Florida Commercial News - Land, Development, Building, Business

A new bill is making its way through the House of Representatives right now that may meet with success up in Congress since it's a bipartisan effort: introduced yesterday, HR 1255 just may become law this year. (An identical version of this proposal failed to become law as HR1755 last year.)

Home Construction Lending Regulatory Improvement Act of 2013 

Which is good news for home builders around the country, because the proposed "The Home Construction Lending Regulatory Improvement Act of 2013" aims to help home builders get credit for their residential developments.  

What will HR 1255 do?

Right now, federal regulations are seen as thwarting home builders in their efforts to get financing to go forward with new projects.  As a result, in March 2013 we have a small number of new homes to offer buyers while builders are not able to get new construction loans to build more new houses because banks cannot loan them money.  

If passed, this new law means American home builders would be able to get credit in order to build their projects much easier than they can right now.  How?  Among other things:

1. The new law would free qualified lenders with real estate loans making up 100% of their capital to make new real estate loans to home builders.
2. It would end the ability of the federal government to block a home builder from getting a loan on a project from a qualified lender. 
3. It would block federal agencies from forcing a lender to call in a home builder's real estate loan if it's in good standing. 
4. If the collateral on a builder's loan has lost value, a builder in good standing on its loan would be able to work with the lender to maximize the situation through workouts, etc. 

The National Association of Home Builders issued a release yesterday applauding this proposed law.  From the NAHB:

“We commend Reps. Miller and McCarthy for acting to remove a major impediment to the housing recovery by promoting legislation that will enable home builders to obtain construction loans in order to put construction crews back to work and to meet rising demand across much of the nation for new homes,” said Rick Judson, chairman of the National Association of Home Builders (NAHB) and a home builder from Charlotte, N.C. 

 You can read the full text of HR 1255 online soon (it was not available today), as well as track its progress through the House and Senate.  

This week, the Mortgage Bankers Association (MBA) released its Quarterly Survey of Commercial/Multifamily Mortgage Bankers Originations, and it's nice to read good news in forecasts by experts into the future of commercial real estate development in this country.  It's been awhile as the nation, especially the Sunshine State of Florida, had to deal with the past few years' housing crises, banking scandals, and unprecedented industry financial valleys.

Mortgage Bankers Forecasting Good Things for Commercial Real Estate in 2013 

According to the Mortgage Bankers Association, there will be a jump in the originations of commercial and multifamily mortgages of $254 billion this year.  That's going to be higher than 2012 by 11%.  It gets better: the MBA is forecasting this to be $289 billion two years from now, in 2015. 

"2012 was a strong year for the commercial and multifamily mortgage markets, and 2013 is shaping up to continue the growth,” said Jamie Woodwell, MBA’s VP of Commercial Real Estate Research. “Despite a 21 percent decline in the volume of commercial and multifamily mortgages maturing this year, we expect origination volumes and the amount of mortgage debt outstanding will both increase. Our forecast anticipates Fannie Mae, Freddie Mac and FHA, as well as life insurance companies, will all continue to have strong appetites for making loans, and—coupled with growth in originations for CMBS—the total market will continue to expand.”

Meanwhile, MBA predicts that outstanding commercial/multifamily mortgage debt will exceed $2.4 trillion by the end of this year (2% higher than 2012) and over $2.5 trillion at year-end 2015. 

Read and download the MBA Report here.

National Association of Realtors Commercial Real Estate Forecast for 2013

Meanwhile, the National Association of Realtors released its predictions for commercial real estate sectors in the United States a couple of months back in their Commercial Real Estate Outlook (CREO).    

Among their forecasts, 2013 will see declines in vacancy rates as follows:

• 1.0 percentage point in the office market;
• 0.6 point in industrial;
• 0.2 point for retail;
• 0.1 point in multifamily.

The Realtors' Report also predicts the following in 2013:   

Office Ma​rkets

Vacancy rates in the office sector are projected to fall from an estimated 16.7 percent in the fourth quarter to 15.7 percent in the fourth quarter of 2013.... 

Office rent is expected to increase 2.0 percent this year and 2.5 percent in 2013. Net absorption of office space in the U.S., which includes the leasing of new space coming on the market as well as space in existing properties, is likely to total 21.7 million square feet in 2012 and 49.0 million next year. 

Industrial Markets

Industrial vacancy rates should decline from 10.1 percent in the fourth quarter of this year to 9.5 percent in the fourth quarter of 2013. 

The areas with the lowest industrial vacancy rates currently are Orange County, Calif., with a vacancy rate of 4.3 percent; Los Angeles, 4.4 percent; and Miami at 6.5 percent. 

Annual industrial rent is forecast to rise 1.7 percent in 2012 and 2.2 percent next year. Net absorption of industrial space nationally will probably total 93.4 million square feet this year and 89.6 million in 2013. 

Retail Markets

Retail vacancy rates are expected to ease from 10.8 percent in the fourth quarter to 10.6 percent in the fourth quarter of 2013. ...

Average retail rent should increase 0.8 percent this year and 1.4 percent in 2013. Net absorption of retail space is estimated to be 9.1 million square feet this year and 19.8 million in 2013.

Multifamily Markets

The apartment rental market - multifamily housing - is projected to see vacancy rates decline from 4.0 percent in the fourth quarter to 3.9 percent in the fourth quarter of 2013; vacancy rates below 5 percent are considered a landlord's market with demand justifying higher rents.... 

Average apartment rent should increase 4.1 percent in 2012 and another 4.6 percent next year. Multifamily net absorption is likely to be 219,700 units this year and 234,600 in 2013.

Read the National Association of Realtors' report online here.

Image: Wells Fargo Center in Miami, Florida (Wikimedia Commons)

Recently, the Department of Commerce announced that homebuilding permits in the United States hit the highest number in 4.5 years last month (November 2012). Specifically, there were 899,000 units which is the highest amount since July 2008. 

Reactions from economists in the news seem to have those in the know confident that the home building industry will continue to improve throughout 2013.

Recovery of the U.S. Home Building Industry - How This Helps Florida

Here in South Florida, where we've seen home builders so strapped by the bad economic climate, this is very good news.  However, these numbers currently are simply good news for the future for many, since interest rates for home mortgages haven't changed much yet.  

Right now, home buyers are looking at a 30-year, fixed-rate mortgage of 3.37% (week ending 12/20) which is lower than last year's 3.91% during the same time period.  Financing remains an issue.

Nationally, the confidence of home builders is getting more and more sunny as the National Association of Home Builders/Wells Fargo Housing Market Index reports today that builder confidence continues to rise for the 8th month in a row in the future of the U.S. market in newly built, single-family homes.  It's at 47, which is the highest it's been since April 2006.  

Costs of Home Building Skyrocketing: Lumber Up 35% in One Year's Time

Here in Florida, builders are dealing with practicalities.  Not that they aren't optimistic about Florida's future, but there are the realities they see in their work: things like rising prices in new home construction costs. 

Florida home builders are seeing lumber, drywall, cement, and other necessary costs in building a home here in Florida rising sharply.  For example, the cost of lumber has more than doubled since January 2009 and right now, lumber prices are at a six year high according to Standard and Poor's GSCI Spot Index.  

Drywall prices are higher, too, and right now there's a lawsuit alleging that 8 of the biggest suppliers of drywall for use in both home building (residential) and commercial construction have been working together to fix gypsum board prices since September 2011.  

Bottom line: there may be more home building happening in Florida and the rest of the country now and in 2013, but the costs of building those new homes are rising too which makes many in the housing industry wary since building material prices impact the number of new homes built and sold.  

There's good news in all of this data, released in the past few days, even if building materials are rising in price.  We have good reason to be optimistic about 2013 here in Florida.  

Florida's construction industry may find some good news in the latest survey results releaed by Freddie Mac this week, which appears today in our News Release of the Week (emphasis added):

Mortgage Rates Near Record Lows As Home Construction Builds Up Steam

MCLEAN, Va., Oct. 18, 2012 /PRNewswire/ -- Freddie Mac (OTC: FMCC) today released the results of its Primary Mortgage Market Survey® (PMMS®), showing fixed mortgage rates edging slightly lower with the 30-year fixed averaging 3.37 percent, just above its all-time record low of 3.36 percent, and the average 15-year fixed dipping to a new all-time record low at 2.66 percent.

News Facts

30-year fixed-rate mortgage (FRM) averaged 3.37 percent with an average 0.7 point for the week ending October 18, 2012, down from last week when it averaged 3.39 percent. Last year at this time, the 30-year FRM averaged 4.11 percent.

15-year FRM this week averaged 2.66 percent with an average 0.6 point, down from last week when it averaged 2.70 percent. A year ago at this time, the 15-year FRM averaged 3.38 percent.

5-year Treasury-indexed hybrid adjustable-rate mortgage (ARM) averaged 2.75 percent this week with an average 0.6 point, up from last week when it averaged 2.73 percent. A year ago, the 5-year ARM averaged 3.01 percent.

1-year Treasury-indexed ARM averaged 2.60 percent this week with an average 0.4 point, up from last week when it averaged 2.59 percent. last week. At this time last year, the 1-year ARM averaged 2.94 percent.

Average commitment rates should be reported along with average fees and points to reflect the total upfront cost of obtaining the mortgage. Visit the following links for Regional and National Mortgage Rate Details and Definitions. Borrowers may still pay closing costs which are not included in the survey.

Quotes

Attributed to Frank Nothaft, vice president and chief economist, Freddie Mac.

"Mortgage rates remained more or less unchanged this week as home construction builds up steam. Construction on single-family homes jumped to an annualized rate of 11 percent in August, the strongest pace since August 2008. Over the first nine months of the year, single-family starts were 23 percent higher than the same period last year. Moreover, homebuilder confidence rose for the sixth consecutive month in October to the highest level since June 2006, according to the NAHB/Wells Fargo Housing Market Index."

Get the latest information from Freddie Mac's Office of the Chief Economist on Twitter:@FreddieMac

Freddie Mac was established by Congress in 1970 to provide liquidity, stability and affordability to the nation's residential mortgage markets. Freddie Mac supports communities across the nation by providing mortgage capital to lenders. Today Freddie Mac is making home possible for one in four homebuyers and is one of the largest sources of financing for multifamily housing. www.FreddieMac.com.

SOURCE Freddie Mac

For further information: Chad Wandler, +1-703-903-2446, Chad_Wandler@FreddieMac.com

 The financial and other information contained in the documents that may be accessed on this page speaks only as of the date of those documents. The information could be out of date and no longer accurate. Freddie Mac does not undertake an obligation, and disclaims any duty, to update any of the information in those documents. Freddie Mac's future performance, including financial performance, is subject to various risks and uncertainties that could cause actual results to differ materially from expectations. The factors that could affect the company's future results are discussed more fully in our reports filed with the SEC.

As Orlando (including Lake Nona) continues to enjoy rising commercial development, especially in the area of medical research and health care, news came from the well-known Florida Hospital, part of the Adventist Health System, that it will be building three new, big health care facilities in the Orlando area, all targeting the needs of women's health care - and spending almost $270 million, its 2nd largest capital investment in 100 years, making this our news release of the week: 

Florida Hospital Unveils Historic New Vision for Women's Health Care in Central Florida

Research show women's lifespan is not growing as fast as men's

ORLANDO, Fla., Sept. 18, 2012 - New research shows that the lifespan of women is not growing at the same rate as the lifespan as men. Florida Hospital believes that now is the time to put the focus back on women's health. On the front lawn of the hospital, Florida Hospital announced a renewed commitment to women's services that will span across Central Florida with three new buildings, additional services, world-class physicians and an innovative health and wellness platform to provide women with tools to live longer, healthier lives.

"Florida Hospital has been providing services to women for more than 100 years across our system and it has always been a part of who we are," said Lars Houmann, president and CEO of Florida Hospital. "But we know we can do more. Now is the time for us to step forward and put the focus on women's health."

As part of the commitment to extend women's health services to all women through Central Florida, Florida Hospital unveiled a comprehensive plan that is the largest commitment to women's services in Florida Hospital history.

"As a physician, I saw first-hand the stress women put on themselves and the types of unique health challenges women face on a daily basis," said Dr. Monica Reed, senior vice president of Florida Hospital. "We need to create new services for women that will bring innovative and personalized medical care together."

The three new buildings will house comprehensive services for women and expand on current services already available at Florida Hospital. The Celebration Health Women's Institute is a four-story 80,000-square-foot building that will house a variety of women's health services including breast care, radiation and oncology, gynecology and obstetrics. The Winter Park Women's Health Pavilion, a two-story building opening in fall of 2013, will be a comprehensive one-stop boutique center for women's health and wellness and also offer a variety of medical services. Florida Hospital Orlando announced plans for a new women's tower, the Florida Hospital Orlando Women's Pavilion, a 12-story patient tower that will feature more than 300 patient beds when it is complete in 2015.

"Women experience a variety of health challenges that can affect the entire home and family unit," said Marla Silliman, senior vice president of Florida Hospital. "We also know women are extremely busy and are more likely to put their own health concerns on hold. Part of our commitment will include a unique wellness and prevention program, designed just for women."

New mom Sarah Doherty knows from first-hand experience the importance of having access to high-quality medical care, for both her and her new baby.

"As a new mom of a one month old daughter, my life has completely changed," said Doherty. "I had a very difficult end to my pregnancy and spent eight weeks in the high risk OB unit at Florida Hospital on bed rest. The hospital's commitment to treating the health needs of women is of great comfort to me. I know Florida Hospital will be here to care for my daughter throughout her entire life."

Florida Hospital also announced the kick-off of Healthy 100 Women. Florida Hospital is on a journey to inspire the entire Central Florida community to live to a Healthy 100 years old. Healthy 100 Women will allow women to help shape what services and programs should be included as Florida Hospital embarks on this journey to expand women's health care services.

As the dust continues to settle on the real estate crisis in Florida and the rest of the country, we are becoming increasingly aware of potential opportunities in the market place.  At least, there are hints of this in the news this week as we see real estate developers and investors taking advantage of historically low prices while economic analysts are putting the pieces together and tying up the crisis into an understandable perspective:

Commercial Real Estate Developers Taking Advantage of Cheap Land and Foreign Investment

Here in Florida, savvy real estate developers are building condos - condos are very popular here in South Florida, especially, given our scenic attractions including all those miles of beautiful oceanfront beaches. Lots of condos, in all shapes and sizes.

How are they doing this? With lots of foreign investment funding.

As we have discussed in prior posts, one of the big advantages of having foreign investment dollars for condominium projects in particular is that the international investor often comes with experience in financing real estate that is much, much different that the American model. They pay up front: condo developers see foreign investors willing to pay as much as 80% of the total before the build is done.

Meanwhile, all across the country there are smart land developers who are looking around for great deals on land that is pristine - undeveloped land can be bought at bargain basement prices these days in much of the country. For the first time in a long time, land is attractive again, to developers and builders.

US Housing Crisis Losses of $13 Trillion Almost Match GDP for 2011 Dollar for Dollar Per Expert Analyst

This week, during a speech at the Mortgage Bankers Association meeting in Dallas, a representative of the fraud analysis firm Interthinx told the crowd of bankers that Interthinx studies revealed that the country's housing industry crisis has piled up $13 trillion in costs to the nation's economy, if various areas are combined: the litigation expense, the bailouts, the mortgage-backed securities claims.

Here's the thing: in her speech, Interthinx's Ann Fulmer pointed out that this $13 trillion almost jives, dollar for dollar, with the Gross Domestic Product (GDP) for the United States in 2011 (which was $15 trillion).

Where did she come up with $13 trillion? Interthinx has the following:

• $8,000,000,000,000.00 (yes, that's the right amount of zeroes: we're talking TRILLIONS here, not millions or billions) in lost homeowner equity
• $2,000,000,000,000.00 in mortgage industry losses (ForeclosureGate)
• $3,000,000,000,000.00 in losses to the federal government (and presumably state governments, too) along with U.S. taxpayers

So, is the worst part of the housing crisis behind us?

Are things getting better, or are we in the eye of the hurricane, where the winds lessen and things seem brighter to those who aren't aware that the hurricane still has lots of fury to bring?

We'll know soon enough -- but one thing that gives hope: smart real estate developers aren't just setting back and fretting: they are taking advantage of cheap land, cheap construction costs, and foreign money to build projects like condominium towers in South Florida. It's this kind of determination, to find a way to success and move forward, that is the real and solid sign that we're putting the crisis behind us.

Miami's Design District is well-known to almost everyone: tourists seek it out, investors appreciate its success, heck - television shows use it for backdrop.  It's a beautiful part of the city and one of the jewels of South Florida.  Set among some of Miami's great neighborhoods -- Wynwood, Buena Vista, and the Upper East Side communities -- the Miami Design District has sprung its art galleries, retail stores, cafes, restaurants, antique shops, and the like from a place that long ago was primarily a bunch of warehouses. 

However, from a land use perspective, the Miami Design District has also provided an example both to South Florida and other parts of the country on how to plan and develop a mixed-use community that benefits not only its commercial and residential residents but the area economy as well.

First on all, Miami's Commissioners okayed land development group DACRA's $312 million plan to revamp the current Design District into much more: there will be new plazas, cafes, stores, and both hotels and residential housing in the new District.  Second, Miami's use of land in its Design District has already been an example to a number of municipalities over the country as a way to boost their local urban areas.

Design Districts aren't a new concept. For example, Waikiki, Hawaii, has had its own Design District since the mid-1970s.  However, for places like Hartford, Connecticut, the design district of Miami has been something to consider as its own North Park Design District mixed use land plan was recently created.

2012 - Amending the Design District in Doral, Florida

South Florida is seriously considering the mixed-use land plan seen in Miami as a way to ignite economic growth in urban locales.  This month, the City Council of Doral made national news when it voted on the "Doral Design District Core" and its application to 185 acres of land inside the city's design district. Doral already created a Design District back in 2010 (you can read the Master Plan online): now, an Ordinance has been passed to amend that 2010 concept.

The Doral vision is to create a Design District from a place that currently houses lots of offices, warehouses, and showrooms into a pretty place that will be easily accessed by foot traffic and particularly inviting to the design industry.  The City leadership envisions a place that is " ... the mecca for designers, artist(s), architects, boutique retail stories, galleries and restaurants."  There will be places to live within the Doral Design District, too. 

For more, check out the website here. 

Earlier this month, we discussed the news out of Lake County, Florida, regarding plans to develop lots of rural land (citrus groves) in that part of of Central Florida and the current strategic corridors that Lake County already has in place. 

Florida has a lot of strategic corridors - Lake County isn't reinventing the wheel here. In fact, from a real estate investment and development perspective, Florida is fast becoming a spider web of corridors each with their own incentives and advantages - and a sign that Florida is fighting to win back its economic strength.

Consider these Florida corridors that land planners and real estate developers must coordinate with and consider in their work, all new or just getting going in 2012:

1.  The Florida Wildlife Corridor

From its website:  "The Florida Wildlife Corridor aims to protect and restore connected landscapes throughout the Florida Peninsula to create a viable corridor from the Everglades to Georgia. The corridor addresses the fragmentation of natural landscapes and watersheds from the Everglades ecosystem north. Contributing to the fragmentation problem is the disconnect between the perceptions of Floridians, and the real need to keep natural systems connected. The Florida Wildlife Corridor is positioned to mend the perception gap through an education and awareness campaign that demonstrates the connection between the landscapes and watersheds. If we show Floridians the panthers, bears, native cultures, ranchlands and rivers and how they are all connected, then they can help us make the Florida Wildlife Corridor a reality."

Sponsors include Disney; National Geographic; Everglades Foundation; Patagonia; and many more (see the online list of sponsors and partners here). 

2.  Florida's High Tech Corridor

From their website:  "The Florida High Tech Corridor Council (FHTCC) is a regional economic development initiative of the University of Central Florida (UCF), the University of South Florida (USF) and the University of Florida (UF) whose mission is to grow high tech industry and innovation in the region through research, workforce and marketing partnerships.

"The Florida High Tech Corridor Council’s numerous entrepreneurial initiatives support small businesses and growing companies alike. Growing companies can apply for specific business help through GrowFL, a statewide initiative that provides just-in-time technical assistance for second-stage companies. Using tools like the Florida Virtual Entrepreneur Center, visitors can find the resources they need to start, expand or relocate a business. Even the university and community-based incubators aim to nurture start-up companies to grow into stable enterprises that contribute to the local and regional economy."

3.  Northwest Florida Transportation Corridor

From their website:  "The Northwest Florida Transportation Corridor Authority (NFTCA) continues in our mission to improve mobility, to enhance traveler safety, to provide for hurricane evacuation routes, and to promote economic development in the northwest Florida region. We are currently updating our Master Plan which is expected to continue to progress through Fall of 2012. To learn more about the plan update and view upcoming public involvement opportunities, please visit the Master Plan page and the Calendar of Events."

4.  The South Florida East Coast Corridor

From their website:  "The South Florida East Coast Corridor (SFECC) Study proposes reintroducing passenger service along an 85-mile stretch of the Florida East Coast (FEC) Railway corridor between downtown Miami and Jupiter. Such service will connect the hearts of 28 densely-populated municipalities in eastern Miami-Dade, Broward and Palm Beach Counties. It will improve north-south mobility, encourage stronger east-west connections, promote redevelopment and revitalization, and enhance freight movement.

"Reinstating passenger service in the FEC corridor will provide an efficient option to driving on congested streets and highways and a much-needed integrated transportation link essential for smart growth management, sustainability and a vital economy.

"This corridor will serve as the spine of a regional intermodal network, connecting to the existing bus systems and rail transit systems including both Tri-Rail and Metrorail. It will also integrate with the various transit systems including the new Miami Trolley, the proposed Wave in downtown Fort Lauderdale and the proposed Central Broward East-West Connection. It links to the three major airports, Miami International, Fort Lauderdale-Hollywood International and Palm Beach International; the four regional airports within the tri-county area; and to the region's seaports, PortMiami, Port Everglades and Port of Palm Beach.

"Benefits of this study include expanded freight capacity; reliable travel time savings; improved service for the transit dependent population; enhanced intermodal connectivity for riders; improvements in land use; sustainability; more job opportunities; and an enhanced quality of life for South Florida's current and future residents and visitors."

5.  Future Corridors Program

As we discussed last month, the Future Corridors Program has a goal of creating a statewide transportation corridor system and it's looking to outside, third party experts to interview folk like those at the various Water Management Districts for their input.  Not everyone is pleased with this approach, of course.

Below, an image of the watercolor map of the proposed Florida Wildlife Corridor:

United States District Judge Alan Gold makes news this month (again) with another Everglades Order: you'll recall that he issued a pretty big ruling last fall with his decision to put the federal government and not the State of Florida in the role of issuing pollution permits that impact the Everglades (read our earlier post as well as that order here). 

Miami's Judge Gold has been making lots of news, in fact. 

Earlier this month, he issued a federal court order that requires the Miccosukee Indian Tribe to fork over its financial records to the federal investigators that are checking into claims that the Miccosukee Indians have not reported income tax on millions of dollars in gambling profits coming to members of the Miccosukee Indian Tribe. 

The Tribe's argument that it did not have to honor the IRS subpoena because it was a separate, sovereign nation was not victorious with the court. 

But that wasn't the only July 2012 ruling of Judge Gold that is making national headlines. 

This week, Judge Alan Gold in a rather short and sweet order (it's only three pages long) okayed the $880 million dollar phosphorus clean up plan proposed by the EPA (Environmental Protection Agency). 

News pundits are reporting that Judge Gold may have just ended around 20 years of litigation with this single order. 

What he's done is okay the EPA to review and approve permits in a number of different projects all targeting the problem of phosphorus pollution in the River of Grass.  Which brings us back to the Miccosukee Tribe of Indians. 

The Miccosukee were one of a number of parties concerned with protecting the natural resources here in Florida, and the tribe joined with the Friends of the Everglades in filing a federal lawsuit several years ago against the EPA alleging that the federal agency was violating federal law by not cleaning up the Everglades pollution problem, a byproduct of the sugar industry here.

The Friends of the Everglades have issued an opinion statement that the proposal approved by Judge Gold is not going to work.  Read it here. 

The Miccosukee Indian Tribe has not issued a formal statement, yet (at least not that we could find).  On either newsmaking order of Judge Gold's this month.  Stay tuned. 

For those interested in developing land in Florida or otherwise investing in Florida real estate, it's important to know that the State of Florida is in the process of changing and reforming how land planning, land conservation, environmental protection, and real estate development is handled by both state and local governments.  Statewide reforms have gutted much of the state control over land regulation (for more, check out the ebook in the left sidebar). 

Today, the State of Florida owns and oversees management of approximately 3.8 million acres of uplands. This acreage includes 500,000 acres of conservation easements. Almost all of this state land is used for either recreation or conservation purposes, uses that are constitutionally protected by the Florida Constitution in perpetuity. 

When the State of Florida decides that a parcel of land is no longer needed by the State, the land is first offered as a lease to state agencies, state universities, etc., and if they decline, then the first offer to sell the land is made to local governments.  If those local governments don't buy the tract, then the State will offer the property up for public sale or bid.

Here are 10 things that remain true today for those interested in Florida land and real estate:

1. Florida has over 3.8 million acres of conservation land, leased by the Division of State Lands (Division) to state agencies or local governments to oversee and manage as things like parks, preserves, forests, or recreation areas.
2. The Florida Division of State Lands also leases non-conservation lands to state agencies and local governments for things like college campuses, state prisons, and government office buildings.
3. Land use or land management plans are legally required for uplands under lease from the State of Florida and for both conservation and non-conservation lands.
4. Land use requirements will not require the same thing under Florida law for conservation and non-conservation land. 
5. There is a one year time period for conservation property to have a land management plan submitted (from time of lease) and approval may be needed by the Department of Environmental Protection, a Florida water management district, the Florida Natural Areas Inventory and/or the Division of Historical Resources, and the Division of State Lands. 
6. Land management plans for conservation lands in Florida must meet Florida Statute Sections 253.034(5) and 259.032(10), and agency rule requirements.  For non-conservation land,   land use plans must be submitted on a Division form (if you're smart, it's not an absolute requirement).
7. Many changes in land use or management activities, especially those that are included in ARC’s list of approved Interim Management Activities or additions to the Optimum Planning Boundary, may be allowed without any review by ARC or by posting on the ARC website as a minor plan amendment. More substantive changes must be presented to ARC at a regularly scheduled meeting. 
8. Land Management Plans for parcels over 160 acres must be presented to the Acquisition and Restoration Council (ARC) for their recommendations.
9. Land Management Plans for parcels less than 160 acres may use a form that was developed by the Division.
10. Most of the state’s conservation lands are managed by the following state agencies:

• Florida Forest Service
• Florida Fish and Wildlife Conservation Commission (FWC)
• DEP's Division of Recreation and Parks (DRP)
• DEP's Office of Greenways and Trails (OGT)
• DEP's Office of Coastal and Aquatic Managed Areas (CAMA)
• In addition, Florida’s five water management districts collectively own more than 1.5 million acres, which are managed to protect drinking water supplies as well as provide outdoor recreation opportunities:

• Northwest Florida Water Management District (NWFWMD)
• South Florida Water Management District (SFWMD)
• Southwest Florida Water Management District (SWFWMD)
• St. Johns River Water Management District (SJRWMD)
• Suwannee River Water Management District (SRWMD)

It is St. John's River Water Management District that is currently considering selling off surplus land to private buyers, as discussed in our earlier post on Tuesday.  Whether or not the other WMDs will follow St Johns' lead is being debated, but given their cash-strapped situation these days, it seems likely that surplus land sales to the public will be considered in the near future. 

Source:  Florida Department of Environmental Protection

The Federal Reserve Board has taken information provided by all twelve (12) of the Federal Reserve Districts as of May 25, 2012, and put all this data together in one Summary of Commentary on where our economy is at right now.  You may know this as the Beige Book for June 2012. 

Here's a Short Synopsis of what you will find in the complete Federal Reserve Board’s Summary of Commentary (read it here):

1.  Manufacturing

Manufacturing continued to expand, and most Districts reported gains in production or new orders. The only exceptions were from the Philadelphia, Richmond and St. Louis Districts, where factory activity was mixed or had softened slightly. Growth was seen in the following in one or more of the Districts:

• auto and steel manufacturing
• semiconductors and high-tech equipment
• aircraft and parts
• agricultural and construction equipment
• industrial machinery
• food
• pharmaceuticals
• petrochemicals
• construction-related products
• lumber and wood products

2.  Consumer Spending

Retail spending was flat to modestly positive in nearly all Districts. Growth was seen in the following in one or more of the Districts:

• household goods
• apparel
• automobiles 

3.  Travel and tourism

Reports from most Districts pointed to continued strength in travel and tourism, bolstered by both the business and leisure segments. Favorable spring weather spurred tourism in the Minneapolis and Kansas City Districts. Time-share rentals were strong in the Richmond District, and foreign visitors boosted activity in Florida.... Growth was seen in the following in one or more of the Districts:

• restaurants
• food service
• business travel
• convention bookings
• hotel bookings
• hospitality-related projects

4.  Nonfinancial Services

Demand for nonfinancial services was generally stable to slightly stronger since the previous report.  Growth was seen in the following in one or more of the Districts:

• information technology
• healthcare services
• professional and business services(e.g.,accounting, engineering, advertising, and legal)
• advertising sales
• freight transportation
• railroad contacts

5.  Real Estate and Construction

Activity in residential real estate markets improved in most Districts since the previous report. Growth was seen in the following in one or more of the Districts:

• apartment market
• multifamily construction
• home sales
• Commercial construction
• Commercial leasing
• Build-to-suit construction
• speculative industrial projects
• hotels / luxury hotels
• higher education projects

6.  Banking and Finance

Stronger loan demand in energy, healthcare, and commercial real estate.  Growth was seen in the following in one or more of the Districts:

• capital spending loans
• stronger mortgage lending
• commercial real estate loans
• auto loans.

7.  Agriculture and Natural Resources

Agricultural conditions generally improved since the previous report. Growth was seen in the following in one or more of the Districts:

• corn
• winter wheat
• hog and cattle
• Energy activity remained robust, with drilling expanding further in the Cleveland, Atlanta, Minneapolis, Kansas City, and Dallas Districts. 

8.  Employment, Wages and Prices

Hiring was steady or showed a modest increase. Reports of hiring were most prevalent in the manufacturing, construction, information technology, and professional services sectors.  Price inflation was modest across most areas of the country.   

The State of Florida has not removed itself from every bit of control over land use and real estate development in the state, despite the huge deregulations of the past two years (see the little ebook in the left sidebar for details).  Florida state government still has lots of say-so about roads and highways, for example.

However, there's a new twist on how things are going to be done in Florida.  The Florida Department of Transportation (FDOT) together with the Florida Transportation Commission (FTC) and partners at various levels from municipal to state-level groups, has already implemented the Future Corridors Program.

You can read all about the Future Corridors Program here.  In sum, what the Future Corridors Program aims to achieve is considering the various roads and highways and byways throughout the Sunshine State and then, with all these different players contributing their expert opinions, determining which Florida roads, highways, etc. -- what they call "statewide transportation corridors" will be built as brand-new projects as well as fixed up, expanded, or altered to better serve the public through new design or other changes.  The SIS Corridor Development is one example. 

The Future Corridors Program isn't a short term project: it's considering the state's ground transportation needs over the next 50 years. 

Read the formal Future Corridors Program Action Plan (published in 2006) online here.

Florida Will Pay $100,000 For Outside Expert Opinion on Future Corridors

Here's where some folk are shocked: the State of Florida isn't just listening to its own experts here.  It's 2012 and the current Powers that Be are looking to the future by hiring outside consultants to bring their savvy to the table as these long-reaching decisions are made.

Who's being hired?  Two former St. Joe Company executives who bring big real estate developer perspectives to the table, Chris Corr and Billy Buzzett, who will then go out and interview around 20 different major Florida  landowners about transportation development proposals and get their input on the plans, and the possible need for changes in state or local laws or maybe agency regulations in order to make the deals more doable.

Input will be gathered from developers, as well as big Florida utilities and Florida's powerful Water Management Districts.  Environomentalists, of course, are distrustful.  Some are suggesting this is going to result in a wildfire of land development across the state, particularly its Central Region.

We'll see.  In this economy, any kind of development wildfire sounds like a pretty dream or memories of days gone by ... or hope.  Optimistic home in our future isn't a bad thing.

Back in February 2012, we were cautiously optimistic about residential home construction because the National Association of Home Builders Housing Market Index had doubled from September 2011 to February 2012 in builder confidence in the construction of new single-family homes nationwide.  Last February, the NAHB Housing Market Index jumped to 29 from 25, measuring the expectations of buyers over the next six months.  It was the strongest index that had been seen since 2008. 

Lots of real estate professionals - developers, builders, contractors, lenders, suppliers, you get the idea - were happy about this and keeping their fingers crossed.

This month, things are looking even better. 

NAHB Index in June 2012: Solid Builder Confidence Reflects Improving Housing Markets.

On June 18, 2012, the National Association of Home Builders released their latest HMI, quoting from their report:

“This month’s modest uptick in builder confidence comes on the heels of a four-point gain in May and is reflective of the continued, gradual improvement we are seeing in many individual housing markets as more buyers decide to take advantage of today’s low prices and interest rates,” said Barry Rutenberg, chairman of the National Association of Home Builders (NAHB) and a home builder from Gainesville, Fla.

“While the June HMI is in keeping with our forecast for gradually improving single-family home sales this year, recent economic reports that have shown some weakening in the pace of recovery likely factored into the marginal gain,” said NAHB Chief Economist David Crowe. “In addition, builders across the country continue to report that overly tight lending conditions and inaccurate appraisals are major obstacles to completing sales at this time.”

How Is This Playing Out in Florida?

News media took this latest report and went to local industry folk to get their take on things, with interesting results.

The Tampa Bay Business Journal checked with the division marketing manager of Taylor Morrison, who confirmed that Florida appears to be in the early stages of recovery.

Business Week checked with Gainesville builder Barry Rutenberg, who confirmed that the NAHB report is showing the reality of a gradual improvement in the housing market -- but expect this from Rutenberg, since he's also chairman of the NAHB. 

The Sarasota Herald Tribune checked with a local company, Anchor Builders, whose head honcho confirmed that things are better now than they were last year. 

Here in Florida, we've been hit harder than almost any other part of the country in this housing crisis and it's not going to be a fast recovery no matter how much we would all like to see that happen.  Things are getting better, and that's good. 

It's good to see this confirmation, both from people who are out there working in the market as well as those crunching the numbers.  We may not be moving and shaking like we were a few years ago, but it's looking like the worst part of this bad time is over for housing.  Fingers crossed!

The fighting over how to regulate the Florida Everglades has been going on for years.  And years.  This week, however, lots of that controversy will stop because an agreement has been reached and okayed by the Environmental Protection Agency (subject to the approval of two federal judges to sign off on the deal).

What's the agreement?  It's a plan to spend $880 million to reduce the pollution going into Florida's famous Everglades area.  Pollution from farming, as well as from urban (suburban) land use has been entering the wetlands area of the Everglades and the area most locals know as the River of Grass.

Image show here:  NASA's satellite view of the Florida Everglades ecoregion known as the River of Grass.  (FYI, author Marjory Stoneman Douglas coined the phrase "River of Grass" to describe this area of Florida wetlands that most know as the Everglades back in 1947, when she wrote a book that has been compared to works like Silent Spring and Uncle Tom's Cabin for its impact upon the environmental advocacy designed to protect this area.)

Assuming that the two federal judges approve this agreement, then Florida will see many new projects developed and expanded in an effort to clean up storm water run-off before it flows into the Everglades region. 

Specifically, according to the EPA's take on things, several projects will be undertaken by the  South Florida Water Management District (SFWMD) designed to reduce phosphorus discharges into the Everglades. The EPA will oversee the projects and will issue and enforce the permit requirements.

As reported by the Miami Herald, the $880 million will be used to expand 45,000 acres to 56,000 acres of networked, man-made marshes that grab the bad stuff from the storm water runoff before it hits the protected wetlands areas.   This bad stuff?  One of the damaging nutrients that this new deal is targeting is phosphorous. 

What's phosphorous?  It is a chemical used in various fertilizers and garden products that are popular not only in farmlands but also in suburban green areas (like yards).  Rain moves these chemicals from the farm crops and the garden beds and into the water runoff where it has ended up in the wetlands area.

What happens in the wetlands area?  Phosphorous encourages some plants to grow, like cattails, at the cost of plants that have been growing in the Everglades ecosystem naturally. 

There will also be basins built near this network of marshes, a ribbon of them, designed to help maintain water flow and prevent flooding of the marsh network into the protected zones. They'll take up around 6500 acres.

Last year's major deregulation of Florida state oversight of land development continued this year with a number of additional laws being passed in the Spring and Summer of 2012 (see our earlier post for details) as well as HB 503, which is now law in the State of Florida.

HB503 changes the way that builders and developers get permits from the State.  With HB 503, it will take less time for business endeavors to get through the process of getting regulatory okays -- and no, the environment isn't tossed aside as this new legislation changes the permitting procedures.

Both business representatives and environmental activists worked with members of the Florida Legislature to form the final version of HB503 which was sent to Governor Rick Scott's desk for signature earlier this year.   With the revamped permit process, costs in time and money are lessened for builders, developers, and the like -- which helps them do business, and that helps Florida's economy to rebuild itself.

HB503

For a complete review of HB503, please see our earlier post which provides a complete bill summary. 

This new law does the following:

• creates, amends, & revises numerous provisions relating to: development, construction, operating, & building permits;
• permit application requirements & procedures, including waivers, variances, & revocation;
• local government comprehensive plans & plan amendments;
• programmatic general permits & regional general permits;
• permits for projects relating to stormwater management systems, coastal construction, dredge & fill activities,
• intermodal logistics centers & commercial & industrial development;
• sanitary program surveys of certain water systems;
• innocent victim petroleum storage system restoration, ambient air quality & water quality standards, & solid waste disposal;
• sale of unblended gasoline for certain uses;
• exemption from payment to authorizing agencies for use of certain extensions;
• provides a 2-year permit extension.

Here are the Florida Statutes that are impacted by HB503:

• 125.022 - Development permits.
• 161.041 - Permits required.
• 166.033 - Development permits.
• 218.075 - Reduction or waiver of permit processing fees.
• 373.026 - General powers and duties of the department.
• 373.326 - Exemptions.
• 373.4141 - Permits; processing.
• 373.4144 - Federal environmental permitting.
• 376.3071 - Inland Protection Trust Fund; creation; purposes; funding.
• 376.30715 - Innocent victim petroleum storage system restoration.
• 380.0657 - Expedited permitting process for economic development projects.
• 403.061 - Department; powers and duties.
• 403.087 - Permits; general issuance; denial; revocation; prohibition; penalty.
• 403.1838 - Small Community Sewer Construction Assistance Act.
• 403.7045 - Application of act and integration with other acts.
• 403.706 - Local government solid waste responsibilities.
• 403.707 - Permits.
• 403.7125 - Financial assurance.
• 403.814 - General permits; delegation.
• 403.853 - Drinking water standards.
• 403.973 - Expedited permitting; amendments to comprehensive plans.
• 526.203 - Renewable fuel standard.

The Florida East Coast Railway L.L.C. (FEC) is a railroad line that moves lots of containers up and down the eastern coastline of Florida, competing with big rig trucks and seagoing vessels in getting product in and out of the State of Florida. The FEC is the only railroad operating on the east coast of Florida, and it has a rich history as being invaluable in the development and construction of treasured parts of today's Florida landscape, from Miami to the Keys. 

In the past, Florida land developers and Florida contractors knew the Florida East Coast Railway L.L.C. (FEC) as the way to get heavy loads of material moved through the state - usually stone that was needed for both commercial and residential projects. Time was, the FEC train tracks were a big deal for getting construction projects done here in Florida.

Railway Expanded to Other Container Needs When Construction Needs Fell: Intermodal

However, in recent years the bad economy has meant less traffic in construction materials like crushed rocks and the Florida East Coast Railway has turned from construction to grow its intermodal business.  In fact, earlier this month the FEC had an open house for the media and reported that intermodal makes up almost 80% of what's being shipped on the FEC tracks today.   FEC honchos want to keep that business. 

The FEC also wants to get into other ventures, too - other areas where container cargo needs to be moved in and out.  There's the Port of Miami, for example, and Fort Lauderdales' Port Everglades. 

FEC May Host Passenger Trains, Too, If Amtrak Project Gets Off the Ground

Over in Daytona, there's also talk about how Amtrak is planning on running a passenger train on the same tracks that the FEC runs those container cars now. Earlier this month, there was a big conflab among Daytona powers that be about how to get passenger service on the FEC and how to make sure Daytona Beach was included in that project.

There's been talk of putting a passenger line on the Florida East Coast Railway for over 40 years, of course.  This isn't a new idea.  However, business developers in several parts of Florida hope to have an Amtrak passenger train moving on the FEC tracks on a daily basis, taking people from stops in Daytona Beach as well as Cocoa, Fort Pierce, Melbourne, St. Augustine, Stuart, Titusville and Vero Beach.  Big hurdle all this time?  Funding - especially federal funding.

However, now the money seems to be in place and the project appears to be a "go" with Amtrak, Florida East Coast Railway and the state Department of Transportation reportedly ironing out the final operating agreement. 

Which means that in the next few years, the FEC will be moving lots of container cargo on its rails along with the passenger line. 

Making Room for Florida Construction Bouncing Back

One of the interesting developments in reviving Florida's economy is the impact of the out of the box thinking that has been and is being done now to get things healthy and moving again.  Florida's gutted its state regulatory scheme (for more, read the ebook there in the left sidebar).  Florida's private and public sectors have been very creative in finding ways to make real estate investment and land development in the state attractive to foreign investors. 

The innovations in using the FEC train tracks when construction needs fell is just one more example of how Florida will survive and thrive in the future through innovation.  This is good.

However, here is another question:  when Florida construction needs come back to FEC for the containers of stone and crushed rock and construction materials in (hopefully) volumes analogous to those of years past, will the FEC be ready and able to accommodate those needs? 

Florida land developers and contractors will be need those rails again.  Maybe sooner than the FEC realizes.  Can they handle it? 

It will be nice when these are the problems to resolve again in Florida, won't it? Everyone having to make room for lots of new construction, new business, new product and service needs.  That may be the reality in just a year or two....

Here's good news for Florida - a new research study finds that the Florida economy as a whole is getting better, news carried by media outlets like the New York Times.  More here in our "news release of the week." 

To get the actual study, you will need to email Comerica at www.comerica.com/econsubscribe and subscribe.

Here from the Comerica Bank out of Dallas:

Florida Economy Rises In March, Reports Comerica Bank's Florida Economic Activity Index

DALLAS, May 23, 2012 /PRNewswire/ -- Comerica Bank's Florida Economic Activity Index increased in March, rising four points to a level of 109.5. The March index reading is 29 points, or 36 percent, above the index cyclical low of 80.6. The index averaged 107 in the first quarter of 2012, eight points above the index average for all of 2011.

"Florida is gaining economic momentum, as shown by the uptick in our Florida Economic Activity Index for March. Real estate conditions are gradually firming, as buyers take advantage of the very high affordability in residential markets," said Robert Dye, Chief Economist at Comerica Bank. "Tourism activity is picking up and that is helping to stabilize the state economy. However, cuts in federal spending are dragging on the Florida economy as the space shuttle program fades into the history books. A weaker global macroeconomic environment may limit international interest in Florida real estate this year."

The Florida Economic Activity Index consists of seven variables, as follows: nonfarm payrolls, exports, sales tax revenues, hotel occupancy rates, continuing claims for unemployment insurance, building permits, and airline passenger deplanements. All data are seasonally adjusted, as necessary, and indexed to a base year of 2008. Nominal values have been converted to constant dollar values. Index levels are expressed in terms of three-month moving averages.

In addition to Boca Raton, East Boca Raton, Fort Lauderdale, Naples, Orlando, Palm Beach Gardens, Singer Island, Sarasota, Stuart, Wellington and Weston, Fla., Comerica (NYSE: CMA) locations can be found in its headquarters state of Texas, as well as in Arizona, California and Michigan, with select businesses operating in several other states, as well as in Canada and Mexico.

SOURCE Comerica Bank

RELATED LINKS

http://www.comerica.com

Source: PR Newswire (http://s.tt/1czTx)

Here's another piece of evidence that Florida real estate is bouncing back: national builder Meritage Homes has announced that it will be developing a new community of custom-build homes near Medical City, in the Lake Nona High School area, forecasting 146 residences in the new upscale neighborhood. Expect to see frames going up within the next few months.

Who is Meritage Homes?

Meritage Homes is a biggie in the home building industry, with residential home projects in several states besides Florida (Arizona, California, Colorado, Nevada, North Carolina, and Texas).  From its website:

Some might say it's important to tell you that we've been around since 1985. Or that we've won a slew of awards ranging from Forbes' Platinum 400 Best Big Companies of America to being the recipient of Texas' Builder of the Year five times, or being named ENERGY STAR® Partner of the Year. But we're about practicality and doing things that actually make a difference in your life and the way you live.

For instance, you're probably a lot more interested in knowing that Meritage builds new, beautifully designed, energy-efficient homes that can save you as much as 80% on your utility bills.* Or, that we were the first national top 10 homebuilder to have every home we build be 100% ENERGY STAR-qualified. That means it saves you energy and money.

With more than 70,000 homes built, our focus, since day one, has been to build incredible new homes and communities in prime locations for fantastic prices. We build them for real people: People with families and those without; people with everyday, busy lives, and those who are now enjoying a more relaxed lifestyle. But more than anything, we build energy-efficient homes and communities for people who appreciate a home being built the way it can, and should, be built. For you it means having a new home that comes standard with ENERGY STAR features that save money and energy, month after month, at no extra cost to you.

Check out Fells Landing, the first phase of the new Lake Nona project by Meritage Homes

Meritage Homes will follow a pretty standard implementation plan here, with the first part of its community being developed in the fall under the name of Fells Landing. This first phase will have 47 homes built near Boggy Creek Road. 

Zillow.com is ready for this project to get going: the Fells Landing page at Zillow is in place, just waiting for an image of the construction itself.  Zillow describes the new project as part of a master planned community of " ... estate-size homes coming soon. Generous floor plans range from 2,701 - 5,107 sq. ft., with great schools and fantastic amenities nearby."

That's right, folks.  New homes being built in Orlando, Florida.  Lots of them.  Things are looking up!

HB1013 in the Florida Legislature has been closely monitored by many in the Florida real estate industry (check out our earlier post from February 2012 for details) and now, it's a done deal.

Last week (on April 27, 2012), Florida Governor Rick Scott signed HB 1013 into law, and it becomes effective on July 1, 2012. You can read Governor Scott's transmittal letter here. 

What does HB1013 Do, and Why Are So Many Against It?

This new law changes implied warranties for construction of residential properties - like the many condominiums here in Florida.  HB1013 limits implied warranties for a new home by stating in Florida legislation that these warranties do not extend to defects in things like roads and drainage improvements. 

This helps Florida builders and Florida real estate developers because they can now point to Florida legislation as a shield when HOAs (homeowners' associations) assert claims against the builders for infrastructure issues. 

It says something that Governor Rick Scott signed this bill into law this week; after all, there were lots of folk asking that Governor Scott veto HB1013.  Consider their arguments as presented here:

1. Today's editorial in the SunSentinel, entitled "Developers get costly break;" and

2. Last week's story in the Miami Herald, "Homeowners want Scott to veto bill that forces them - not developer - to pay neighborhood repairs."

As for the persuasive arguments that helped convince Governor Scott to sign this legislation, check out "Action Alert: Lower Costs for Business by Preventing Frivolous Lawsuits – Urge Governor Scott to Sign HB 1013," by the Florida Chamber of Commerce. 

What about the Lakeview Reserve case?

Back in 2010, the Fifth District Court of Appeals here in Florida issued its opinion in Lakeview Reserve Homeowners v. Maronda Homes, Inc., 48 So.3d 902 (Fla. 5th DCA 2010),  and by doing so, the Florida court ruled that implied warranties of developers and builders of residential properties did extend to the subdivision infrastructure areas like roads, sewers, drainage, etc. -- in HB1013, Florida law is returned to the status quo that existed before this decision.

In essence, the Florida Legislature and the Florida Governor have told the Florida Courts that nope, Florida warranty law isn't going to get new boundaries in this current economic crisis. 

And that's good news for Florida real estate. 

Real estate developers and investors both in Florida and around the world are aware of Enterprise Florida Inc. (EFI).  Enterprise Florida has offices all over the world (there's a map on their site if you're interested) all working to better Florida's economic future.  

Enterprise Florida Inc. Designed to Facilitate a Growing Florida Economy Through Coordinated Efforts

Enterprise Florida is not a totally private corporation nor is it another government agency; instead, it's a combination of both private and public efforts working together in a quasi-private organization. From EFI's website, EFI's mission is:

"... [t]o facilitate job growth for Florida's businesses and citizens leading to a vibrant statewide economy.  EFI accomplishes this mission by focusing on a wide range of industry sectors, including clean energy, life sciences, information technology, aviation/aerospace, homeland security/defense, financial/professional services, manufacturing and beyond. In collaboration with a statewide network of regional and local economic development organizations, EFI helps to improve Florida's business climate, ensuring the state's global competitiveness.

Enterprise Florida is committed to assisting companies confidentially with their expansion and location plans. We provide site selection services, demographic information, incentive information, trade leads and much more. We also coordinate introductions to our network of economic development partners located throughout the state.

Enterprise Florida works hard to bring foreign investment and international business to Florida - which is especially vital to our current economy.  EF boasts to all sorts of global business interests about why they should be doing business here in Florida - for just one example, read their downloadable pdf entitled "Why Florida? Top 10 Reasons."

Which is why the recent Watchdog Report suggesting corruption at Enterprise Florida is getting so much attention.

Integrity Florida has issued a 24 page report - available for free download here - that suggests that not everything is on the up and up at Enterprise Florida.  Who is Integrity Florida? According to its site, it is "a nonprofit, nonpartisan research institute whose mission is to promote integrity in government and expose public corruption." 

From the Orlando Sentinel we know that Integrity Florida is run by the former state director of Common Cause, Ben Wilcox, and the ex-communications director of the Florida Chamber, Dan Krassner.  Also from the Orlando Sentinel, we know that the Integrity Florida report is not based upon its own independent efforts, but instead pulls information from a review done by The Center for Public Integrity, Global Integrity and Public Radio International, as well as various news stories that have been reported in the Florida news media.  

What does the Integrity Florida report have to say about Enterprise Florida? 

According to its “Corruption Risk report” there are both conflicts of interest at EFI as well as operations being done without public access to their workings - some board meetings didn't get proper notice, some contracts have been awarded with "secret project code-names" and Integrity Florida promises that its going to work hard to find out what those secret codes mean.  (Since they're not doing their own research, we can assume they are depending upon journalists to do this?)

What does Enterprise Florida have to say about the Integrity Florida report? 

In a statement to the media, the head of Enterprise Florida offered the following statement:

“My chief marketing officer, Melissa Medley, and I readily accepted a request from Mr. Krassner to meet and discuss the concerns he has been promoting regarding Enterprise Florida. We feel it is our obligation to do so with any concerned citizen. The meeting concluded with our clarifying, explaining and correcting Mr. Krassner’s points about whether Enterprise Florida has been transparent in its business practices. In a time where there is fierce competition for jobs, we made it clear to him and his research director, Ben Wilcox, that we do not agree with Mr. Krassner’s approach of releasing half-truths to inflame emotions. He is misleading Florida’s citizens by disseminating misinformation and misrepresentations of our organization, our mission and our work each day.

“I expect and require our organization to follow the law and make sure there is a fiduciary responsibility to the Florida taxpayer. The position piece he presented this morning fails to reflect the outcome of our discussion and the specific points that we clarified and to which he appeared to understand and agree. As a result, we now look forward to clarifying, once again, Enterprise Florida’s business practices, transparent approach and the state’s economic development process. And, at the same time our EFI team will continue to work every day with the passion and dedication to foster job creation for our citizens.”

 

If there's been evildoing at Enterprise Florida, then we all need to know it and it needs to be corrected.  However, if there's been fingerpointing at this organization that is either premature, incomplete, or scewed, then we need to know that, too.  Something's rotten in Denmark somewhere.

Florida's economy is in serious trouble and we don't need these hijinks. 

Here at Florida Commercial News, we post major news announcements and press releases that impact Florida real estate investment and Florida land development as the "release of the week."

This week's big news item is the announcement of more development in Lake Nona as Florida Hospital announces a new, important expansion:

______________________

Florida Hospital College of Health Sciences breaks ground on new five-story building to accommodate new programs

ORLANDO, Fla., April 10, 2012 - With an eye toward the future, Florida Hospital College of Health Sciences announced plans to expand its campus to accommodate more students and offer new programs in the health care field.

"With this new building, we are going to be able to educate and train more students in a variety of medical professions," said Dr. David Greenlaw, president of Florida Hospital College of Health Sciences. "Florida is a destination spot for many retirees around the country, so it is imperative that we respond accordingly to offer the best medical care training."

The new 90,000-square-foot, five-story building will feature a large multi-purpose room to host educational hospital and community events, as well as a medical simulation lab with infant, child and adult simulators. The new academic center will also house four clinical labs, five chemistry and biology labs, and a variety of other classrooms with the capability to broadcast courses to diverse geographic locations using the latest web streaming technology.

"Our students truly benefit from a hands-on learning experience," said Kathleen Wren, Ph.D., CRNA, Chair of the Nurse Anesthesia Program at the Florida Hospital College. "This new building will enhance what we are already doing with our students. Our proximity to Florida Hospital Orlando already provides our students with a valuable clinical learning experience and by creating more programs that are in demand, we will be able to train more future medical professionals."

In addition to the new building, the college is expanding its curriculum to offer doctorates in nurse anesthesia, physical therapy and pharmacy. The college currently has a master's program in occupational therapy and health care administration in additional to a variety of associate and bachelor's degrees ranging from nursing to diagnostic medical sonography.

Based on information compiled by the U.S. Census Bureau, it is estimated that by 2030 there will be 72.1 million people over the age of 65 living in the United States. In other words, the elderly will comprise 19 percent of the U.S. population, almost twice their percentage in 2000. With the aging population, as well as an increasingly health conscious society, Florida Hospital College has taken the initiative to prepare for the inevitable growing need for medical professionals.

Florida Hospital College of Health Sciences, located near downtown Orlando, specializes in allied health and nursing education. Founded in 1992, the college currently enrolls 2,700 students in its associate, bachelor's and master's degree programs. The college works closely with Florida Hospital to give students the clinical experience that only a major medical center can provide.

For media inquiries only, contact Florida Hospital Media Relations at 407-303-8217.

The Florida Legislature was very busy this month, getting legislation passed and over to Governor Rick Scott's desk before the end of the 2012 Legislative Session this month.  Lots of people are still combing through all the things that the Florida Legislature undertook in 2012; here are two new laws that are of interest to Florida real estate developers and investors.  Both will be effective July 1, 2012, unless Governor Scott blocks them.

1.  HB503 (read the full text of HB503 here)

From its summary, the Florida Legislature provides the following description of this new law:

• Prohibits a county or a municipality from conditioning the processing for a development permit on an applicant obtaining a permit or approval from any other state or federal agency;
• Authorizes the DEP to issue a coastal construction permit before an applicant receives an incidental take authorization;
• Expands eligibility for those entities entitled to reduced or waived permit processing fees;
• Expands the use of Internet-based self-certification services and general permits;
• Exempts previously authorized underground injection wells from ch. 373, part III, F.S., except for Class V, Group 1 wells;
• Reduces the time for agency action or proposed action on a permit from 90 to 60 days;
• Provides for an expanded state programmatic general permit;
• Raises the qualifying low-scored site initiative priority ranking score from 10 to 29, and exempts certain expenditures from counting against the program;
• Revises qualifications for fiscal assistance for innocent victim petroleum storage system restoration;
• Provides expedited permitting for intermodal logistic centers (inland ports);
• Authorizes zones of discharges existing installations, with certain limitations;
• Revises requirements for permit revocation;
• Revises the definition for “financially disadvantaged small community”;
• Revises the definition of industrial sludge;
• Specifies recycling credits available for counties that operate waste-to-energy facilities;
• Revises provisions related to solid waste disposal and management;
• Provides for a general permit for small surface water management systems;
• Expands the definition for “transient noncommunity water systems” to include religious institutions;
• Clarifies creation of regional permit action teams for certain businesses;
• Allows for sale of unblended fuels for specified applications, and specifies that alternative fuels other than ethanol may be used as blending fuels for blending gasoline; and
• Prohibits the collection of permit renewal fees for those permits that were automatically extended by Chapter 2011-139, ss. 73 and 79, L.O.F.

What is happening here? 

With HB503 the Florida Legislature has done some housekeeping in the way that environmental permits are given here in the State of Florida.   HB503 changes the environmental permitting process in several ways - one which may get more and more chatter involves nixing the ability of local governments to make a development permit dependent upon another state permit.   Another change: HB503 also gives more time to those seeking environmental resource permits.

2.  SB1986 (read the full text of SB1986 here)

From its summary, the Florida Legislature provides the following description of this new law:

• Authorizes the Legislature to set the maximum millage rate for each district.
• Removes a provision requiring that the maximum property tax revenue for water management districts revert to the amount authorized for the prior year if the Legislature does not set the amount.
• Removes the maximum revenue limitation for the 2011-2012 fiscal year.
• Creates s. 373.535, F.S., to require each water management district to submit a preliminary budget by January 15 for legislative review, requires the preliminary budget to include certain information, and authorizes the President of the Senate and the Speaker of the House of Representatives to submit comments regarding the preliminary budget to the district by March 1. Requires each district to respond to the comments no later than March 15.
• Provides for the preliminary budget reviewed by the Legislature to be the basis for developing each district’s tentative budget for the next fiscal year.
• Provides criteria for the Legislative Budget Commission (LBC) to use in approving the tentative budget of a district and authorizes the LBC to reject certain district budget proposals.
• Requires a district to submit for review a description of any significant changes made from the preliminary budget to the tentative budget.
• Requires that a five-year water resource development work program describe the district’s implementation strategy and funding plan for water resource, water supply, and alternative water supply development components of each approved regional water supply plan.
• Authorizes the governing board of a water management district to provide group insurance for its employees and the employees of another water management district.
• Allows each water management district to own, acquire, develop, construct, operate, and manage a public information system, and exempts local government review or approval of such public information system.
• Revises the definitions of the terms “regularly established position” and “temporary position” for purposes of district positions within the state retirement system, effective October 1, 2012.

What's happening here?

With SB1986, the Florida Legislature erased caps that were in place for funding Florida Water Management Districts - which is a good thing, considering that the statehouse had passed legislation in 2011 that took away over $200 million in funding for WMDs.

Assuming that July 2012 sees SB 1986 becomes effective law here in Florida, developers will see revenue caps lifted and districts will decide their funding levels (though there will be state legislative review).

Update: As described below, and reported by many industry leaders, it appeared that the Florida Legislature left Tallahassee this March without taking important action.  However, as the dust settles, we find that an amendment to HB517, dealing with licensure of appraisers, etc. has included within it an extension of the "bulk buyer" and "bulk assignee" classifications to July 2015.  Read the Bill Summary here. 

Those foreign interests as well as U.S. buyers interested in purchasing inventories of distressed Florida condominium units got some bad news last week.  Buying up lots of condos here in Florida seems like a smart move for lots of folks these days, and they're right:  we all know that condos (particularly here in South Florida) are a hot ticket right now. 

In fact, for the past few years, Florida's current real estate market has offered real estate investors a great opportunity to buy condos in bulk. Savvy investors have been buying up existing condo units as well as buying up prime real estate at bargain prices to build even more condo projects. 

Earlier this month, Business Week covered the huge international interest in Florida's condominium market in an article entitled, "Foreign Buyers Heat Up Miami's Condo Market."  There, experts opined that foreign buyers are making up 80% of the Florida condo investment and gave details on just how big the Florida condo market really is right now. 

Part of this market rebound has to be credited to the actions of the Florida lawmakers, particularly in the passage of the Florida Distressed Condominum Relief Act.  (Read the full text of the Act here.)

Florida Distressed Condominium Act Is Not Extended

However, on March 9, 2012, despite the Florida condo fever two bills died up in Tallahassee that would have extended the life of the Florida Distressed Condominium Act by three years.  Florida House Bill 319 and Florida Senate Bill 680 each contained language that would keep the law effective through 2015.  Both died in committee last week. 

Which means that the Florida Distressed Condominium Act will cease to be effective law on July 1, 2012.

What does the end of the Florida Distressed Condominium Act mean for condo investors? 

Without this law being extended, the legal classification of "bulk buyer" or "bulk assignee" as it pertains to Florida condos will no longer have legal effect after the July 2012 deadline.  The Florida Distressed Condominium Relief Act (FDCRA) allowed buyers to qualify as "bulk buyers" or "bulk assignees" under Florida law and thereby gain some nice benefits in exchange for their buying up distressed condos in bulk and repositioning the projects.  

Which was part of the plan.  Passed in 2010, the goal of the FDCRA was to promote the sale of the huge glut of condominiums setting empty in Florida and to help condo associations who were hard hit by falling property values and huge numbers of vacant, unoccupied condos that had been abandoned to foreclosure.  

Now, we're close to 90 days of opportunity for real estate investors or foreclosing lenders to qualify as "bulk buyers" or "bulk assignees" which will provide them, among other things, limited liability from any claims that originated with the original condo developer.  After July 2012, those buying condos in bulk acquistions here in Florida will need to be aware that they may have successor liabilities involving things like past due assessments, reserves that have not been funded, the responsibility of honoring warranties on individual condominium units, and more. 

No more limited liability protections under Florida law when you buy up condos in bulk.  At least, after July 1, 2012. 

Lesson here?  If a real estate investor is considering buying an existing, distressed condominium project in Florida then they need to hurry and make the deal and get that FDCRA protection.  The clock is ticking. 

This year marks the 100th anniversary of the Florida Chapter of the American Institute of Architects (AIA Florida) and to celebrate this achievement, AIA Florida has created a statewide competition under the banner of “Florida Architecture: 100 Years. 100 Places.”

The goal?  To have the public vote and decide which of Florida's many beautiful sites should be listed as number one of the 100 buildings and places that are considered most representative of true architectural achievement in this state. 

You Can Vote for Your Central Florida Favorites! Here's How

There are already nominations set up in a list, and starting this week AIA Florida has opened public voting on these nominated buildings.  The goal?  Number One, of course - it is sort of like choosing the Idol of Florida Architecture in 2012.  Without Ryan Secrest, JLo, and the gang.

You can vote as much as you like.  Vote at http://www.aiafltop100.org.

Click here to vote.  You do not need to be an architect to vote.  Voting ends on March 31, 2012.

Nine Central Florida Contenders

There are 9 Central Florida buildings on the AIA Florida list, which is already quite a nice recognition of some very impressive places.  However, one of these could be the Number One Architectural Site in Florida, with your help. They are (images available for each at the voting site):

• Disney’s Cinderella Castle, Lake Buena Vista
• Daytona Beach Bandshell, Daytona
• Disney’s Contemporary Resort, Lake Buena Vista
• Knowles Chapel at Rollins College , Winter Park
• Orange County Convention Center, Orlando
• Orlando Federal Courthouse, Orlando
• Orlando Public Library, Orlando
• Disney’s Swan and Dolphin Hotels, Lake Buena Vista 

Nominee: Orange County Convention Center, Orlando, built in 2003 by TVS Architects of Atlanta in conjunction with Hunton Brady and HHCP.

Right now, the probability of the Florida Fair Foreclosure Act becoming effective state law increased as HB 213 as amended was adopted without objection late yesterday by the Florida House of Representative's Judiciary Committee. Meanwhile, its version in the Florida Senate, SB 1890, just passed the Senate Judiciary Committee by a majority vote. 

It's looking like the Florida Fair Foreclosure Act will be up for a full vote very soon. 

Meanwhile, a big report out of California this week is estimating that 84% of the nation's foreclosure filings are illegal due to legal improprieties of some sort - robosigning, etc. and that almost 100% of these foreclosures contain irregularities.  The basis for this statistic was an audit performed on 382 foreclosures in the San Francisco area as commissioned by the San Francisco Assessor-Recorder, Phil Ting. 

Read the California report in its entirety here.

Already, opinions are being voiced that this report highlights the reasons why the Florida Fair Foreclosure Act should not become law.  The Sarasota Herald Tribune, for example, has gone on record as being against its passage.

Meanwhile, questions remain.  The State of Florida has a huge glut of foreclosures that are in limbo and this does no good for the communities these properties sit in, nor for the lenders left holding the bag on an unpaid loan.  It's taking around two years time at this point for a Florida bank to foreclose on the home as collateral on that unpaid mortgage - and then, there's another significant amount of time for that bank to bear the costs of that property until it can move the home off its books.

No wonder Federal Reserve Chairman Ben Bernanke is suggesting that banks start being landlords and renting out these homes. 

Florida's judicial system was not prepared for this massive wave of defaulting mortgages and the resulting foreclosure filings.  The courts are bottlenecked. 

One way to move things along, and it's not the only answer - this is no silver bullet - is the proposed HB213, which allows a streamlined foreclosure process in certain situations as well as doing other things like limiting the number of years that a bank can seek a deficiency judgment to one year. 

There are no magic potions to fix the huge Florida housing crisis and its impact on the Florida economy. 

This proposal may not be perfect, but it's one way to get our state back on track.  Because right now, the reality is that Florida's home mortgage and residential real estate economy is one big train wreck. 

Last month, we posted about the white paper that US Federal Reserve Chairman Ben S. Bernanke submitted to Congress (read it here, along with the full text of that Federal Reserve white paper) and all the reactions to his submission. Some think the Fed Reserve Chairman is going too far, with Bernanke exceeding the limits of his authority with what he's suggesting to Congress and essentially promoting in his speech last week.

Because Bernanke's speech to the International Builders Group of the National Association of Homebuilders on February 10, 2012, was taken point by point from Bernanke's arguments to Congress. 

At least everyone can agree that Bernanke is a man with a mission.

In essence, Ben Bernanke is arguing that the Federal Reserve system is being hampered in its efforts to jump start the American economy because the U.S. Housing Industry is not cooperating. Specifically, the Federal Reserve Chairman is pointing fingers at the weak mortgage lending present in Florida as well as the rest of the country.

Weak mortgage lending means a weak housing market, which is a big problem for the Federal Reserve these days.  A problem to be solved. 

Bernanke Didn't Talk Money to the Builders, He Talked Housing

After acknowledging a fact that everyone in the real estate industry, if not the country at large, understands - that record low interest rates on home mortgages are not igniting home sales - Bernanke moved to suggestions for getting things moving. 

Things like having government entities (land banks) take on home ownership thru donations of homes; buying of homes; and selling of homes, as well as having the power to clear up title questions.

Result?  Many who are currently facing foreclosure in Florida may never move from their home; however, they may change from being "owner" to "tenant" with the government taking on the responsibility of home ownership.  In the future, will the government sell that home back to the tenant who was facing foreclosure as a home owner?  Probably - but that's one of the big issues here: once the government owns the real estate, some are concerned that the government won't let go.

Here is the full text of Federal Reserve Chairman Ben Bernanke's speech in Orlando last Friday (click to view the entire speech), entitled "Housing Markets in Transition," as it was presented at the National Association of Homebuilders' International Builders Show:

The economic recovery began more than two years ago, but it doesn't feel like much of a recovery for many Americans--certainly for those of you who depend on the housing sector for your living, as well as for the millions of others who have seen their home values plummet or lost their homes through foreclosure. Though some progress has been made in reversing the losses in jobs and income sustained during the recession, the pace of expansion has been frustratingly slow and the unemployment rate remains very high by historical standards. The state of the housing sector has been a key impediment to a faster recovery. In the typical economic recovery, a resurgent housing sector

Continue Reading

The beginning of 2012 is bringing lots of different forecasts relating to economic recovery in South Florida, and most of us agree that a sustainable recovery can only come after a turn around in the housing industry.  Now, there are those who are proposing creative ways to boost housing and get things moving forward.

Like Federal Reserve Chairman Ben Bernanke.

This week, Bernanke released his Big Idea for Housing:  let banks move lots of those Real Estate Owned properties sitting on their books after foreclosures have been completed into an income-producing column on their books:  rental properties.

Read Bernanke's white paper here. 

It was sent yesterday to the Senate's Committee on Banking, Housing and Urban Affairs and it's spreading like wildfire among news analysts and industry leaders. Some are calling Bernanke's idea a "game changer." 

Banks are sitting on a tremendous number of homes and paying the expense of their maintenance: why not rent them out and get some money coming in?  Sounds great to a lot of people.  And for many segments of our industry, this may provide an answer, but it is not positive news for everyone.  If banks begin to throw their inventory of homes into the rental market, there may be adverse effects to others in the real estate and construction industries. 

In Florida, Renting is Looking Good - for the Construction Industry

The Fiscal Times reports that real estate developers are already forecasting an increased popularity in renting as opposed to home ownership.  Projects in development in Florida and elsewhere for multi-family dwellings are booming in today's bad economy: they are being built at three times the rate of single family homes.  

Here in South Florida, apartments are especially popular in real estate development circles.  As the Fiscal Times notes, we're already aware of development of around 4000 rentals in Fort Lauderdale, Hollywood, and Plantation alone.

It's not good news for those interested in planning and building these new multi-family homes to hear that banks are about to put "For Rent" signs all across the community in front of single family homes.  With the right rent, many families will opt for those homes instead of renting an apartment. 

Mr.. Bernanke's "Game Changer" may not be great news for everyone in South Florida after all. 

Right now, the Florida Legislature is on holiday break but soon it will be back in session up in Tallahassee working on one of the biggest jobs to be undertaken:  finalizing the casino bill legislation to allow limited and supervised gambling in Miami and other parts of Florida.

To monitor that legislation, Senate Bill 0710, follow SB-710's site page at the Florida Senate.

Media Takes Notice of Encouraging Economy Boost Due to Genting's Arrival in Miami

The New York Times covered what's happening here in the Miami area with a recent article entitled, "South Florida Poised for Birth of Casino Gambling," which delves not only into the status of Genting's Resorts World Miami and the future of casinos in South Florida, but also points out what we've been discussing for awhile now:

Genting's entry into the Miami metroplex commercial real estate economy has had an almost immediate, positive impact.  Included in the NYT coverage are examples like:

1.  Miami World Center

You can view a very sleek website for Miami World Center online already, even though the "city within a city" has yet to break ground.  Technically, this project has been in the works since November 2008 and predates Genting's Resorts World Miami, but as the NYT reports, Genting has reinvigorated the project with its promise of an economic boost.  

2. Miami Beach Convention Center

The Miami Beach Convention Center may be getting a nice renovation - and expansion - as the local Powers that Be paid Arquitectonica for a study of what it will take to makeover the place. Steve Wynn was interested in footing the bill to redo the Center if he could build his own casino nearby (a big hint, hint to Tallahassee).  

Miami Beach has hit a stumbling block for the moment here, since their Board of Supervisors voted down the proposal to allow gambling there.  Is it over?  We'll see.  

Economic Predictions

Right now, the economists are still doing their statistical studies and crunching their numbers before issuing their opinions on gambling casinos impacting South Florida.  

However, a big group of businesspeople in a number of industries have taken the floor to state their take on things and how this will help them and their people.  For more, watch this video where the Associated Industries of Florida held a press conference to make their opinion known:

[This post is the fourth in a series discussing the Foreign Account Tax Compliance Act (FATCA) and its impact upon foreign investment and development in South Florida and the United States as well as efforts both locally and in other countries to stop FATCA.]

As 2011 comes to an end, and time ticks closer to the June 2013 effective date of the Foreign Account Tax Compliance Act (FATCA), more and more reaction across the globe is taking place.  As discussed earlier, to implement the requirements of FATCA will cost banks an enormous amount of money -- and there are many foreign lenders that are not too happy at the prospect.

Eight Billion Reasons Feds Like FATCA

In a November 2011 Reuters piece covering FATCA as a forecasted financial tsumani, one U.S. legal expert opined during an Italian tax conference that FATCA may cost the big multinational banks $100,000,000 EACH.  

Compare this against the predicted $8+ billion in tax revenue that FATCA is expected to bring into the coffers of the U.S. Department of Treasury, and we begin to see where the battleground really lies.  The old adage of "show me the money" is often wise advice.  

It's going to be very hard to get FATCA repealed when it's promising so much revenue to a federal government dealing with a severe economic crisis.  Additionally, Congress passed this law as a means of catching alleged tax evaders (whether or not it will actually hurt or halt tax evasion is another issue), so FATCA brings with it a righteous rationale that also weakens the likelihood of repeal.

Other Countries Are Fighting FATCA

As discussed earlier in this series, other countries are shocked and stymied by FATCA because not only does the new law clash with their privacy laws in some instances, but many see FATCA as the United States trying to turn independent jurisdictions into deputized IRS collection agents, and many nations find this insulting. They see this as the worst kind of US economic imperialism at work.

These nations are not sitting still.  They are taking action now, and not betting on a repeal.  China is reported to be planning on ignoring or avoiding FATCA, flat out.  European banks are turning away Americans as customers rather than deal with FATCA.  Canada, meanwhile, has been negotiating with federal representatives on FATCA's impact.  

Earlier this month, Jim Flaherty (Canada's Finance Minister) spoke to reporters to say that the Treasury Department was working with his office on ways to make FATCA easier on Canada's banks.  Flaherty's explanation?  Canada is not a place where U.S. tax evaders are known to find safe harbor.   Since FATCA is aimed at collected hidden tax dollars overseas, Canada is arguing that its banks shouldn't be forced into spending a lot of money to institute compliance (aka collection) procedures that don't jive with FATCA in the first place.  

IRS Commissioner Discusses FATCA Impact Before International Tax Institute

On December 15, 2011, the Commissioner of the IRS gave a speech at the IRS/George Washington University 24th Annual Institute on Current Issues in International Taxation,  (You can read the full text of his speech online here.) It doesn't sound like the IRS thinks that FATCA's days are numbered - Commissioner Shulman definitely sounds like he's with those that think FATCA is a done deal.  

Here are some highlights from Commissioner Shulman's speech (all are quotes from his 12/15/11 speech):

• Our approach to offshore tax evasion follows a natural course…cleaning up the abuses of the past and then mining and leveraging the data we receive to mount a greater attack on the abuse.
• Indeed, I framed the new disclosure initiative as the best chance for people to get back into the system… back into compliance… so they properly report and pay their taxes for years to come. 
• Today, banks are much less willing to facilitate offshore evasion than they were in the past and advisors are asking more questions of their clients regarding offshore accounts. Indeed, individuals now find it more difficult to find an advisor who would suggest such a risky approach and a bank that would accept the money under secrecy conditions. 
• I think it’s fair to say that we are well on our way to deterring the next generation of taxpayers from using hidden bank accounts to cheat on their taxes. Through our ongoing efforts, we are demonstrating that the world has become a smaller place… that we will eventually find you if you are hiding assets overseas.
• Combating international tax evasion is also a coordinated global effort on multiple fronts, including new international tax information agreements and increased collaboration with other governments and tax authorities.
• Congress wrote and passed FATCA to give us tools to combat offshore tax evasion. Since the law was passed, we have put out three pieces of guidance laying out a practical framework and timeline for implementation, such as phasing in the statute’s requirements.
• I have also directly engaged executives from banks and financial institutions around the globe, as have my colleagues at the Treasury Department and IRS. We have listened to their major concerns that generally fall into two categories. First, is the conflict between FATCA and other countries’ laws. Second, is the difficulty in implementing and administering the withholding requirements for passthru payments and the potential burden they place on foreign financial institutions.
• We have taken these conversations very seriously and you can expect new proposed regulations from us soon after the new year that take into account the implementation concerns we have heard. One goal of these regulations is to address these concerns and provide a way forward to allow responsible corporate citizens to work through these tricky issues in a practical fashion.
• To this end, we are shifting our approach to be more strategic, and to view taxpayers through the prism of their business objectives and tax planning strategies. This is a real change.
• We traditionally viewed and pursued international issues through the lens of individual code sections. But this occluded our view of the larger, more meaningful picture. We were only getting a slice of it… and that needs to change.
• For example, when a U.S. corporation shifts income to a low-tax jurisdiction, we need to look at the entire structure that was created to accomplish this. We need to understand the overall planning paradigm… What’s motivating the company...What are the benefits...What are the most aggressive positions…How are they managing tax exposure…In other words, we have to understand what they are trying to accomplish.
•  So, we are shifting our approach to be more strategic and to view taxpayers through their business objectives and tax planning strategies. The end game is to try to develop a way of organizing our international compliance programs to:
  • Indentify the highest compliance risks among our taxpayer base;
  • Work cases as effectively and efficiently as possible;
  • Not waste our and taxpayers’ time on issues that do not pose compliance risk; and
  • Find appropriate ways to resolve cases as soon as possible.
  • Allocation of resources will also follow more closely the way in which taxpayers plan and adopt tax positions. In other words, the strategy mirrors the tax planning paradigm.

• The world of international tax is very dynamic: from our efforts to combat offshore tax evasion by individuals, to deeper coordination of action by sovereign governments, to our evolving strategy to work with the largest corporate taxpayers. Each strategy will depend on us continuing to innovate … continuing to have dialogue outside of our agency…and continuing to always strive to work smarter. We are very focused on continuing to up our game in administering the tax laws in a global environment, and you can expect to see the same intensity of efforts in the years to come that you have seen in the past several years.

What does this mean for Florida land development and Florida real estate investment?  

Well, particularly here in Miami, we are a cosmopolitan culture with longstanding ties - both busness and personal - to countries all over the world.  Florida's economy is in serious trouble, and lots of people are working hard to build upon our global ties to bring foreign investment into the Sunshine State. 

We need to be building that cross-polination between Florida and Brazil, Mexico, Israel, Canada, and beyond.  Asking that these folk come here to invest and build while at the same time, asking their banks to spend millions in an effort for the United States to collect tax dollars -- well, in its simplest terms, it's not very hospitable, is it?  

Financially, it's much more complex than that, of course.  But that is for another post on another day.  

Florida should become even more alluring to foreign investors and international real estate buyers if the United States Congress passes the proposed “Visa Improvements to Stimulate International Tourism to the United States of America Act” (VISIT USA Act).  

You can follow the legislation's progress online here.  

What is the VISIT USA Act?

In October 2011, Senator Charles Schumer (D-NY) and Mike Lee (R-Utah) worked together to put together a bill that if it becomes law will grant foreigners to the United States visas if they spend at least $500,000 on residential housing in this country.

That's right:  buy $500,000 or more in residential real estate in the United States, and you will automatically get a U.S. Visa - if the VISIT USA Act becomes law.  

The proposed Act, if passed, will obviously be of interest to real estate investors worldwide who are considering purchasing homes or condos here in Florida, particularly here in beautiful Miami. Visas can be cumbersome to deal with, and this helps foreigners who are interested in buying property in our area as rental investments or vacation homes.  

The U.S. Chamber of Commerce is already on-board.  From their news release:

Travel and tourism—a sector dominated by small businesses—accounts for more than $700 billion in revenues and 7.4 million American jobs. When business visitors travel to the United States to buy products or attend conferences, training, and trade shows, they strengthen America’s role as the center of innovation and global commerce. These important reforms could help the United States restore its share of the travel market to its 2000 level of 17 percent and create an additional 1.3 million jobs by 2020. 

For too long, we have created barriers, and too many hoops and hurdles, which act to deter visitors from other countries coming to the United States to spend their money and create jobs. This is a loss we can ill afford in today’s economy. We can address these barriers and still protect the security of the United States. The Schumer-Lee bill meets these twin goals and we look forward to working with the Congress to achieve enactment of this important legislation.

The New Act's Visa Will Have Limitations

As currently drafted, the legislation will offer a new kind of visa, one that can be renewed every 3 years.  It would be specific to foreign owners of American residential real estate (buy an apartment building and you're not a part of the Act).  Finally, this new kind of visa would not be a step toward citizenship.  

Additionally, the buyer would have to be buying real estate without debt attached to it: the Act would only apply to cash purchases.  If the foreign buyer lives in the home for 6 months or more, then they would be subject to U.S. taxes, unless the draft is changed during the legislative process.  

There's been a lot of interest and debate over this proposal.  So much so, that Senator Lee wrote an online article and placed it on his website to give more details into the proposal, entitled, "Clarifying Elements of the VISITUSA Act."  He's calling it a "travel visa," not a work visa or an immigrant visa.  

Call it what you will, there appears to be lots of international interest in this legislation.  For example, ChinaDaily reports that it's interesting to Chinese investors who are interested in American schools for their kids, among other things.  

In 2011, shortly after the landmark legislation was signed into law by Governor Rick Scott, a lawsuit was filed by the Town of Yankeetown, Florida, challenging the Florida Community Planning Act as being unconstitutional for among other reasons, allegedly being unconstitutionally vague. The State of Florida moved to dismiss the complaint. From the Leon County Clerk's docket:

Plaintiff seeks declaratory relief, alleging that HB 7207/Chapter Law 2011-139 is unconstitutional because it contains more than one subject and has a misleading title as an act relating to trust funds when the act includes a preemption prohibition on certain referendum and initiatives; and because it contains an unconstitutional delegation of authority to the Florida Department of Community Affairs to determine vague and undefined terms.

On November 9, 2011, a proposed settlement between the State of Florida and the municipality was presented to the court, which would result in an exception to the Act’s application when localities had charter provisions authorizing certain referenda in place on the date that the Act became effective. While the settlement must be approved by both the Governor of Florida and the Florida Legislature, an amendment to the Act itself that would make the settlement provisions part of the Act itself has already been proposed.  

Introduced by Senator Mike Bennett as SB 842, it will amend Florida Statutes Section 163.3167 to read, among other things:

“[A]ny local government charter provision that was in effect as of June 1, 2011, for an initiate or referendum process in regard to development orders or in regard to local comprehensive plan amendments or map amendments, may be retained and implemented.”

Senator Bennett’s proposed amendment to the Community Planning Act does other things, as well as disposing of the Town of Yankeetown’s concerns. From the Florida Senate’s overview, this amendment includes:

Repealing provisions relating to the powers and duties of the Secretary of Community Affairs and functions of the Department of Community Affairs with respect to federal grant-in-aid programs; replacing references to the Department of Community Affairs with state land planning agency; repealing provisions relating to the Urban Infill and Redevelopment Assistance Grant Program; deleting provisions relating to the Coastal Resources Interagency Management Committee; deleting provisions excluding a municipality that is not a signatory to a certain interlocal agreement from participating in a school concurrency system; replacing references to the Department of Community Affairs with the Department of Economic Opportunity; deleting requirements for interlocal agreements relating to public education facilities, etc.

 

This proposed legislation may be tracked online.

[This post is the second in a series discussing the Foreign Account Tax Compliance Act (FATCA) and its impact upon foreign investment and development in South Florida and the United States as well as efforts both locally and in other countries to stop FATCA.]

FATCA (the Foreign Account Tax Compliance Act) will become effective in 2013 unless action is taken, and as discussed earlier in this series, there are a tremendous number of critics of FATCA that believe it is harmful to a wide range of interests, not the least of which is economic stability and recovery in South Florida and elsewhere.

Why Was FATCA Passed in the First Place? Money.

The purported reason for Congress to pass FATCA was to enhance the ability of the federal government to gather taxes due on assets that are sitting in foreign accounts.  Congress passed the legislation as part of the HIRE Act (Hiring Incentives to Restore Employment Act), all for the reason of collecting revenue for the federal coffers.  It's an international tax collection effort aimed at perceived tax evasion through overseas accounts.

What Does FATCA Do?

One basic thing that FATCA does is require that financial institutions, American or foreign, anywhere in the world, provide the Internal Revenue Service with account information for any U.S. clientele with $50,000+ in their account.  Which means that the U.S Government is trying to make its tax collections more effective by having banks file information with the IRS and not just the taxpayer.

However, FATCA isn't a simple tax collection procedure.  FATCA will require major alterations to the way business is done by both foreign and domestic enterprises - and that's the problem. 

FATCA, for example, will force every foreign bank to report all of its U.S. account holders to the Internal Revenue Service (regardless of account balance); afterwards, FATCA mandates that these foreign banks  impose a 30% tax on all payments or transfers to these U.S. account holders who refuse to identify themselves. Any foreign bank that doesn't want to do this will be penalized by the federal government through  withholding of interest and dividends for U.S. sources as well as withholding of gross proceeds from the disposition of U.S. securities, etc.

If FATCA does become effective in 2013 (that's one year, one month, and a few days from now), then a huge number of corporations are going to have to make lots of internal changes in order to comply with this new law. Huge numbers of changes. 

Change is expensive. While this type of imposed change is never welcomed with open arms by companies, FATCA requirements are hitting businesses at an especially bad time: internal changes in frameworks, procedures, operations, etc. are expensive in time and money.  

That's not all.  Accounting firms like Delotte and Ernst and Young are already offering their services to provide "compliance risk assessment" and evaluations of systems and how these internal systems will need to be changed in order to meet FATCA's requirements for withholding and reporting.  Which means not only the expense of the changes themselves, but the additional expense of hiring a firm to evaluate and recommend what those changes need to be. 

Given today's economic climate, forcing additional expenditures in already tight corporate budgets in order for the federal government to collect more tax dollars is not setting well with lots and lots of businesspeople.  Companies in all kinds of industries and in all parts of the world are against FATCA and what it means to their bottom line.

Growing Concern for FATCA's Impact on Investment and Trade

Several months ago, Forbes published an interesting take on FATCA in its June 21, 2011 online edition, written by Forbes contributor Daniel J. Mitchell and entitled "Why Obama's FATCA Law Is A Threat To Business Growth."

There, it's first pointed out that FATCA was passed alongside draconian legislation requiring 1099s to be filed by every U.S. business (from solo proprietorships to the largest corporations) for any vendor with whom they did $600 of business (or more).  That was egregious, and this law was nixed.  No one is going to have to jump through that 1099 for $600+ hoop after all. 

However, FATCA - which Forbes describes as a mere "international version of Obamacare’s 1099 scheme" - remains alive and well and since it's impacting foreign business operations much more than those here at home, Congress hasn't heard the outcry against its unfairness as easily as it heard the 1099 - $600 protests. 

Foreign Companies May Respond By Cutting Off American Investment Rather Than Comply With FATCA

Forbes warns that FATCA is so much trouble that it may mean that foreign financial institutions could decide that the easiest change for them will be to ignore all those offers for help from Ernst and Deloitte and instead, just stop doing business in America.  No U.S. investment, no FATCA worries.

Seems like an option that any sensible foreign business would be pondering, doesn't it? 

Add to this, an article (referenced by Forbes) from Great Britain's Financial Times published in June 2011 entitled "US demains tax tolerance of foreign financial groups," where country after country after country is identified as being at the minimum upset and all the more often outraged at this American legislation.

The outrage against FATCA continues to grow.  For some, it's cost.  For others, it's putting them between a rock and a hard place, since FATCA requirements fly in the face of their own jurisdictions' privacy laws.  There are other bases for foreign criticism, too.  Things like a feeling of being disrespected, as they ask why should other countries be required to act as indirect tax collection agents for America?

Meanwhile, we're starting to see what FATCA will mean if it's not repealed.  This week, Ascentric announced its decision: it's not going to be doing business with Americans because FATCA is not worth the effort.

Next in the series, more details on FATCA and what it means to Americans including businesses in South Florida.

Foreign investment in South Florida is growing and industry experts are predicting that next year, in 2012, there will be even more international interest in the South Florida real estate market.  Who are these experts?  Lots of folks who should know, since they were the ones in attendance at the Miami International Real Estate Congress.

Held at the Biltmore in Coral Gables, the Miami International Real Estate Congress described its conference as one of "...more than 300 U.S. & worldwide international real estate professionals in Miami for two powerful days. Bringing together our valued global partners & professionals to collaborate & achieve maximum business results."

Real Estate Experts Predict Increased Global Interest in South Florida Real Estate Investment

Conference leaders were uniform in their perception of the South Florida real estate market: an already solid foreign interest in South Florida real estate sales is only going to get bigger next year. 

The new president of the National Association of Realtors, Moe Veissi, told the conference that he expects this to be a growing trend for several years, not just 2011 and 2012.  International buyers coming to the Miami-Dade area and elsewhere in South Florida will be a growing segment of local real estate investment.

Florida - Number One in US for Foreign Real Estate Investment

The Miami Herald reports that Florida is the number one state in the country for international real estate transactions, with almost one-third of the country's foreign investment transactions in 2011, where total foreign investment in U.S. land was $82 billion.  The Herald's numbers show that out of that Foreign Investment pie here in Florida, 30% can be found in the Miami - Fort Lauderdale - Miami Beach real estate market. 

At Turks.Us, it's being reported that Miami, in particular, is rebounding now (based upon the Case-Shiller home price index) with 65% of its residential real estate inventory being sold now that foreign investment has come to South Florida.

In fact, Turks points out, if you reference Trulia’s top 10 lists of foreign buyers’ real estate options, Miami shines like the sun on its beaches: this is an extremely beautiful area with great weather - a tempting place to invest, even if you are a foreign investor also looking at real estate in California or Nevada or New York. 

For more information, check out our earlier posts on International Real Estate Investment in South Florida.

Miami-Dade County Commissioners learned a lot more about the proposed new Resorts World Miami this week, as Genting's proposed casino resort was discussed in detail at a Commissioners' meeting.  Proponents and critics alike were there to put their two cents' worth into the debate about casinos being built in Miami.  Specifically, the three resort casinos currently being proposed in Tallahassee with Genting's casino the one that has all the details all ready to go.  Genting's got a plan, Genting's already moving ahead.

Genting's Resorts World Miami Will be HUGE

Genting is sharing lots of information about its Miami project, much like a proud new mother shares photos of her baby.  Just check our their video (below).  Amazing stuff.

And, at the Commissioners' meeting this week, Genting shared:

• Resorts World Miami is estimated to cost $3.8 billion to complete
• Resorts World Miami will be bigger than any Vegas hotel or casino
• Resorts World Miami is expected to create "tens of thousands" of construction jobs in the short term and "tens of millions" of tourist dollars in the long run
• Genting will issue casino debit cards to its guests for use at restaurants, shops, etc. in the surrounding area (i.e., non-Genting establishments)
• Resorts World Miami is expected to have 5200 hotel rooms (compare this with the MGM Grand at 5044)
• Resorts World Miami plans include two casinos in two different parts of its project, one almost twice as big as the other.  8500 slot machines are included along with 50 restaurants. 
• It is targeting a higher-stakes gambler (more "whales" for Miami).
• Resorts World Miami will be the biggest casino resort in the world - if the plans are okayed by the Powers That Be. 

Bigger than Vegas?  Bigger than anything else in the world?  That's real estate development in a big way and its impact on our economy will be staggeringly positive. Now and later. 

Genting is good for Miami. 

Watch what Genting is planning here:

Florida's environmental issues -- such as the status of the Everglades Restoration -- is going to be in the spotlight now not only because the convention of the Society of Environmental Journalists is being held here, but because they invited U.S. Secretary of the Interior Ken Salazar to speak.  Salazar gave a talk to the environmental journalists Wednesday night at the Miami Inter-Continental Hotel's Grand Ballroom.

Salazar Talks About the Everglades Restoration

And what was Secretary Salazar addressing?  He focused on the Florida Everglades Restoration as an example of conservation projects and their pros and cons.  His entire speech is available to read online; here's an excerpt: 

Finally, I ask for your help explaining what is at stake for conservation at this moment in our history.

Here in the Everglades, we have undertaken the largest watershed restoration project on the planet.

And over the last two years, the Obama Administration, including the Department of the Interior and our colleagues at EPA, the Army Corps of Engineers, USDA and others have moved mountains to provide additional funding and to move Everglades restoration from planning to on-the-ground results.

Tomorrow morning, we’ll see some of that work underway at the Tamiami Trail, where contractors and heavy machinery are helping remove a major barrier that has prevented fresh water from entering Everglades National Park.

We will soon see the River of Grass flow again.

Tomorrow, we’ll also talk more about a new conservation initiative, Everglades Headwaters National Wildlife Refuge, that will preserve the community’s ranching heritage and conserve the headwaters and fish and wildlife of the Everglades.

And we’ll discuss the work we have underway to plan for the next ten years of Everglades restoration.

But the remarkable progress we have made on conservation in the last two and a half years - here in the Everglades and around the country - is in jeopardy.

It’s not simply a matter of budgets, although the House Republican budget would force the closure of an estimated 100 national wildlife refuges to the public.

It’s also about a fundamentally different vision of who we are as a nation and what we can do as a people.

President Obama and I believe that when times are tough, Americans stand together, work together, and do big things together.

But we are faced with a competing vision of an America where – when times are tough – it’s every person for themselves… where we shy away from our goals… where we say: “that mountain is too tall.”

And that’s why you see attacks on water settlements and river restorations that have been decades in the making.

Or it’s why you see folks turning their backs on the promise of the Land and Water Conservation Fund.

We should be reinvesting revenues from oil and gas development in the permanent protection of rivers, parks, and wildlife habitat.

It’s common sense – and it was a promise we made more than 40 years ago. Yet those revenues are not getting to where they should be.

Sixteen billion dollars is owed to the Land and Water Conservation Fund.

So if you’re a hunter in this country, you’ve been shorted. If you’re a fisherman, you’ve been shorted. And if you’re an energy company, you’ve been shorted.

The American people expect more from their leaders, but they have to know what’s happening.

That’s why you, as journalists, carry a tremendous responsibility.

Fifteen months ago, you helped the world understand what happened in the Gulf of Mexico, and you helped mobilize an army of citizens and public servants to respond.

The challenges we face today deserve the same relentless attention, careful reporting, and clear explanation.

The American people are interested in the great outdoors. They are passionate. And they need your expertise to bring them the information they seek.

Meanwhile, out in the Florida Everglades, U.S. Sugar is Still Farming the Land It Sold to Florida

In last week's Sun Sentinel, you will read about U.S. Sugar Corporation operating around 27,000 acres as sugar cane fields and citrus groves, even though that land was part of a hugh ($197 million) land deal it made with the South Florida Water Management District last October. 

SFWMD has a goal of using the land for projects designed to clean up polluted stormwater, which would boost the restoration efforts of the Florida Everglades.  A noble cause, clean water for a flourishing Everglades.

Sure It Is:  SFWMD Leased the Land Because It Needed Cash Fast After Taxes Were Cut

What's not being discussed here is funding.  Money.  After Governor Scott cut property taxes last year, the South Florida Water Management District did a smart move to keep its doors open in the face of huge government budget cuts, and invited agricultural operators (including citrus growers) to lease up to 18,000 acres of the 26,800 acres it purchased from U.S. Sugar last fall, the land deal described in the Sun Sentinel article last week.  

As we discussed back in March:

The proposed leasehold is located in Hendry County -- and it was originally targeted to be part of the first restoration efforts. The idea was to use this prime farm land, ideal for citrus and sugar cane, for cleaning and storing stormwaters that then be used as a needed water supply in the bigger plan to restore Everglades acreage. Now, the Water District will allow the land to return to its use for growing crops for at least the short term.

What's going on here?

Well, Governor Rick Scott is looking at numbers and his idea to cut property taxes means that the South Florida Water Management District has to find some revenue - fast - or face letting people go, as well as putting a hold on the Everglades restoration.

So, the Water District is trying to avoid cutting its staff by letting these 18,000 acres return to growing oranges or sugar instead of setting there for a couple of years. Environmental activists are not going to be happy about this delay in the Everglades project, but that doesn't seem to be a big priority in the state capital right now -- and from a land development perspective, the Water District seems to be making a very smart move.

Here's the Bottom Line:  Florida is In a Economic Crisis and Everglades Restoration Costs Lots of Money

It's always interesting when fingers start pointing at purported evildoers when environmental issues pop up.  Where are the villians here?  Florida is in a terrible financial situation and fighting for survival -- and the South Florida Water Management Agency didn't get funding from taxes like it had in the past. 

Property tax revenue is down, because of ForeclosureGate and the lack of Land Development and crashing market values and other things.  Money can get complicated fast.

So now, eyes turn to the Everglades.  Who in Florida doesn't want the Everglades protected?  The question is: where do we find the money to accomplish that task when Florida's economy is in the condition that it is?

South Florida Water Management Agency did buy the land, after all.  Leases until the SFWMA can find funding to do more doesn't seem like a bad idea, it's a smart move. 

While Miami is feeling the first few waves of the economic hurricane being built in downtown Miami by Genting, i.e., Resorts World Miami, there is more news to quiet those critics who considered this project to be a single bright light in a dark economy.  What's the latest?  Another resort by a proven resort developer will be built in Hollywood, Florida. 

On Hollywood Beach, the Jimmy Buffett / island themed Margaritaville will be built, smack dab in the middle of the Boardwalk.  Smaller, of course, than the mammoth Resorts World Miami, but still a significant spark to flame the economic fires of our fair state.

Margaritaville is reported to include a hotel (350 rooms) which will open to its first guests in January 2014.

In a news story appearing this week in the Miami Herald, business people in the area were interviewed, and alreaady there are signs that this new land development project is boosting the Hollywood economy.  With savvy foresight, over $14,000,000 was allotted a few years back to give the Broadwalk area (including the beachfront) a face lift - the community now has a new bike path and new benches as well as little parks, new art features, artistic lighting, etc.

Completed in 2010, the CRA has seen the Hollywood Broadwalk upgraded with:

• Multicolored concrete decorative pavers in the pedestrian area
• Tabby concrete bike path
• Crushed shell jogging path
• 18" high decorative wall with LED lighting
• Historically significant Tri-globe and Acorn lighting fixtures with decorative concrete pads
• Palm Tree clusters
• Re-location of showers and the addition of ADA accessible shower
• New public restrooms

The organization that has funded this face lift, Hollywood’s Community Redevelopment Agency, is now offering $1 million to local land owners if they want to join in the campaign and do mini-lifts to their businesses.  The Herald interviewed the proprietors of Billy’s Stone Crabs and the owner of Blue Sky Apartments about their renovations as part of the CRA incentives.

Now, Hollywood's progressive attitude toward land development appears to have reaped its rewards, as the Margaritaville resort hits the local economy.  Perhaps it is not as grand as Resorts World Miami, but it is an excellent example of how Florida real estate development will play a key role in Florida's statewide economy recovery. 

Genting Malaysia has closed many of its land deals and debuted its plan for Resorts World Miami, a new $3 billion mega-resort located in downtown Miami (part of it in the old Miami Herald building, part in the Omni) with news that it's moving fast:  Genting developers see doors opening as soon as next year for the hotels, condos, restaurants and other amenities. 

We're already posted about Resorts World Miami and what it means to Miami.  It offers a unique opportunity for South Florida's renewal, and signals economic recovery - even a new prosperity for our community. 

After all, Genting won't be a development in a vacuum: other symbiotic and even parasitic developments will be popping up around Resorts World Miami.  That's a given.  (To check out the details surrounding Resorts World Miami, check out Genting's new website on the planned development.)

So, it's no surprise that some would be concerned at all this fierce activity.  Lots of things will be happening now, and fast.

Miami Powers that Be are justifiably concerned about how Genting's new economic bombshell - as well as the expected additional developments  - will work with what is already here: particularly, the cultural arts facilities that exist in the area.  So much so that the non-profit entity The Town Square Neighborhood Development Corporation is now focusing its efforts on working out the infrastructure kinks (traffic, parking, etc.) that Genting's bringing to the party.  Adrienne Arsht Center's Michael Eidson and Parker Thomson are involved here, along with developer Armando Codina and architect Cesar Pelli.  

Cautiously, and rightfully so, they're turning a watchful eye on Resorts World Miami. Their hope: another Lincoln Center, but this one in Miami not NYC. 

It's too bad that some in Miami haven't been so gracious to Genting.

Others are not so welcoming.  Luther Campbell in the Miami New Times comes right out and challenges the new development in an opinion piece entitled, "Genting casino will kill Miami and Miami Beach." Campbell argues that Genting will keep its visitors on Genting property - that tourists who come will be lured to stay (and spend) only on Genting property, and that Miami Beach and other nearby restaurants and attractions will not only not benefit, but also suffer by having their tourist base drawn to the Genting project. He also argues that the jobs Genting brings are all low paying service jobs, because the casinos will be operated by experienced employees Genting imports from other states, with experience running gambling tables.

 It just does not make sense. A project like Genting's will bring all kinds of jobs - from construction jobs, to development jobs, to service jobs, to jobs for those who will run the hotels, restaurants, and retail establishments.  There is, by the way, no downside to bringing lots of service jobs to Florida - we need the jobs.  Plus, it is hard to believe that tourists who come to Genting won't also be drawn to our beaches, to the Everglades, and to the many nearby attractions that make Miami a world class city. We are all likely to benefit.

The Miami Herald published a piece on Tuesday by Michael Putney, "Genting deals winning hand for Miami," where, after researching the specifics of the deal and Genting's background, including that of its CEO, Mr.. K.T. Lim,  Putney ultimately supports the project (even though there are some comparisons in the article to con men and Ponzi scammers like Scott Rothstein and David Paul).

What brought trust to Putney?  First, that Genting has already invested so many hundreds of millions of dollars here already, just to buy land.  (The Miami Herald spot for $236 million, for example.) Second, that Genting's been hiring locally, getting Floridians to do their work here - Putney points out that  Arquitectonica is doing sculptural design.

Third, Genting's got a track record of success with this sort of thing.  Resorts World Miami isn't Genting's first rodeo.  They've got successful examples of similar types of developments all over the world. 

Is It Wise to Already Be Biting the Investor's Hand That Is Feeding Our Economic Recovery?

Genting is well aware that it may be single-handedly instituting a local recovery here and still, its plans and behavior have been gracious and considerate of local interests.

Billions of dollars are coming into Miami.  Now.  Infrastructure concerns?  Of course.  Water, electricity, traffic, roads, parking.  Wow - lots of work.  And work means jobs.  Jobs.  Right now, as well as later.

Genting has revealed its big plan for Miami, and it's turning lots of heads. As well it should, because we may have just heard the magic words that will release our local community from being under its current dark economic spell. 

Foreign Developer Announces Details of New, Huge Tourist Mecca In Resorts World Miami

Yesterday, Genting pulled back the curtain on its plans for a mixed-use development named Resorts World Miami, and it includes taking the Omni Center and neighboring land to construct not only restaurants, bars, and such but a real, live casino to open as soon as a year from now.  If Genting can get the okay to operate a casino in downtown Miami, of course.

Many believe that the Genting Group (officially, Genting Malaysia Bhd., operating casinos worldwide from its Southeast Asia headquarters) will succeed in obtaining a gambling license for its shiny new project from the Florida Powers That Be.  That will only increase the pull of this new tourist destination for visitors across the country as well as across the globe. 

This is a very, very big deal.  Genting will be spending $3 billion here in Miami to develop and build its Resort World Miami project.  The waterfront resort, according to the latest Genting release, will have four (4) hotels (5200 rooms) with two (2) condo towers (1000 units) and (wait for it)... a lagoon on the roof that is estimated to span 3.6 acres.  There will be a convention center, and Resorts World Miami will have the largest ballroom in the United States.

All this is happening very fast.  We've just learned that the Genting Group bought one mortgage note on the Omni last week, pulling the property out of foreclosure.  Soon thereafter, Genting purchased the remaining mortgage note, giving it control of the Omni Center.   

Genting had made news earlier this year when it bought the property that housed the Miami Herald for so many years (see our earlier post, "Foreign Investors Announce Big New Miami Land Development: Genting Malaysia Spend $236 Million for 14 Acres in Downtown Miami.") 

It's Redevelopment Like This Which Will Bring South Florida Back to Sunny Economic Days

Genting's projection include the creation of 15,000 construction-related jobs as well as 30,000 permanent jobs from its development.  These, of course, are projections tied only directly to Genting.  There will be many other jobs that are created as the ripples of this economic tidal wave crest in downtown Miami.

Consider this:  the U.S. Department of Commerce tracks and measures local economies and it has recently released its tallies for Florida (see the GDP Tables here).  According to Tuesday's information, in South Florida (including the Miami metroplex), real estate is tops, government is next, and trade/finance comes in third as contributing to our economy. 

However, you have to consider that within those numbers are foreign and domestic visitors -- and when you do, as calculated by the Miami Herald, you've got around 15% of the local economy which brings tourism into second place right behind real estate. 

Genting's project is right in the big middle of those numbers.  Genting will be coattailed by others seeking to profit from overflow from Resorts World Miami or to compliment the resorts' offerings. 

Yes, this is a very big deal.  And through tourism investment and real estate development, South Florida may be back on the road to prosperity. 

It's already happened:  the Federal Housing Finance Agency (FHFA) has filed suit against many of the nation's top banks over alleged bad acts involving mortgage-backed securities, i.e., ForeclosureGate. (Read the agency press release here.) 

The question is -- what are the consequences?

Specifically, here is what's happened:  the following big name financial institutions have been sued by the federal government - as well as individuals that include not only some of the bank's top officers but also some of the defendant lenders'  unaffiliated lead underwriters -- for alleged violations of  (1) the Securities Act of 1933, a federal claim for damages that gets these cases filed in federal court as well as (2) analogous claims under state securities law and (3) assorted tort claims under state law including negligent misrepresentation and/or common law fraud. 

Torts, of course, bring with them the possibility of compensatory (punitive) damages.  These banks and bankers are being sued for intentional bad acts under state and federal law. 

Federal and State Law Claims Asserted Against 17 Lenders (and Various Individuals) by the FHFA

Which state law applies depends upon where the lawsuit against the particular defendant has been filed - the FHFA has filed these suits in New York as well as Virginia, etc. Go here to click on links that will connect you with the particular complaint filed by the feds against each of the following seventeen (17) lenders:

1. Ally Financial Inc. f/k/a GMAC, LLC

2. Bank of America Corporation

3. Barclays Bank PLC

4. Citigroup, Inc.

5. Countrywide Financial Corporation

6. Credit Suisse Holdings (USA), Inc.

7. Deutsche Bank AG

8. First Horizon National Corporation

9. General Electric Company

10. Goldman Sachs & Co.

11. HSBC North America Holdings, Inc.

12. JPMorgan Chase & Co.

13. Merrill Lynch & Co. / First Franklin Financial Corp.

14. Morgan Stanley

15. Nomura Holding America Inc.

16. The Royal Bank of Scotland Group PLC

17. Société Générale

What are the Consequences of the Federal Government Suing Banks and Bankers? 

The ramifications of these lawsuits is still being pondered by many -- both experts here in the United States as well as across the globe.  Of course, there will be serious consequences here and the real question becomes who is going to be hurt by this, and how bad.

Consider the following articles as debate grows on what has happened here:

In the Wall Street Journal, Jeffrey Sica writes, "Empire Of Dirt - "Let them fail: Why Failing Banks Should Fail," opining that the FHFA has lost all respect as a regulator because it was this very agency that has put the U.S. economy in "peril" by its contribution to the failure of both Fannie Mae and Freddie Mac.

At Bloomberg, Paul Miller of FBR Capital Markets & Co. is arguing that the federal government must stop “punishing banks” because it's hurting any possible economic recovery. He's quoted at Housing Wire as opining that these lawsuits will result in less money available for loans.  Period. 

Overseas, the BBC is reporting that lenders (at least defendant The Royal Bank of Scotland Group PLC ) will be aggressively defending against these suits, which are expected to seek billions of dollars in damage claims, "Royal Bank of Scotland to Fight US Mortgage Action."

What Does This Mean to Florida?

Florida could well be the poster child of ForeclosureGate -- the Sunshine State is definitely one of the hardest hit economies in the aftermath of all the unprecedented foreclosure fraud that's been reported.  The economy is hurting and both government and industry are working hard, feverishly even, to find ways to get Florida out of its current economic quagmire.

How to get from recession to recovery is a hot topic here: environmentalists may clash with developers, for example, but it's not debatable that financing (i.e., banks) are vital to any economic recovery.  Money has to be moving here for Florida to rebound, and having the federal government sue these lenders doesn't bode well for Florida's future financial health. 

Banks need to be finding ways to loan money and get Florida moving again, and with these lawsuits, one thing is clear:  the biggest lenders will be busy finding ways to protect themselves from tort damages. 

Commercial real estate in Florida (and elsewhwere) is dependent on the availability of financing.  Developers and builders need third party lenders as a basic component of their business plan.  Developers are rarely in a position to fund large scale projects for cash, and inviting equity partners often involves giving away too large a piece of the pie.  Without third party financing, commercial real estate development will simply not return to Florida. It is key to our economic renewal.  Unfortunately, current economic conditions are making some common financing structures riskier for lenders (and as a result less available for borrowers), and that means many large scale devleopments may not get built, further stalling Florida's recovery. 

Why do large scale commercial deals matter to South Floridians?

Large scale real estate projects have always fueled growth in our economy, state wide.  They create jobs, boost  tax bases, and increase revenues in local communities through tourist spending, etc.   When development comes to small municipalities, that means new infrastructure, new schools, more jobs, retail growth and tax revenues. Our cities need this now more than ever in recent history.  One of the reasons that Florida has recently loosened its grip on developers is because increased real estate development is vital to revitalizing the state's economy.  (For more on this, read our prior posts on the June 2011 deregulation legislation.)

However, there's still, unfortunately, very little certainty in Miami conference rooms or anywhere on Wall Street.  Market fluctuations, banking failures and a general lack of confidence in our economic climate have created more than skepticism in the lending community, which means those who invest and provide needed financing for commercial real estate and land development are facing more risk (or at least they perceive more risk).  This is true for both American investors and foreign lenders.

For example, one well-known means of financing all types of real estate, including hotels, resorts, retail and the like (i.e., income-producing properties) is through CMBS: commercial mortgage backed securities.  CMBS bind together a selection of commercial mortgages in pools and the pools are then used to support the sale of bonds to investors.  There is an international financial market that deals exclusively in CMBS. 

However, the risk involved in the CMBS market is changing.  It is calculated by comparing the CMBS bond to U.S. Treasury bonds - and the difference between the two (where the Treasury bond has traditionally been considered risk-free) has defined the risk (and therefore the cost) of the CMBS.

That difference is growing, which doesn't excite the current players in the CMBS market and certainly doesn't intice others to enter it.  Risk costs.  If this difference (called the "spread") continues to widen, then we can expect less investor interest in CMBS and this will, in turn, have a negative impact on commercial property financing.

What does this mean for South Florida? 

As the spreads in CMBS investments rise, South Florida entrepeneurs and investors may have fewer alternatives when they look to finance their projects, and as a result, many of these projects may be delayed, some indefinitely.  Higher levels of risk in CMBS investment will clearly impact, in a negative way, real estate development and growth in Florida. 

Brazil's economy is doing well, perhaps better than it's ever been before.  Brazil's unemployment rate in April 2011 was 6.4%, an all-time low record. Its economy is growing, its citizens are confident in their country's future. 

Brazil's economy is currently the 9th largest in the world.

Why Brazil Likes South Florida - Bang for their Real

And here's a big fact for South Florida:  in the past three years, the Brazilian real has gained 39% in value against the U.S. dollar - which means that coming to Miami and spending those reals gets the Brazilian buyer a lot more bang for their buck. (Import tariffs and sales taxes are other factors that make shopping in Brazil significantly more expensive than shopping in South Florida for many brand items.)

Consider this:  in a recent story covering Brazilian tourists flocking to South Florida, the Miami Herald gave an example of one pair of running shoes that cost six times more in Brazil than they do at a local Orlando shoe store. 

In fact, in that same story we learn that in 2010 Brazil-Florida trade increased by almost a third as Brazilians discovered South Florida’s bargain prices and ease of access.  Most of these purchases are in South Florida, where (in comparison to Tampa, which has no nonstop flights to/from Brazil) the Brazilian airline TAM offers nonstop flights to/from Miami and Orlando and American Airlines has 52 weekly flights from Miami to five different cities in Brazil.

Today, Brazil spends more reals in the Sunshine State than anywhere else in the United States.  Over one-third of the condos sold in downtown Miami today are being sold to Brazilians. 

Brazil's Growing Interest in Real Estate Investment and Development in South Florida

We post earlier about Brazilians buying more and more South Florida real estate, and it seems savvy for Florida real estate professionals to recognize and welcome Portugese-speaking Brazilians as potential investment partners, buyers, and more.  This should only increase in the future.

Long-Term Relationship Between Brazil and South Florida

However, given that the average retirement age for men in Brazil is 54 and for Brazilian women, 51, and the fact that there are some economists who are predicting that Brazil will have some economic trouble in the future (including inflation) unless some things change, it would seem that South Florida may well be a true Mecca for smart Brazilians looking for a safe retirement haven where their reals will have the most clout. 

The South Florida Water Management District was quick to put together a buyout package for its employees after the Florida Legislature's big budgetary cutbacks were signed into law by Governor Scott last month.  Facing a big budget cut from the state, the South Florida Water Management district hastily put together a buyout package to reduce payroll.

Water Management District Saves Money on Payroll, Employees Avoid Layoff

It was a nice package, and last Friday, 123 South Florida Water Management District employees who had been on a salary of $100,000+ per year officially started their Fourth of July Weekend by saying goodbye to the South Florida Water Management District as their employer - saving them from layoffs expected to occur next month and saving the SFWMD around $10,000,000 in payroll.

How Will This Impact Florida?  The Doom and Gloom

Out of the 123 employees who took the buyout last Friday, 15% were scientists and 10% were engineers.  Already, there are those who question how the SFWMD can be effective with this loss of expertise, given that the District is responsible for managing the state's water supply.  Who knows how many more of these brainiacs will be let go next month, when it's expected that 100 employees will be laid off, leaving the SFWMD will around 1500 employees.

Meanwhile, conservationists are bemoaning the future of the Everglades with these manpower cutbacks at the South Florida Water Management District.  These critics include attorney Allan Milledge, member of the Florida Audubon Board and formerly the chairman of the board for the South Florida Water Management District. In a recent editorial in the Orlando Sentinel, Mr. Milledge voiced his concern that the cutbacks at the SFWMD will harm the Everglades, especially as drought conditions continue. 

The Hard Realities Florida Faces Means Tightening the Budget - We Must All Work Together for Florida

It is true that last week's buyouts and next week's layoffs at the South Florida Water Management District are motivated by money:  the SFWMD governing board has to find $128,300,000 to cut from its $1+ billion budget because of the new legislation that cut its revenues by 30% as part of a statewide reduction in property taxes. 

However, this does not mean that the District has been gutted and made powerless.  There are those that thought it could use some streamlining - that the District had more people on its books that it really needed in the first place. 

New Executive Director Mellissa Meeker, for example, has announced her desire to reduce the District's overall salary and benefits package so that it looks more like the packages that other State of Florida workers get.

This means the SFWMD folk don't get golf carts to carry them from the office to their car, for example.  And Meeker's already sold ONE of the SFWMD airplanes.  She's also cut her own salary from $202,000 of her predecessor to $165,000, taking 20% off her own payday at the get-go.

It makes sense for conservationists to be afraid of rampant disregard of everything they hold dear if there is no regulation left for protecting the Florida Everglades.  However, the cruel reality is that the State of Florida is broke, Floridians are sharing the tough times of this Great Recession, and we must all tighten our belts in this economic crisis. 

The Everglades are protected by local, state, and federal laws as well as being monitored by private and public groups dedicated to its survival. Perhaps there will be dangers to the Everglades because of these cutbacks, but that suggests a distrust of Ms. Meeker and her remaining, streamlined crew at SFWMD which may be very premature and unwarranted.  Melissa Meeker gave up her job as state water czar to helm the SFWMD, after all. 

We must all be financially responsible as well as ethically vigilant.  We're in tough times and things have to change. 

Yesterday, Florida Governor Rick Scott flew to West Palm Beach and signed Florida Senate Bill 2142 into law at the offices of the South Florida Water Management District, enacting big, big changes to Florida's five water management districts as it eases the property tax burden on Florida homeowners and Florida business. 

This is the same bill that conservationists were asking the Governor to veto - for details on their failed challenge, read our earlier post on May 19, 2011, "Governor Scott Asked by Conservationists to veto SB 2142 Which Gives Legislative Power Over Water District Budgets."

The Governor's press release focuses not upon the shift in power issue, but instead highlights the savings that result from reducing the property taxes previously levied by the water management districts, which his office estimates to be $210.5 million in total savings to Florida homeowners. 

These are the taxes levied by four of the five Florida water management districts, a part of the Florida  Department of Environmental Protection in charge of administering flood protection programs and overseeing state water resources, including implementing plans for managing water needs during droughts, watching over aquifer recharge, well construction, surface water management, and buying lands under the Florida Save Our Rivers program.

Florida has five water management districts (see a map of the districts here), and the new law impacts them as follows:

• Southwest Florida Water Management District – 36% reduction
• South Florida Water Management District – 30% reduction
• St. Johns Water Management District - 26% reduction
• Suwannee River Water Management District – 8% reduction
• Northwest Florida Water Management District – No change

 Of course, as the Orlando Sentinel points out, the savings to the individual Florida homeowner may not be significant, since the Water District's taxes weren't that high before the change.  And, as the Miami Herald reports, conservation groups remain adamant that Governor Scott's action only serves to doom the Florida Everglades as well as other Florida environmental concerns. 

With ink barely dry on the Community Planning Act, savvy foreign investors are flocking to Florida and its real estate investment opportunities.  In the same month that Resort World Miami was announced by Malaysian investors, Condo King Jorge Perez and his well-known firm, The Related Group, revealed their new partnership with International Sales Group, helmed by Philip Spiegelman and Craig Studnicky. 

Jorge Perez Knows Real Estate, Florida, and Latin America

You may remember Jorge Perez: in 2005, TIME magazine him one of the 25 most influential Hispanics in the United States; in 2007, Forbes magazine named him one of the 400 Richest Americans, and in past years, his Related Group was routinely named as one of the largest Hispanic-owned businesses in the USA, although current economic factors have found Related Group no longer on that list in 2010.

The new partnership between the real estate developer and the international brokerage will operate under the name "Related ISG" and their efforts are targeting the South Florida condo market for interested buyers in Mexico, Central America, and South America.

First, they will be promoting a Hollywood, Florida, condo project at Apogee Beach (ground breaking set for early 2012) where condominium homes in the 22 story oceanfront building will be marketed primarily to Latin American buyers.  

That's right: Florida is getting an influx of cash from foreign sources, as we've been predicting for awhile now.

Condo King's Dedication to Bringing Latin American Clients Into South Florida Real Estate Gets National Attention

The Wall Street Journal considers Related's financial package to be "unconventional" because it will ask buyers to pay over 80% of their condo's building expense during construction - lots more cash that Americans are used to considering, even at a 20% down payment.  

Related's proposal? Buyers must provide 20% down payment; 20% when building commences, and another 40% during the construction process.   That's right: by the time the new owners move into their new home, they've only got 20% left to pay before they own the condo outright.

However, this is "unconventional" only to American ears.  In other countries, this isn't a bizarre request at all.   Most Latin American real estate is sold in this staggered payment system; Related's targeted foreign buyers are not going to find the proposal "unconventional' in the slightest. 

Already, More Future Related Condo Projects Slated for South Florida and Latin American Buyers

Related has already bought the land and released its plans for four condo projects in the Miami area, using the same financial strategy and marketing the same Latin American buyers:

1. A small condo building with around 250 units to be constructed next to Related's 500 Brickell project and called "My Brickell;"

2. A condo project designed by Mexico's renowned architect Enrique Norton in the same area as My Brickell, this with 300+ units;

3. A 400+ unit waterfront condo in Midtown Miami; and

4. The above-described Apogee Beach condominium project in Hollywood, Florida.

Prediction: More and More Foreign Investment Comes to Florida Real Estate Developers

Jorge Perez is just one of many business savvy folk who are seeing opportunity in the crisis Florida faces in this current recession.  With the current Florida lawmakers and their goals of making Florida more business-friendly, as evidenced by the recent Growth Management Reforms, Latin American investors will be finding great opportunities here in South Florida, a beautiful and cosmopolitan locale with a shared heritage, language, art, religion, and culture.

Jorge Perez is one of the pioneers leading the way. 

Today, hundreds of new laws are effective here in Florida having been signed into law by Florida Governor Rick Scott, demonstrating a controversial and concrete attempt by Florida lawmakers to resolve the state’s current economic crisis and promote a turnaround. 

This was done with the state bringing in $3,800,000,000.00 less in revenue than it had the previous year (yes, that is $3.8 billion); without raising taxes; and without closing hospitals, schools, or cutting back on health care. 

From the Florida Senate News Release of May 31, 2011:

• State spending cut by over $3 billion
• Not one penny of taxes or fees were increased
• Over $300 million in tax reductions benefited property owners and small businesses. Medicaid, the biggest cost in the state budget, was reformed with a billion dollars in savings. Highly effective teachers will be paid more, chronically ineffective teachers will lose tenure
• Florida state workers, like those in 49 other states, will contribute to their own retirement, ending a practice of taxpayers subsidizing 100 percent of public pensions.
• Expanded educational benefits for children with disabilities
• Second Amendment rights protected against local government interference
• Public funds won’t be used for elective abortions
• Golden parachutes and phony bonuses prohibited for public employees
• “Smart Cap” prohibiting state taxing and spending from rising faster than family income
• 1,100 regulations on small businesses eliminated

From the 2011 Legislative Session Report released by the Florida Senate on May 31, 2011, here are the laws passed from Florida Senate bills into law that impact Florida real estate and/or Florida land development. This, of course, does not include legislation originating in the Florida House that became law this week

(Go here for the complete Florida Senate press release and full list of Florida Senate bills that became law.)

Oil Spill Economic Recovery Act

(passed as SB 2156)

This major legislation is designed to help coastal Northwest Florida recover from the economic consequences of the Deepwater Horizon Oil Spill.  The bill provides that three fourths of all fine and settlement monies paid by B P or other responsible parties coming to the State of Florida would be used to benefit Escambia, Santa Rosa, Okaloosa, Walton, B ay, Gulf, Franklin and Wakulla counties.

The legislation also provides a preference for Northwest Florida in the use of state economic development programs and tax incentives for the next three years.  The bill calls for a multi-state cooperative agreement among Gulf states to monitor industry safety practices and influence federal policies regarding offshore oil and gas exploration and includes a $30 million appropriation to help expand and attract businesses, create jobs and diversify the region’s economy.

Elimination of Government Agencies, More Jobs in the Private Sector

(passed as SB 2156 and HB 143)

As Chairman of the Senate Appropriations Committee with jurisdiction over transportation, tourism, trade and economic development, Senator Gaetz championed legislation to eliminate the Florida Department of Community Affairs, eliminate the Agency for Workforce Innovation, and eliminate the Office of Tourism, Trade and Economic Development.

This bill achieves $8.6 million in recurring savings by eliminating job-killing functions of the Department of Community Affairs and overlapping unnecessary functions of other state government agencies.  The legislation turns over more authority and responsibility for planning to local governments and simplifies permitting for businesses and individuals.

A streamlined Department of Economic Opportunity will be a one-stop for businesses and local EDCs seeking state support for job creation activities.  The current protracted and complicated approval process is vastly simplified with the Governor given more latitude to approve projects and attract new businesses.

Under this legislation, the state is doing more to encourage private sector job creation.  To promote tourism, VISIT FLORIDA funding is increased from $26,647,961 to $34,899,209.  The Quick Action Closing Fund, used to close deals to bring higher paying jobs to Florida, is increased from $16 million to $42 million.  Commercialization of public research – or bringing university-level research to market with products that can be made in Florida – is funded at $10 million, up from $2 million.  Funding in the amount of $5 million is provided to promote our state’s military bases and the hundreds of thousands of jobs linked to the bases. The state’s ports will be improved with a $117 million appropriation, including widening the Port of Miami to accept larger ships following the expansion of the Panama Canal.  Overall, the economic development, trade, tourism and transportation budget is increased from $6.1 billion to $6.7 billion.

Support for Military and Veterans

(passed as HB 1141, HB 95, and HB 227)

Florida-based military members deployed in war zones don’t have to pay property taxes during the months they are deployed.  Families of members of the military killed in action and families of law enforcement and firefighters who died in the line of duty are given free lifetime entrance passes to Florida parks.  Uniformed military and overseas voters are permitted to use a federal write-in ballot to ensure that all military votes are counted in all elections.

Constitutional Amendments

The only way the state constitution can be amended is if 60 percent of the voters agree.  Constitutional amendments may be proposed either by petition or by a super majority vote of the Legislature, but in either case, voters at the next general election must approve any changes.

This session, among others, four proposed constitutional amendments will be on the November, 2012, general election ballot:

1.       Cap on Taxing and Spending (passed as SJR 958) Called “Smart Cap,” this proposal would limit revenues collected by state government to only the amount collected the previous year, plus an annual adjustment based on a combination of population growth and inflation.  This provision would stop legislators from using inflated revenues in good times to expand government and spend more.

2.       Health Care Freedom (passed as HJR 1) This provision protects Florida citizens from the “Obama-Care” federal mandate to purchase health coverage dictated by the federal government.

3.       Cap on Non-Homestead Property Taxes, Elimination of “Recapture Rule” (passed as HJR 381) This proposal would prohibit local governments from increasing property taxes by more than 5 percent per year on non-homestead property.  Current law limits non-homestead tax increases to 10 percent per year. The constitutional provision also allows the Legislature to prohibit increases in the assessed value of homestead and non-homestead property if the just value of the property decreases.  This would in effect repeal the controversial “recapture rule.”

4.       Disabled Veterans Property Tax Discount (passed as SJR 592) SJR 592 would grant partially or totally disabled veterans an enhanced property tax exemption on their homesteads.

Of note: Special Budget Provision/Septic Tanks

Provision placed within the new budget laws that protects December 2010 moratorium on the unpopular septic tank mandate objected by so many Florida property owners.  During the regular session of the Legislature, Senator Evers, with Senator Gaetz’s support, then sponsored SB 168, which would have permanently repealed the mandate.  Unfortunately, Senator Evers was unable to pass his bill.  Therefore, Senator Gaetz placed in SB 2002, the state budget, a provision which prohibits the Department of Health from implementing the mandate – in other words, the moratorium continues.

Now that the Florida Legislature has overhauled state laws that controlled and curtailed the activities of land developers in Florida - laws that await the Governor's approval, and which for the most part will become effective almost immediately upon his signature since they are budgetary in nature - Floridians are coming to grips with what this may mean for their local communities. 

In the Miami-Dade and South Florida areas, environmentalists have pushed for law after law designed to block urban growth in order to protect perceived dangers to nearby wetlands, farmlands, and the Everglades.  With the 2011 legislation, things will change.

Now, the state will not be the entity blocking real estate development - those controls have been turned over to local communities and left to federal oversight.  The Florida Legislature hopes that this freedom to move will help real estate markets, commercial and residential, both in development and in later transactions, all with the goal of salvaging the depressed Florida ecomony. 

What's appearing on the horizon?  New development, new jobs, an economic boost - hopefully

Already, the Miami Herald is reporting about the revival of a plan for a "suburban town" to be built west of Homestead, based upon 2008 plans that got shelved after the economy went south and state powers-that-be challenged the need for the development.  Lennar, one of the country's largest homebuilders, is attached to this project.  One example.

In an interview given to Jennifer LeClaire at GlobeStreet.com yesterday, Terry Stiles, Chief Executive Officer of the Stiles Corp., provided his input on what will be happening in South Florida now that the Growth Management Laws have been changed. 

According to developer Terry Stiles, among other things:

1.  Stiles Corp. is very interested in the Miami-Dade County area right now; the company is investing over $120 million here in office, retail, and mixed-use projects.

2. As we've discussed earlier, right now there is an intersection of low construction costs and bottom-dollar property, so it's a good time for developers and investors to grab up good deals.  Stiles agrees with this viewpoint, and believes that multifamily projects are particularly "hot" right now.

3.   The other target for Stiles is grocery-anchored retail shopping centers, he's very focused on the viability of these projects in South Florida right now. 

4.  Stiles also opines that land use in Florida is more "redevelopment" than development of raw land, since there is not that much pristine, raw land left in the state.  

Florida Growth Management Laws Overhaul Will Not Wreck the Environment

Stiles provides another example of how important regulation is in the real estate industry, because  redevelopment changes must be approved by the various agencies in charge of land use.  The more that agencies are involved, the more time and money must be committed to the project. 

Consider this: the outcry by environmentalists about the dangers of urban sprawl escalating with the Florida Growth Management Law Overhaul seems to be missing the mark here, and Stiles is making a good point.

Redevelopment Isn't Increasing Sprawl

It's not sprawl to redevelop land that has already been developed.  It's making the best use of land that has already been developed for use by humans -- and maximizing that use for current needs.  Which means more jobs, short term and long term, and more money flowing into our area, short term and long term.

Sure, the Miami Herald has provided one example of farmland that may be replaced by homes; however, that's not going to be the majority of development projects that will spring up as a result of the actions that the Florida Legislature (and presumably, Governor Scott) took this month. 

The economy of Miami-Dade and South Florida looks a lot brighter now that this Overhaul has been done.  At least, it's looking brighter to people like Terry Stiles, and that's a good thing. 

Florida's Growth Management Laws are a series of statutes passed during times of a booming Florida economy, designed to control growth within Florida communities including protecting the environment and discouraging urban sprawl.  They include:

1. Environmental Land and Water Management Act of 1972 (Florida Statutes 380.012 -380.07)
2. Florida Water Resources Act of 1972 (Florida Statutes 373)
3. Florida State Comprehensive Planning Act of 1972 (Florida Statutes 186.001)
4. Local Government Comprehensive Planning Act of 1975 (amended in Florida Statutes 163.3161)
5. State and Regional Planning Act of 1984 (Florida Statutes 23.01-.015,160.002-.076 - now appearing as 186.001 et seq. )
6. Local Government Comprehensive Planning and Land Development Act of 1985 (Florida Statutes 163.3161)
   

Changing Times, Changing Laws: The Florida Growth Management Laws Are Overhauled

The Florida Legislature ended its 2011 legislative session this month by passing big changes to these longstanding growth management laws in a dedicated effort to free land developers throughout the State of Florida from burdensome statutory requirements.

The real estate industry - developers, investors, lenders, and the like - welcomed these changes.  Environmentalists did not.  Many of the conservationists in Florida and across the country fear that the 2011 overhaul to the Florida Growth Management Laws will doom species and habitats, such as the vulnerable Florida wetlands. 

What has the Overhaul of the Florida Growth Management Laws Really Done?

The changes are designed to spur economic development in a state sorely in need of it.  Florida needs land development for all that it brings with it:  an infusion of revenue, an increase of jobs. 

Land development will bring short term and long term economic growth to Florida.  This isn't something that anyone is disputing. 

Problem was that there isn't that much land development happening in Florida these days.  We're in a slump (and that may be an optimistic description).  How to turn this around? 

From the perspective in Tallahassee, this is done both by repealing regulations that placed monetary burdens on land developers as well as removing state involvement in community decisions, moving those resolutions to the local government.  For example, the doors to the Florida Department of Community Affairs have been closed, and developers are no longer mandated by the state to build parks, roadways, or schools whenever they plan and build a new development. 

New laws were passed just as old laws were being amended or abolished during this overhaul.  These included freeing land developers trying to get water permits.  A new law (HB 993) removes the requirement that developers prove to the Powers That Be that their proposed project would not harm the environment, lessening their costs, and instead places the burden of proving there will be harm on anyone challenging the project. 

Will the local communities just pass the same measures for their jurisdictions?  No.  Under the new laws, local Powers That Be will not be allowed to mimic previous regulations that were established at the state level.  Counties and municipalities cannot, for example, set impact fees on commercial development until 2013.  

This is not the end of efforts to encourage and promote Florida land development.  However, what has happened this month with the Florida Growth Managment Laws' overhaul is a great beginning.  These efforts are not just important to land developers, they are critical to moving the Florida economy forward.

In yesterday's Sun Sentinel, Michael Mayo's column covers the latest developments in the growth management bills pending before the Florida Legislature, suggesting that one new law (HB 7129/ SB1122) should be labelled the "Build, Baby, Build Act" and not the officially proposed title of the "Community Planning Act." 

The "Build, Baby, Build Act" Likely Will Become Law Soon. 

We've been monitoring the path of HB 7129/SB 1122 through the Florida lawmaking process. For details, including links to read the proposed language and following their status, read our earlier post. 

News coverage of the proposed legislation is also getting lots of column inches.  It's a big deal, and lots of its opponents are very vocal, and very adept at getting their voices heard.

Mr. Mayo's criticism of the "Build, Baby, Build Act" warns that its passage may return our Sunshine State to "... our development Dark Ages, " which he and others have defined as life in Florida prior to the passage of the 1985 Growth Management Act.  He quotes one activist as predicting that this new law, if enacted, will flush conservation in our state down the toilet, leaving land developers to run amok -- presumably intent upon destroying every bit of natural beauty they can find.

Beware of Doomsday Predictions

Perhaps Florida doesn't have the luxury right now of pondering the "what ifs" because of what is staring us in the face today.  These doomsday predictions are simply that: predictions, suggestions, worries, fears. 

The truth is that this legislation is being considered as part and parcel of the Florida lawmakers' focus on the Florida budget.  It's all about money and the cruel reality that Florida doesn't have any -- and that for the many Americans, our economy is dealing with a depression (yes, depression; not recession - see the latest Gallup poll).

It's a difficult time and action is needed to get us out of this mess.  These laws aren't being discussed, drafted, and passed because anyone is desperate to destroy anything.  These laws are being created because we've got to get moving in order to stop the economic destruction we've already experienced.

Build, Baby, Build?  Yes.  You betcha. 

During the same week that history was made as the Chairman of the Federal Reserve gave the first press conference ever offered by the Fed (ever), a federal district judge in Miami opened the doors for the federal government to take over the reins of water oversight in Florida - particularly the Everglades - and did so in direct opposition to the economic realities of Florida's financial situation and the goals of Florida Governor Rick Scott to lessen the amount of regulation that the state government is currently required to maintain.

Federal Judge Gold Fears for Everglades - Replaces Fed With State

In an order issued Tuesday by Alan Gold, presiding over the United States District Court for the Southern District of Florida, the judge was presented factually with the matter concerning the River of Glass and the amount of phosphorus flowing through it. 

His ruling, an opinion over 75 pages long, arguably extends itself to the entirety of the Florida Everglades and squares the federal government off against the state in a power struggle over control of Florida's waters and wetlands.  Specifically, the waters of Florida - including but not limited to the Everglades. 

By doing so, Judge Gold dissed the arguments of the South Florida Water Management District.  SFWMD is the state agency that has the job of cleaning up and restoring the Everglades - and it was this agency that pled with Gold that the plan proposed by the EPA is simply too expensive given the current economy. 

The South Florida Water Management District cannot find the money to finance the EPA plan with its $1.5 billion proposed expansion of reservoirs and marshes into a correlated web of waterways that would  absorb phosphorus coming into Florida waters from sugar farms, residential lawns, etc.  The District filed its arguments before Judge Gold, to no avail.

From the Order:

Protection of the Everglades requires a major commitment which cannot be simply pushed aside in the face of financial hardships, political opposition, or other excuses .... These obstacles will always exist, but the Everglades will not — especially if the protracted pace of preservation efforts continues at the current pace.

What Federal Judge Gold Has Done

District Judge Gold has exerted his power to take authority from the State of Florida to issue pollution discharge permits for Florida's web of marshes and place this authority with the EPA (Environmental Protection Agency).

His action can be seen as an easy springboard for the federal government to move Florida's state government aside in regards to all of Florida's waterways -- throughout the Everglades, as well as elsewhere in the state: lakes, streams, creeks ... even coastal waters. 

The Scott administration, which has defended the state's oversight of Everglades cleanup and water pollution standards, said it was already "vigorously pursuing" an appeal filed earlier with the 11th Circuit Court in Atlanta.

Show Us the Money

Here in Florida, times are tough and getting tougher.  It is one thing to opine that the Florida Everglades must be protected at all costs, and quite another to put pen to paper and find the funds to actually make that happen.

Where's the money, Judge Gold? 

First, the general rule:  Florida land development has always been at odds with those who want to conserve and protect the natural environment of our beautiful state.  Developers, like all of us, marvel at how truly magnificent this area can be: those involved in planning, designing, surveying, building, financing - all the facets of corralling the wilds for the use of people - also appreciate the beauties of our beaches, sunsets, glades, not to mention all the wildlife which enriches our state (e.g., our earlier post on the Florida Panther). 

It's not that developers are blind to beauty: it's just that they are dedicated to serving the needs of the human population in transportation, economic growth, living standards, and the like.  Land development, at its best, accommodates the beauty of nature along with the needs of the population.   Conservationists may not always trust this to be true, however. 

Everglades - Prime Example of the Longstanding Dispute Between Development and Conservation

The Florida Everglades are positioned in an area prime for development, and they have been for decades.  Fights over land use of Everglades territory go back to the 1800s, when the first fights to drain the Everglades where unsuccessfully instituted by territorial representatives from the U.S. Government back in Washington, D.C. 

For a humorous, witty take on the Everglades fight, check out the series of books written by Carl Hiassen - particlarly the one man war against development undertaken by former Governor Clinton Tyree, now known simply as "Skink."  Probably best to read them in the order they were written, fyi.

Today's Miami Herald Article Spotlights Another Twist: Nature Is Always Changing

In an article entitled "Exotic Animals and Plants Threaten South Florida Ecosystem," reporter Christina Veiga of the Miami Herald provides an excellent overview of how here in Florida, the only thing that you can really rely upon is that things will change.  Florida's natural state isn't just sitting there, a foe to the development of lands into roadways, schools, shops, and homes.  Nope.  Nature is always changing, evolving.   Sometimes it's something new.

Sometimes, Development and Conservation Face the Same Fight Against Nature

For Florida, this means that species are guaranteed to pop up among the plant and animal life, and sometimes these are not good things.  Alligators and other exotic animals have been released into the wilds and now serve to threaten other animals (including pets) as well as humans. 

Invasive species are the exception to the General Rule of Conservation vs Development

A growing concern: the Python, which shares the top of the food chain with the well known Florida Alligator - in fact, the python may consider even the alligator its prey.  National Geographic labels this a "Nightmare" as these 20 foot long snakes, native to Africa, seem to be right at home here in South Florida (particularly near Miami). 

Moreover, as the Miami Herald article discusses, there are also invasions of plant and fish life that are at the minimum a nuisance and at most, a danger.  Things like the Mile-a-Minute Weed, a fast growing intrusive, non-native plant that is a serious headache for conservationists and developers alike.  Or the blue tilapia fish, considered an invasive species that has proven to be a serious problem in Florida waterways.

Faced With Invasions, We're On the Same Team

Faced with 20 foot long snakes, or weeds that grow 2 feet overnight, environmentalists and developers can find common ground.  The constant change in Florida natural habitat sometimes means we're all in this together. 

The Pew Research Center, respected world-wide for its research efforts, has released a new study today regarding American real estate - particularly, whether or not the American Dream of owning one's home is still alive and kicking today, post ForeclosureGate and along with a downward-turned economy and other things.

Entitled, "Home Sweet Home. Still. Five Years After the Bubble Burst," you can download the full report here.

According to the Pew research:

• 8 out of 10 Americans still believe that the best investment someone can make in this country, long-term, is to buy a home.
• 86% of those participating in the Pew Study reportedly believe that it will take until at least 2014 for real estate values to return to pre-recession levels, and 10% of those questioned believe that's too optimistic, and that it will take a decade (till 2021) to get those values back to the fair market values that everyone saw back in 2006.
• Many Americans (23%) regret their prior real estate decisions: when asked by Pew researchers, they answered that they would not buy their current home again if they had the choice.

What Does the Pew Research Study on the American Dream Mean to Florida?

The American Dream arguably encompasses more than owning one's home.  It's a concept rooted in the Constitutional guarantee of an American's right to the "life, liberty, and the pursuit of happiness," and for some, the American Dream means the right to roam free - without the encumbrance of a home (and a mortgage).

Nevertheless, for many here in Florida and elsewhere, owning one's home as opposed to renting provides a freedom of its own -- and buying rather than renting has been seen as an integral part of achieving their American Dream.  Owning your own home is still very important to lots of people, and the barriers that currently exist between them and that reality are causes for concern.

The truth is that Floridians who purchased their home long ago, and have only a few years if any left on their mortgage, have indeed found a good investment for their money in the purchase of real estate.  The fair market value of their property is still a lot higher than it was when they bought it. 

Floridians that bought oceanfront condos and the like just a few years ago - say 2004 to 2006 - have seen their fair market values plummet.  Many of these home owners are probably underwater on their mortgages.  Right now, they may not believe much in the American Dream of home ownership. 

However, looking to the future, even those Floridians may be happy with their real estate investment.  Many are expecting inflation to hit our country hard, and with that prices will rise, along with the cost of a loan (i.e., interest rates). 

Real estate may still be an excellent investment.  Even now, with ForeclosureFraud and all the doomsday predictions.

Florida commercial real estate already awaits the final tally on how much the real estate market will be impacted by proposed deregulation of professionals such as surveyors, landscape architects, and the like.  However, that isn't the only jab to the Florida commercial real estate market by the state government these days. 

Florida commercial leasing is being hit by disappearing government leases - the State of Florida isn't the trustworthy tenant that it used to be, office-space wise.

The new Powers that Be in Tallahassee are all about cutting back on state government - as we've been following with the massive deregulation bill (HB5055) in the past few weeks.  That proposed law would end lots of regulatory efforts by the State of Florida, meaning less state tax dollars would be needed to fund state oversight.  (Read more about it here.)

However, in today's bad economy, the State of Florida has been slashing agency budgets across the state by reducing its office lease rents -- which may look good for the state's budget-balancing monthly accounting, but which is far from good news for those leasing companies and owners of leaseholds who are now facing lots and lots of empty, unprofitable office space.

The Wall Street Journal, in an article by Anton Troianovski entitled "Government Cuts Clip Office Market," reports that already Florida's statewide total of leased office space has declined by five percent (5%) and it's predicted by industry experts that approximately half a million (500,000) of leased square feet will be lost in 2011 as the State of Florida vacates its current leaseholds. 

That is a lot of empty offices in an economy that's already reeling from business declines.

Moreover, this doesn't appear to be the only whammy that the Florida commercial real estate industry will have to survive - and attempt to thrive in spite of its impact.  Those holding leases with the State of Florida may not be secure in those profit projections: the Florida Tax Watch, for example, is calling for existing leases held by the State of Florida to be reviewed and renegotiated.  

Last week's post about the Florida Legislature considering massive deregulation as a budgetary strategy resulted in lots of discussion and commenting - and rather than respond to each item individually, we're providing the following information so anyone with a strong opinion on this issue can give that opinion where it counts: to their representatives in the Florida Legislature itself.

To get the email or phone number or mailing address of your representatives in the Florida Senate and the Florida House of Representatives, go here and input either your zip code or your mailing address. 

The Florida Deregulation Bill Moves Forward - Track it as HB 5055

In our earlier post, the bill was gaining momentum in the House but it was still in subcommittee.  Now, it's official over 300 pages and it's HB 5055, which you track online at the government website. 

On Friday, it moved to the Economic Affairs Committee of the Florida House. You may also want to contact those serving on the Florida Economic Affairs Committee.   

Read the text of this proposed law here.  Here is the summary of what this bill intends to do, according to the Florida House (the official description of the proposed law):

Deregulation of Professions and Occupations: Deletes provisions establishing DBPR's Division of Florida Condominiums, Timeshares, & Mobile Homes, Florida Board of Auctioneers, Board of Employee Leasing Companies, Board of Landscape Architecture, Board of Professional Geologists, & Board of Professional Surveyors & Mappers, Motor Vehicle Repair Advisory Council, & Regulatory Council of Community Association Managers; deletes provisions for regulation of yacht & ship brokers, auctioneers, talent agencies, community association managers, athlete agents, employee leasing companies, home inspectors, mold assessors & remediators, professional surveyors & mappers, persons practicing hair braiding, hair wrapping, or body wrapping, interior designers, landscape architects, professional geologists, professional fundraising consultants & solicitors, water vending machines & operators, health studios, ballroom dance studios, commercial telephone sellers & salespersons, movers & moving brokers, certain outdoor theaters, certain business opportunities, motor vehicle repair shops, sellers of travel, contracts with sales representatives involving commissions, & television picture tubes; revises name & membership of Board of Architecture; revises license classifications of public lodging establishments; deletes DBPR's authority to enforce & ensure compliance of certain provisions relating to condominiums, cooperatives, vacation plans & timeshares, & mobile homes.

Of importance, since this bill is considered to be budgetary in nature it will not need to follow the more well known path of substantive legislation - which means it can get passed a lot faster than the substantive proposals. 

If you want to have your opinion heard by the Powers that Be, then speak now, speak soon -- the proposed effective date of this bill is July 1, 2011. 

This afternoon at six o'clock, Florida Governor Rick Scott will deliver his State of the State address from Tallahassee. You can watch it online via The Florida Channel (www.thefloridachannel.org). 

The Country is Watching Florida Governor Rick Scott

The eyes of the nation will be watching today's address, as well as lots of Floridians concerned about the current business and economic climate.  Rick Scott is well known for having put $73,000,000 of his own money into his victorious election campaign as part of his stance that he was taking on the job of governor not as a politician but as a businessman. 

The New York Times points to this cornerstone of Governor Scott's current position on many economic proposals in a piece entitled "Florida Republicans Are at Odds With Their Leader,"  and one of their big examples of how the Governor is being criticized for failing to understand the distinctions between how a for-profit corporation is run and how a state government operates is his thumbs-down to the bullet train proposal.

The Los Angeles Times is also covering this story, providing their readers with reporting from Aaron Deslatte of the Orlando Sentinel that "Scott, legislators ready to begin contentious 60-day session."  Here, the focus is on Scott's promise to bring 700,000 jobs over the next 7 years to the State of Florida as well as the huge number of folk predicted to show up today to voice their support or their opposition to what the Governor is wanting to do in order to achieve his goals.

Among them:  David Koch's Americans for Prosperity, which is reported to be footing the bill to have activists travel to Florida and rally around Governor Scott's nixing of the the high-speed rail line bullet train between Orlando and Tampa. 

So, is there still a chance for the Bullet Train/High Speed Rail Line Here in Florida?

If there are a bunch of activists showing up to rally around the issue of the Florida High Speed Rail Line, then some might argue that the issue isn't dead in the water yet.  And that's because it's not.

Yesterday, it was reported in the media that Secretary of the Department of Transportation Roy LaHood extended his deadline by another week for Florida to take the money.  (Yes, even though as the Hawaii Reporter points out, Governor Scott has turned it down TWICE.) 

However, other news reports are stating that LaHood has already accepted Florida's refusal and is opting to fund the Fresno alternative, sending the money over to California. 

Apparently, after the Florida Supreme Court ruled last Friday that the state's governor did have the legal right to decline the offer of federal monies for the rail system, LaHood worked with Florida Sen. Bill Nelson to have a regional rail authority in central Florida compete with California and the other states interested in the Bullet Train Money for the federal funds. 

Curious by its absence, there is no official news release on this issue at the Department of Transportation website. There is, in comparison, a recent release on federal funding of a Washington high speed rail line. 

So, is there still hope for the Bullet Train here in Florida?  Maybe so.  Those who believe that this influx of funds would help spark land development here are keeping their fingers crossed.

Anyone following the financial news this week knows the answer to the question of "Who Owns St. Joe," because the company's largest investor has just booted the company's CEO and successfully replaced the St. Joe leadership in a fierce powerplay that's been building for weeks, if not months. 

Bruce Berkowitz of Fairholme Capital Management, the biggest shareholder of St. Joe Co., announced yesterday that St. Joe CEO Britt Greene will be resigning.  Greene just lost a job that he's had for the past 13 years. 

Don't feel too bad for Mr. Greene, though, because he's leaving with a $4,000,000+ severance package.  The Jacksonville Business Journal has all the details on Britt Greene's severance if you're interested in the dollars and cents.

Meanwhile, Berkowitz will be joining the St. Joe Board -- along with other new St. Joe Board members (1) former Florida Governor Charlie Crist;(2) Charles Fernandez, president of Fairholme Capital; and (3) Howard Frank, COO of the popular cruise line operator, Carnival Corp.

A search firm is in the process of finding one more independent director for the St. Joe board -- and they're also on the lookout for a Big Kahuna to take over the CEO spot that Greene is vacating. 

And here's why this is important for all of us to know....

St. Joe Company owns more Florida land than anyone else (except one) and yet St. Joe has been in the red -- running at a loss -- for the past 10 quarters.  Not good for Florida.

St. Joe Company is in the business of land development.  It's heavily involved in Panhandle development, and has been a part of Florida real estate for literally decades.  St. Joe owns almost 600,000 acres of Florida land, and around 70% of that property is within 15 minutes drive of the Gulf of Mexico.

As the Wall Street Journal points out in its coverage today, this revamping of St Joe leadership may well change how North Florida is developed -- indeed, a redirected St. Joe may well impact all of Florida land development in the coming years.   

Bottom line?  We're all hoping that this leadership overhaul at St. Joe Company is one more step toward an economic renaissance of land development throughout the State of Florida.  We all know we need one.

Florida still may get that bullet train between Orlando and Tampa, and later to Miami, if some fast-acting state legislators can pull a rabbit out of their collective hat and get that $2.4 billion of federal funds into the Florida economy.  U.S. Transportation Secretary Ray LaHood has set a quick deadline for an official Florida plan to be placed on his desk. 

That deadline is this Friday.

These 25 or so lawmakers are a combination of Republicans and Democrats, who got together and wrote Mr. LaHood, circumventing the governor with their own brainchild:  a Florida planning agency/railway authority could spearhead the bullet train.  Under their plan, this organization would oversee the building of the high rail line and thereafter take responsibility for its operations.  

The organization is already in place -- Florida created it over a year ago, naming it the Florida Rail Enterprise, so that much is done. (Read the creating legislation here.)

Here's what they wrote to Secretary LaHood (read the full text of their letter here):

In December of 2009, members of the Florida Legislature voted to create the Florida Rail Enterprise and the Florida Statewide Passenger Rail Commission. The enterprise could have the ability (pursuant to s. 341.822, Florida Statutes) to independently move forward with Florida’s plans for high speed rail. Please give us the time necessary to work with the enterprise prior to re‐allocating Florida’s funds to another state.

This project would create real jobs, cleaner and smarter transportation, and true economic development for Floridians. The international consortiums who have been investing time and money while waiting for the chance to respond to a request for a proposal deserve that opportunity. Politics should have no place in the future of Florida’s transportation, as evidenced by this letter of bipartisan support.

Let's see if this fancy footwork pays off: California and New York are both chomping at the bit, pushing the feds to send that $2.4 billion earmarked for high rail projects their way if Florida doesn't get it. 

Sheila Bair chairs the Federal Depository Insurance Corporation ("FDIC") and has since since June 2006, when she was appointed for a five year term by President George W. Bush.  (Sheila Bair is also serving a term on the FDIC's Board of Directors which will end in 2013.)

For many, Sheila Bair's biggest role involves overseeing and salvaging banks that are going under.  Watching the FDIC today usually means watching the news for what banks have failed this week. 

The FDIC Failed Bank List

The FDIC Failed Bank List keeps track of banks that are taken over by the FDIC, which comes in as receiver -- it's a scary list for most at this juncture and many are watching the 2011 FDIC Failed Bank List to see just how many banks fail in 2011 (there have been 11 bank failures so far this year - all in January 2011). 

FDIC Chair Sheila Bair Also Player in Financial Reform

However, FDIC Chair Sheila Bair is also a key mover and shaker in finance and lending practices in this country.  Right now, for example, she is calling for Mortgage Servicers to fork up the necessary funding to establish a Mortgage Servicer Foreclosure Commission that would investigate complaints from consumers regarding these companies and would have the power to resolve these disputes with money provided by the mortgage servicing companies. (If this sounds familiar, it should: it's analogous to the British Petroleum model.)

Sheila Bair is also pushing for the Dodd-Frank Act's risk retention rules to be expanded to incorporate mortgage servicers.  No news here that banks and others involved in the mortgage business are not happy with this proposal.  She advanced this proposition a couple of weeks back during a speech to the Mortgage Bankers Association (see link to full text of her speech, below). 

Rebutting FDIC Chair Sheila Bair's Position on the Mortgage Industry - Maybe She's Wrong

However, rather than go through the details here on why Ms. Bair may not be right in her approach, read the excellent itemized rebuttal of Thomas Brown of Bankstocks.com where he takes her speech, paragraph by paragraph, and points out key issues that include:

• the problem with the mortgage crisis in our country is not how the mortgage notes were serviced, but the fact that borrowers stopped paying on their notes - in massive numbers.  This unprecedented number of home loan defaults forced the financial industry to deal with a new and unique crisis; 
• many of these mortgages were given to folk that should not have been given a home loan, and would not have received financing in prior years; and
• the finance industry views the true crisis as occuring in 2008 and here in 2011, the issue is how to clean things up and move forward.  The massive defaults have already hit. 

Read FDIC Chair Shiela Bair's speech to the Mortgage Bankers Association's January 2011 Summit on Residential Mortgage Servicing for the 21st Century here. 

For an excellent resource on the details of the Dodd-Frank Act, refer to the Law Librarians' Society of Washington, D.C.'s online resource here. 

Banks beware.  If other states follow the lead of decisions being made in Massachusetts, then an onslaught of litigation resulting from ForeclosureGate in Florida, and elsewhere, is inevitable. 

First, the Massachusetts ruling in Ibanez goes against Wells Fargo and US Bancorp.

Earlier this month (January 7, 2011), the highest appellate court in the State of Massachusetts, its Supreme Judicial Court, released its opinion in the case styled U.S. BANK NATIONAL ASSOCIATION, trustee vs. ANTONIO IBANEZ, Cause No. SJC-10694, opining that financial institutions Wells Fargo and US Bancorp had wrongly foreclosed on two homes since when they sold these properties at foreclosure sales in July 2007, neither bank could substantiate their legal title or ownership of the properties at the time of the sale.

Here, the two banks filed suit against the defaulting properties, in an abundance of caution after making the mistake of first publishing their foreclosure notices in the wrong newspaper. Defendant Ibanez did not respond to this lawsuit (at first) and defaulted because he was not living at the property and was not aware of the filing.

Read the complete Ibanez opinion here.  Perhaps most telling is the language (and attitude) presented in the concurrance of Justice Cordy (joined by Justice Botsford):

I concur fully in the opinion of the court, and write separately only to underscore that what is surprising about these cases is not the statement of principles articulated by the court regarding title law and the law of foreclosure in Massachusetts, but rather the utter carelessness with which the plaintiff banks documented the titles to their assets. There is no dispute that the mortgagors of the properties in question had defaulted on their obligations, and that the mortgaged properties were subject to foreclosure. Before commencing such an action, however, the holder of an assigned mortgage needs to take care to ensure that his legal paperwork is in order. Although there was no apparent actual unfairness here to the mortgagors, that is not the point. Foreclosure is a powerful act with significant consequences, and Massachusetts law has always required that it proceed strictly in accord with the statutes that govern it. As the opinion of the court notes, such strict compliance is necessary because Massachusetts both is a title theory State and allows for extrajudicial foreclosure.

The type of sophisticated transactions leading up to the accumulation of the notes and mortgages in question in these cases and their securitization, and, ultimately the sale of mortgaged-backed securities, are not barred nor even burdened by the requirements of Massachusetts law. The plaintiff banks, who brought *656 these cases to clear the titles that they acquired at their own foreclosure sales, have simply failed to prove that the underlying assignments of the mortgages that they allege (and would have) entitled them to foreclose ever existed in any legally cognizable form before they exercised the power of sale that accompanies those assignments. The court's opinion clearly states that such assignments do not need to be in recordable form or recorded before the foreclosure, but they do have to have been effectuated.

What is more complicated, and not addressed in this opinion, because the issue was not before us, is the effect of the conduct of banks such as the plaintiffs here, on a bona fide third-party purchaser who may have relied on the foreclosure title of the bank and the confirmative assignment and affidavit of foreclosure recorded by the bank subsequent to that foreclosure but prior to the purchase by the third party, especially where the party whose property was foreclosed was in fact in violation of the mortgage covenants, had notice of the foreclosure, and took no action to contest it.

Second, the Massachusetts High Court Agrees to Hear Bevilacqua

Usually, the rulings of the Massachusetts Land Court are reviewed by a mid-level appellate court before the case ever appears before the Judicial Supreme Court of that state.  However, this high court has the ability to choose to hear cases directly from the lower courts, bypassing intermediate review, and this month the court has done this in an Ibanez-related case, now before it as Cause No. 10880 and styled Francis Bevilacqua v. Pablo Rodriguez.

In Bevilacqua, a real estate investor bought residential property at a foreclosure sale and thereafter renovated it into four condominiums, which he sold.  Here, Francis Bevilacqua filed suit against the original property owner (who was foreclosed upon) in an attempt to clear his title (and presumably, defend against the predictable condo owners' suits). 

Land Court Judge Keith Long ruled against him, opining that US Bancorp had improperly foreclosed upon Mr. Rodriguez thereby leaving Mr. Rodriguez with full legal title and the bank with the ability to merely quitclaim whatever interest it had in the property to Mr. Bevilacqua at the foreclosure sale.  Similarly, Mr. Bevilacqua could not transfer any legal title in the four condos to their purchasers: he had no legal title to convey since it remains, in the opinion of Judge Long, with Pablo Rodriguez.

From Judge Long's opinion:

Plaintiff Francis Bevilaqua holds no title to the property at 126-128 Summer Street in Haverhill. That title is held by defendant Pablo Rodriguez. What Mr. Bevilaqua has is a quitclaim deed from US Bank, N.A., which conducted an invalid foreclosure sale on the property (it was not the holder of the mortgage at the time the sale was noticed and conducted as required by G.L. c. 244, § 14) [Note 1] and thus acquired nothing from that sale. See US Bank v. Ibanez, 17 LCR 202 (Mar. 26, 2009) & 17 LCR 679 (Oct. 14, 2009) and cases cited therein. US Bank therefore had nothing to convey, and its purported conveyance to Mr. Bevilaqua was a nullity. See Bongaards v. Millen, 440 Mass. 10 , 15 (2003).

Despite this, Mr. Bevilaqua now seeks to create a full, fee simple title in himself — quite literally, something from nothing — through the “try title” procedure of G.L. c. 240, §§ 1-5. He cannot do so, for the reasons set forth below. Accordingly, his complaint is DISMISSED in its entirety, with prejudice.

[Analysis omitted from quote.]

For the foregoing reasons, the plaintiff’s claims are dismissed in their entirety, with prejudice. Judgment shall enter accordingly. [Note 6] I have great sympathy for Mr. Bevilacqua’s situation — he was not the one who conducted the invalid foreclosure, and presumably purchased from the foreclosing entity in reliance on receiving good title — but if that was the case his proper grievance and proper remedy is against that wrongfully foreclosing entity on which he relied.

If the property owners who defaulted on their loans still own this real estate, then what?  The ramifications of this as a reality are overwhelming: what impact on their income tax? what happens to the new owners' tax deductions?  Can they be evicted? Where is the title insurance exposure here? 

The truth is that financial institutions were faced with an unprecedented number of people not paying their home loans.  In response, mistakes were made.  Unscrupulous service providers (apparently including law firms) became involved and got greedy.

However, rulings that hold to traditional land law (however understandable) are not recognizing the unique circumstances these financial institiutions faced, to deal with as best they could.   The number of bank failures in this country is high and growing higher: you can monitor the FDIC Failure List here.

In 2010, 143 banks failed after 2009 saw 140 banks fail.  So far, 7 banks (including the First Commercial Bank of Florida in Orlando) have failed this month. 

The ramifications of a weakening financial system being met with this new line of cases cannot, and should not, be ignored.  

It the first week of Florida's new governor Rick Scott being in office he's making news already -- and this includes his appointment of Billy Buzzett as secretary of the Department of Community Affairs. 

Check out Buzzett's background on his LinkedIn page and you'll find that after getting his law degree back in the 1980s, Billy Buzzett has been involved in Florida real estate development for many years - and currently serves as the vice-president of strategic planning for the St. Joe Company. 

Good background for the man who will now be Florida's new Big Kahuna of land planning. 

St. Joe Company, currently the state's second largest private landowner, has a long history here in Florida, going back to the 1930s.  Built on the foresight of Edward Ball, brother in law of Alfred I. duPont, the company is known for pulling part of the state out of the Great Depression with employment at its Port St. Joe Paper Mill and having ecological challenges afterward from the paper mill's impact on the surrounding ecosystem. 

Today, its efforts focus on four areas of real estate development:  residential, commercial, rural, and forestry.  Explore the company website, and you can find all sorts of related, diverse development interests -- things that have all sorts of commercial complexities that Buzzett will bring with him in his new job.  Accordingly, Buzzett is bringing a developer's mind to state government. 

Buzzett's appointment is good news for Florida - especially in this economic climate.  We're all the better for it. 

Yesterday, Garrison Keillor lovingly acknowledged the 1947 dedication of Florida's Everglades National Park by President Truman in his Writer's Almanac - including a brief history of the Everglades themselves, and the many atttempts to capture its rich beauty, including those by naturalist Archie Carr, author Peter Matthiessen, and Florida's own Zora Neale Hurston, who wrote this in Their Eyes Were Watching God (1937):  

"To Janie's strange eyes, everything in the Everglades was big and new. Big Lake Okechobee, big beans, big cane, big weeds, big everything. Weeds that did well to grow waist high up the state were eight and often ten feet tall down there. Ground so rich that everything went wild. Volunteer cane just taking the place. Dirt roads so rich and black that a half mile of it would have fertilized a Kansas wheat field. Wild cane on either side of the road hiding the rest of the world. People wild too."

The Florida Everglades are well known to Floridians, in no small part due to the fights that have gone on for decades over who gets to use and control the rich wetlands: years before the Civil War (in 1858), there were already legal battles over building the canals necessary for drainage and land development. 

Today, over half of the Florida Everglades has been adapted for human use: we're using it for agricultural purposes, or as urban areas.  The fight continues over that other half, and there doesn't seem to be an end in sight: the juxtaposition of land development against the interests of conservationists over best use of the Everglades guarantees courtroom battles for years to come.  For example:

The United States Supreme Court just declined writ on November 29, 2010, in a case where the petitioners sought High Court review of the federal Clean Water Act's impact on the question of whether water managers can pump water from a canal into a lake without a permit in Friends of the Everglades v. South Florida Water Management District (10-196). 

And, as we discussed in an earlier post, the Florida Supreme Court just announced its ruling in the well-publicized U.S. Sugar litigation, allowing the use of bonds by the South Florida Water Management District in the government's land purchase.

Development vs Conservation: What Does the Future Hold?  Consider the Tamiami Trail

Just last year, the American Recovery and Reinvestment Act of 2009 provided almost a billion dollars ($96 million) toward restoration of the Everglades.  Part of this legislation will result in a bridge to substitute for the Tamiami Trail, a road running alongside the northern border of the Everglades National Park which has been controversial since the Tamiami Trail blocks water from getting to the south. 

The road itself connects Tampa with Miami, and is the last 275 miles of roadway along U.S. Interstate 41. Famous among Floridians and tourists alike, the Tamiami Trail is its own tourist mecca; for example, it is featured in Fodor's Travel Guide.  What happens when the bridge replaces the road? Who knows - and who knows if we won't be seeing future litigation on the impact here, brought either by conservationists or developers whose interests are harmed by this change.

Meanwhile, construction of the mile long bridge has already begun.  In 2010, the State of Florida proposed an additional 5+ miles of bridges be added to the Tamiami Trail.   

Meawhile: Happy Anniversary, Everglades National Park.