Saturday, March 29, 2008

The finance and politics of Marco Rubio, by gimleteye

The Miami Herald reports that House Speaker Marco Rubio failed to report in financial disclosures required by law a $135,000 home equity line of credit based on an appraisal far in excess of the home’s 2005 purchase price. (“Rubio home equity loan questioned”, March 29, 2008, reprinted below.)

There are enough threads in this story to weave a book about the underlying politics of the biggest economic crash in modern Florida history, and they all tie back—in this case—to platted subdivisions in farmland. That business model is central to the wealth, business lines, and board members of US Century Bank in Miami, the institution that made the loan, unreported by the Speaker of the Florida House.

Sergio Pino, the chairman and founder, has the final word in the first installment of this Herald story, “I assure you everything is in order… we’re not involved in politics. My bank is not involved in politics.”

And so, too, the sun rises in the west and sets in the east.

Pino, Rodney Barreto, and Jose Cancela—those are only three of the board members identified in the Herald story-- are widely known for lobbying the county commission on a host of matters, including zoning or Miami International Airport.

On face value, the deal Century made with Rubio sounds like any other excess of appraisal/mortgages that cumulatively had a devastating effect on the mortgage business and, like dominos toppling all the way to Wall Street, risking the security of the US economy.

Here is what becomes clear from the Century bank loan to Rubio: first of all, what is behind the talk about Rubio taking on Mayor Carlos Alvarez in the November election, and second, why the House Speaker is bottling up reforms proposed by the Florida Department of Community Affairs Secretary Tom Pelham.

By illuminating the latter point, the first will become clear.

In response to a citizen’s state-wide referendum initiative, Florida Hometown Democracy, DCA Secretary Pelham has been trying to move new legislative ideas forward to tame the worst abuses of suburban sprawl. It is exactly sprawl that US Century Bank and its board members in Miami hold as model economics.

The target of citizen’s anger is the way that counties and municipalities, controlled by lobbyists such as well-represented on the board of US Century Bank, routinely amend growth management plans required by the State of Florida. One such example is the requirement in Miami-Dade county to maintain the Urban Development Boundary.

Land speculation during the frenzy of the building boom created massively inflated values in farmland outside the UDB in Miami—land whose value is frozen for investors such as those represented on the board of US Century Bank. In some cases, land worth only a few thousand dollars before the boom had escalated to nearly $1 million an acre.

The St. Pete Times editorial page writes today, of new legislative proposals to assuage the anger of Floridians about the wages of suburban sprawl, bottled up by House Speaker Rubio:

“Community Affairs Secretary Thomas Pelham is doing his best to find a middle ground in this increasingly polarized debate. He has found some support in the Senate Community Affairs Committee, which is examining a bill that would take aim at one of the law's clear abuses. Cities and counties were required to adopt growth blueprints, but they have turned around and changed those plans so often — roughly 12,000 times last year — as to make them meaningless. The point of the plan was to guide development, not merely to serve as a starting point.

The limit on plan changes is one of several ideas Pelham has introduced in an attempt to address legitimate concerns about how growth laws have been abused. But, almost halfway through the session, Rubio's House has shown little interest. Some House members are parroting the line offered by development lobbyists, saying the state can't clamp down during a weak economy. But this may be a particularly opportune time to bring more certainty to growth regulations. The market slump, not growth regulation, is what has slowed new construction. This pause, as demand catches up with supply, offers a chance to chart an orderly course on future development.”

There you have it: the interest on Rubio’s home equity line of credit is allegiance to the goals of sprawl boosters, who made sure that local supervisor of elections offices around the state of Florida failed to count all the petitions gathered by Florida Hometown Democracy, so that the 2008 election in November would be free from any examination of the political origins of the housing market crash.

Instead, there will be another sort of election—at least, here, in Miami-Dade if Marco Rubio runs for Mayor Carlos Alvarez’ seat.

You see, Mayor Alvarez has steadfastly opposed the movement of the Urban Development Boundary. For a long time, it has been clear that Alvarez’ position incurred the enmity of investors, like those on the board of US Century Bank, whose speculative land purchases are worthless until the underlying zoning changes—and act requiring an affirmative supermajority vote of the Miami Dade County Commission that will withstand a mayoral veto by Alvarez.

So the picture should be clear, now. Marco Rubio is the new Alex Penelas, the former Democratic mayor who was elected through the financial support of the Latin Builders Association and their dreams of planting new subdivisions in farmland.

Apparently nothing has changed, except for the mere fact of the worst housing market in modern history—an economic calamity that was fed and fostered by ill-advised development machinery, including the strong-arming of political processes, all of which contributed to the greatest jeopardy to the US economy since the Great Depression.

It is too bad, really, that a little home equity line of credit is the pulled thread that unravels the whole fabric, but Florida really isn't so hard to understand when the mainstream media does its work well.

11 comments:

Anonymous said...

Posted on Sat, Mar. 29, 2008
Rubio home equity loan questioned
BY GARY FINEOUT, SUSANNAH A. NESMITH AND ROB BARRY
State House Speaker Marco Rubio abruptly amended his financial disclosure forms Friday after The Miami Herald asked why they lacked a $135,000 home-equity loan he obtained from a bank controlled by his political supporters.
Rubio and his wife bought the West Miami home for $550,000 in December 2005, with a $55,000 down payment. A month later, Rubio qualified for the equity loan from Miami-based U.S. Century Bank because an appraisal valued the home far higher than the purchase price: $735,000.
Real-estate experts said the deal -- on which Rubio gained $185,000 in equity in just 37 days -- was unusual. But the 36-year-old Republican said Friday that it was all above board, that he obtained no special favors and that the failure to disclose the loan was just ``an oversight.''
''There's nothing unusual about the loan or the application,'' Rubio said. ``They went out and ordered the appraisal. . . . They said I qualified for $135,000. I took the equity line.''
Rubio said the appraisal was legitimate, considering the heady days of Miami's real estate boom, but experts aren't so sure.
''It looks a lot like somebody's currying favor with an important political person,'' said Michael Cannon, a market analyst and executive director of Integra Realty Resources-Miami whose real estate column appears in The Herald. ``People off the street don't get this deal because he just purchased the property for $550,000. If it is a true equity loan, there has to be equity in the house to make the loan.''
Though U.S. Century Bank's appraiser said Rubio's new house was worth far more than the purchase price, none of the homes of similar size within a half-mile sold for any more than Rubio paid for his in the year before or after he bought it, according to home sales data.
Rubio provided The Herald a copy of the January 2006 appraisal. Because it was a new home, the appraisal says sales prices near the Rubio home ``do not reflect current market conditions as these were purchased at preconstruction prices prior to price increases in the area, thus these comparables were not used.''
The appraiser, Fidel Petisco of Alliance Appraisal Corp., then compared the home to newer homes located between a mile and a mile and a half away.
Petisco could not be reached Friday.
In his financial disclosure for 2006, Rubio said his home was worth $710,000.
''I definitely knew we had equity for that house when we moved in,'' Rubio said. ``We had spent a year looking for a comparable house in my district.''
Rubio said he went to U.S. Century Bank, whose board of directors includes such South Florida political heavyweights as developer Sergio Pino, lobbyist Rodney Barreto and consultant Jose Cancela, because his sister had a favorable experience with the bank that same year.
Pino, who is vice chairman of the board of Century, said Friday that the bank's decision to lend Rubio the money was based on the value of his home and had nothing to do with politics.
''Whatever loan Marco took, it was backed up by an appraisal,'' he said. ``I'm sure he could have gotten that loan at any other bank. We would not have given Marco a loan that he could not have gotten at any other bank.''
Pino said Rubio never called him personally asking for a loan and that he never called Rubio to suggest that Century could or should lend him money.
He said he didn't remember exactly when he learned of the loan, but that it was too small to require approval from the board of directors.
And Rubio pointed out that it's no surprise that powerful and connected people, like Pino or Cancela, run the bank where he got the loan because ``every bank has politically powerful people on their board.''
Cancela has been deeply involved with Floridians for Property Tax Reform, a group that has gotten behind Rubio's efforts to push for property-tax cuts. Rubio himself has raised money for the organization, which also helped push for a constitutional amendment to cap property taxes.
Rubio said Friday that he followed normal procedures to obtain the financing, saying that the amount U.S. Century agreed to give him was based on the appraisal that the bank ordered. He said he didn't ask for $135,000, the bank came up with that number.
He said he used the money to liquidate a previous debt and fix up his new home with new floors and furniture as he attempted to sell his first home. During much of 2006, he and his wife were carrying five different mortgages, records show.
Besides the two West Miami homes, Rubio owns a town house in Tallahassee which he bought with Republican Rep. David Rivera, the House rules chairman, in early 2005. Rubio sold his first home in West Miami in 2007.
Rubio said his failure to disclose the $135,000 loan on his last financial disclosure, for 2006, ``was an oversight.''
''As soon as I found about it, I corrected it,'' Rubio said. ``I over-disclose. I try to over-disclose as opposed to under-disclose.''
Rubio made the same mistake with another loan, however. He never disclosed a $64,000 equity loan that he took out on his previous home in February 2005. On Friday, he said he plans to amend the disclosure form for that year.
Rubio's most recent disclosure shows that he was earning nearly $32,000 from his position with the Legislature and $300,000 from the law firm of Broad and Cassel, a job he landed in 2004, two years before he became speaker.
Since he began leading the state House of Representatives, Rubio has established himself as the most vociferous of property-tax cutters and has clashed in recent days with Miami-Dade Mayor Carlos Alvarez, against whom he is considering a run later this year.
Rubio has helped build up a formidable political machine, with the help of Cancela, and has long relied on Pino for campaign-finance support. Pino-controlled companies contributed about $3,000 to Rubio in 2006.
''I think that chances are on that board everybody knows Marco, everybody's a friend,'' Pino said. ``Chances are that most people there have given him checks for reelections at some point.''
Pino insisted the financial help from the bank was strictly business.
''I assure you everything is in order,'' Pino said. Rubio ``is a real good guy and it's a real good bank. We're not involved in politics. My bank is not involved in politics.''
Miami Herald staff writers Marc Caputo and Mary Ellen Klas contributed to this report.

Anonymous said...

Prince Rubio is really a toad after all...He got caught and he says it was an oversight. Please. He had the same oversight in 2005. Oversight??? Please Marco don't insult our intelligence.
This whole Rubio Mayoral run goes back to the Jeb administration and the Bola├▒os Senate run, (their nasty and dirty attacks on Villalobos and Crist) and the Gallagher Gubernatorial run, both races in 2006. Rubio and his 2 lapdogs David Rivera and Ralph Arza were the ones behind these 2 dirty and malicious campaigns. And yes they lost both races quite handily. Who was the common denominator in these 2 elections---Mayor Alvarez. He endorsed and actively campaigned for both Crist and Villalobos, and both won.
Folks, isn't it obvious that these guys (Rubio, Rivera, Arza) are really bad people?

Anonymous said...

Payoffs, paybacks, payolas...Rubio's web is unraveling.

Anonymous said...

Good bye, Marco. Maybe Jeb can find you a job as a consultant with Lehman Brothers, when you're through.

Anonymous said...

I might question whether or not the folks at Century Bank have large land holding outside the UDB and would much rather see Rubio be mayor, instead of Alvarez who vetos evry action to move the UDB.

The value of these guys' land would quadruple if they could move the UDB.

What's your stance on moving the UDB Mr. Speaker?

m

Anonymous said...

They do have land holdings outside the UDB.

Anonymous said...

Several years ago Rubio cut a deal with former speaker Alan Bense and the northern Fl contingent, to make Bense speaker, effectively screwing Gaston Cantens-who was in line for speaker; and Rubio assured for himself the speaker's role after Bense.

Anonymous said...

one says, "I misspoke", the other one says, "it was an oversight" I GUESS THERE ARE NO HONEST POLITICIANS

Anonymous said...

Marco Rubio is one of the only honest God fearing politians that are left on the earth. Do your research. He owns a new home in an older part of Miami - thus the differences in worth of the home. Carlos Alvarez and the rest of those out for blood should go look under there own pillows. I am sure there will be plenty enough for them there.
This community needs more men like M. Rubio. But becuase of the dirty politics in Miami Dade COunty he is a breed quickly leaving! Can you blame him?

Genius of Despair said...

BARF bag please.

Anonymous said...

Ok everybody 1,2,3 BARF. Whoever wrote this last anon post must of been drinking with Arza. It makes no sense...God fearing politicians? Look under pillows? Enough for them there? Breed quickly leaving? What a bunch of gobbledygook.
He can't leave soon enough.