Saturday, July 14, 2012

Tenants face losing water if owners don't pony up for bill | Local & Regional | - Portland News, Sports, Traffic Weather and Breaking News - Portland, Oregon

Tenants face losing water if owners don't pony up for bill | Local & Regional | - Portland News, Sports, Traffic Weather and Breaking News - Portland, Oregon: Many people rent the town homes and pay their share of the water to landlords. Ultimately the bill is supposed to be paid by the homeowners association.

The owner of Leanette’s unit says she is paying her bills, but some other owners aren’t.

HOA members will not disclose who the deadbeat landlords are.

“I feel very disappointed about the situation happening over here,” said resident Jesus Amaro. “Some of us are paying our water bills and some are not.”

Keller homeowners say they've been shut out of association despite new state law | Arlingt...

Keller homeowners say they've been shut out of association despite new state law | Arlingt...: KELLER -- The Hidden Lakes Homeowners Association "fired" most of its volunteers without warning and is barring residents from board meetings after the developer began taking an active role on the board, some residents say.

Those residents also complain that the developer is using HOA money to pay for landscaping services from a developer-owned company instead of seeking bids and that it is using association money to make repairs that are the developer's responsibility.

And that may all be legal despite a new state law reining in homeowners associations.

Don't buy investor-government scheme - SFGate

Don't buy investor-government scheme - SFGate: Mortgage Resolution Partners brass argue that the power of eminent domain is well established, as long as local governments can point to a solid public use - in this case, preventing foreclosures.

Cornell law Professor Robert Hockett agrees. In the infamous 2005 Kelo decision, the U.S. Supreme Court ruled that local governments could seize private property for other private entities if there is a public purpose. In that case, New London, Conn., took the waterfront home of Susette Kelo as part of a redevelopment project anchored around Pfizer Inc.

Dana Berliner, an attorney for the Institute of Justice, which represented Kelo, said she believes the California Supreme Court would overturn any law allowing governments to seize mortgages because "it's a scheme by one group of securities investors to steal a bunch of money from another group of securities investors."

But what if Berliner is wrong?

"In California, there'll be very little that (governments) can't do," she said. "It would mean that eminent domain can be used to take from one group of people and give to another group of people to make a profit."
This novel use of eminent domain (previously blogged here by the perfessor and myself) will certainly generate litigation testing its limits as well as legislation to bar it if ultimately employed. From a practical standpoint, it's far from clear local governments using their powers of condemnation to cram down overmortaged properties will really solve their fiscal woes.  They have no control over the price of real estate and continued real estate deflation could undermine any perceived benefit.

There's a cynical adage that states, "privatize the gains, socialize the losses."  This tactic is the epitome of that.

Friday, July 13, 2012

Tyler Berding: Ponzi Scheme?

Ponzi Scheme?
"So how is this similar to the plight of community associations? Simple. The developer of a project creates a reserve program based on the false assumption that most components of a building have an infinite service life and will never need repair or replacement. The early owners (investors) pay into the venture (community association budget) at lower than necessary assessment rates. That not only attracts buyers to the initial sales offering but also, in turn attracts future buyers. Eventually the investors who are the owners when the underfunding is discovered are stuck with not only their share of the bill, but also the shares of all of the prior owners who underpaid their assessments for so many years and then sold off their interests. Not exactly a “Ponzi” scheme, but close."
Tyler Berding shows how the reasons for recent municipal bankruptcy filings are structurally similar to the financial time bomb that is built into many community associations--a must-read.  Thanks to Fred Pilot for the link.

California City Under Investigation Drained Reserve Funds - Bloomberg

California City Under Investigation Drained Reserve Funds - Bloomberg

Law enforcement officials are investigating possible crimes in San Bernardino’s city government, which almost drained special funds to prop up its budget.
The near-bankrupt state of the community of 209,000 east of Los Angeles came to light when a new finance director discovered that previous officials shifted money for workers-compensation and liability insurance to the general fund, said Andrea Travis- Miller, interim city manager.
“The city has relied on a whole variety of one-time measures to balance its budget,” Travis-Miller, who began her job in May, said yesterday. “There have been transfers to the general fund with the expectation that they would be repaid. That became difficult.”
San Bernardino's fiscal crisis is looking more and more like a case of mismanagement occurring in hard economic times in which they lost property tax revenues and also face a huge pension obligation. Thanks to Fred Pilot for the link.

Smoking Banned Inside Santa Monica Residences | NBC Southern California

Smoking Banned Inside Santa Monica Residences | NBC Southern California

"Smoking is already banned at beaches, parks, restaurants and near buildings in Santa Monica, but Tuesday night the city council sought to expand that prohibition and voted 4-2 to ban smoking for all new tenants of apartments and condos inside their residences – with one exception.

“It also requires existing residents to designate their units as smoking or non smoking and from then on it will be prohibited to smoke in a non smoking unit,” said Adam Radinksy, head of the Consumer Protection Unit in Santa Monica."
With condo buildings and apartment buildings going non-smoking, it seems that the People's Republic of Santa Monica has pretty much banned smoking. I guess if you can afford a single-family home in Santa Monica you can post a sign and smoke your head off, but that's a pretty ritzy real estate market.

Wednesday, July 11, 2012

Joe Nocera: Use eminent domain to take underwater mortgages

Housing’s Last Chance? -

"It is well documented that underwater mortgages have a high likelihood of defaulting — and, eventually, being foreclosed on. It has also been clear for some time that the best way to keep troubled homeowners in their homes is by reducing the principal on their mortgages, thus lowering their debt burden and more closely aligning their mortgage with the actual value of the home. Which is why Greg Devereaux, the county’s chief executive officer, found himself listening intently when the folks from Mortgage Resolution Partners came knocking on his door. They had spent the previous year kicking around an intriguing idea: have localities buy underwater mortgages using their power of eminent domain — and then write the homeowner a new, reduced mortgage. It’s principal reduction using a stick instead of a carrot."
This is a fascinating idea.  More here.

San Bernardino seeks bankruptcy protection -

San Bernardino seeks bankruptcy protection -

San Bernardino on Tuesday became the third California city in less than a month to seek bankruptcy protection, with officials saying the financial situation had become so dire that it could not cover payroll through the summer.
The unexpected vote came at the suggestion of the interim city manager, who said the city faces a $46-million deficit and depleted coffers...The city joins two others in California — Stockton and Mammoth Lakes — that have turned to bankruptcy in recent weeks to cope with their financial problems, albeit for different reasons."
San Bernardino has a population of over 200,000. The situation there is complicated because there are several different contributing factors to their financial plight, including a drop in property tax revenue, pension costs, bad development decisions, etc.

Herp Derp YouTube Comments | Tanner's Website

Herp Derp YouTube Comments | Tanner's Website
This is a YouTube extension that converts all comments to "herp derp."

Tuesday, July 10, 2012

Excite News - Report: Some lose homes over as little as $400

Excite News - Report: Some lose homes over as little as $400

WASHINGTON (AP) - The elderly and other vulnerable homeowners are losing their homes because they owe as little as a few hundred dollars in back taxes, according to a report from a consumer group.
Outdated state laws allow big banks and other investors to reap windfall profits by buying the houses for a pittance and reselling them, the National Consumer Law Center said in a report being released Tuesday.
Local governments can seize and sell a home if the owner falls behind on property taxes and fees. The process helps governments make ends meet at a time when low property values and the weak economy are squeezing tax revenue.
But tax debts as small as $400 can cause people to lose their homes because of arcane laws and misinformation among consumers, says John Rao, the report's author and an attorney with NCLC.
For those of us who know about condo/hoa foreclosure practices, this sort of thing is old news. The new part is that now tax farmers are doing it.

The Coasean Republic - Credit Slips

The Coasean Republic - Credit Slips

"At times I've joked to my classes about the possibility of a Coasean Republic, a state I call "Coase-istan" (or perhaps Kosistan), in which the entire world operates via private ordering.  In Coase-istan, government does, well, nothing except put service provision out for private bids.  Mail would be delivered only by private express companies like Fed-Ex.  Prisons would be privately operated. Executions would be contracted out to the highest bidder. Food and drug safety would be policed solely by private litigation, which would, of course, all go to arbitration. Deposits would be privately insured, if at all. Taxes would be collected by tax farmers. The borders of the Coasean Republic would be protected by an army of mercenaries. Health care or transportation? Pay your own way. Want to buy a baby or enter a lifetime personal service contract? Go right ahead...Now, it turns out that the joke's on me. Sandy Springs, Georgia is well on its way to becoming the Coasean Republic. Well, let's hope that Tiebout competition works." 
This is blog post on Credit Slips from law professor Adam Levitin, who is one of the sharpest analysts out there. What he calls "The Coasean Republic," I call "privatopia." Ronald Coase invented the Coase Theorem, which is at the root of much libertarian thinking.  The theorem supports the notion that government regulation of externalities is less efficient than private payments. Externalities are the costs of a transaction that are not born by the parties to the transaction, but instead are imposed on others. A hog farmer grows and sells hogs and we eat bacon. But anybody living near the hog farm has to deal with the air and water pollution.   The way Coase looked at it, instead of the government enacting a zoning law that prohibits you and your neighbors from setting up backyard hog farms, you should be free to do that unless your neighbors care enough about it to pay you not to do it.  So CC&Rs are better than zoning ordinances because they were individually negotiated by the neighbors to create the little private utopia that they enjoy so much, free from the meddlesome and inefficient interference of government.  Get it?  No?  You disagree? Well--Coase got a Nobel Prize, and as Fred Pilot would say, "So there!"

Worst TB outbreak in 20 years kept secret |

Worst TB outbreak in 20 years kept secret |

JACKSONVILLE — The CDC officer had a serious warning for Florida health officials in April: A tuberculosis outbreak in Jacksonville was one of the worst his group had investigated in 20 years. Linked to 13 deaths and 99 illnesses, including six children, it would require concerted action to stop.
That report had been penned on April 5, exactly nine days after Florida Gov. Rick Scott signed the bill that shrank the Department of Health and required the closure of the A.G. Holley State Hospital in Lantana, where tough tuberculosis cases have been treated for more than 60 years.
Florida Governor Rick Scott is, of course, not only Gollum's doomed younger brother.  He is also one of the Tea Party darlings who hates gubmint, taxation, and, it seems, public health services at or above the level of Somalia.  And has he ever given Floridians a present:  "Furthermore, only two-thirds of the active cases could be traced to people and places in Jacksonville where the homeless and mentally ill had congregated. That suggested the TB strain had spread beyond the city’s underclass and into the general population."

I can't wait to hear the libertarians explain how the free market will take care of public health programming.

Monday, July 09, 2012

Scranton moves ahead with minimum wage pay for city workers despite injunction - News - The Times-Tribune

Scranton moves ahead with minimum wage pay for city workers despite injunction - News - The Times-Tribune

In defiance of an injunction issued in Lackawanna County Court, hundreds of city employees will open their checks today to find they were paid only minimum wage for their work.

Amid Scranton's ever-deepening financial crisis, Mayor Chris Doherty said his administration is going forward with a plan to unilaterally slash the pay of 398 workers to the federal minimum of $7.25 an hour with today's payroll, insisting it is all the city can afford.
And then they came for the municipal employees, and I said nothing...