An Essay: On The Sixth Day of Christmas ... by gimleteye

(The following is part of a series following the 12 Days of Christmas. Scroll down for the earlier installments.) The 2004 Christmas edition of the defunct Sunpost, published on Miami Beach, was a full-blown paean to Miami’s builders and developers. In this 12 part series, it is time to step back and take a look at what was happening in 2004 to understand where we are, today. In 2004, the top of the real estate market was fast approaching. The only critics one could find then were affordable housing advocates, conservationists trying to stop bulldozers and drag lines in Everglades wetlands, and a handful of community activists tired of taxes funding the ceaseless costs of growth.

What mattered in 2004 to the critics of growth—banished from the pages of the mainstream press, of course—was the erosion of local and state regulations whose intent was to protect communities and the environment from the greed and self-interest of builders, developers and the supply chain of the Growth Machine. With the election of Jeb Bush, as governor of Florida in 1998, critics were on the defensive: Jeb and the Republican operatives who seized control of the legislature were determined to prove, as a matter of policy and principle, that the free market and self-interest of corporations could protect what the critics wanted to protect, better than any rules, regulations or bureaucrats.

Earlier in South Florida, the Democrats had played their role in undermining those rules and regulations—like Florida’s Growth Management Act established in the early 1980’s through bipartisan consensus. Taming the costs of growth had seemed common sense to generations grown prosperous through building and construction who recognized that regulatory tools needed to be put in place from stupid things like putting airports in the middle of the Everglades or otherwise killing the goose laying the golden eggs.

The 1994 mid-term elections returned Congress to a Republican majority for the first time in 40 years. It was a disastrous result for Bill Clinton, a president under siege. Former senator Lawton Chiles had barely defeated Jeb Bush. For the Democrats the writing was on the wall: tack toward the right to capture the wind (and campaign money) from GOP sails.

The late Governor Lawton Chiles – the last Democratic to hold the office—failed to lend muscle to the idea of taming the forces of sprawl. He compelled formation of The Governor’s Commission for a Sustainable South Florida. Big Agriculture and the Growth Machine dominated the appointed council. Although the commission conceived the plan to prioritize infill development (Eastward Ho!), it was all carrot and no stick. 

As Chiles rolled to victory in a contentious race for re-election against Jeb Bush, his administration made a series of devastating decisions to allow more suburban sprawl in western Broward encroaching directly on Everglades wetlands.

The worst of these involved a massive development approved by the state: Sunset Lakes in Broward County. The first decisions—the ones that environmentalists pleaded with Chiles to reject as violations of state growth management law—had been made by local county commissioners in Broward. For the Everglades and environmentalists grittily engaged in efforts to protect the fading River of Grass, the net effect of Sunset Lakes was to destroy the possibility for flood control and water storage within Broward County as a buffer to the Everglades. It is the same formulaic disaster that envelops the Urban Development Boundary in Miami-Dade and serial assaults against the boundary by well-funded corporations and lobbyists more than two decades later.

The retreat by a Democratic administration in Florida presaged the mounting assault by the state GOP, organized around developers who dominated campaign contribution cycles. The developer of Sunset Lakes, Atlantic Gulf Communities, trailed a long list of legal problems as it faded to bankruptcy.

This is the paradigm revealed by the close examination of the 2004 edition of the Sunpost. Although the Growth Machine lies busted and broken, its legacy is etched in concrete, constructed lakes called “water features”, and subdivisions with catching names of vanished places and endangered species.

Of the master-strokes facilitating the housing boom, one was a law passed by the Florida legislature in 2002. It was sponsored by then state representative from Miami Gaston Cantens, a telegenic son of Cuban immigrants and a rising GOP star.

Cantens did the heavy lifting for a new bill. HB 813 was called the Everglades Bill because it promised $100 million towards the multi-billion dollar price tag to restore the Everglades. But that is not what the bill really did. The plan was to red-line citizen and civic organizations from being able to use state administrative courts to sue government over changes to local rules and regulations. By limiting citizen standing, the Cantens bill helped ensure that crappy, fetid overdevelopment in wetlands and farmland would proceed without challenges during the Jeb Bush years. It was a bargain to fund the Everglades by stripping away the legal rights of citizens.

Across the state, newspaper editorial boards joined citizens howling in protest. The St. Pete Times editorial board called it an "unwarranted assault" against citizen standing: "Now, if a developer seeks a permit on a project that threatens to degrade the environment, Florida residents have a reasonable opportunity to oppose the permit. There is no indication that the right is being abused or that developers are thwarted if their projects are responsible. Yet a fair hearing for the environment is too much to ask of some legislators." (St. Pete Times, April 3, 2002)

All the cogs of the Growth Machine counted; even the smallest ones like laws inhibiting citizens from due process. (Audubon alone supported the bill, contributing to the divide-and-conquer tactics used by the Bush office at tht time to great advantage.)

Cantens left the legislature for a lucrative job with Big Sugar’s Fanjul billionaires. When Jeb Bush left the governor’s mansion in 2006, his first consultant agreement in his new private business career was with Lehman Brothers, the largest provider of financial derivatives to the state pension funds.

In a 2010 report by The Miami Herald, Cantens’ family was identified as key operators in a real estate investment fraud. ("Miami's little Madoff" is how one Cuban American investor described a prominent businessman and his wife, Gaston and Teresita Cantens.) "The Cantenses, said SEC officials, told investors that Jesuit priests and other well-known leaders in the Cuban American community had invested with Royal West. They 'targeted' investors at charitable and religious gatherings and at parties at their Miami home." (“Trust turns to crisis for older investors”, Miami Herald, March 4, 2010).

The SEC charged that the Cantenses used "$20 million from investors to pay themselves exorbitant salaries, to invest in other projects and to divert some $1 million to their children and grandchildren in the form of alleged 'consulting fees'.

In July 2009 the website for Royal West Properties stated the obvious: “THE PROBLEMS WITH THE ECONOMY, BOTH AT NATIONAL AS WELL AS INTERNATIONALLY, HAVE FORCED ROYAL WEST PROPERTIES TO SEEK PROTECTION FROM CREDITORS UNDER THE BANKRUPTCY LAWS. THE COMPANY IS CONTINUING TO COLLECT ON THOSE MORTGAGES THAT IT HAS FINANCED THROUGHOUT THE YEARS TO CLIENTS BOTH IN THE UNITED STATES AS WELL AS IN OTHER COUNTRIES.”

The essential ingredients for a virtual growth explosive device had been improvised in the 1980’s through the work of Louis Ranieri, a brilliant bond trader for Solomon Brothers and then banker. Ranieri had deciphered a complex process to vertically integrate and leverage debt tied to real estate through financial derivatives.

The components of the growth juggernaut were assembled long before Jeb Bush came to Tallahassee. But these were quaint business lines compared to what would happen once regulatory barriers—like those nominally protecting Florida’s environment—were knocked down and agencies, themselves, captured by the regulated. The essential ingredient, the one that turned the coke bottle filled with baking soda into a full-on explosive device, was lowering the cost of money to virtually nothing. That is exactly what Alan Greenspan, Federal Reserve chairman, did—starting in response to the perceived crisis of 9/11 in 2001.

Saving the US economy meshed perfectly with the confidence men who had grabbed control of national politics. They were, after all, the Karl Rove characters who “invented reality” while the rest of us (ie. critics) studied what they did.

And study is what brings us back to Christmas 2004 and the pantheon of developers who are mostly, now, toast. They are toast because their supreme confidence had no governing mechanism. If a little leverage was good for net worth, then more leverage was better, and leverage compounded was best of all. Especially if it was someone else’s money. It took a financial implosion of epic proportions to bring the fiasco into focus.

The problem, of course, is that the regulations—from top to bottom—that are needed to protect us from ourselves have been largely dismantled. Financial “reform” never happened even after the financial collapse in 2008. In Florida, the 2010-2011 sessions of the legislature effectively knee-capped what remained of protections against the metatastic forms of growth that have been a scourge on the Florida landscape with profound social and political implications. Absent industries other than Big Sugar and the Florida Farm Bureau—and real estate development—the Florida Chamber of Commerce, Associated Industries, and builder groups; once governing rules and regulations for growth were weakened or eliminated, it was “Katie, bar the door”.

What exists, in place of a sound economic footing, are well-funded message machines (ie, Fox News) and a political operation, supported by conservative foundations, to keep a badly flawed economic model in place.

Jeb Bush coined the phrase for the Florida Department of Environmental Protection: more protection, less process. Today there is less process, less accountability, and certainly less protection. These are the facts on the ground, on the Sixth Day of Christmas 2011.