Saturday, July 24, 2004

Judge broadens class-action suit against law firm
Article Courtesy of the Sun Sentinel
By Joe Kollin
Posted Saturday, July 24, 2004
Some 1,176 owners of condos and homes in South Florida will be eligible to join a lawsuit seeking damages from a law firm that threatened them with foreclosure for not paying assessments to their associations.

California Pays Dearly for All That Borrowing
California has paid $230.7 million in fees to Wall Street investment firms over the last year — a largely hidden cost to taxpayers of the huge borrowings needed to keep state government afloat.

An examination of how officials managed the heaviest borrowing in state history shows that the fees and commissions California has paid were in some cases higher than those charged to other state governments.

On one massive loan, officials agreed to fees that were 42% higher per bond than Illinois had paid last year for a similarly large borrowing.

On another, California paid fees at a rate about 25% higher than Washington had paid in the mid-1980s while that state was being penalized for the costliest municipal bond default in U.S. history.

In all, California took on $27.4 billion in debt to cover past and present budget shortfalls. While about half of that amount has been repaid, the ultimate price for the financing could include as much as $8.9 billion in interest. And the state budget now awaiting action in Sacramento contemplates nearly $1 billion more borrowing later this year.

In case you were feeling guilty about your credit card statement, this should put it in perspective. $27.4 billion borrowed. $8.9 billion in interest...a mere 32.48% of the principal. What a bargain. Think about that the next time you see one of these grinning California legislators on the tube. Tar and feathers, anyone?
Bookkeeper pleads guilty to $230,000 theft

Susan Spencer-Wendel
Friday, July 23, 2004

WEST PALM BEACH -- The bookkeeper was such a nice young man -- clean-cut, polite, all yes-sir-yes-ma'am, so likable -- the retirees invited him to Easter dinner.

Meanwhile, Todd Demartine, 32, was raiding their homeowner association accounts, withdrawing thousands of dollars, buying things such as a WaveRunner and a Tiffany diamond ring.

Thursday, Demartine pleaded guilty to stealing more than $230,000 from his employer, Hawk-Eye Management, and accounts it handled. He worked almost two years for the Boca Raton company, which employs 15 and handles finances for condo homeowner associations in southern Palm Beach County.

Think of the possibilities. Here are the HOAs, run by volunteers who may or may not have any accounting or business background. Here's their money. Here sits the enterprising and perhaps dishonest bookkeeper or property manager. Who will notice if he or she takes a little off the top? There have been many reports of this sort of thing.

Tuesday, July 20, 2004

Las Vegas SUN: Redevelopment area could be expanded
Monica Caruso passed this along from Las Vegas. I wrote a paper that mentioned among other things the City of Las Vegas' use of a downtown redevelopment district to compete with the County for tax dollars. The new mega-casinos are on the Strip, which is outside the city limits in county jurisdiction, so that's where the tax dollars go. The redevelopment district is an effort to recapture some of that by using various mechanisms to attract money and rebuild the downtown casinos. Anyway, here's an article about what's underway--expanding the district.
The Las Vegas City Council on Wednesday will consider a resolution to expand the Downtown Redevelopment District to include three large parcels near downtown.

The move would allow projects improving those areas to tap into redevelopment incentives through 2031 and, if necessary, seek the use of eminent domain to take property from the current owners at fair market value.

Here's something scary....
Deadly Fairfax Fire Shows Growing Peril
By Eric M. WeissWashington Post Staff WriterMonday, July 19, 2004; Page B01

A tiny flame from a candle touched papers that melted vinyl siding and set off a fire that raced unnoticed up three floors. The blaze torched 18 condominiums, left three people dead and forced a man on fire to leap from a third-floor balcony.
Beyond the devastating personal tragedy, the fire in Fairfax County last weekend also highlighted a little-known danger in the Washington region and across the county, fire safety officials say: Houses are built too close together. Radiant heat from the fire in the Kingstowne section of the county nearly set ablaze another building 34 feet away.
"It was about ready to go over there, very close," said Fairfax fire and rescue's Peter J. Michel, lead investigator in the fatal blaze. "I'm surprised we only lost the three the other day."
Michel and other fire officials fear that entire blocks of houses could erupt in flames in a serious fire. National building codes allow single-family houses to be built just six feet apart. Increasing development pressure and the scarcity of land in metropolitan areas are resulting in more -- and larger -- houses built to minimum spacing standards.
Building suburban-style houses at an urban density could cause conflagrations that could devastate whole neighborhoods, fire officials warn.

I don't have a link to the whole story, but with the trend toward massive density (small lots) and the insistence on building as much house as possible in those little lots, the prospect for major fires is fairly obvious... 
Homebuilder goes deep into density - 2004-07-19 - Sacramento Business Journal
More evidence (see below) that builders go with condos and other CID housing because it allows higher density. And more evidence that the whole California housing market is so nuts that soon people will be paying a million bucks to live in a cardboard box.

John Laing Homes plans to increase its production by 52 percent next year by building most of its housing in projects that pack eight to 14 homes per acre.

Laing is Sacramento's No. 16 homebuilder, according to The Gregory Group, a company that studies the new-home market. The builder's move to erect 80 percent of its homes in such close-packed projects would make it among the first to commit so heavily to higher-density development, although Beazer Homes and KB Homes are also buying into the game.

The idea behind the move is to focus on those who want home ownership but can't afford today's price tags for a house on a big lot.

Laing's strategy is more evidence the market is changing in Sacramento. The region's days of ample and cheap land for building affordable homes with big yards are gone. Faced with a dwindling supply of land suitable for development, sold at skyrocketing prices, more builders will likely use Laing's approach.

Officials at Laing estimate they can slice as much as $50,000 from the price of a typical home by building in high-density projects that use less land. With revised home plans, most homes in the denser communities would sell for roughly $150,000 less than the average new-home price, pegged by The Gregory Group at $439,135 in Sacramento, Yolo, Placer, El Dorado, Yuba and Sutter counties.

Laing aims to increase its sales to 550 units next year from this year's estimated 360, said Kevin Carson, president of the company's Sacramento division.

The cost of elbow room: Traditionally, new homes in this region have been built at a density of five to six houses per acre. The average density in the four-county area is 5.7 lots per acre, about what it was in 2000, according to The Gregory Group.

But the price of land has doubled since 2000, noted Tom DeLucca, Laing's vice president of land development. That makes the old densities more expensive for builder and buyer alike.

Builders set to build record number of condos North County Times - North San Diego and Southwest Riverside County News
Fred Pilot sent this along. It is from north San Diego County, known locally as "north county." I lived there for quite a while, including a few years in Leucadia (now part of the city of Encinitas) and then my wife and I lived for three years in Cardiff-by-the-Sea, also now part of Encinitas. Anyway, it's one of the fastest growing parts of California, and that is saying something. Check out the condo construction in north county. It is a vast expanse of land, and there is room for lots and lots of new construction. The questions are, how on earth are these people going to be able to drive to work, given the traffic congestion that is looming? And where will their kids go to school? Little details like that...
With prices for new houses rocketing far out of reach for most first-time buyers in North County, local builders have abruptly shifted into the condominium market, setting off a construction boom that's poised to dwarf the condo craze of the mid-1980s.

After several years of focusing on high-end, detached houses, builders are finding strong demand and record sales for attached homes, which can be packed onto lots at 30 homes per acre.

The average price of a new condo reached $473,000 countywide in the second quarter, up 21 percent from the previous three months, according to a report Monday by MarketPointe Realty Advisors, a research firm based in San Diego. Along the Highway 78 corridor from Oceanside to Fallbrook, new condos sold for an average $395,000, up 18 percent from the first quarter.

What's more, sales are likely to set a record this year, with 4,904 attached homes sold in the first half. As recently as 2002, builders were selling fewer than 300 condos in a three-month period. The industry is considered certain to build 9,000 or more this year, easily surpassing peak production of 6,164 units set in 1985.

"We're really seeing an explosion in the attached housing market," said Russ Valone, president of MarketPointe. The firm calculates a weighted average of new-home prices to reduce the statistical effects of a few very expensive or low-priced homes sold each quarter.

Valone also had sobering news for buyers of new houses. The countywide average price for single-family, detached homes was a record $713,000 in the quarter ended June 30, up nearly 10 percent in a single quarter. The average size was 2,739 square feet.

In the north coastal region, which extends in the MarketPointe report from La Jolla through Carlsbad, the weighted average price for a new house was $975,000, up just 1 percent. In the Highway 78 corridor, the average was $662,000, up 13 percent from the first quarter.

Although prices shot higher, sales of new houses declined amid extremely tight supplies to 1,643 homes in the second quarter, or 37 percent of total home sales in the county.

Some builders say the prospect of rising mortgage rates prompted them a year or two ago to find ways to build more houses at lower costs to hedge against the possibility of crumbling demand for the high-end homes that have dominated the industry in recent years.

"I think that people are going to be buying less expensive housing and not more expensive housing if interest rates go up," said Greg Gallagher, vice president of land acquisition for Greystone Homes, the Carlsbad-based unit of industry giant Lennar Corp.

There's more--read the whole thing.