Wednesday, February 18, 2015

Reform the condominium

This op-ed by urban planning professor Matthew Lasner follows on the hells of a series the New York times published on a bizarre trend in the condo market:  very rich people, some with shady backgrounds, buying condos in NYC behind shell companies so nobody knows who they are.  Even the condo association doesn't know who the owners are. And the city has been subsidizing this trend because they want more rich people having their pied a terre in New York City. There's a lot more wrong with the condo model than this op-ed describes, but for a short piece it is excellent.
"FROM New York to Miami, from South Padre Island, Tex., to Park City, Utah, the American condominium has become the hot new investment for global capital. In Manhattan, the trend is so pronounced that a whole new category of real estate has emerged around the southern edges of Central Park: supertall, ultraluxury buildings, with more than half of the homes being sold to anonymous buyers (some perhaps looking to stash ill-gotten gains) who rarely, if ever, occupy them. The city, meanwhile, struggles to produce sufficient housing for those who do live here."

Monday, February 16, 2015

State of Florida subsidizes golf course conversion

This raises some interesting benefits to being a real estate developer in these supposedly "free market" states.  Everybody is supposed to pull him/her self up by bootstraps we don't have except developers, bank, insurance companies, auto manufacturers, and on and on.  It would be one thing if these boondoggles worked, but often it turns out that projects like these are risky and would never be built if the developer couldn't offload a huge tax burden on the rest of us.  For example, as the article points out, the market for golf course developments is old people.  Then there is the environmental risk of such developments, which many buyers are reluctant to bear.  Thanks to Deborah for this link.

"The rolling fairways at DeLand Country Club are about to become shops and houses with the help of state incentives to clean up polluted areas known as brownfields. Developers say Florida's tax credits were essential in transforming the weedy course into Country Club Corners shopping center, anchored by a Publix. It's one of a handful of Florida golf courses that have been redeveloped with financial assistance from the state, and it could signal redevelopment opportunities for owners of struggling and closed courses....State-designated brownfields are a "redevelopment tool" aimed at sparking construction, jobs and green space, according to the Department of Environmental Protection. In exchange for cleaning up a site, developers get corporate-income-tax credits, which they can sell. Developers' incentives increase if they build affordable housing and health-care facilities on brownfield sites. In addition, the state allows $2,500 for every job created on the property and breaks on sales taxes for construction materials."