Friday December 25 Housing and Economic stories

KeNosHousingPortal.blogspot.com

TOP STORIES:

Eminent domain case haunts New London after Properties Confiscated in 2005 sit Vacant and Pfizer Shuts Down Plant - (www.nhregister.com) Connecticut was one of the last states to revise its eminent domain law after the U.S. Supreme Court upheld New London’s taking of 15 homes in its Fort Trumbull neighborhood to clear the way for a private developer’s mixed-used project. The 5-4 ruling in 2005 stretched the use of public takings from those for public uses, such as highways, to takings for public purposes like private development that add to a community’s tax rolls. The ruling, which upheld a Connecticut law, provoked a national uproar. Many states passed laws barring use of eminent domain for the profit of private developers. At the same time, cities in California and Ohio tried to use the ruling to take a church and homes so developers could build a big box store, a theme park and condominiums. In 2007, Connecticut’s legislature passed a law that prohibits municipalities from taking property just to increase tax revenue and includes other minor checks on potential abuses by influential development interests. The law also created an ombudsman to handle eminent domain issues that especially served small property owners with few resources. The ombudsman’s office was cut from the state budget this year just weeks before Pfizer announced it was closing its $294 million research building in New London. It was Pfizer’s move to land adjacent to Fort Trumbull that sparked the eminent domain battle. A Boston developer wanted to level the neighborhood to make way for a hotel-conference center, condominiums and research space. The developer claimed his project would produce some 3,100 jobs and $1.2 million in annual tax revenue. Fort Trumbull’s homes were demolished after the Supreme Court ruling, but the development plan collapsed. Four years later, the 90-acre tract remains largely barren, with little prospect of renewal. It will soon be joined by Pfizer’s huge, vacant and difficult-to-market building. Without the club of eminent domain, the final outcome might have been happier. Instead of bulldozing the homeowners, the developer would have had to accommodate the homes in his plans. Even though the development plan failed, a neighborhood would have been saved.

CNET Founder facing million-dollar foreclosure - (www.readthehook.com) Halsey Minor, the raised-in-Charlottesville entrepreneur whose successes include Salesforce and CNet but whose recent forays into jet-buying, hotel-building, and horse-racing appear to have taxed his voluminous coffers, is now going through something that’s becoming all too common in recession-racked America: foreclosure. But there’s nothing common about Fox Ridge Farm. A 205-acre spread with a brick mansion, spectacular Blue Ridge views, and one of Albemarle’s largest equestrian barns, the Farm will be sold December 21 on the steps of the county courthouse— unless Minor’s Fox Ridge Farms Holdings LLC makes good on the loan he put against the Free Union-area property earlier this year. Minor is the owner of the unfinished Landmark, a 101-room Downtown Mall luxury hotel now mired in liens, litigation, and sheets of Tyvek flapping in the breeze. Late last month, a Charlottesville judge, while granting Minor the right to refile his suit against former developer Lee Danielson, called the litigation a “nightmare.” As for Fox Ridge, it was a dream home early in the century to Minor, his first wife, and first three children before a return to multiple dwellings on the West Coast. A planned equestrian operation appears moribund, although Minor has donated the use of the multi-cupolaed barn for several charity balls. Minor says the loan came from local investor Mark Giles “and whatever individuals he may be affiliated with,” but Giles, the founding president of Virginia National Bank, declines comment. “I never talk about private transactions ever,” explains Giles. Public records indicate that, in April, attorneys for the Harrisonburg office of the Lenhart Obenshain law firm served as trustees for what appears to be the Giles loan, a cool one million dollars. A search of the County’s building permit database shows no construction activity for several years at Fox Ridge Farm, but there’s no taboo against squeezing cash from one’s equity. There is, however, a taboo against not paying one’s bills. “He may have stopped paying, or he was light with his payments somewhere along the line,” says Charlottesville real estate expert Wallace S. Gibson. “And then somebody, rather than taking his okay-I’ll-pay-you-next-Tuesday, got scared, and foreclosed.”

Rothstein Charged, Held Without Bail In Ponzi Scheme - (www.msnbc.msn.com) A noticeably in-shape Scott Rothstein appeared before a federal judge this morning where he was formally charged with five counts related to a massive, $1.2 billion Ponzi scheme. In a tight t-shirt and designer jeans, Rothstein appeared before Judge Robin Rosenbaum in a U.S. District Courtroom in Fort Lauderdale just after 11 a.m. Rothstein showed little emotion throughout the hearing while still wearing the handcuffs placed on him when he was scooped up by the FBI early this morning. Wife Kimberly was noticeably absent from the hearing. Prosecutors charged the 47-year-old former lawyer with wire fraud, mail fraud, racketeering, conspiracy to commit fraud, and conspiracy to commit money laundering. The complicated case against Rothstein was outlined by prosecutors, who charged that he used his lawfirm -- Rothstein Rosenfeldt Adler -- to bilk investors out of over $1 billion in a scheme dating back to 2005. Prosecutors allege that Rothstein used the funds from the scheme to fund his lifestyle of excess. Agents are seeking through legal filings to seize Rothstein's 20 luxury cars, a handful of homes in Florida, New York and Rhode Island, a half-dozen boats, millions in cash and bank accounts and other expensive nik-naks, including a 300+ jewelry collection and Rothstein's guitar and sports memorabilia collections. Rothstein, who ran a host of businesses and donated millions to local charities, schmoozed with several high-powered politicians including Florida Governor Charlie Crist. Calling it a "classic Ponzi scheme," prosecutors alleged that Rothstein used his law firm office -- a veritable fortress -- to project legitimacy as he scammed investors out of hundreds of millions. Sensing his scheme was collapsing, Rothstein, according to prosecutors, fled to Morocco in October, but not before wiring $16 million to the country and taking another $400,000-$500,000 with him. Though Judge Rosenbaum gave Rothstein credit for returning to the country to face the music, he was ordered held in pretrial detention, considered to be a flight risk. The only words Rothstein spoke were after Judge Rosenbaum asked him if he understood the charges against him. "Yes, your honor," he said.

Woman Who Dodged Foreclosure Locked Out of Home - (money.cnn.com) A New Jersey woman returned home from Thanksgiving with family to find the locks changed days after she avoided foreclosure. Bank of America says it made a mistake. Nina Morra was locked out of her fully furnished Trenton home for three days by an inspector hired by the bank. The 57-year-old was away when the inspector showed up on Nov. 22. Bank of America spokeswoman Jumana Bauwens says the inspector changed the locks because he thought the dwelling was vacant. Morra had received a letter from the bank days earlier saying she had been accepted into a new payment program. The bank spokeswoman says she thinks the lockout occurred because the timing was so close. Morra became delinquent on her mortgage when she suffered a stroke in January.

Cash-short Ariz. maxes out new line of credit - (www.azcentral.com) The state's cash-flow problems are so dire that it took less than two weeks for government to tap the entire $700 million loan it had borrowed to help with short-term needs. State Treasurer Dean Martin on Wednesday said that means the state will have to revert to some internal borrowing to keep money flowing in the state's checking account. The shortage developed when the Treasurer's Office had to make a Dec. 1 payment of $389 million to the state's schools, which exceeded the cash on hand. To make up the difference, Martin borrowed $73 million from internal state accounts. Those amounts will be replenished as tax collections roll in. On Nov. 19, the state finalized a loan agreement with Bank of America for $700 million, the first time since the Depression that Arizona has needed to turn to an outside borrower.

Abandoned Brooklyn: Property Developers Pull The Plug - (www.businessinsider.com) A couple of years ago, the North Brooklyn property market was one of the hottest areas in a city that was one of the hottest in the country. Developers and homeowners alike had visions of quick flips and quick fortunes. But, contrary to some expectations, the area would not prove to be immune from the bust. Not only have many developments proven to be a financial bust, many developers have cut and run, abandoning projects midway through development. The Observer noted this trend on Summer. The New York Department of Buildings keeps an updated list of "stalled" projects throughout the New York City. This weekend, we set out to discover what these stalled projects look like. Take the tour >>

24 States Borrow Money To Pay Unemployment Benefits - (globaleconomicanalysis.blogspot.com) 15 states have collectively borrowed more than $15 billion and another 9 states are in the red over unemployment benefits. Please consider Jobless claims put state in debt. North Carolina's high unemployment rate has stuck the state with $1.4 billion in debt - money that officials don't know how they'll pay back. It gets worse. The debt is still rising. The problem is that with about 500,000 people out of work, the state has more unemployment claims than it can pay. So it has been borrowing from the federal government since February, sometimes as much as $20 million a day. The tally will rise to at least $2billion by the end of the year, said David Clegg, deputy chairman and chief operating officer of the N.C. Employment Security Commission. Next year, depending on the economy, could add another $2 billion to the tab, he said. For purposes of comparison, the state budget for the current fiscal year is $19 billion. Let's do the math. The state budget is $19 billion. Potentially $4 billion will be borrowed to pay unemployment benefits. In other words the state is borrowing an amount equal to 21% of its total budget just to pay unemployment benefits. Wow. Only five states have borrowed more than North Carolina. Altogether, seven states have borrowed more than $1 billion each - more than $15 billion collectively - to shore up their unemployment insurance systems, according to the U.S. Department of Labor. A total of 24 states plus the Virgin Islands have borrowed money from the federal government. Many states "are in pretty dire straits right now," said Ingrid Evans, unemployment insurance director at the National Association of State Workforce Agencies. The best hope for North Carolina, said Clegg, is for Congress to forgive a portion of the debt, if not all of it. Another solution would be to raise the tax on employers that funds jobless benefits. Indiana, which owes about as much as North Carolina, recently took that move, but North Carolina officials worry it would increase financial pressure on businesses when they can least afford it. "I would love to hear some U.S. Department of Labor official explain how they expect the states to pay billions of dollars from an employee base which is, at best, 20 percent smaller than it was before the recession started," Clegg said. I guess Clegg did not hear Obama's plan to create or save 3.5 million jobs. Then again, the economy has lost about 9 million jobs. Of course the economy needs 100,000 jobs per month just to keep up with demographics (birth rate and immigration).

OTHER STORIES:

Estate tax: Cancel the death knell - (money.cnn.com)

Taxes, taxes everywhere - (money.cnn.com)

Nesting is the new flipping - (money.cnn.com)

Bernanke faces fire at confirmation hearing - (money.cnn.com)

English central banker calls for 'bubble tax' on houses - (www.telegraph.co.uk)

Australia Increases Benchmark Interest Rate to 3.75% - (www.bloomberg.com)

Why Wells Fargo hasn't paid U.S. back - (money.cnn.com)

Las Vegas House Prices Fall 34% on Foreclosure Sales - (www.bloomberg.com)

Foreclosures again rising in El Paso County, CO - (www.newsfirst5.com)

In FL mortgage fraud hot spot, agency sets example - (www.heraldtribune.com)

The Jobs Imperative - (www.nytimes.com)

Systemic Risk and Fannie Mae - (www.online.wsj.com)

BofA prices offering for bailout payback - (money.cnn.com)

Enron, welcome to Broadway - (money.cnn.com)

First new uranium mill since the Cold War - (money.cnn.com)

Big bank accounting yet worse than Enron's? - (www.commondreams.org)

US commercial property loan defaults soar - (www.reuters.com)

Dubai events hint at more pockets of financial rot - (www.atimes.com)

In Wake of Dubai, Trying to Predict the Next Crisis - (www.nytimes.com)

Another 'Extreme Makeover' Family Facing Foreclosure Through Own Choices - (tv.yahoo.com)

American House-Owning Dream On Life Support - (www.huffingtonpost.com)

As housing falls, so falls the economy - (www.marketwatch.com)