already decided to give a great big tax subsidy to Drive Shack and its developers, there should be no problem loading up their potential customers as well.  You would think it is but, the evidence of that sure is scarce.  Or at least it changes day-to-day. 

The fall of Jaegertown

Once there was a big beautiful gentrifying  and profiteering dream.  But now look.

Five years ago, Jaeger was involved in talks to develop the entire area through a partnership with Darryl Berger and the Howard Hughes Corp. And while talks never resulted in a deal, last year a new plan began gaining momentum.

After successful negotiations with Mayor LaToya Cantrell over tourism tax dollars, Convention Center officials began moving forward on a 1,200-room Omni hotel as well as a vast multi-acre development filled with restaurants, shops, residences and other amenities.

In December, Convention Center General Manager Michael Sawaya announced the selection of three development teams to submit "master plan" proposals for the entire property. With development under way, Jaeger's bet on what is still one of the largest tracts of undeveloped land near downtown New Orleans looked set to finally pay off.

Since then, the shutdowns aimed at slowing the spread of the coronavirus have sent the Convention Center into a tailspin. With events canceled for the foreseeable future, officials have said they will have to dip into reserves to cover tens of millions of dollars of expenses and upgrades to its existing buildings. In April, board members put plans to choose a master developer on hold.  

Sure COVID 19 is bad and all but consider also that Market St. power plant might just be cursed.

The old coal-fired plant, with its Victorian-era twin smokestacks, was built in 1902 by the predecessor to Entergy Corp. and supplied electricity to the city's residents for more than six decades. It has remained a feature of the New Orleans skyline even since its furnaces ceased operating when the building was sold in 1973, and there has been speculation about what its next iteration would be ever since.

Will that be enough to keep the speculators away, though?

Siegel said that the Market Street plant will likely attract the kind of long-term buyer who can wait for a possible return of plans for the entertainment district when travel and business resume.

"I would be surprised if we didn't see substantial interest from potential national and international buyers...[but] it will be someone who takes a generational view," Siegel said.

Of course, the only outcome anyone can imagine for some of the most valuable land on high ground near downtown New Orleans right now is for it to become a site for parked money from "international buyers" with a "generational view."  Things are going great, aren't they. 

Anyway, RIP Jaegertown... or at least this particular vision for it.  I wonder what the NOligarchs map will end up looking like at the end of the depression.