There’s anecdotal talk around Pittsburgh that the owners of at least two high-rise, older stock, office buildings could be on the brink of default on their debt.
No one appears to be going on the record to identify those buildings or their owners. But the COVID-19 pandemic is being blamed – a catalyst that sent employees working from home and a laggard post-pandemic recovery that’s insufficient to cover their obligations.
Ancillary to this speculation is growing talk about “what should be done” — to either forestall such defaults or, if defaults occur, how to pick up the pieces.
From that kind of talk, we gather these folks are advocating for some kind of government “action.”
But the only acceptable government action falls into two categories: That’s either a foreclosure sale in the event of a loan default or the owners seek protection under federal bankruptcy laws.
And we find even that latter “remedy” on the distasteful side, given far too many unsecured creditors typically are seriously harmed, some, irreparably through no fault of their own.
But what absolutely should not happen is any kind of government bailout.
Yet government-to-the-rescue types keep upping the ante, either already subsidizing or offering subsidies, to convert office buildings into residential units or, perhaps, for other uses.
Proponents argue that taxpayer subsidies are needed because such conversions often are cost-prohibitive. Then why is the public’s money being offered – and abused? The public that should have no skin in these games is at risk of being skinned.
Robbing their tax dollars certainly does not make such projects “cost-effective”; it only confirms that such conversions typically aren’t sustainable. Making such units “affordable” only worsens the situation.
If building owners still insist on attempting such conversions, they should seek private investors to help. That we can’t recall hearing of any private investors willing to ride to the rescue speaks volumes, at a much higher volume, that such conversions make no sense.
We’ve also heard talk that if such conversions aren’t feasible, then perhaps some of these older buildings need to come down. But because demolition is a very expensive proposition, advocates suggest the government should assist in the process.
Sorry, but no. Demolition of such private buildings should not be in the government’s purview. Unless, that is, the in-default owner abandons such structures, they become unsafe and, in the name of public safety, the government must take action.
But even in that case, the government should take the abandoners to court to recoup the taxpayers’ dollars.
Some will argue that the same government that helped to create this problem with its imprudent pandemic lockdowns should be forced to fix the mess it created.
After all, they will rationalize, should there be en masse real estate defaults, some banks might fail; the government then would have to bail out two market sectors.
But that would be like hiring the arsonist who set the fire to restore the building his torching destroyed.
Why would anyone trust the government to fix a mess of government’s own creation?
It’s past time to draw a line in the sand against all such government chicanery. The time to halt government’s hubristic interventionist impudence is now.
Colin McNickle is communications and marketing director at the Allegheny Institute for Public Policy (cmcnickle@alleghenyinstitute.org).
