Cocoposts

Flying Cars

Albuquerque Journal notes that the flying electric carpet company, Tesla Motors, won't be coming to Albuquerque. 

Our city was a pawn in an "economic development" chess game.

Schwarzenegger, during Monday's news conference, said it drove him “absolutely insane” that Tesla planned to build the 4-door sedan in New Mexico.

Just crazy about New Mexico, Schwarzenegger is!

Nobody here is happy about the news - least of all Albuquerque's business boosters.  But Fred Mondragon, Marty's economic development guy, assured the New Mexico Independent that "Nobody is going to go out and shoot themselves because Tesla isn’t coming.” 

Someone may want to drive an electric WhiteStar sedan over a cliff, however.  Don't hold your breath for the day. 

The County Commissioner, at least, has vowed to get back his dime. 

But Tesla may not have heard the last from Albuquerque. Cummins said that he and his partners are talking over their options for recouping their $300,000 investment in the car company. “Now that they’re definitely not coming, we’re going to have some serious discussions,” he said.

Land Don't Move

Albuquerque is not running out of land. We are running out of money, water and oil but not land.  Land is still there.  Same land the Indians grew corn on and Spanish herded sheep over. Just look down. Land don't move.

It can be consumed and racked by bulldozers and building, the soil poisoned or paved over, but the place will still exist. And the people in place now may either love it and not plan to leave, or own it and don't want to sell it at a loss.

But there is a popular assumption that developers will go elsewhere if they can't get what they want.  They will stamp their expensive shoes on marble and, essentially, threaten to move all that SunCal land to Valencia County if they don't get TIDD's.

The slowed economy and the long emergency are hard news for land flippers who have enjoyed the housing boom and status quo.  They will try whatever they can to make the bottom line, including arguing that remaining regulations, like impact fees, are burdensome. 

Crisis Deniers

It’s all credit.  The whole thing is built on borrowed money.  He gestured at the big house. They don’t even own the furniture.  It’s leased.  And they got a second loan for the swimming pool before they even moved in.  

She watched him as he swaggered back to the big black SUV, stepping over a new storm drain in the paved street.  City sewer and water?  

Yep.  He opened her door.  

You know, that’s built on credit too, she said.   

Government Bonds with  a AAA rating!  So what? 

She paused.  What happens if it stops? 

If what stops?  

All of it.  What happens if values don’t keep going up?  What if everything changes and what you assumed was all wrong?  What if things you think will happen don't happen?  What if your power plants and water desalinization plants and hydrogen cars and space tourism.  All.  Don’t.  Happen?  What then?

The look on his face changed - like he was backing away slowly from a big cat in the woods - disengaging carefully.  But she stepped closer and lowered her voice.  What if your 9000 square foot houses with pools on golf courses in desert cities totally built on credit are a bad fucking idea?  

He stared at the gravel a few moments and then shrugged.  Buy you a margarita?  

Jumbo Corporate Welfare

Dr. Housing Bubble comments on this news from the Washington Post about how it is Getting Easier to Get Big Loans.

In what is now becoming a bigger and bigger joke where financially responsible folks are the butt of ridicule, they are going to remove the safe guards of giving money to folks in declining markets without them putting more skin in the game.  Forget about the fact that the markets are declining because folks went into the housing game with no skin and lower standards to begin with!   

We are living in a Twilight Zone episode in which the “solution” to our problem is the problem. This is utterly stupid and virtually guarantees a taxpayer bailout whether we want it or not.

Racino Richardson

In a move that, IMHO,  will be the death knell for the State Fairgrounds and horse events within Albuquerque, the Governor's Racing Commission  prepares the public for a decision to make the Governor's good friend, Paul Blanchard, even richer.   

The Albuquerque Journal:

Paul Blanchard, Downs at Albuquerque president, is seeking state approval to move the racetrack and casino to a 500-acre parcel at the northeast corner of Interstate 40 and N.M. 41 in Moriarty. ...

Blanchard's architects touted a massive facility that would include a one-mile racetrack, 22 barns, 1,512 stalls, a travel center/truck stop, multistory hotel, RV park, indoor equestrian center, outdoor show ring, paddock/amphitheater, advanced veterinary clinic, private fourth-floor grandstand suites, steak house, food court and no fewer than five bars.  The facility also would allow Blanchard to more than double the number of the Downs' 330 slot machines to 715.

Blanchard— a high-dollar campaign contributor and political ally to Gov. Bill Richardson— said the new facility would nearly triple the taxes the Downs pays to the state, growing from $4,812,196 in 2006 to $12,552,898 in 2009.

Five bars?  Giddyup.    

Sprawl Schools

Last week's vainglorious announcement by the Albuquerque Public School Board that new school construction is  "going clear to the Rio Puerco"  is followed this week by the announcement of a budget shortfall.  Go figure.

In a transparent attempt to spread around responsibility, they're asking what we think.   

Like perhaps, don't build schools if you can't afford to run the ones you've already got.   From KOB

The Albuquerque Public School system is asking for public input into how the district can overcome a forecast $20 million budget shortfall.  The problem: The district'€™s growth in construction spending has overrun the district's growth in enrollment.  Five new schools will be opening in the 2008-2009 school year and each new school will add operating costs ranging from staffing and maintenance to utilities.

New school construction on raw land at the leading edge of the sprawl line is trumpeted as completely necessary to keep up with growth.  How to pay for staffing and operating them? ::sound of crickets::

APS construction responds to the sprawl industry's constant demand for supporting public infrastructure of all kinds.   Without these, their subdivisions (and dreams of big profits) are too far away.   

That little weanie building fee that APS bragged about "negotiating" with home builders a couple years ago was a token contribution in exchange for the much much bigger promise to build.  It doesn't come close to fair coverage of capital costs and, obviously, contributes nothing to staffing and operating the schools clear to the Rio Puerco.   

Development Addict

You gotta read the whole Denver Post story about a man who, in spite being a felon already and  presently indicted awaiting a summer trial, is still engaging in the behavior and profiting from it. 

Drugs?  No.  Land speculator and developer.    

The 60-year-old real estate guru has been twice convicted of felonies over his long career.  But now he faces 67 more counts in the collapse of Mile High Capital, the Denver-based real estate investment firm he founded. Mile High reportedly collected about $44 million from 882 investors across the nation — and then filed bankruptcy.

Out on $250,000 bail, Dryer continues his work as a persuasive real estate guru. He has been working as a consultant to a Charlotte, N.C.-based company called Convergent Acquisitions & Development Inc., which peddles "non-owner occupied" investment properties.

"I can't believe he's still on the street," said Harold Ellerington, a Denver-area resident who claims he lost $250,000 of his retirement savings at Mile High. "I guess the bail was too low. . . . He's like a drug addict. He just can't help himself."

Blaming Smart Growth

In a mighty leap of logic and misdirection, not unusual for the Heritage Foundation, author Wendell Cox blames smart growth for the housing bubble, economic downturn and alopecia.       

These policies, often referred to as "smart growth," create a scarcity of land, artificially raise the price of housing, and, again, have increased the exposure of the market to risky mortgage debt. When more liberal loan policies were implemented, metropolitan areas that had adopted these more restrictive policies lacked the resilient land markets that would have allowed the greater demand to be accommodated without inordinate increases in house prices.

This is simultaneously ridiculous and boring - other typifying traits of  HF material.

There is a glut of housing tied directly to those  liberal loan policies, not a shortage of land caused by excessive land use regulation.  And we should be so lucky.  The sprawl pattern paradigm of the last twenty-five years was constrained by very little and the least of these was "smart growth" regulation.   The term itself was only more recently popularized to describe the largely ineffective and pathetic attempts to rein in the juggernaut - like Albuquerque's Planned Growth Strategy in 1996 - the potential of which was nipped in the bud by sprawlmeisters.   

Albuquerque's most obvious development constraint is land ownership, not regulation.  The edges of our ubiquitous suburbia are defined by federal, Indian or old land grant boundaries, not smart growth boundaries.  The entire idea of effective growth boundaries was kneecapped by the very developer friendly Legislature early in the decade.

Blaming planning or local government regulation seems popular with those who made record breaking profits in the housing boom and on the way down they are grasping at straws. 

Dependent and Obsessed with Real Estate

Dr. Housing Bubble estimates almost $3 trillion in real estate equity is gone and notes Bloomberg on the State of California's $20 billion deficit.   The Dr. says:

Now tell me, what other industries are going to start hiring to boost the so-called phantom housing bottom especially here in California?  Never mind the astounding fact that according to the California Association of Realtors the median price statewide is now off by a stunning 30 percent. It only logically follows that real estate declining will hurt a state that is utterly dependent and obsessed with all things real estate.

SunCal Defaults

California news of troubles for SunCal. 

BAKERSFIELD, Calif. -- The company behind the McAllister Ranch project is in default on its $235 million loan.  That project southwest of Bakersfield was designed to build 6,000 homes, but the project may now be in peril.  The notice of default was filed on Tuesday at the County Recorder's Office.

The three page document said that as of April 15, Suncal McAllister Ranch, LLC, a partner of Irvine-based Suncal Companies owed more than $4.1 million on the $235 million loan Suncal took out in order to develop the site near South Allen Road and Panama Lane southwest of Bakersfield.  The loan company, Lehman Commericial Paper Incorporated filed the default notice and now Chicago Title Company is responsible for collecting the remainder on that loan or the property could be sold.

Photo from KERO 23 News.   Thanks Hunter.