Monday, June 15, 2009

Developers can't see into the future, either

Bluffton Today

Before we begin, I’d like to make a comment on the recent revelations concerning the Sea Turtle Center and Crescent Resources. As a businessman and developer, I respect the courage and creativity that have gone into both these enterprises.

Lori Kaylor, developer of the Sea Turtle Complex, is a friend whom I hold in high regard. She is also a smart woman who put together a great project out on the Buckwalter Parkway that has provided a number of small entrepreneurs a venue for putting their ideas to the commercial test. In my view, she has been treated badly by the press for failing to anticipate what the smartest minds in both the public and private sectors also failed to predict, that is the collapse of the real estate market.

Similarly, Crescent Resources, the developer of two of the flagship properties in the Lowcountry, Palmetto Bluff and Oldfield, is being forced by circumstances not of its making, into arrangements that seemed vanishingly improbable just a few months ago.

It seems that sometimes folks whose ideas and business practices are above reproach are diminished by macroeconomic forces put into play by entities for whom nothing is unthinkable-- who view reasonable regulation as something to be gamed and finessed-- to the detriment of those who play by the rules.

While the General Assembly can’t do too much about credit default swaps or the more arcane derivatives that pushed the economy off the cliff, we can do something about the more banal forms of bad business practice. Such was the case with the big banks that issue credit cards and unfortunately seek to maximize profit by playing games with interest rates and terms and conditions of use.

Most of you know that I was one of the originators of the credit card legislation in South Carolina, which was later adopted by the federal government. The reason for this was that I heard from so many of you about what you were enduring at the hand of the credit card issuers. The stories were many, and each one made me madder than the last. As I started to work on the legislation, we were confronted with a barrage of hardball lobbying from the banking industry. This is the same banking industry that played a key role in the above-mentioned “macroeconomic forces” that are contributing to the local dislocations about which we are reading.

Let me be clear on this: this is not about your local bankers, the folks that you might see having lunch at the Sippin Cow or May River Grill. Small and moderate size banks managed to maintain good, fiscally sound, conservative business practices when their larger competitors were exploring the brave new world of hyper-leverage. The smaller guys also didn’t even quiver when the giants were near collapse. They also didn’t need to break out the small print to extract undeserved dollars from you with questionable business practices.

Friends, this whole mess was quite a revelation for me. It will also influence the decisions about where my personal business is conducted.

I will be out of the office for most of this week, so we may be a little delayed in answering calls and emails.

Next week, I will have something to say about legislative vetoes and the balance of power in the South Carolina General Assembly. In the meantime, try to keep cool, wear sunscreen, and act in a manner that respects our May River.