Wednesday, December 19, 2007

Florida's illiquid assets, by gimleteye

I haven’t seen anything like this week’s action at the Miami Dade county commission in a long, long time. Momentous votes totaling billions of dollars of investment were taken on practically no information, by commissioners claiming to represent progress and the people.

The day’s opening presentation by the South Florida Water Management District outlined more than $1.5 billion in new water infrastructure requirements to ensure that growth proceeds apace, notwithstanding an historic drought gripping the nation's southeast.

There were no questions, just praise for Florida's largest county and the county commissioner, Natacha Seijas, who had single-handedly provided for the growth of suburban sprawl and its grandees, the political elite of Miami, who grew wealthy by foisting the costs of quality of life, transportation, and environmental "sustainability" to future generations of taxpayers.

It was enough to gag and it was only nine thirty in the morning.

Then came the former legal counsel to Miami developers, now assistant secretary of the federal housing agency, Orlando Cabrera to update the commissioners on the "rescue" plan for its takeover of the Miami Dade Housing Agency, ransacked by lobbyists close to county commissioners. The African Americans on the county commission, on whose watch the theft and scandal occurred while they were obsessed with zoning approvals for production housing developers encroaching westward to the Everglades, tried their best to appear concerned for the needs of their constituents, some of whom were in the audience and oblivious to the subtext playing out in full daylight: that their own elected representatives were responsible but not accountable.

Next came the Urban Development Boundary, originally intended to contain the costs of infrastructure and to protect the Everglades.

In voting to override Mayor Alvarez’ earlier veto of approvals to move developers’ applications to bust through the UDB, the county commissioners had already shown that fiscal reality or protecting the environment plays no role in its deliberations. (Tomorrow, the county commission will vote to approve a zoning request to lead to two new nuclear reactors on the edge of Biscayne National Park. The utility, Florida Power and Light, is waving around $11 billion in economic impacts: another strand of lights for the Christmas tree!)

Then came the billions represented in the rest of the day’s agenda: a professional baseball stadium, a professional soccer stadium, a two billion dollar tunnel under state lands in Biscayne Bay, and museum park, and a bailout for the Carniverous Performing Arts Center, a $500 million investment that can scarcely afford to keep its lights on: all to be funded through the expansion of two Miami community redevelopment agencies, hounded by past scandals and financial irregularities.

The Miami Herald has been vague on where Miami mayor Manny Diaz believes the money will come from, perhaps because the intended incremental investments for the CRA's may or may not come from billionaire investors in Dubai and Turkey who don't necessarily believe in Christmas.

Well. This is Miami and it is a time for grandiose schemes especially when a recession is brewing, when layoffs are imminent when budgets are falling to pieces, and when government is filled with Republicans who advertise themselves as fiscal conservatives.

The point was driven home yesterday in a phone call from a real estate investor friend who called me from the Florida Keys: there’s a fifty month inventory of single family homes from Marathon to Key Largo. In November and December, 30 home sales closed and 80 new properties came on the market. Just south of Miami, whose elected officials are breaking open champagne over multi-billion dollar infrastructure investments--local governments are laying off and firing.

This morning two stories attracted my attention. I needed some amuse bouche after so much bile.

Polk County’s Lakeland Ledger reports, “county commissioners Monday rebuffed local planning activist John Ryan’s suggestion that they work together to pass a charter amendment that would put limits on new residential development…Ryan, a member of the Polk County Planning Commission, unveiled the proposal in October. It would amend the county charter to limit residential growth within a defined urban growth boundary.”

I felt like raising my hand, like the over-eager fourth grader in the front row. “Excuse me, under no circumstances give control of an urban boundary to county commissioners! Look here!”

Polk county commissioner Bob English opposed Ryan’s amendment. ‘This is going to be another layer of chaos,’ he said, and argued it flies in the face of representative government.”

Ah, my hand flew up… to keep the bile down.

Because that is exactly the closing argument offered by Miami city manager Pete Hernandez to the Miami Herald on Sunday, “There comes a time, I think, when the elected officials have to assume the responsibility that the people placed on them, and they have to make tough choices. Otherwise things would never get done.”

Which brings me to the second story of interest, reported yesterday by Bloomberg but not, apparently, worth reprinting by the stone-cold editors of the Miami Herald: “Florida got Lehman help before run on School’s funds”.

Bloomberg reports, that last June, former Governor Jeb Bush was hired as a consultant by Lehman brothers,“the same firm that had sold the state fund $842 million of mortgage-backed debt in July and August. Those securities defaulted within four months, and totaled more failing debt than any other bank sold the state, Florida records show.” .

“Until November, the Florida pool was the largest public money market fund in the U.S. It held cash for about 1,000 school districts, towns and local agencies in Florida.”

Bloomberg doesn’t say whether the terms of Jeb’s consultancy were based on a monthly retainer or a percentage of theft.

Back in 2002, when Jeb was governor, the state of Florida lost $398 million investing in Enron stock while the company was going down the toilet. It was a stretch that Jeb was personally involved in trying to lift the fortunes of a Bush family loyalist, Ken Lay. On the other hand, it was the same time frame in which Enron's subsidiary, Azurix, was promoting its plan to "privatize" Florida's water resources with the help of Jeb's key political allies. Azurix' coming out party was festively called, "Liquid Gold".

But it’s a different deal with Lehman. Jeb! knew that the mortgage bonds he helped to sell his buddy Coleman Spinaovich, “who earned $180,213 in 2006 as executive director of the State Board of Administration “ and who he had put in place, was in financial derivatives that had made fortunes for his developer backers in Florida, like Florida’s largest homebuilder WCI Communities Al Hoffman, now ambassador to Portugal, who had been his campaign finance chair as well as finance chair for the Republican National Committee during the two campaigns of George W. Bush.

The damage to Florida from the Jeb Bush governorship totals far more than the $1.2 billion of investments for which someone generated massive fees and commissions.

The true damage is fraudulent claims for representative democracy.

As to the exact content of the subprime mortgages in the state investment pool whose value simply disappeared—maybe the school teachers, the firemen, and the government employees whose paychecks are written on that state fund will be the ones to investigate whether the bond originators at Lehman were packaging mortgages from Florida developers who are Bush family loyalists.

In the meantime, hold onto your wallets.


Anonymous said...

You make it sound like a bad thing that "local governments are laying off, and firing people".

I think that's a good thing. Government at every level has become too fat.

Do you think your taxes are too high because of infrastructure needs and Capital Construction Costs?

Well that's not the reason your taxes are high. They're high because of Operating Costs (Salaries, benefits, etc...) Those things accounty for over 60% of your local governments' annual budgets.

Anonymous said...

Politicians have given in to Police and Fire Unions that got too powerful. Now far too much of muncipal budgets go to inflated pay scales and Fortune 500 style pension schemes for Police and Fire. Who knew college drop-outs could join the Fire Dept at age 19 and retire at age 39 with a taxpayer funded pension of $100,000+ per year for life?

How about those Commissioners? We elect them to protect us and they give away billions on various projects with only a few minutes of due diligence?

Anonymous said...

Do you really believe the commissioners that acted as if they didn't know anything about the project under discussion (Manny Diaz' project)? They stage everything so that the people will believe that there's real opposition within the BCC. Reality is that before the hearing they discuss any matters that will come before the BCC and most certainly they even decide what commissioners will pretend to oppose to give the appearance of real democracy. Some of us have caught the routine.

Anonymous said...

I couln't agree more. Many people in the Miami-Dade Commission chambers knew the exact vote (9-4) hours before the 7 hour Hearing even started. In fact, County Hall insiders were repeating the Commissioners "quotes" hours before the Commissioners heard the presentations and actually gave the "lines". What a farce.

amo said...

Again, I don't understand. How does government justify this kind of spending, a day before the Herald reports that housing for M-D poor may never be built because M-D government does not have the money?? A baseball stadium before homes? They can't fill the seats now. Do they expect magic genies to suddenly start sprinkling Marlins dust on the tourists?

And I know, money is earmarked, comes from different sources, intended for different things. But from the bigger picture, it's all extremely confounding for taxpayers who are learning about it.

Anonymous said...

Florida Hometown Democracy will be the first time that voters are on a level playing field with developers, and the county commission will be out of the equation. I CAN'T WAIT!!!

Anonymous said...

oh please people. tune in more than once a year. the commission has seen all of the items passed yesterday before. over and over. just because they didn't feel as if the county executive staff didn't kiss their butts before the vote, they feel slighted or as they say it... 'uninformed'.

Anonymous said...

The only thing that was decided yesterday was the plan for the city of Miami's contribution to all these projects.

The county agreed to rejigger the boundaries of the omni CRA and to extend their lifespan in order to generate the bucks to pay for a portion of the projects.

Nobody made a last-minute uninformed decision about building a tunnel, or building a stadium, or doing something with Bicentennial park. Those things have already been approved and voted on a dozen times. Miami has just dragged their heels in offering even the smallest contribution to all these projects that benefit them the most.

The vote was rushed because of the prospect of losing nearly half a billion dollars in state funds for the tunnel.

Personally, I think the tunnel sucks. It's a creative attempt at fixing the truck traffic problem but it cost waaaay too much. But nobody can say it was a last minute thing. The idea has been around for years. The funding plan has been around that long too, and the darned thing was part of the GOB plan voted on in 2004.

I voted "no" but my side didn't win.

Anonymous said...

last anon is correct

This specific plan for the tunnel has been kicked around since "at least" 1983, when Steirhiem said he wished he could do it, but the money just wasn't there.

The state is not only putting up over $400 million for construction, but is also kicking in another $500 + million for the Operations and Maintenance of the tunnel. That's almost $1 billion from the state.

Everyone who reads this blog knew about the museum park for at least 3 years now.

The stadium issue has been discussed ad-nausium (sp?) for over 10 years.

If you want people to live closer to the urban core (eastward ho), then shouldn't there be things that attract them to live there?

Anonymous said...

$155 Mil from the Marlins? What a joke. That number includes their rent. So basically they get the taxpayers to pay 100% of their new retracable roof stadium. What dumbasses gave away the store?

David Samson and the Marlins are laughing at us.

Anonymous said...

Miami-Dade County Commissioners need an IQ threshold. Along with being a resident no individuals with IQ's in single digits should qualify to be a commissioner. That should help get better decision making.