On the topic of hedge funds and bad real estate deals… Look at Stuyvesant Town in NYC and the big boys who bought it – then backed out of the deal, leaving CalPers, among others, holding the bag.

http://www.npr.org/2013/04/03/175511949/the-botched-ny-real-estate-deal-that-lost-other-people-billions

Not local… but it could happen on a smaller scale here.