KeNo's Housing and Economic Portal: Friday April 9 Housing and Economic stories

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Houseowner associations block guests - (www.orlandosentinel.com) Melissa Solis said she understands that she can't use her community pool or clubhouse because she's late paying her homeowner-association fees. But it's unfair, she said, that security guards at the gated entrance to her neighborhood prevent her friends, family, babysitter and even the delivery man from Winter Garden Pizza Co. from getting to her home. They wouldn't even allow her mother-in-law inside the gates for a family birthday party. Instead, she has to meet her visitors outside the community's entrance, pick them up and drive them inside in her car. Unlike residents who are current with their fees, even Solis cannot enter through the automatic gates; she must instead get the guard's approval to access her home. "I think it's more them trying to humiliate us," said Solis, who works in food services. "It's very embarrassing for our daughter. She's 10 years old, and she doesn't understand that the economy is tight and Daddy doesn't have a job." Stoneybrook West's guard-shack standoff underscores the mounting frustration of homeowner and condominium associations in the Orlando area and across Florida. Many associations face mounting delinquency rates of 30 percent to 50 percent, in a state with one of the highest foreclosure rates in the country. As state legislators meet in their annual session this month and next, they will consider several bills designed to ease the financial woes of homeowner and condominium associations.

Vallejo struggles to keep city safe during bankruptcy - (www.kalwnews.org) It was just about two years ago that the city of Vallejo declared bankruptcy and started hacking away at its public services. Just last month, in the wake of heavy cuts to Vallejo’s police force, a wave of violent crimes gripped the town, leaving cities all over the Bay Area wondering what toll budget cuts can take. What happens to a city when it’s reached the brink? Reporter Adelaide Chen has this story.

ADELAIDE CHEN: On any given night, about ten police officers working the swing shift patrol the streets of Vallejo. On a recent Wednesday, one of them was Officer Drew Ramsey. It was almost two years ago that Vallejo went broke. Literally. When it declared bankruptcy, it was the first ever for a California city of over 100,000 residents. At the time the police department had nearly 150 officers. Today Ramsey is one of a hundred--half of what you’d find in a Bay Area city with a similar size.

DREW RAMSEY: It’s not just the police department. The whole city has been affected by the bankruptcy. Everything gets cut. Our roads are not being paved when they should. Fire department is cut. Police department is cut. Schools are cut. Parks are cut. Just basically everything. Ramsey says he hasn’t seen an increase in his paycheck since the bankruptcy. Luckily, there is one on the horizon, but not everyone is looking forward to it.

In Phoenix, Real Estate Downturn Hits Commercial Properties - (www.nytimes.com) Perhaps it was just a matter of time, but three years after this city’s housing market collapsed in spectacular fashion, commercial real estate has followed it off the cliff. The average price paid for office space in the Phoenix metro area tumbled more than 50 percent last year, from $205 a square foot in 2008 to $102 a square foot in 2009, according to data compiled by Kammrath & Associates, a local real estate analysis firm. Retail and industrial space underwent similar declines. “Prices are falling like a stone,” said Bob Kammrath, who has studied the commercial market in Phoenix since 1981. “I see them going lower.” The recession has been the main instigator of the crash, but overbuilding and speculation set the stage. In a mirror image of the housing bubble, relaxed lending standards and a boom mentality prompted the construction of hundreds of offices, shopping centers, industrial buildings, hotels and apartments from 2005 to 2009 — about 86.5 million square feet of new commercial space in all, according to research by CB Richard Ellis. In 2006, when growth peaked, about 30 percent of the Phoenix area’s economic output was tied to real estate and construction. So it was not long after the once white-hot housing market fell apart, in 2007, that the rest of the city’s economy stumbled, and hard. As jobs in construction and real estate dried up, and stock market losses curbed the relocation of retirees from the north, in-migration to the city radically slowed. Commercial brokers blame a confluence of factors for the worst downturn in memory: rampant overbuilding, a national economic crisis, spiking unemployment and a near halt in population growth. The result is visible all over the city in the form of empty storefronts and “for lease” signs affixed to office buildings.

Alameda land-use ruling could lower cost of a house in CA - (www.sfgate.com) When an Alameda County judge this month ruled that Pleasanton must loosen its development rules to allow large amounts of new housing for all income levels, he sent a message that could ricochet around the state. The ruling by Superior Court Judge Frank Roesch found the prosperous city of 68,000 at fault for a voter-approved cap on the number of housing units allowed within its borders. Roesch based his decision on a California law that requires cities to make land available to accommodate their share of regional housing needs - and that is a standard that most municipalities don't meet. If the Alameda decision stands, and if other cities face legal challenges, the result could reshape the landscape of California suburbs and small cities - conceivably forcing them to reconsider height limits or increasing the density in their downtowns. "The next few weeks, everyone is going to take a look at this and see what it might mean," said Cathy Cresswell, the deputy director for housing policy development at the state's Department of Housing and Community Development. "Some might want to take another look at how they've addressed this very important state requirement."

Caterpillar: Health Bill Would Cost Company $100 Million - (www.foxnews.com) Caterpillar Inc. said the proposed overhaul of the U.S. health-care system could increase its costs by $100 million, signaling disquiet in corporate America about the controversial plan. The heavy-equipment maker's concerns are focused on the potential loss of subsidies to prescription drug costs it covers for retired employees. In a letter Thursday to House Speaker Nancy Pelosi (D., Calif.) and House Republican Leader John Boehner (R., Ohio), Caterpillar urged lawmakers to vote against the plan "because of the substantial cost burdens it would place on our shareholders, employees and retirees." The company said the potential extra costs would primarily come from provisions to tax the federal subsidies the company now receives for providing prescription-drug benefits to retirees and their spouses. Since the Medicare drug program was enacted in 2003, Caterpillar and more than 3,500 companies that already provided drug benefits for retirees have received tax-free subsidies from the federal government as an incentive to maintain their drug programs.

How to lose $222 million in real estate - (lansner.freedomblogging.com) The vision was to create “the best of living in a condo and living in a hotel”– all just a short drive from South Coast Plaza and the Orange County Performing Arts Center. “We’re defining what urban living should be in Orange County,” Curt Olson, owner of the Nexus Cos., said of Skyline at MacArthur Place in a 2007 promotional video. Nexus valued the property at $350 million. But none of the 349 units ever sold. Nexus Cos. lost the property to foreclosure. Two weeks ago, the lender sold the project for $128 million — a $222 million loss, or about 37 cents on the dollar. The new owner, Essex Property Trust, will convert the condo towers into high-rise apartments. The 25-story twin towers became the fourth tallest buildings in Orange County’s skyline. One Essex executive predicted that the newly renamed Essex Skyline at MacArthur Place will be the nicest apartments in the county. A look back through the Register archives shows how the developer originally envisioned Skyline, and what became of that dream: