By Robert F. Biniszkiewicz

I have a question: Since when is a privately held mortgage the taxpayers’ concern?

Are taxpayers ever invited to join in private enterprise profits? Of course not! No business decides, upon making more money than anticipated: “Hey, this is more profit than we expected; let’s give the extra to the taxpayer!” We’re not gifted unexpected profits. So why should we absorb unanticipated private enterprise losses? It’s “private,” remember?

Seneca One purchased the HSBC tower with private financing at a certain price based upon estimates of the income the tower would produce. Recently, the tower lost its two primary tenants, and Seneca One leaders face a daunting prospect: how to pay the mortgage without the income they literally banked on.

But this is hardly an unprecedented, or particularly noteworthy, circumstance.

What happens in cases such as this is exactly the same thing as happens when someone purchases a home he can no longer afford (after a downward change in income, say): the home must be sold (sometimes at a loss) or the mortgage paid with other funds or the bank will foreclose and sell the asset to someone else. None of this should be of any particular concern whatsoever to the taxpayer.

The notion that HSBC will sit vacant for years is ridiculous. Without one dime of improvements, dozens of developers could make that tower work. It is not obsolete; it can compete. The trick is, however, that in order to make it work, rents must be lowered. And that means the private lender might not get all its money back.

HSBC Tower has been promoted as class A office space for four decades now (even though class A is usually defined as newer than 10 years old). The rents charged have been higher than the many class B or class C buildings that populate the downtown core. What would fill up the HSBC tower? Cheaper rent. Period. Lower the rent and watch the place thrive in the marketplace.

Of course, lower rents might mean there’s not enough to pay the mortgage on the terms to which the bank originally agreed. Oh, well. Usually the banks win on mortgages, but sometimes they lose. It’s all in the nature of the business.

It is patently unfair for government to subsidize some property owners at the expense of competing property owners who receive no such subsidies. Government ought not skew the marketplace. Such cherry picking of winners is not only unjust; it also dilutes the efficiency of the marketplace.

Seneca One was unsuccessful at retaining its tenants. C’est la vie! It happens. While that might be a private financial catastrophe for Seneca One and its lender, it ought hardly be a concern for the broader public.

Robert F. Biniszkiewicz of Buffalo is a commercial real estate agent.