KeNo's Housing and Economic Portal: Wednesday February 24 Housing and Economic stories

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TOP STORIES:

Colton considering cost of disbanding fire department, contracting out - (www.sbsun.com) In the latest effort to find better - and cheaper - ways of operating, Colton officials are exploring the possibility of disbanding the city fire department and contracting with an outside agency. The City Council unanimously approved contracts totaling $187,570 with San Francisco-based consulting firm Harvey M. Rose Associates, LLC to perform "operational performance audits" of the Fire Department and Colton Electric Utility. A work plan for the fire audit states auditors will evaluate alternatives for paramedic services, such as "private and/or public service providers." The costs and benefits to contract with CalFire, the state's fire agency, the San Bernardino County Fire Department and nearby cities will be analyzed, the plan states. "I'm going to have to look at all the options here very close," said Councilman David Toro. "The people of Colton are going to expect that same level of service. If there's a cheaper way of doing it, that may be an alternative we're going to have to take a good look at." The city's fiscal woes are well known. The recession has forced the closure of many businesses, resulting in huge drops in sales tax, the city's top income source. State adjustments have further dwindled sales tax income. Some residents and council members say mismanagement by former top administrators has exacerbated financial troubles. Over the past 12 months, the city's work force has been slashed to deal with multi-million dollar deficits. About 90 employees were laid off or had their contracts severed and 16 employees have accepted early retirement offers to save the city money. The city's fire union and other employee groups have accepted pay cuts and other salary and benefit concessions to cut costs. New City Manager Rod Foster, who began his tenure in December, proposed the audits so an unbiased outside source could evaluate the fire and electric departments for efficiency and provide recommendations for increasing revenue to help fund city services. Both audits will begin this week and should be completed within three months, Foster said. The hope is that the audits will provide several recommendations that will save money to help close a $950,000 deficit city officials have projected at the onset of the fiscal year that begins July 1.

Mortgage Bankers Association Sells Headquarters at Big Loss - (www.washingtonpost.com) Even the pros are taking a beating. The Mortgage Bankers Association, its membership expert in real estate, sold its $90 million headquarters in downtown Washington on Friday for $41 million. The three-year-old, 10-story building at 1331 L St. NW -- built just before the office market soured -- was bought by the CoStar Group, a commercial real estate information firm that plans to move its headquarters from Bethesda to the District. The city, which has been negotiating with CoStar for several months, offered the company a $6 million break on its property taxes to lure it from Maryland. "We have a huge demand for space for our headquarters. This was too great an opportunity to pass up," said Andrew Florance, chief executive of CoStar Group. "It's a quality building at a rock-bottom price," he added. "We think we'll save tens of millions of dollars over the next decade." The sale comes as commercial real estate troubles are rapidly multiplying in the Washington area. At least 20 percent of commercial properties in the region are worth less than their mortgages, experts say, compared with less than 1 percent before the recession. The Mortgage Bankers Association moved into the building in 2008 just as the real estate market was crashing, and ended up paying millions of dollars more when interest rates rose. Moreover, the leasing market slowed considerably and the association had trouble getting other tenants into the 168,000-square-foot building.

Unions Threaten More Strikes Against Greek Govt - (www.cnbc.com) Greek civil servants warned on Monday they could call more strikes if the Socialist government unveils tough austerity measures to cut its deficit and ballooning public debt. The ADEDY public sector union already plans a 24-hour strike on Wednesday as Prime Minister George Papandreou puts the finishing touches to a deficit-cutting plan, endorsed by the European Commission to pull Greek finances back from the brink. His socialist government has promised to tighten one of Europe's leakiest tax systems and freeze public sector wages in a bid to slash Greece's deficit from 12.7 percent last year to below the EU's 3 percent ceiling by 2012. "We will strike on Wednesday to defend our dignity, to put an end to our sacrifices on the altar of financial markets. These are pointless sacrifices," ADEDY President Spyros Papaspyros told a news conference.

Saugatuck Township asks voters to approve new tax to fight lawsuits seeking lower property taxes - (www.mlive.com) A ballot referendum for an 0.5 mill, two-year levy to build a $205,000 budget for fighting land issue in court will face township voters on the May 4 ballot. Township Board Trustee Jim Hanson said lawsuits by developers and people who trying to get property taxes reduced are draining the township's budget. During 2008-09, the township spent nearly $50,000 defending its regulations. This year, it has already chalked up $45,000 in legal fees to fend off a 40 percent tax reduction case brought by Singapore Dunes LLC on a $20 million piece of land that was formerly of the Denison estate. "If our voters want us to continue defending our land use policies and fair taxation, they're going to have to let us know by voting for this millage," Trustee Chris Roerig said. If approved, the millage would cost homeowners $50 a year on a $200,000 market value home.

European Central Bank in a Squeeze - (www.nytimes.com) ther he likes it or not, Jean-Claude Trichet is not just the president of the European Central Bank. Mr. Trichet, 67, is also the de facto president of Europe, at least for the 16 nations that rely on the euro as their common currency. On paper, the European Union has just established a new president in Brussels, and the central bank’s sole responsibility is to keep inflation in check. Moreover, the bank, based here, has almost no formal policy tools to help an ailing member country like Greece. But as investor alarm about Greek, Spanish and Portuguese indebtedness increases, the crisis has highlighted the fundamental weakness of the European monetary union. With no strong political arm to ensure that members observe debt limits set by treaty, the responsibility falls to Mr. Trichet to try to resolve the crisis. In the current situation, said Jörg Krämer, chief economist at Commerzbank in Frankfurt, only the bank’s president “has the authority and the expertise” to manage the situation.

TrimTabs: Here's Why The Real Jobs Loss Number Was 5x Worse Than What The BLS Reported - (www.businessinsider.com) TrimTabs thinks the jobs data was MUCH worse than what the numbers suggested this morning. TrimTabs employment analysis, which uses real-time daily income tax deposits from all U.S. taxpayers to compute employment growth, estimated that the U.S. economy shed 104,000 jobs in January. Meanwhile, the Bureau of Labor Statistics (BLS) reported the U.S. economy lost 20,000 jobs. We believe the BLS has underestimated January’s results due to problems inherent in their survey techniques. In addition to their regular report, the BLS published benchmark revisions to their employment estimates derived from an actual payroll count for March 2009. As a result, job losses from April 2008 through March 2009 were revised up a whopping 930,000, or 23% from their earlier revisions. In addition, the BLS revised their job loss estimates for 2009 up 617,000, or 14.8%. While the BLS originally reported job losses of 4.2 million in 2009, TrimTabs reported 5.3 million, a difference of more than a million lost jobs. We consistently reported that based on real-time tax data, job losses were much higher than the BLS was reporting. This past January, the BLS revised their job loss estimate to 4.8 million, an increase of almost 600,000 lost jobs. The new total brought the BLS’ revised estimates much closer to TrimTabs’ original estimate based on real-time tax data.

OTHER STORIES:

Is Trichet the De-Facto President of Europe? - (www.cnbc.com)

Pimco Prefers German Bonds to US Treasurys - (www.cnbc.com)

World's Tallest Tower Lookout Suddenly Shut Down - (www.cnbc.com)

CIT Group Picks John Thain, Ex-Merrill Boss, as New CEO - (www.cnbc.com)

CVS Caremark Profit Tops View; Sales Fall Short - (www.cnbc.com)

Hasbro Profit Beats Street; Sees Growth in 2010 - (www.cnbc.com)

Testy Conflict With Goldman Helped Push AIG to Edge - (www.cnbc.com)

Toyota to Extend Recall to 2010 Prius Model Soon - (www.cnbc.com)

Corporate Bond Spreads Rise Most Since November: Credit Markets - (www.bloomberg.com)

Ailing securitisation market hits Citi asset sales - (www.ft.com)

Stock investors see threats from all directions - (finance.yahoo.com)