It is hard to know what the Florida electorate is thinking in this Age of Stupid. 1000 people showed up to County Hall to protest budget cuts the other day in downtown Miami. But where were they when their county commissioners were helping pump up the Ponzi Scheme of Growth At Any Cost? I recall seeing a few dozen intrepid environmentalists and civic activists opposing zoning changes in farmland and wetlands: all were exercises in debt creation that allowed politicians and builders and lobbyists to skim right off the top. The debt bubble was good business, and your elected representatives -- at least the unreformable majority-- saw no reason at all to line up on the side of fiscal sanity, conservatism, and stewardship.
Last week we learned Miami is apparently number 3 in the nation for traffic congestion. According to environmental groups, Florida gets a D+ for protecting its water resources. We're close to the top, in mortgage foreclosures. Time Magazine has taken notice. And now it turns out we're number 1 in default of municipal debt.
I wrote about Community Development Districts not too long ago; a number of readers offered their own opinions about the problems occurring in these investment vehicles that are turning into Miami's own Ghost Suburbs. As a civic activist who tried to fight many of the zoning changes over the years, the appearance of CDD's was used by the unreformable county commission as a way of dismissing concerns of broader objection. "Never mind," they would say, approving one zoning change after another in farmland, "The developer will form a CDD and any additional costs including "education" would be borne by those residents." Well, so much for that.
Florida’s Bust Propels Muni Default Spike: Chart of the Day
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By Joe Mysak
Sept. 1 (Bloomberg) -- No other state comes close to Florida in defaulted municipal bonds.
The CHART OF THE DAY shows the number of bond issues that have gone into default over the past decade and Florida’s contribution to the total, according to the Distressed Debt Securities newsletter of Miami Lakes, Florida. Of the 126 bonds that are in default in 2009, 70 were sold in Florida.
Blame it on the collapse of the real estate market in general and, in particular, on Community Development Districts, which sell bonds to pay for infrastructure to support new real estate developments. Florida has 600 such districts, and 105 have gone into default on a total of $3.2 billion in bonds.
Asked how the so-called dirt district defaults in Florida compared with similar meltdowns in Colorado in the 1980s, Texas in the late 1980s and early 1990s and California in the 1990s, Richard Lehmann, publisher of the newsletter, said, “It’s worse than all three combined.” He also observed that some California defaults are still being worked out a decade after they occurred. Lehmann has launched a Web site devoted to this, http://www.floridacddreport.com.
“The death of Florida real estate has been reported and greatly exaggerated,” said Terry O’Grady, senior vice president of municipal trading at FMSBonds Inc. in North Miami Beach, which makes a market in Florida CDD bonds. “If you have time to do the research properly, and can figure out which districts are going to be built out, this is a good buying opportunity.”
After Florida, Ohio is second-largest with eight defaults and Illinois is third with five. The record year for municipal defaults was 2008, when 151 municipalities violated covenants on $7.9 billion in bonds.
To contact the reporter on this story: Joe Mysak in New York at jmysakjr@bloomberg.net.
Last Updated: September 1, 2009 06:00 EDT
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9 comments:
CDD's are the devil in disguise for homebuyers. Remember the Lennar suit and Waterstone? I do. I remember the BCC giving the homeowners no relief other than a disclosure policy - after the fact. Shiver loved those CDD's as did the developers. I mean, why would they want to pay for those silly roads (thanks Crist & SB360) and other insfrastructure when they could stick it to the homeowner on their already inflated property tax bill.
I was a little un nerved that Miami got such a high bond rating for the Marlins deal. I had to wonder how much of our general funds would be used to cover the tourist tax short fall, which there will be - at least for the next few years.
And, of course, in the infinite wisdom of Alvarez and some of the BCC - let's cut the 4H off at their knees! (read today's Herald). It's almost un American to me. If they tried that in the Midwest, I think public lynchings would come back. How stupid that budget cut was and is. I could only hope a few sane Commissioners would put the funding back in and help their 9000+ members! But, it's Ag related and that's stuff you just pave over or rock mine. Those Farmers and those kids! The BCC needs more farm land to re zone for campaign contributions.
As someone who's been fighting against urban sprawl for years, I must admit I'm tired. They say vote em out, but you can't. The BCC is entrenched like Castro or Chavez and they cannot see it because Lobbyists have inflated their ego's so they're bigger than Texas at this point.
Isn't it funny that Warren Buffet is dumping his Moody's shares? "Berkshire cuts Moody's stake second time in 2 months" "The recession exposed weaknesses in structured securities once decorated with gold-standard AAA grades, prompting a lawsuit by investors who claim Moody's and S&P hid risk of investments.............." from today's Daily Business Review, page A13! How appropriate.
Let's not forget we are Number 1 in Malpractice suits.
All the people protesting the budget cuts should bring up all the financial fiascos the BCC has done in the past - including approving the Marlins Stadium. There is money to fund social services, parks, environment, libraries. It's a matter of allocating the resources.
And not misspending. I wouldn't be surprised if we see pitchforks at the next meeting. And everyone should start every comment by bringing up the payraises authorized by Moss and Alvarez. They couldn't possibly remove everyone? Or could they?
All the people protesting the budget cuts should bring up all the financial fiascos the BCC has done in the past - including approving the Marlins Stadium. There is money to fund social services, parks, environment, libraries. It's a matter of allocating the resources.
And not misspending. I wouldn't be surprised if we see pitchforks at the next meeting. And everyone should start every comment by bringing up the payraises authorized by Moss and Alvarez. They couldn't possibly remove everyone? Or could they?
Where is the list of all the cuts to these groups?
The investment environment is chaotic, to say the least. Major repairs or renovations trigger a requirement for lower density, which would force the hotels to get rid of rooms, which would drive them out of business. The prohibition on rebuilding complicates the tasks of buying insurance....
Ha - FL voters (and I resisted the temptation to put air quotes around the word voters) will do absoultely NOTHING. They will continue to be too self involved to go to the polls and oust the A&^holes like those Miami Dade commissioners that approve every development project - and take big campaign donations
I believe there are more problems a foot with some of our (Dade County) investments. I believe there is $19 million in swaps coming due that we might not get.
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