(The following essay is based on unpublished work. Scroll down for the earlier parts. This is Part Seven. The essay, to be concluded on Christmas Day.) From the Chamber of Commerce to the National
Association of Realtors, from the National Association of Homebuilders to other
lobbying groups for the Growth Machine; its standard bearers were held up as
paragons of virtue during the housing boom that topped in 2006, then crashed and burned.
Where better place to promote these
paragons than in Florida – where speculation is ingrained in the nature of the
economy—and in South Florida where the politics of zoning and permitting had
been finely meshed to the gears of finance?
For skeptics and dissenters, Florida was
also a state with a capitol ringed by a virtual moat protecting big land
owners, like the Fanjul billionaire sugar growers, who understood perfectly
well that to enhance speculative land values meant constantly tweaking at the
edges of rules and regulations nominally intended to slow growth and protect the
value and integrity of the public commons. Now we sift through the cinders.
"You can't stop it," said
Al Hoffman, the most politically influential developer in a state crowded with
influential developers to the Washington Post in 2002. At the time, Hoffman was
the top money man for Gov. Jeb Bush and chairman of an exclusive council of
CEOs who advised the governor on economic policy, the Council of 100. The
purpose of the council was to funnel up schematics for Florida’s infrastructure
future. Hoffman had been co-chair of George W. Bush's presidential campaign and
the Republican National Committee's finance chair. "There's no power on
earth that can stop it!", Hoffman told the Post.
"The unstoppable force Hoffman was
talking about is the runaway development marching from southwest Florida toward
the Everglades. The Naples area was the second-fastest-growing in America in
the 1990s." (Washington Post, June 25, 2002) In 2003 homeownership in
America stood at 68 percent and a record $3.84 trillion mortgages were written,
triple the amount originated just three years earlier.” (“Reckless
Endangerment”, Gretchen Morgensen, page 168, 2011)
By February 2010, Naples and its environs had
the second highest foreclosure rate in the nation. (April 15, 2010, "Cape
Coral-Fort Myers foreclosure rate drops to sixth in US", Naples Daily News).
In 2008, WCI, the company from which Hoffman derived wealth and power—an
ambassadorship and a direct line to the Oval Office—filed for bankruptcy with
more than $1.8 billion in debt.
Citizens were powerless, naturally, to
stand in the way of 20 year depreciation schedules of big electric utilities or
the highway lobby laying out future highways and suburbs or the trillions in
collateral debt obligations issued by Wall Street financiers. Buried in this
legacy is the agitation of Occupy Wall Street though few have made the
connections.
“Relax, we’ll be fine” (April 6, 2010),
conservative writer David Brooks advised in The New York Times. Never mind
public opinion polls showing a big majority believing the nation to be
off-track, Brooks offered good news, “The initial wave of suburbanization was
sprawling and featureless. Tom Wolfe once observed that you only knew you were
in a new town when you began to see a new set of 7-Elevens. But humans need
meaningful places, so developers have been filling in with neo-downtowns —
suburban gathering spots where people can dine, work, go to the movies and
enjoy public space.”
Understanding and untangling the realities,
however, require finer tools; a microscope and not a magnifying glass. Close
examination shows—in details such as those provided by the fierce competition
to breach the Urban Development Boundary in Miami-Dade and restore value to
speculative land purchases burning craters in shareholders’ net worth
statements—that the purposes of Wall Street finance and insurance to deploy
maximum leverage and extract maximum compensation is twinned to the purposes of
land use zoning and permitting processes at the state and municipal levels of
government. Both created vast wealth for the extractors and dismal results for
wetlands, farmland, and waterfront real estate. In other words, exactly the
form of socialized risk and privatized profit that destabilized the US economy.
WCI Communities, Lennar, the Latin Builders
Association and their teams of lobbyists from downtown law firms, earning $750
an hour, needed willing accomplices to effect land use zoning changes to build more
sprawl and permits to cram more condos on the South Florida coast: they needed elected
officials – partners molded and shaped through campaign finance practices—to override
what limited regulations had been put in place by past generations of officials.
In Miami-Dade, a small cadre of citizens, environmentalists and community
activists attempted to stand up to the juggernaut; organizing community
associations, neighbors and businesses that opposed the leap-frog developments
and condo canyons.
The 2004 Christmas edition of the now
defunct Sunpost captured the giddy euphoria in “Power Developers of Real Estate”. “What is a developer?”, the Sun Post asks. “According to the Second
College Edition of the American Heritage Dictionary, a developer is "one
that develops. More specifically, it is a "person who develops real
estate." A developer can also be "a chemical used to render visible
the image recorded on a photosensitive surface." In hindsight, it is also
a fixative to the law of intended and unintended consequences.
“Lennar Developers is a subsidiary of
Lennar Corporation, a $7 billion multidivisional, home-building company with
projects all over these United States. One of those states happens to be
Florida. So there is a lot of responsibility being placed on the shoulders of
Anthony Seijas and Carlos Gonzalez, the two men chosen to lead Lennar's
expansion into South Florida's condominium market.”
Lennar is also the titan of production home
building, with deep roots in Miami Dade wetlands edging to the Everglades. In
other words, Lennar is at the top of the pyramid. The 2004 Sunpost continues, “Anthony
Seijas holds several bragging rights. As president of Lennar Developers Inc.,
he has already introduced three luxury projects in its first year. He began his
career with Lennar in 1993, was awarded with several promotions and, at just 30
years old, became the youngest person at Lennar to hold the title of president
of a division. As a testament to his ability to lead in his newest role, The
Grand sold out within seven hours. The mid-rise was followed by Colonnade in
Downtown Dadeland and 360ยบ in North Bay Village.
Carlos Gonzalez holds the title of vice
president of sales and marketing for the Lennar Homes/Lennar Developers Inc.,
Dade Division. A long title for a job with a lot of responsibility: he is in
charge of supervising the sales and marketing department, closings, financial
forecasting, land feasibility analysis, acquisitions, product development and
operations. On behalf of Lennar he oversees a staff of 50 and is in charge of
7,000 home sites.
Together the pair has made Lennar
Developers a major player in the community once again.”
By October 2009, Lennar was reaching into
the bottom of the barrel for buyers. "This weekend the Southeast Florida
division of Lennar begins its “Be Afraid, Be Very Afraid” sales event campaign.
… With the government’s first-time homebuyer tax credit opportunity expiring on
November 30, the time for waiting to buy a new home has passed. If you haven’t
owned a home in the last three years you may qualify to receive this government
tax credit of up to $8,000*. It’s not a loan, there is no re-payment, but this
government stimulus offer comes to a close on November 30." (from the Lennar
website)
Scare tactics as part of the “proud
renaissance”? The homebuilders have only been able to survive because of
government subsidies through the tax credit benefiting corporations by allowing
them to write off profits from the boom years against losses in recent years on
the one hand, and, on the other hand, using individual tax credits to lure
buyers back into the game. There is no Plan B for the homebuilders, any more
than for BP managers who promised in their permits that they could easily
handle a deepsea blowout, any more than Wall Street financiers who contend that
whatever Congress and the Obama White House want to do so far as regulating
financial derivatives will be bad for business and bad for the American public.
Just consider that Lennar’s 2009 fright
campaign, “Be Afraid, Very Afraid”, was followed up by the renewal of the tax
credit it; their PR flowed on unstaunched by reality: "… if you haven’t
owned a home in the last three years you may qualify to receive a first-time
buyer government tax credit of up to $8,000. Current homeowners may even
qualify to receive an up to $6,500 tax credit. These tax credits are not loans,
but prospective buyers need to act now, as this is one historic opportunity you
don’t want to miss. “Most likely the home buyer tax credit will not be extended
again,” says Carlos Gonzalez, president of Lennar’s Southeast Florida division.
“This means the time to buy is before April 30 or buyers will miss out on these
historic opportunities.” (Lennar advertorial in Miami Herald, 3/5/2010)
According to the South Florida Business
Journal, “Most of the land where Lennar Corp. has proposed building
7,000 homes for its Parkland project in southwestern Miami-Dade County is tied
to a $44.6 million loan that went into default after it matured in October. The
loan, from Miami-based City National Bank of Florida to Krome Groves Land Trust, covers 781 of the 961
acres of farmland planned for development by Lennar and several local
homebuilders. Located on the northeast corner of Krome Avenue and Coral Reef
Drive (Southwest 152nd Street), Parkland still is seeking to move the county’s
urban development boundary. Local environmental activist groups have mounted
opposition to it based on its potential impact on traffic, water supplies and
environmentally sensitive lands.” (South Fl Business Journal, Feb 12, 2010)
Anthony Seijas, former rising star at
Lennar, was moved by company executives from Lennar to be president of Rialto,
a major real estate management company wholly owned by Lennar. “Rialto is a
real estate investment management company focused on distressed real estate
asset investment, management and workouts… with a particular emphasis on
turnaround situations, particularly during previous real estate market
downturns in the United States and overseas.” (Miami Herald, March 8,
2010)
With scarcely a beat, and nary a whisper
from Congress, the key actors in the market crash simply switched from creating
the wreck to salvaging the wreckage. Lennar, benefiting from the Obama
financial rescue package allowing homebuilders to write off current losses
against profits during the boom, has used its tax savings to buy back thousands
of acres lost to foreclosure at a lower cost basis.
One does begin to wonder if carnage wasn’t
the point, in the first place, and the extent to which the mainstream media has
also worked in the magical schemes that have put the US economy at such great
risk, fleecing taxpayers and allowing equity regeneration to occur in a way
designed to concentrate power, authority and wealth.
Here is how the promise of low cost housing
worked out, according to one project by another developer heralded by the 2004
Christmas edition of the Sunpost: Al Piazza.
“Coscan Homes operates as a "fully
integrated residential developer and construction company," the Sunpost
writes. The company “has built more than 5,000 homes in over 20 communities
either as a residential developer or as a construction company.” In Broward
County, Piazza’s company Coscan Homes cleared out trailer park residents to
build a 33 acre platted subdivision called Arden Park, a named heisted from
Shakespeare’s Eden.
The plan to build 153 single-family homes
required a change in zoning, which was achieved through local public officials’
stamp of approval but no construction ever took place. Four years later, it
came to an end for Coscan. “Great Florida Bank won a $33.7 million foreclosure
judgment over the stalled Arden Park
residential project in Hollywood,” the South Florida Business Journal reported.
“The Miami Lakes-based bank (NASDAQ: GFLB) won the judgment against Arden Park
LLC. … The site, at 3499 Stirling Road, is set for public sale on April 13 at
11 a.m.” (South FL Business Journal, March 5, 2010)
Great Florida Bank spins off another
apocryphal tale: In 2006 the bank had been hit by the FDIC with a cease and
desist order, “citing unsafe and unsound banking practice and violations of the
Bank Secrecy Act.” (FDIC hits Great Florida Bank With Cease and Desist”, Nov.
30, 2006, SFL Business Journal) According to its website, “Great Florida Bank
believes in connecting to people, to the communities we serve, to organizations
and to ideals. Beyond our balance sheet strength, our most important
performance benchmarks are client satisfaction, associate excellence, positive
workplace environment, exceptional corporate governance and progressive
community involvement.” Today, shares of Great Florida Bank trade at $.15.
What David Brooks misses from his New York
Times aerie are the many points where citizens were ground down by politics at
the local level of government that had deformed to serve the purposes of
Hoffman, Greenberg Traurig, et al. This was also a point missed entirely by
mainstream daily media in Florida, threatened by a changing business model from
internet-based sources of news.
Miami is such a place, where city leaders
and elected officials in the past decade whistled past the graveyard of
unsustainable development as the 20th century drew to a close.
Development on Florida’s east and west coast, and Big Sugar to the north,
bracket the Everglades, where billions of dollars are committed to the most complex
environmental restoration in history.
During the boom in South Florida, a new
policy guiding growth was called “Eastward Ho!” Tens of thousands of man hours
have been applied to planning forums in hotel conference rooms, presentations
and awards luncheons touting the features and benefits of concentrating
development inside the urban core and around transit hubs. These have been presented
as convincingly as any mutual fund salesman or training seminar for Citigroup
could ever conceive for junior associates. Go out and sell the new way to a new
Florida, the trainers seemed to be saying during the boom, while on the top
floors the senior partners divided the spoils gathered the old fashioned way.
The mantra of “Eastward Ho!” could have
been mandated as a replacement to the old model of suburban sprawl in wetlands
and farmland. Fragmented land use within urban areas would have benefited
immensely, as would have taxpayers in urban areas. Instead, the new way forward
was gingerly placed alongside, as a complement to, and parallel with the
superstructure of sprawl that wielded so much influence. Accordingly, every
governmental entity from the US Army Corps of Engineers, to local water and
environmental authorities, and cities and counties were encouraged, they
weren’t told. They were shown powerpoint presentations; not mandated.
The grand vision David Brooks celebrates
was layed out in Florida nearly fifteen years BEFORE the housing asset bubble. But
the push back against rules and regulations has been a continuous mantra of the
Growth Machine, cannily transferred as a populist appeal for “limited”
government.
No wonder, the American voter is so
confused, barely able to distinguish up from down, inside from out. How could
they feel when the last version of economic prosperity, encapsulated by the
housing boom, bankrupted the US economy? Under what guise of faith should voters
believe the current direction is a
momentary tack into the wind, before the ship rights course and steered onto a
shipwreck for the second, or third, or fourth time?
In hindsight, the best description for
Eastward Ho! is a vast disinformation campaign that succeeded primarily in
taking the potential sting from skeptics, environmentalists and government
believers. Just as Karl Rove explained to the New York Times in 2003, the
Growth Machine and its apparatus shape shifted language and meaning into pablum
called “win-win”, “private public partnerships” and the whole constellation of
inventions to paper over how much damage was being done to democracy in the
name of free markets.
“You can’t stop it,” Al Hoffman said in
2002. A decade later, the Growth Machine that Hoffman represented is busted by
the side of the road like a truck flipped on its side, engine roaring and
wheels still spinning. According to Bauer Financial, a bank ratings agency, in
the 3rd quarter 37 percent of Florida’s banks and thrifts are
“problematic and troubled”. From 2008 through 2010, bank failures cost the
federal insurance deposit fund $76.8 billion. The FDIC expects another $19
billion in losses between 2011 and 2015. (Business Week, Dec. 16, 2011) A few
billion here and there, and pretty soon you are talking about real money. (to be continued…)
3 comments:
What is your word count on this one Gimleteye? A zillion?
Whatever it is, I will be buying the book - Hopefully Gimleteye will publish it. Hats off and thank you Gimleteye from one more of the lukewarm residents upset but ignorant about the players of the whole fiasco.
All I want for Christmas is for about 300,000 of my neighbors to demolish their houses and move somewhere where there are jobs. I am envisioning red tail lights as they leave. No offense, neighbors.
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