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.