Florida Commercial News - Land, Development, Building, Business

The complete report by President Obama to the U.S. Congress is available online as released by the White House in pdf format.

The National Association of Realtors' Commercial Division has released its latest report on the U.S. Commercial Real Estate market today, and here is the news release from NAR that accompanied today's debut as our news release of the week:

Commercial Real Estate Sectors Steadily Improve

WASHINGTON (February 25, 2013) - Major commercial real estate sectors continue to improve, albeit slowly, with gradual economic improvement and job creation driving absorption of space, according to the National Association of Realtors® quarterly commercial real estate forecast. 

Lawrence Yun, NAR chief economist, said rental housing demand has been exceptionally strong. "Rent increases have been higher in multifamily housing where supply is not matching strong demand, thereby allowing landlords to raise rents at faster rates," he said. "Overall commercial real estate leasing activity continued to grow in most markets during the closing months of 2012, which is modestly lowering vacancy rates in all of the commercial sectors early this year." 

National vacancy rates over the coming year are expected to decline 0.4 percentage point in the office market, 0.4 point in industrial, 0.3 point for retail and 0.1 point in multifamily, with that sector experiencing the tightest availability. 

"Business spending is expected to rise faster in 2013 because of record high corporate profits. Low interest rates also are permitting companies to improve their balance sheets," Yun said. 

NAR's latest Commercial Real Estate Outlook1 offers projections for four major commercial sectors and analyzes quarterly data in the office, industrial, retail and multifamily markets. Historic data for metro areas were provided by REIS, Inc.,2 a source of commercial real estate performance information. 

Office Markets

Vacancy rates in the office sector are forecast to fall from a projected 16.0 percent in the first quarter to 15.6 percent in the first quarter of 2014. 

The markets with the lowest office vacancy rates presently (in the first quarter) are Washington, D.C., with a vacancy rate of 9.4 percent; New York City, at 9.6 percent; and Little Rock, Ark., 12.1 percent. 

Office rents should increase 2.6 percent in 2013 and 2.8 percent next year, following a 2.0 percent gain in 2012. 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 expected to total 34.0 million square feet this year and 42.3 million in 2014. 

Industrial Markets

Industrial vacancy rates are likely to decline from 9.6 percent in the first quarter of this year to 9.2 percent in the first quarter of 2014. 

The areas with the lowest industrial vacancy rates currently are Los Angeles and Orange County, Calif., each with a vacancy rate of 3.6 percent; Miami, 5.6 percent; and Seattle at 6.0 percent. 

Annual industrial rents are projected to rise 2.3 percent this year and 2.6 percent in 2014, after increasing 1.7 percent last year. Net absorption of industrial space nationally is likely to total 121.8 million square feet in 2013 and 103.5 million next year. 

Retail Markets

Retail vacancy rates are forecast to slide from 10.7 percent in the first quarter of the year to 10.4 percent in the first quarter of 2014. 

Presently, markets with the lowest retail vacancy rates include San Francisco, 3.5 percent; Fairfield County, Conn., at 4.2 percent; and Orange County, Calif., 5.2 percent. 

Average retail rents will probably rise 1.5 percent in 2013 and 2.1 percent next year, following a 0.8 percent gain in 2012. Net absorption of retail space is seen at 11.9 million square feet in 2013 and 16.4 million next year. 

Multifamily Markets

The apartment rental market - multifamily housing - should see vacancy rates ease from 4.0 percent in the first quarter to 3.9 percent in the first quarter of 2014; vacancy rates below 5 percent generally are considered a landlord's market with demand justifying higher rents. 

Areas with the lowest multifamily vacancy rates currently are New Haven, Conn., at 2.0 percent; New York City, 2.1 percent; and Minneapolis and Syracuse, N.Y., each at 2.5 percent. 

Average apartment rents are expected to increase 4.6 percent this year and 4.7 percent in 2014, after rising 4.1 percent in 2012. Multifamily net absorption is projected at 270,600 units in 2013 and 253,200 next year. 

The Commercial Real Estate Outlook is published by the NAR Research Division. NAR's Commercial Division, formed in 1990, provides targeted products and services to meet the needs of the commercial market and constituency within NAR. 

# # # 

1 Additional analyses will be posted under Economists' Outlook in the Research blog section of Realtor.org in coming days at: http://economistsoutlook.blogs.realtor.org/. 

2 Beginning in the third quarter of 2011, NAR commercial forecasts have been generated based on historical data provided by REIS, Inc., and do not correspond with prior historical information from previous forecasts. This source permits coverage of more metro areas than were previously covered. 

The next commercial real estate forecast and quarterly market report will be released on May 28 at 10:00 a.m. EDT.

This week, as the nation prepares to hear President Obama give the State of the Union Address, Florida Governor Rick Scott has already given Floridians information on the State of our Sunshine State, in his budget proposal which is described below in our release of the week.  

For details on the budget proposal, check out the pdf online that outlines the budget in a document that has graphs, pie charts, and assorted facts and figures to support the Governor's recommendations to the Legislature.  

Note: this is biggest budget ever proposed for Florida.

Florida Families First: 2013-2014 Budget Propsed by Florida Governor Rick Scott

Introduction from Governor Rick Scott 

“Florida Families First,” our executive budget for 2013-2014, reflects not only the progress we have made in reducing the size and cost of state government but our continued focus on creating jobs, improving education and keeping the cost of living low for all Floridians. This budget will continue our progress on reducing business taxes, investing in K-12 education, making higher education more affordable and creating an environment that encourages job creation. 

In the four years before I took office, Florida lost 825,000 jobs, unemployment more than tripled – from 3.5 percent to 11.1 percent, and state debt increased by $5.2 billion. Since I took office, we have supported the creation of around 200,000 private sector jobs. Florida’s unemployment rate has declined to 8 percent. We have also eliminated over 2,300 onerous regulations, reduced government positions by over 12,000, and streamlined the permitting processes for businesses. We also reversed the 20-year trend of billion-dollar increases in state debt and paid down state debt for the first time since 1994 at a rate of $1 billion each year for the last two years. 

Over the last two years, we made the tough choices to get our economy back on track. Through cost-savings efforts, we were able to cut taxes and eliminate regulations on businesses to help them succeed and create more jobs. As a result of our work over the last two years, we have created an environment where Florida’s private sector was able to create thousands of jobs. We are also now among the best states in the country for our drop in our unemployment rate. Florida’s economy is back on track. 

The nation is taking notice of our economic turnaround. The nation’s top CEOs now rank Florida the second best state in the nation for business. We have a $24 billion trade surplus, no personal income tax, we are on our way to eliminating the business tax, and our weather and beaches attract 90 million tourists a year. The National Chamber Foundation recognized us for having the number one talent pipeline, and the National Council on Teacher Quality said Florida has the most effective teachers in the nation.

 I ran for Governor of Florida because I wanted to keep the American Dream alive for my children, my grandchildren and all future generations of Floridians. My message is simple – everything we do in government must be focused on helping families pursue their dreams by getting a great job and accessing a quality education. Growing up, my family struggled financially and we moved a lot. My parents took different jobs to afford to pay the bills. My father was a bus driver and a truck driver. My mom worked as everything from a hostess in a Chinese restaurant to a clerk at JC Penney’s. We didn’t have a fancy house or nice cars, but what I got from my parents was better than that. They taught me that the American Dream is real – and that only in this country can you start anywhere, work hard and sacrifice, and make your dreams come true. I know that the opportunity to get a quality education and find a great job is key to this success. 

In everything we do in government, I ask, “How will this impact a family making less than $50,000 a year?” That is around half of the families living in Florida today, and that was also my family growing up. This budget puts Florida Families First because it is focused on helping Florida families get a great job and a quality education. Now that our economy is back on track, it is time to invest in these two important priorities in order to drive our economic growth forward. 

My Florida Families First 2013-2014 Recommended Budget includes $18.47 billion in total funding for K-12 education, an increase of $1.25 billion, or 7.3 percent, for K-12 public schools. This increase represents per student funding of $6,799, an increase of $412, or 6.45 percent, over the current fiscal year. State funding for K-12 education totals $10.7 billion - the highest state funding level in history. Included in this historic total is $480 million to support $2,500 pay raises for Florida’s K-12 teachers, plus the cost of associated benefits. 

Additionally, my Florida Families First 2013-2014 Recommended Budget focuses on building up our state’s manufacturing sector by eliminating the tax barriers on manufacturers who buy equipment. Florida’s current manufacturing tax policy puts our state at a competitive disadvantage because most states do not force manufacturers to pay taxes on the purchase of equipment or require them to adhere to regulations for tax exemptions. We want more manufacturers to move to Florida, and this budget proposes to save manufacturers $141 million (of which $115 million is recurring state funds) so we can eliminate the taxes on manufacturing equipment. 

I am proud of what we have accomplished already in the areas of jobs and education, but there is much work left to do. As long as even one Florida family is struggling to find work or access a great education, our work is not done. This year, we will build on our successes through strategic investments that put Florida Families First.  

Image: Florida Governor's Mansion (Wikimedia Commons)

This morning, Florida's Attorney General Pam Bondi announced that Florida - along with another 45 state Attorneys General have made a bargain with Lender Processing Services, Inc. (LPS) which ends the investigations in "robosigning" of real estate documents by LPS and its subsidiaries, LPS Default Solutions and DocX, with a settlement involving LPS paying millions in settlement proceeds and the entry of a consent judgment by each Attorney General in their state's case against the mortgage servicer.

LPS is based in Jacksonville, and moved into the national spotlight early on in the Foreclosure Housing Crisis:  for details, check out our earlier post "Defining RoboSigning: What Exactly is Robosigning - and Why is Everyone So Upset About It?"  LPS is a national leader in real estate financing in this country, and has been for years.  Its primary service is technological:  it helps banks and mortgage servicing companies with all the paperwork and documentation in real estate transactions, and for this reason it became caught up in the ForeclosureGate scandal involving "robosigned" documents.

The consent judgment will provide for new measures to be implemented by LPS in its documentation services. For Florida, that judgment will also bring with it millions of dollars in settlement proceeds to the State of Florida. 

“This settlement reflects the efforts of the states to work together to remedy the widespread abuses occurring in the residential mortgage industry in the past few years,” stated Attorney General Pam Bondi. “The proposed judgment holds LPS and its subsidiaries accountable and requires reforms that ensure the proper handling of residential mortgage-related documents.” 

Meanwhile, LPS has also issued a news release this morning.  However, while an announcement will surely be coming regarding this national settlement, today's news from LPS looks to the future, which LPS believes to be sunny.  According to LPS Applied Analytics Senior Vice President Herb Blecher:

“Though still a long way off from the historic level of originations that preceded the mortgage crisis, 2012 was the strongest full year of originations we’ve seen since 2007,” Blecher said. “Volumes were up approximately 34 percent year over year, with about 8.6 million new loans originated. And, while the majority of these new loans were government-backed – 84 percent in 2012 as compared to just over 50 percent at the peak – the trend over the last four years does suggest a slowly resurgent non-agency lending market.”

From Bondi's release, here are the changes that LPS will be required to make, some of which we can assume will have costs passed on to LPS's banking clientele:  

• Prohibits LPS (including DOCX) from engaging in the practice of surrogate signing of documents;
• Ensures that LPS has proper authority to sign documents on behalf of a servicer, if in fact it is signing documents;
• Requires LPS to accurately identify the authority that the signer has to execute the document and where that signer works;
• Prohibits LPS from notarizing documents outside the presence of a notary and ensures that notarizations will comply with applicable laws;
• Prohibits LPS from improperly interfering with the attorney-client relationship between attorneys and services;
• Prohibits LPS from incentivizing or promoting attorney speed or volume to the detriment of accuracy;
• Requires LPS to ensure that foreclosure and bankruptcy counsel or trustees can communicate directly with the servicer;
• Requires LPS to have enhanced oversight and review of processes over third parties it manages, including those entities that perform property preservation services;
• Prohibits LPS from imposing unreasonable mark-ups or other fees on third party providers’ default or foreclosure-related services;
• Requires LPS to establish and maintain a toll-free phone number for consumers concerning document execution and property preservation services (including winterization, inspection, preservation, and maintenance); and
• Requires LPS to modify mortgage documents that require remediation when LPS has legal authority to do so and when reasonably necessary to assist a consumer or when required by state or local laws.

The states that are in agreement here, and sharing the $120 million settlement proceeds:  Florida, Alabama, Alaska, Arizona, Arkansas, California, Connecticut, Georgia, Hawaii, Idaho, Illinois, Indiana, Iowa, Kansas, Kentucky, Louisiana, Maine, Maryland, Massachusetts, Minnesota, Mississippi, Montana, Nebraska, New Hampshire, New Jersey, New Mexico, New York, North Carolina, North Dakota, Ohio, Oklahoma, Oregon, Pennsylvania, Rhode Island, South Carolina, South Dakota, Tennessee, Texas, Utah, Vermont, Virginia, Washington, West Virginia, Wisconsin, Wyoming, and the District of Columbia.

Entering into the New Year, Florida real estate analysts and professionals involved in land development and real estate investment are looking at the South Florida commercial real estate market and wondering how it will fare in the upcoming twelve months.  All things considered, the future of South Florida Commercial Real Estate looks good as the following factors come into play:

Lack of New Construction Means Tenants Have Leverage in Negotiations

Last week, the Sun Sentinel reported on the state of the South Florida commercial real estate market, concluding that Miami area commercial properties will find a continuing recovery in 2013 but without expectations of any sudden upswings.  In an article written by Paul Owers entitled"Commercial real estate market 'bouncing along bottom'," the gist of those experts queried for their opinions seems to be that it's a tenants market right now in South Florida, due in no small part to the lack of new construction of office buildings, warehouses, retail spaces, and the like over the past few years.  For businesses looking to lease office or retail or warehouse space, there are deals to be made right now in South Florida. 

CMBS Loans Delinquency Rates Falling for South Florida

Meanwhile, for the first time in several years, the delinquency for commercial mortgage-backed securities ("CMBS") loans secured by South Florida commercial properties is under $1 billion dollars ($957 million) and December 2012 saw the delinquency rate at a low 8.2% (compared to the prior year's 9.4%).  

According to a South Florida Business Journal report, this translates into South Florida commercial mortgage-backed securities loan delinquencies going in the right direction (down) while the United States as a whole has seen the CMBS delinquency rate stay about the same (9.7% in December 2012, 9.6% in December 2011). 

Experts report that CMBS loans in the Miami area are performing well these days because the South Florida real estate market is finding favor with investors and things are happening here.  

Major New Commercial Projects Planned for Miami and South Florida

The expansion and re-do of the Miami Beach Convention Center should be finalized and moving forward in 2013; the Convention Center's master plan should be ready to roll by May 2013 according to city planners.  This will involve not only the convention center meeting spaces but a convention hotel site as well as the expected commercial properties to compliment these new facilities.  It's a major overhaul of the Center which some estimate will take up to $1 billion to complete.  

While this isn't the only new, big commercial project being planned for Miami, it is a big deal in considering the future of Florida's real estate market given this overhaul is happening now and the last time the Convention Center had any work done was in the late 1980s.  

Perhaps the biggest news in South Florida's future is the international investment and trade influx to our area.  As discussed in prior posts, Port Miami is currently being expanded to accommodate the huge sea vessels that will soon be able to move through the renovated Panama Canal.  This will not only increase Miami's stature as an international trade center,but it will bring with it the need for extended commercial real estate planning and projects to meet the needs of this increased sea trade traffic.

Miami - Dade County Is First US Foreign Trade Zone Operating Under Alternative Process

Additionally, the Commerce Department of Commerce not only allows Miami-Dade County to operate as a  Foreign Trade Zone (Miami is FTZ No. 281) but Miami-Dade is the first FTZ in the country that has been approved to operate under the federal government's new "Alternative Site Framework" which is designed to "streamline" things.

This is very important to the future of South Florida's commercial real estate industry because a foreign trade zone is created in order to help foreign commerce by allowing the FTZ to be exempt from the usual requirements of U.S Customs. How?  FTZs are not considered U.S. Customs territory insofar as the payment of duty, and any company that does business in an FTZ can reduce or even erase the usual custom duty payment.  

Here is the map of the Miami Dade FTZ, which extends north from SW 8th to the Broward County Line:

Today, the impact of the legislation passed by the House and Senate and autopenned into law by President Obama is still being digested and the entirety of its impact is still being analyzed for its impact on businesses, development, and individuals across the country.  

Here in Florida, from a real estate perspective, there are two key things that we are able to confirm that have been resolved.

1.  The Mortgage Insurance Deduction From Income Taxes Continues

The deduction of mortgage insurance from federal income taxes has been extended for one year: to December 31, 2013.  This allows home buyers who have less than a 20% down payment for their home purchase to buy the required mortgage insurance to deduct that insurance expense from their taxes.  

The mortgage insurance requirement varies from lender to lender:  VA mortgage insurance requirements are much different than private, conventional lenders mandate for new home loans.  In its various forms, mortgage insurance policies are necessary for people who are getting a home loan without putting 20% of the purchase price on the closing table.

Accordingly, this extension impacts millions of Americans who want a home loan in 2013.  It also impacts the housing industry as well as the national real estate markets -- particularly the real estate markets here in Florida, which are working so diligently to recover from the past few years of hardship.

2.  The FIT Exemption of Deficiencies in Short Sales and Foreclosures Also Survives

For those who sell their homes in a short sale, as well as those borrowers whose mortgages go into default and result in foreclosure, there will be an amount left on the bank's balance sheet after the home is sold.  That amount is the substracted sum of the sales price (and expenses) from the mortgage amount, usually refered to as the "deficiency."  

Several years ago, a federal law was passed to exempt that deficiency amount from being considered as income for federal income tax purposes.  This law was set to expire on December 31, 2013, and many in the real estate industry and financial circles were very concerned that its expiration would dampen and harm the fledging recovery in housing.  

The new fiscal cliff legislation extends this exemption of deficiency amounts from short sales and foreclosures.  However, there is a caveat: it does so only for properties that are homesteads.  Sell a second home or investment property, and there remains FIT implications as of 2013.

It's a short term resolution, however:  this exemption also expires on December 31, 2013.  

The floodgates for unprecedented foreign interest in Florida real estate, especially commercial development, may be opening for Miami and South Florida as many miles to the south of us, the Panama Canal expansion comes closer to completion.  Why?  Global trade is expected to explode here on the Eastern Seaboard of the United States, but particularly here in Miami where anticipation of the impact of a bigger (and wider) Panama Canal meant that Port Miami needed to be ready for change. 

The Panama Canal Expansion

What is happening in Panama?  Construction began in 2007 to expand the canal so it could serve the newer, bigger ships that move along modern sea routes.  Called the "Third Set of Locks Project," this will DOUBLE the Panama Canal's ability to move ships to and from the Pacific and Atlantic oceans, and it will offer a new traffic lane for today's monster ships -- vessels of a size not envisoned when the Panama Canal was initially designed. This new lane of traffic is a third set of locks, hence the project's name.  

It is projected that this expansion of the Panama Canal will build much more trade traffic to ports along the Eastern coastline of the United States.  In fact, ports from Baltimore on south have been preparing for the impact of the Panama Canal's Third Set of Locks Project for several years now.  

Port Miami Prepares for Over-Panamax and Post-Panamax Ships 

Many ships, including all U.S. aircraft carriers, most supertankers that carry oil, and most container ships, are too big to fit through the Panama Canal as it was originally built.  In shipping circles, these big vessels are called "Over-Panamax" or "Post-Panamax" and they cannot take advantage of the convenience that the Canal offers in traveling from one ocean to the other, or for trade between Asia and Europe and the Americas and the West African Coast.  

These Over-Panamax ships have been around and unable to use the Panama Canal since the mid-1960s, when these big ships and tankers first started being introduced to the seas. 

Now, the Port of Miami is in the process of deepening the port by 50 feet and doing other things to accommodate these Post-Panamax vessels.  

Right now, the Panama Canal project is behind schedule: it's expected to be completed in 2015. This may be good news for Miami, however, since it gives Port Miami more time to get ready for the dance: the only ports prepared to host the Post-Panamax ships at this point are Norfolk, Virginia, and Baltimore, Maryland: Miami can use the time to get its deep water port finished.

Fingers crossed, Port Miami will be ready for Post-Panamax vessels when the Panama Canal Expansion debuts -- and assuming so, Miami is hopeful that given Miami's location as well as its reputation as an international trade mecca will make Port Miami the first stop and preferred U.S. destination for many of those huge trade vessels coming through the Panama Canal in the future.  

The Florida Supreme Court has issued its opinion on the current state of the Florida judiciary system, with the following statement provided on its official website, in this our News Release of the Week:

Certification of the Need for New Judges In Florida 2000 through 2012

Each year the Supreme Court issues its opinion certifying the need for new judges throughout the State of Florida, an annual requirement imposed upon the Court by the state Constitution. This opinion sets the presumed number of new judges that could be created in local counties and circuits. However, the legislature has the final say as to whether new judgeships are created and funded. 

For district courts and trial courts, the determination for need is based on a complex calculation of caseloads. The Supreme Court uses a system for determining caseloads that takes into account the differing amounts of time needed in different kinds of cases. More complex kinds of cases receive greater weight under this system than simpler cases. It is called the "Weighted Caseload System." Thus, the certification is not a statement of what the Supreme Court simply wants, but rather what it has determined is objectively needed using the calculations dictated by the weighted caseload system. 

For an overview of the district courts system, read the Workload Report and the follow up Review of Case Weights Report. Also contained in the Workload Report are the DCA Case Weights. 

For the trial courts system overview, read the Executive Summary of the Judicial Resource Study Final Report recommending it be used by the Court. A brief Introduction of how it came to be used in Florida also is available along with the full Report. In addition, the full Report includes the Trial Court Case Weights. 

Read the 2013, 2012, 2011, 2010, 2009, 2008, 2007, 2006, 2005, 2004, 2003, 2002, 2001 and 2000 certification opinions. Statistics on Legislative Funding of prior certification requests also are available. 

If a blank screen appears after you click on any of these links, hit the Reload or Refresh button on your browser. 

All inquiries: 

Craig Waters, (850) 414-7641, Publicinformation@flcourts.org

One month from now, the United States Supreme Court will hear oral argument in Case No. 11-1447, styled Coy A. Koontz, Jr., Petitioner v. St. Johns River Water Management District, Respondent (read the docket here).  We've monitored this case for awhile now (read more about its 18+ year history here) as Mr. Koontz continues his father's lawsuit over 3.7 acres of land from the various Florida courts to the highest court in the nation.  

Koontz v St. Johns River WMD Oral Argument on January 15, 2013

On a wintery Tuesday morning next month, attorneys for both sides will present their arguments to the Supreme Court Justices and presumably, several of the counsel for those friends of the court who have filed amicus curaie briefs in the case will also be present.  

Questions Presented

Here are the two questions that will be addressed next month, and it is only these two legal issues that will be heard:

1. Whether the government can be held liable for a taking when it refuses to issue a land-use permit on the sole basis that the permit applicant did not accede to a permit condition that, if applied, would violate the essential nexus and rough proportionality tests set out in Nollan v. California Coastal Commission, 483 U.S. 825 (1987), and Dolan v. City of Tigard, 512 U.S. 374 (1994); and 

2. Whether the nexus and proportionality tests set out in Nollan and Dolan apply to a land-use exaction that takes the form of a government demand that a permit applicant dedicate money, services, labor, or any other type of personal property to a public use.

Briefing Filed and Online For Your Review

• Koontz's brief on the merits can be read online here.  
• St. Johns River Water Management District's brief in opposition can be read online here.
• Koontz's reply to St. Johns River WMD response can be read online here.

As for the briefing filed by the friends of the court, most of this briefing has been filed on behalf of the petitioner, Mr. Koontz.  Will this make a difference?  The only thing that is known for sure is that these filed briefs will be read and subject to discussion during the oral arguments next month.

On file before the U.S. Supreme Court are the following amici briefs, click on the link and you can read the briefing for yourself that has been made available online (at other than subscription services):

1. Brief amici curiae of Association of Florida Community Developers, et al. 
2. Brief amicus curiae of National Federation of Independent Business Small Business Legal Center.
3. Brief amicus curiae of Hillcrest Property, LLP 
4. Brief amicus curiae of American Civil Rights Union 
5. Brief amicus curiae of Land Use Institute, Ltd. 
6. Brief amici curiae of National Association of Home Builders, et al. 
7. Brief amici curiae of Atlantic Legal Foundation, et al. 
8. Brief amici curiae of Institute for Justice, et al. 
9. Brief amicus curiae of Owners' Counsel of America.

Lending is obviously important to land planning and commercial real estate development and Florida has been particularly hard hit in its financial industry, so the news this week from the Mortgage Bankers' Association regarding the current commercial loan delinquency rates is good news for many South Floridians: read more here, in our news release of the week:

Commercial/Multifamily Mortgage Delinquency Rates Down in Third Quarter

WASHINGTON, D.C. (December 6, 2012) – Delinquency rates decreased for commercial and multifamily mortgage loans in the third quarter, according to the Mortgage Bankers Association’s (MBA) Commercial/Multifamily Delinquency Report.

“Commercial and multifamily mortgage delinquency rates for loans held by life companies, Fannie Mae and Freddie Mac all remain extremely low,” said Jamie Woodwell, MBA’s Vice President of Commercial Real Estate Research. “The delinquency rate on bank-held loans is at its lowest level since the beginning of 2009 and the delinquency rate for loans held in commercial mortgage-backed securities (CMBS) – while still elevated – continues to stabilize. If one removes the CMBS loans that are in foreclosure or REO, that delinquency rate is at its lowest since late 2009.” 

During the third quarter of 2012, the 60+ day delinquency rate for commercial and multifamily mortgages held in life company portfolios decreased 0.03 percentage points to 0.12 percent. The 60+ day delinquency rate for multifamily loans held or insured by Fannie Mae decreased 0.01 percentage points to 0.28 percent. The 90+ day delinquency rate for loans held by FDIC-insured banks and thrifts decreased 0.18 percentage points to 2.93 percent. The 30+ day delinquency rate for loans held in commercial mortgage-backed securities (CMBS) decreased 0.11 percentage points to 8.86 percent. The 60+ day delinquency rate for multifamily loans held or insured by Freddie Mac remained the same at 0.27 percent. 

The third quarter 2012 delinquency rate for commercial and multifamily mortgages held in life insurance company portfolios was 7.41 percentage points lower than the series high (7.53 percent, reached during the second quarter of 1992). The delinquency rate for multifamily loans held by Freddie Mac was 6.54 percentage points lower than the series high (6.81 percent, reached in the fourth quarter of 1992). The delinquency rate for multifamily loans held by Fannie Mae was 3.34 percentage points below the series high (3.62 percent, reached during the fourth quarter of 1991). The rate for commercial and multifamily mortgages held by banks and thrifts was 3.65 percentage points lower than the series high (6.58 percent, reached in the second quarter of 1991). The rate for loans held in CMBS was 0.16 percentage points below the series high (9.02 percent, reached in the second quarter of 2011). 

Please note: In March 2012, MBA released a DataNote covering the performance of commercial and multifamily mortgages at commercial banks and thrifts over the entire year 2011. The DataNote found that commercial and multifamily mortgages had the lowest charge-off rates of any major loan type and had delinquency rates lower than the overall book of loans and leases held by banks and thrifts. The DataNote can be found at: www.mortgagebankers.org/research.

Construction and development loans are not included in the numbers presented here, but are included in many regulatory definitions of ‘commercial real estate’ despite the fact that they are often backed by single-family residential development projects rather than by office buildings, apartment buildings, shopping centers or other income-producing properties. The FDIC delinquency rates for bank and thrift held mortgages reported here do include loans backed by owner-occupied commercial properties. 

The MBA analysis looks at commercial/multifamily delinquency rates for five of the largest investor-groups: commercial banks and thrifts, commercial mortgage-backed securities (CMBS), life insurance companies, Fannie Mae and Freddie Mac. Together these groups hold more than 80 percent of commercial/multifamily mortgage debt outstanding. 

The analysis incorporates the same measures used by each individual investor group to track the performance of their loans. Because each investor group tracks delinquencies in its own way, delinquency rates are not comparable from one group to another. 

Based on the unpaid principal balance (UPB) of loans, delinquency rates for each group at the end of the third quarter were as follows: 

• Life company portfolios: 0.12 percent (60 or more delinquent);

• Freddie Mac: 0.27 percent (60 or more days delinquent);

• Fannie Mae: 0.28 percent (60 or more days delinquent);

• Banks and thrifts: 2.93 percent (90 or more days delinquent or in non-accrual);

• CMBS: 8.86 percent (30 or more days delinquent or in REO). 

Differences between the delinquency measures are detailed in Appendix A. 

The complete report is avaiable online. 

###

For over 20 years, The Beacon Council has been working for the economic prosperity of the Miami area and it's just released its annual report for how the Miami-Dade County economy looks now, and into the future.  It looks good.  

The Beacon Council is partly private, partly public, where Miami business leaders sit at the table with Miami officials (like the mayor and county commissioners) to work towards getting new investments into this area, helping existing businesses, and growing new jobs.  It's called an "economic development partnership," and the Beacon Council is one of only 31 economic development organizations in North America (that's Canada and the U.S.) that is accredited by the International Economic Development Council. 

Columbia Beer Brewers Relocation to Miami: Example of International Interest in Miami

You can read the 2011-2012 Beacon Council Annual Report online.  It provides not only incentives that Beacon Council promotes to players both in the United States and around the world, reasons that Miami is the place to be in 2013 and beyond, but concrete examples of its successes, such as the March 2012 decision by SABMiller Latin America to relocate from Bogota, Colombia to Miami-Dade County. SABMiller Latin America is one of the world’s largest brewers of beer, and it sells over 200 beer brands around the world.  

SABMiller has over 70,000 employees in more than 75 countries, and its move to Miami is a big boost to the local economy.  Why did SABMiller Latin America decide on Miami-Dade?  According to the Beacon Council report, it was the easy access offered to South American markets by the Miami International Airport combined with South Florida's skilled and bilingual work force. 

Beacon Council's Top 10 Reasons to do Business in Miami, Florida:

1. Excellent business climate with no state or local income tax.
2. Convenient direct air service from Miami International Airport to all major destinations in Latin America and the Carribbean, and more flights to the region than any other U.S. airport.
3. Ability to ship goods efficiently anywhere in the world through PortMiami, Florida's largest container port.
4. Centrally located in the Western Hemisphere and in the Eastern Time Zone, facilitating communication with Europe and the western United States.
5. More than 100 international consultates, trade offices, and bi-national chambers of commerce that support the worldwide flow of goods and services.
6. Skilled multilingual, multicultural work force drawn from more than 100 nations.
7. Strong, growing domestic economy serving more than 5.6 million South Floridans.
8. Ready access to sophisticated banking, insurance and legal services and other professional services.
9. High quality of life with a wide range of housing options, year-round outdoor recreational activities, renowned cultural institutions and four major professional sports franchises.
10. Financial and workforce training incentives available to qualified companies.  

Just how much international trade connections does Miami have, really?  

Just scroll through the list at the County Website, where the Office of Economic Development and Tourism keeps a roster of Interational Consulates with offices here in Miami.  Here are those consultates and trade offices (and their contact information) as of October 2012 located here in Miami ... and from the looks of this list, the real question seems to be "what country ISN"T interested in doing business here in Miami??"

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It seems that Florida through the eyes of the international investor looks very good indeed, at least that's the take on things provided by respected British investment firm Colordarcy. 

From their London offices, Colordarcy has issued a news release that explains not only why Florida is seen as an excellent real estate investment now, but also reports on Delaware's Vulcan Group, who recently issued its own news release detailing how its group of Mexican "businessmen and financial experts" are going to invest $150 million in foreclosed and repossessed homes here in Florida. (For more on Vulcan, go here.)

For more information on how international investors are looking at Florida real estate, check out Colordarcy's free 20-page booklet entitled, "Florida Property Investment Report."  Here is Colordarcy's recent press release as it was issued in the United Kingdom, and our news release of the week (emphasis added):

The Big Funds Continue To Invest In Distressed Florida Property

The number of South Florida homes for sale on has fallen by 34 percent in the past year according to figures released this month (Source: Zillow.com). This could be one reason why Florida property is attracting the attention of the big funds according to property investment firm Colordarcy.

(PRWEB UK) 15 October 2012

Warren Buffet thinks single family homes in Florida are cheap and now another major investment firm has decided they are now such good value they are prepared to invest a cool $150 million in 1,200 repossessed and foreclosed property in South Florida. This, according to Colordarcy, confirms their analysis that Florida property is one of the best investments in the US even though we are only just seeing signs of a tentative recovery in the state housing market.

Loxley McKenzie, Managing Director of Colordarcy commented, “Florida property is extremely attractive to investors right now. A combination of high rental yields, heavily discounted prices and a market that finally seems to be following a sustainable path towards recovery is what has drawn the attention of big investors this year.”

The latest funding group to invest big in Florida property are the Vulcan group which is made up of Mexican investors who are pretty clear about why they want to invest in South Florida property. Their CEO Inaki Negrete said in a press release, “We’re buying properties once valued at $200,000 or more for $75,000 and making them available within six weeks for a reasonable $1,500-a-month rent.”

McKenzie added, “Buffett, one of the world’s richest investors, saw the potential right back at the beginning of the year and this latest investment only reinforces the idea that Florida property is an extremely good long term bet – certainly in contrast to most property markets in Europe at the moment.”

Vulcan pointed out in the press release that the residential home market in South Florida is “definitely on the rise.” The fund is so optimistic about their investment, they expect to liquidate it in 2017, with a 100 percent increase in the values of the properties in its portfolio.

Analysts at Colordarcy point out that even though smaller investors cannot invest on the scale of the large investment funds, they can still enjoy the same percentage of growth on their investment. This latest move by Vulcan should alert investors that time is running out when it comes to some of the larger gains as property values steadily increase.

Only last month, a Reuters poll forecast that house prices would rise 2.5 percent next in Florida next year, up from 1.8 percent on their July poll. In August the average price of a Miami Condo rose 9.1% to $404,927 from $371,205 a year earlier. Colordarcy also highlight that average rents are climbing 4.4% annually according to the latest data.

Analysts at Colordarcy conclude that rising rents and prices happening in one state at the same time is unusual , yet this is what is happening now as a result of tight lending conditions and the influx of foreign cash buyers from Canada and Brazil as well as the big fund managers.

Notes to the editor:

Colordarcy is a leading property investment company that specialises in finding positive cash flow investment properties worldwide. Colordarcy investment property portfolio includes some of the best properties for sale in Brazil, Florida, Turkey and the United Kingdom.

This morning, at 8:10 EST, the United States Air Force launched a Delta IV rocket into space with its cargo, a military GPS satellite, from Florida's Cape Caneveral Air Force Station.  It's supposed to help both the military and the public with location, direction, and other map-type issues, and it's going up into space to replace an older model.  According to the Air Force officials, this GPS satellite should work just fine for the next 12 years.

However, the big news for Florida land developers and real estate investors was not that there was a launch from Cape Canaveral this morning.  The big news is that Florida is definitely going into the space business.

That's right.  Not only is Florida fighting hard to recover from this bad economic crisis by innovations like huge law reforms and foreign investment incentives, Florida is looking to build an investment base in land, sea, air ... and space.

Outer Space - The New Florida Commercial Development Frontier?

This month, Florida officially asked NASA to transfer ownership of around 150 acres of NASA property that sits north of NASA's shuttle launch pads and the shuttle runway, giving legal control of the land to Space Florida, the name of Florida's aerospace development agency.

Yes, Florida has its own aerospace development agency.  Think about that. 

What is Space Florida?  From its own web site:

Space Florida is an Independent Special District of the State of Florida, created by Chapter 331, Part II, Florida Statutes, for the purposes of fostering the growth and development of a sustainable and world-leading space industry in Florida.

As the State of Florida’s aerospace economic development agency, Space Florida fosters bold economic development activities to expand and diversify domestic and international opportunities that support talent development, enhance infrastructure and support governments and organizations in improving the state’s competitive business climate. Space Florida does this by supporting, assisting, facilitating and/or consulting on space industry related needs for:

Attracting, retaining, and expanding aerospace or related supply chain businesses that create economic opportunities in the State of Florida by:  

• • Arranging financial incentives and providing start up and relocation support
  • Providing financial and business consulting on business formation, relocation and venture development
  • Providing resources, retraining and access to experienced professional workforce
  • Development of targeted infrastructure and facilities
  • Research and Development opportunities that enable target industry growth
  • Space Florida also develops, conducts, hosts and/or arranges educational services, summits, conferences and/or programs relating to space-based scientific research and economic opportunities and incentives for space-related business, as well as recommends future requirements for aerospace workforce training and related skills.

The letter that Space Florida wrote to NASA top dog Charles Bolden as well as the Secretary of the Department of Transportation, Ray LaHood, has been published online as part of Project Sunburst.  Grabbing this land from NASA will help Space Florida in its big goal, which is to build a big, commercial complex to be called the "Cape Canaveral Spaceport," which would be like a commercial airport, except it would involve travel to space.

True, there are already some commercial space launches at Cape Canaveral Air Force Base, the site of this morning's Air Force satellite launch.  The big news about this land transfer request, from federal ownership to state control, is that it goes hand in hand with the State of Florida's fight to get a SpaceX launchpad, something that interests in both Brownsville, Texas, and Puerto Rico want to have for themselves.

SpaceX means private interests since SpaceX launchpads are those owned and used by privately owned Space Exploration Technologies (nicknamed "SpaceX"). SpaceX isn't a dream -- they are already actively in space with vehicles, or spaceships if you will, named things like Falcon and Dragon.  SpaceX, formed by former PayPal and Tesla Motors co-founder Elon Musk, is ten years old and already a big success as well as pioneer in this new commercial space industry.   

Will SpaceX Help Create Florida's Space Version of the Great Port of Miami Seaport?

This will be a new growth hub for Florida: the spaceport.  Why is this important?  Land developers as well as real estate investors can look to the needs of current airports, train terminals, and international ports like the great Port of Miami, "the Cargo Gateway of the Americas" to forecast where the deals and project needs will be. 

For those interested in exploring various areas of Florida for possible real estate development or investment, there are more and more ways to find interesting and valuable information online.  Consider the following information, available online at no charge, for two of the biggest development targets in the State of Florida right now:  Orlando and Miami-Dade.

Orlando Economic Development Information

In Orlando, located in Central Florida, there is the Metro Orlando Economic Development Commission where economic indicators for that area are studied and reported on each month.  You can download its overview of September 2012 Economic Indicators for Metro Orlando online for free. 

For those interested in commercial real estate, the web site also provides things like this:

• Orlando Office and Industry Market Statistics
• National Industrial Comparison - Metro Orlando
• National Office Comparison - Metro Orlando
• National Retail Comparison - Metro Orlando

Miami - Dade Economic Development Information

The City of Miami has its office of Economic Incentives which provides lots and lots of information about the Greater Miami area as well as information regarding incentives that the City of Miami offers to those interesting in doing business there, such as its New Markets Tax Credit (NMTC) program, where "... low interest, private capital [are steered]  into distressed census tracts to capitalize hard to fund commercial and residential projects."

Miami-Dade County also has its Department of Regulatory and Economic Resources which hosts the Economic Development and International Trade website.  Economic trends are reported on a quarterly basis (not a monthly report like Orlando provides) and these are also offered for free as a downloadable pdf document (get the Second Quarter 2012 Report for Miami-Dade here). 

Miami-Dade also offers an overall economic forecast for 2012, published March 2012 by Chief Economist Robert Cruz.  Here, information including the following is provided:

"Except for office market, commercial real estate in Miami-Dade starting to show signs of improvement: vacancy rates down, lease rates up, and positive net absorption in 2011."

"In 2011 the value of total trade was up 19.5% vs. 2010. 2011 saw continuing diversification in value of trade among trading partners (+Europe, +Asia)."

Regional and State-Wide Sources of Economic Information for Florida Commercial Real Estate

There are other sources of economic information and analysis of Florida's economic future as well as details about its economy, not only at a local level as these three sites demonstrate, but also at the regional and state-wide levels. 

What are they describing?  Florida has suffered economically for the past few years, but things are not as bad now as they were a couple of years ago for most Florida industries and economic sectors - and there are optimistic opinions that we're going to see a stronger and more stable Florida economy in 2013 and beyond. 

However, some regions of Florida do look to be bouncing back and offering more opportunity than others, as for example the Orlando area especially its Lake Nona region.  Within the state, some areas are indeed doing much better and offering more to the commercial real estate investor than others do.  If the rest of Florida follows the lead of Lake Nona, then the future will be very bright, indeed.

Lake Nona is a master planned community located in Orlando that seems to be getting more successful by the day.  For those that aren't aware of Lake Nona, here's the description of this unique Florida community from the LearnLakeNona web site:

Lake Nona is a 7,000-acre master planned community within the city limits of Orlando that will be home to world-class education, medical and recreational facilities, a medical city, diverse workspaces, retail centers, entertainment choices and residential options for all types of people seeking the best the city has to offer with all the conveniences of living within a dynamic, vibrant community. Lake Nona is being developed by Lake Nona Property Holdings, owned by Tavistock Group, a private investment company with a broad portfolio of assets around the world.

Lake Nona Development Booming

This week, the Orlando Business Journal reported on how popular Lake Nona really is these days: in this bad economy, 300 new home sales were made in 2012 in the Lake Nona neighborhoods of Laureate Park, Lake Nona Golf & Country Club, Village Walk and Water’s Edge: the best sales record for Lake Nona since 2005.  For more details, check out the info at the Lake Nona blog.

Commercial development is looking good for Lake Nona, too. 

It's not just residential development that is booming -- some would argue that the residential boost in 2012 is following on the coattails of commercial development that is already in place (Medical City) or is in the process of being completed.  Consider:

1. In August 2012, Valencia College ’s Lake Nona campus at Medical City opened for students
2. In March 2012, construction began on a 79,000-square-foot Publix-anchored shopping center.
3. Additionally, there are the new and expanding medical facilities in Lake Nona's Medical City:

•Nemours Children's Hospital at Lake Nona Medical City will open at a cost of $380 million next month.
•VA Medical Center at Lake Nona, 1.2 million-square-foot medical center costing more than $650 million expected to be open for patients in mid to late 2013.
• Orlando Regional Medical Center adding a 10-story patient tower at a cost of $300 million; scheduled to be complete in late 2015.

For more information regarding Lake Nona, leave a comment or visit the Lake Nona website.

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.

Broward County just got some big news: the Seminole Tribe (the only Indian Tribe to never surrender, for more of their history visit their web site) is planning to build a major new highrise hotel and casino over in Coconut Creek. 

Genting's Loss May Be Seminole Indian Tribe's Gain?

That's right: remember all the controversy over the casino being proposed by Genting in their new Resorts World Miami project?  So many critics challenged having a new, big gambling mecca in the Miami area.  It was a big deal last year.  Tallahassee law makers did not pass the necessary legislation to allow Genting (and other casino owners) to offer gambling in their establishments, so Resorts World Miami has been radically reduced from its original scope. 

Well, now the Seminole Indian Tribe has announced that it has sought approval from the Bureau of Indian Affairs to build a 20 story hotel and entertainment complex which would include a swanky casino with a goal toward this new project becoming a national draw for gamblers across the country.

The tribe plans on using land it already owns:  45 acres setting next to its existing Coconut Creek casino.  By declaring this tract as its sovereign land, the Seminoles can build the new project while taking the casino off the government tax rolls since it would set on tribal land. 

Reports are that the Seminole Hotel and Casino would invest the local area with lots of new jobs: around 1090 people would find permanent employment here.  They would work in the 1000 room hotel as well as the casino, the 2500 seat theater, or any number of shops and restaurants that are included in the overall plan. 

Big incentive for the Powers that Be to allow the Seminole Tribe to build this thing:  this hotel is expected to put  $76.8 million into the local economy each year.  That's sweet talk to many people out there.

Once built, the new Broward County hotel complex would be over twice as big as the Seminole Tribe's Hard Rock Hotel in Hollywood, Florida.  (Yes, the Seminoles are not new to this ball game.)  This new hotel complex would all be one of the biggest in all of South Florida: and South Florida already has a lot of nice and very big entertainment - hotel complexes for American tourists and foreign visitors to enjoy. 

Will it happen?  Too soon to tell. 

The Seminole Tribe is serious about the project, but there are lots of things to consider and hurdles to jump before any groundbreaking ceremony.  Traffic infrastructure needs are one problem to solve.  On the other hand, construction costs right now are low and that's a benefit in a big hotel build which might not exist in a few years. 

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. 

As more and more investment chatter centers around the possibility of investing in the huge volume of single family homes that have, or will be, foreclosed upon in the United States, many are seeing an opportunity in Single Family REITs.  (Read our earlier posts about this blossoming investment vehicle here.)

However, there are those that are very concerned about what Rental REITs (both apartments and SFDs) will mean in the long run to the American economy - and the U.S. Citizen.  Here are some of their concerns and criticisms (with a hat tip to Yves Smith at Naked Capitalism for collecting most of these in his column and its commentary):

1.  The expected popularity of this investment vehicle, together with the decline in homeownership in this country, may mean that many Americans will be tenants to private equity landlords: it will change the very essence of our society.  These private equity landlords won't be like beloved Stanley Roper in the old Three's Company TV Series - nearby, quick to respond to complaints, always involved in maintainance.  Nope.  The worry is that Private Equity Landlords will be anonymous, unapproachable and possibly mysterious owners of properties without any regard for their tenants' concerns or the property's needs.

2.  This is a new concept, and even if Rental REITs have some interest in being good landlords, they've got no pattern to follow, no example in the past to use in figuring out how to be the Corporate Stanley Roper.  

3.  Gretchen Morgenson of the New York Times points to skullduggery happening in New York City with apartment REITs:  including suspicions of sending fake notices and fraudulent notices of non-payment (when payments have been made) to replace low paying tenants.

4.  Some are predicting that these new Private Equity Landlords are going to transfer the responsibility of maintaining the property to the tenant as part of the lease terms.  

5.  If the Rental REITs fails to meet its own obligations, like Tishman Speyer did a couple of years ago on a NY apartment REIT, a large number of tenants are suddenly in limbo - and may not even be aware that their Private Equity Landlord has defaulted on its own agreements.  

As more discussion occurs on this new investment vehicle, especially its latest version - the Single Family REIT, these and other worries will be a part of the conversation.  And they should be.  However, here's the big elephant in the room: there are unprecedented numbers of homes sitting on bank balance sheets right now because of all the foreclosures that have happened in this country.  We know the impact of this very well here in Florida.

Something needs to be done to move forward, and we have no pattern here for how to fix this mess.  It's something new.  

So, new answers are being developed like Single Family REITs, not in a sinister way to thwart the American Dream, but in an optimistic way to get the economy moving again.  Those homes have to get off the bank's shoulders so banks can get back to the industry of finance and not housing.  

This month, a new drive for environmental protection of Florida's natural resources began in a big way as the "Florida's Water and Land Legacy" campaign kicked off -- its goal: to insure there is money in the coffers to buy conservation land as well as recreation areas here in the Sunshine State by inserting this requirement into the State Constitution as a budget mandate.  It's a big deal, asking for big money, and therefore, it's our news release of the week:

Florida’s Water & Land Legacy Campaign Launches Constitutional Amendment Drive to Guarantee Funding for Environmental Protection in Florida

TALLAHASSEE––Aiming to provide a stable, dedicated funding source for the acquisition of conservation and recreation lands in Florida, a coalition of leading defenders of the state’s environment today launched a Constitutional amendment petition drive to ask voters to guarantee support for this long-term state priority.

“This will be the most significant vote in Florida for our environment in our lifetimes,” said Will Abberger, the campaign’s chair and the director of conservation finance for the Trust for Public Land. “We are launching a grassroots effort to let the people decide if clean water and natural land are a legacy we want to leave for our children and grandchildren––and generations to come.”

The amendment would take effect July 1, 2015, and for 20 years would dedicate one-third of the net revenues from the existing excise tax on documents to restore the Everglades, protect drinking water sources, and revive the state’s historic commitment to protecting natural lands and wildlife habitat through the Florida Forever Program.

Under the amendment, the monies deposited into the Land Acquisition Trust Fund will remain separate from the State’s General Revenue Fund. The amendment would provide more than $5 billion for water and land conservation in Florida over the next ten years and $10 billion over the 20-year life of the measure, without any tax increase.

The Florida Water and Land Legacy Campaign brings together the Trust for Public Land, Audubon Florida, the Florida Wildlife Federation, the Sierra Club, the Nature Conservancy, 1000 Friends of Florida, Defenders of Wildlife, and others. The campaign will reach out to gain signatures of at least 676,811 registered voters to put the issue on the 2014 ballot.

The Coalition notes that since 2009, the Florida Legislature has provided only $23 million for the landmark Florida Forever program. This is a 97.5 percent reduction in previous funding. State appropriations for land management and ecological restoration, including the Everglades, have suffered similar declines.

In 2012, the Legislature allocated $8.5 million to safeguard important water protection areas and conservation lands. In light of a state budget of $60 billion, that means that for every dollar the state spends in 2012, less than two-hundredths of one penny will go to water and land conservation––less than $1 for each Floridian.

“We are reaching out across our state to business leaders, conservationists, people of every age, ethnicity, creed, and political stripe, to ask them to protect what is fundamental to our economy and our quality of life in Florida––the land and water that makes this such a special place,” added Eric Draper, executive director of Audubon Florida. “Florida Forever has been cut drastically since 2009. We can’t protect this state on less than a dollar per year per Floridian. It just won’t work.”

The Coalition sees the proposed amendment as a responsible remedy to counter the dramatic reduction in funding for environmental protection and preservation, without having to raise taxes.

“When it comes to dedicating funding to protect Florida’s environment, the Great Recession has led to a complete depression. State funding to protect our most precious natural resources has slowed to a trickle,” said Manley Fuller, president of the Florida Wildlife Federation, and a leader in the effort. “This amendment is not a tax increase. It is the dedication of an existing funding source back to its historic purpose. Passing this amendment will ensure Florida’s long-term traditional conservation values are secure and protected from short-term political pressures.”

The amendment would create Article X, Section 28, of the Florida Constitution. Under the amendment, Florida’s Land Acquisition Trust Fund would receive a guaranteed 33 percent of net revenues from the existing excise tax on documents. These funds would be dedicated to support financing or refinancing the acquisition and improvement of:

• Land, water areas, and related property interests and resources for conservation lands including wetlands, forests, and fish and wildlife habitat;

• Lands that protect significant water resources and drinking water sources, including lands protecting the water quality and quantity of rivers, lakes, streams, springsheds, and lands providing recharge for groundwater and aquifer systems;

• Lands in the Everglades Agricultural Area and the Everglades Protection Area, as defined in Section 7(b) of Article II of the Florida Constitution;

• Beaches and shores; outdoor recreation lands, including recreational trails, parks, and urban open space; rural landscapes; historic, archaeological, or geologic sites as well as management of lands acquired;

• Restoration of natural systems related to the enhancement of public access and recreational enjoyment; and

• Payment of the debt service on bonds issued pursuant to Article VII, Section 11(e) of the Florida Constitution.

The Coalition says support for environmental protection remains strong in Florida and is solidly nonpartisan. Since 1994, Florida voters have approved five of the six amendments proposed to the state Constitution related to conservation and the environment––an 83 percent passage rate. The average “Yes” vote for those successful conservation amendments was 68 percent.

Former Florida Governors Graham, Martinez, Chiles, Bush, and Crist all supported Preservation 2000/Florida Forever, Everglades’ restoration, and funding for land management. Historically, Democratic and Republican leadership in the Florida Legislature have supported funding for land and water conservation.

“Regardless of political party and in good times and bad, for more than 20 years Legislatures and Governors have supported these programs. Since the recent economic downturn, our water and land, our beaches and springs, have suffered greater cuts and more damage than almost any other area of statewide concern,” said Abberger.

The campaign will rely on volunteer signature gatherers and donors from across the state, and is urging supporters to sign up at floridawaterlandlegacy.org, or call 850-629-4656, or e-mail: campaign@FloridaWaterLandLegacy.org.

###

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. 

In November 2012, Florida will decide whether or not to amend the state constitution with proposed Amendment 4.  As for what that might mean to individual Floridians as well as Florida business interests and those developing real estate and investing in Florida land, the highly respected FloridaTaxWatch research group has determined that the proposed amendment is a good idea here, in our news release of the week (read their full abstract online here):

TaxWatch Analysis Shows Amendment 4 Would Create Jobs and Spur Economic Activity in Florida

TALLAHASSEE— A proposed Constitutional Amendment on the November 2012 ballot would create Florida jobs, grow Florida’s Gross Domestic Product, and increase the personal income of Floridians, if passed, according to an independent economic and fiscal analysis of the amendment by Florida TaxWatch, the nonpartisan, nonprofit public policy research institute and government watchdog. Amendment 4, a legislatively proposed amendment to the Florida Constitution that would make changes to the property tax system, was analyzed by a new Florida TaxWatch report, Fiscal and Economic Impact of Amendment 4.

Dominic M. Calabro, President and CEO of Florida TaxWatch, explained: “As an integral part of our mission to educate taxpayers and citizens, Florida TaxWatch has been conducting analyses of the likely impacts of proposed Constitutional Amendments for more than three decades, and I know that this independent analysis will help Floridians judge the potential benefits of this Amendment.”

Amendment 4 would take effect on January 1, 2013, and proposes:

• an additional homestead exemption for first-time Florida homebuyers, equal to 50 percent of the Just Value of a property up to the median Just Value of a homestead property in that county, which phases out over 5 years by reducing by 20 percent each year;

• a reduction in the nonhomestead maximum annual Assessed Value increase cap from the current 10 percent (on non-school levies) to a new level of 5 percent and an extension of nonhomestead Assessed Value caps through the 2022 tax year (which also does not apply to school levies) and;

• providing legislative authority to eliminate the Save Our Homes “Recapture Rule.”

Using the best available data and an advanced econometric analysis, Florida TaxWatch estimates that the passage of Amendment 4 would result in the creation of 19,483 private, non-farm jobs over the 10-year period of the analysis (2013-2022), that Florida GDP would increase by approximately $1.1 billion, and personal income would increase by more than $5.3 billion.

Jerry D. Parrish, Ph.D. Florida TaxWatch Chief Economist, Executive Director of the Center for Competitive Florida, and author of the study, explained that, “The increased economic activity estimated by the dynamic econometric model used in this analysis is the result of the savings from Amendment 4 being distributed throughout the economy. From an economist’s standpoint, these findings are not surprising because the proposed Amendment 4 would reduce uncertainty for both personal and business investment, and when individuals and businesses can better estimate their future costs, including property taxes, they are more likely to invest. Basically, reducing the uncertainty of potentially large property tax increases will increase investment in both nonhomestead residential and commercial property in Florida, and the econometric model bears that out.”

The Florida TaxWatch analysis also estimates that between 319,861 and 383,810 additional home sales would occur due to the effects of Amendment 4 during the 10- year period following its passage and implementation.

According to the report, “the additional home sales attributable to Amendment 4, over and above those estimated to have occurred in the absence of Amendment 4, are due to the effect of the additional homestead exemption, the additional income for Floridians, and the population growth predicted by this analysis.

Additionally, there are effects from both the nonhomestead exemption on additional residential sales and the number of homes that are purchased by persons who have sold their homes and moved up in size or downsized.”

One important effect of Amendment 4 that does not directly affect the estimates in the economic analysis but is worth noting is the effect of the nonhomestead property tax cap reduction (from 10 percent to 5 percent) in reducing uncertainty. Property tax caps have two main economic effects. First, they reduce uncertainty for personal and business investment, and when businesses can better estimate their costs, including property taxes, they are more likely to invest, so reducing the uncertainty of potentially large property tax increases will increase investment in both nonhomestead residential and commercial property in Florida. However, property tax caps can also reward early investors and give them an advantage over later investors, which could affect investment timing decisions, by potentially moving them to earlier periods, at the expense of future investments.

Florida TaxWatch is a statewide, non-profit, non-partisan research institute that over its 32-year history has become widely recognized as the watchdog of citizens’ hard-earned tax dollars. Its mission is to provide the citizens of Florida and public officials with high quality, independent research and education on government revenues, expenditures, taxation, public policies and programs and to increase the productivity and accountability of Florida state and local government. Its support comes from homeowners and retirees, small and large businesses, philanthropic foundations, and professional associations.

Since Rick Scott took on the role of Governor of Florida, there's been a lot of discussion over his actions regarding Florida water -- particularly, the Florida Water Management Districts and how much power they have and how that power is used. For example, check out this September 2011 article from the Orlando Sentinel that opines Scott wants to control all Florida waterways by bringing water decisions under a central control.

Florida Water Districts Selling Surplus Land

One result we're seeing now:  Florida water districts may be selling off lands that they own because they need the cash flow and the lands are not critical to the water districts' raison d'etre.  Consider this:  St. John's Water Management District is currently reviewing every single acre it owns, all 705,000+ acres of it, to see what could be sold off.

Not everyone is happy about this.  Some are very worried at the environmental impact of these land sales.  Others are considering the cost in the long run to taxpayers. Their cost-benefit analysis argues developing this real estate isn't good for Florida.

Others are watching this process with anticipation.  These water districts do have land which could be used for development, and the districts should be offering the acreage at a good price.

St. John's Water Management District In Process of Assessing Land Holdings

Last month, St. John's Water Management District had its first public meeting so anyone interested in the decision making here could put in their two cents worth.  They'll have more; in fact, one was on the schedule for last night at the Volusia County Council Chambers and the SJWMD will be announcing more of these meetings later in the year. 

You can also send a message to the St. John's Water Management District Powers that Be regarding this land assessment for potential sale of surplus lands online in a "comment form" here. 

Here's a video from the SJWMD that gives an overview of their land assessment:

If you are in Florida and you are involved in land planning or real estate development, you probably know all about Seven50 already; if not, you're about to get acquainted with Seven50 since it's making history.

What is Seven50?  From its website, Seven50 describes itself as:

The Southeast Florida Regional Partnership (SFRP) is a voluntary, broad-based and growing collaboration of more than 200 public, private, and civic stakeholders from the Southeast Florida region of Monroe, Miami-Dade, Broward, Palm Beach, Martin, St. Lucie and Indian River counties. The Partnership has united to leverage resources and coordinate strategic long-term planning to drive competitiveness and prosperity for the region. SFRP seeks greater opportunities for sustained job creation, access to affordable housing, a better menu of transportation options, and more people-friendly, environment-friendly places to live.

The Partnership and Seven50 are explained on the site as:

The Partnership is developing Seven50, a seven county, 50-year Southeast Florida Prosperity Plan that will reflect regional agreement around priority investments in key areas of importance toSoutheast Florida’s future. When considered together, these issues will coalesce into a coherent strategy and investment plan in support of the future sustainability and economic prosperity of our communities and region. Seven initial work groups have been identified along issue areas:

• Education, Workforce & Economic Development
• Development Patterns (Housing, Transportation, Healthy Communities)
• Environment, Natural Resources, and Agriculture
• Climate Resiliency
• Community Assets and Culture
• Inclusive Regional Leadership and Equity
  

Outcomes  

The HUD Sustainable Communities Initiative is the region’s best opportunity to develop consensus around a strategic vision and investment plan that will chart the course to a brighter and more prosperous future for Southeast Florida’s residents and in turn, Florida. It is expected that this strategic vision and the Seven 50 will:

• Serve as the framework for future federal, state and local investment;
• Support and advance the efforts of individual counties, municipalities and other regional partners whose plans and projects further the implementation of the Seven50 Plan; and
• Enhance the ability of the Southeast Florida Region to secure resources needed for critical infrastructure projects that further regional sustainability and economic prosperity.
  

“Preferred Sustainability Status” for certain federal grant programs has already resulted in millions of dollars in additional investment inSoutheast Floridathrough its Partnership member organizations.

 Last week, Delray Beach hosted a historic event involving Seven50: around 500 leaders in real estate - from environmental activists to government honchos to land planners and the like, met together and began the process of gathering public input into the creation of a fifty year (50) plan for the future of seven Florida counties, planning how these areas would grow from now until around 2060.

Things like transportation needs, protecting the environment, suburb growth, and much more will be considered as the Seven50 group plots out how best to balance lifestyle and wildlife concerns with economic needs. 

From project director Marcela Camblor:

“Seven50 is an investment plan that will help guide the allocation of federal and other dollars into the region in order to help ensure economic prosperity and the best-possible quality of life for Southeast Florida’s residents. While Seven50 will be designed to ensure the brightest-possible future for the region in the next 50 years, its impacts will be felt in the near future as early as five years from today.”

 

The counties involved are: Monroe, Miami-Dade, Broward, Palm Beach, Martin, St. Lucie and Indian River.  If you are interested in being involved in this historic project, then go to here for details on how to join a forum or otherwise contribute. 

Florida sure seems to be popular among investors these days. We've posted in the past about foreign investors from faraway places like Great Britain, Brazil, Israel, and other parts of the world finding the current Florida real estate market a place of great bargains but now it seems there is a new ribbon running through the investor chatter.  It's an idea that things are looking a bit brighter for the Sunshine State's economy - at least for the vacation/second home real estate market and those that benefit from it. 

Consider these news items appearing in the past week:

1. There's an article out of Seattle this week, inviting individual investors to invest their money in Florida real estate. A Florida investment company is educating clients on how to build wealth by taking its services to the Pacific Northwest to sell them on the advantages of Florida real estate investment.
2. Some analysts are warning that demand is exceeding supply for some Florida vacation investment properties. In one story, the CEO of Coldwell Banker Feltrim discussed his review of the first three months of 2012.  There was a rise in sales of vacation homes and  second homes in the Orlando area.  So much interest, in fact, that he didn't have all that many top quality properties to show investors interested in vacation-type residential properties in his area.  That's something new to see in Florida after our track record of the past few years, isn't it?
3. Real estate realities are that Florida investment upswing into second homes and vacation properties is part of a new national trend.  According to several real estate pros, Southwest Florida has seen a jump in second homes along with other parts of the state.  Prices are not rising, but there are more investment dollars coming in to buy up the vacation/second home inventories.

The news that Donald Trump has serious plans for building a big TV and film studio in Florida is making lots of waves in various industries across the country.  The development would be hugh, of course, but the true impact of this Trump endeavor would be the many offshoots to the Trump project itself.  Given the potential of Trump's game plan upon South Florida and the state as a whole, it's our News Release of the Week:

Miami goes Hollywood! Film industry forecasted to bring thousands of jobs to Miami-Dade County

For Immediate Release: June 05, 2012

Media Contact:  Arleen Gomez

(Miami-Dade County, FL) -- In an effort to stimulate economic development and job growth in Miami-Dade County, Chairman Joe A. Martinez presented a business opportunity to his colleagues at today’s County Commission meeting. Chairman Martinez joined forces with Mr. Donald J. Trump and the Trump Organization to present his vision to bring a new job industry to Miami-Dade – filmmaking. The Chairman’s presentation asked his fellow commissioners to explore the possibility of building a film studio “city” on County-owned land next to the Homestead Air Reserve Base. This media city, Chairman Martinez explained, will not only help stimulate our current struggling economy by creating jobs, but it will also help revitalize the area of Homestead and Florida City which took a major hit during the economic downturn and has been struggling ever since to rebuild itself.

“Many movies and TV shows have been filmed in Miami, but we’ve never been truly able to capitalize on the film industry as many studios opt to complete their work in Los Angeles,” said Chairman Martinez. “If the resources of a studio and a wealth of land to build massive sets – at a cheaper cost – were at filmmakers’ fingertips, I don’t doubt that they would be eager to take advantage of the opportunity.”

According to preliminary plans, “Trump Studio City”, designed after the most modern facilities in Europe, would be built on land spanning 3.16 miles in Homestead, and would consist of film studios and stages, back lots, a media hub, state of the art digital production, hotel, and offices making this bigger and greater than Hollywood. Michael D. Cohen, Executive Vice President and Special Council to Donald J. Trump informed the Board that this industry could inject as much as $262,000 a day in local revenue.

In a unanimous vote, the Board directed the County Attorney’s office to provide a report within 90 days outlining the status of the land and to place a 180-day moratorium on any recommendation for the utilization of the land in question.

“This will make Miami-Dade County the jewel of our great state,” said Chairman Martinez.

First things first, here's the bottom line: Florida developers and builders are very, very interested in what the local county will be charging in impact fees because it can be a big, big number. So what is happening in Osceola County Florida and the possible end to impact fees there is big news.

What are impact fees exactly? 

Impact fees are fees set by the county on new building - whether it's an expansion of something that already exists or whether it's a new development of custom homes, a new residential neighborhood, a shopping mall, an office building, a condo, or some other type of business structure. 

The impact fee is an amount that the county levies against whatever is being developed or built so the county can take that money and use it against the county's costs to meet the added use on county utilities, etc.  -- in other words, it's a fee to cover the added impact of the build upon the county's services.

What is happening to impact fees in Osceola County, Florida?

Osceola County has been hit hard in this Great Recession. It had one of the highest foreclosure rates in the nation.  Its tax base was slipping:  from 2011 to 2012, it fell 5.45%. 

So, Osceola's powers that be decided that one way to spur new growth in the area was to waive impact fees -- and it worked.  Osceola County saw an increase in commercial construction as a result of allowing developers to build without this cost to their bottom line.

Here is the Osceola County Impact Fee Office explanation of its commercial construction impact fee waiver (there's also one for residential construction):

OSCEOLA COUNTY IMPACT FEE WAIVER FOR COMMERCIAL CONSTRUCTION

Transportation and Fire/Rescue Impact Fees are currently waived for new commercial construction. To qualify for the commercial impact fee waiver:

Building permits need to be issued between December 13, 2010 and September 30, 2012

Initial inspection needs to be called in within 60 days of permit issuance

Certificate of Occupancy must be issued within 18 months from the date the building permit is issued

The County Manager may approve an extension of the completion date:

6 additional months for projects of 20,000 to 100,000 square feet

12 additional months for projects of more than 100,000 square feet

(Example: For a building permit issued on January 31, 2012, the C.O. would not be due until July 31, 2013, with the possibility of an extension ranging from December 31, 2013 thru July 31, 2014)

The current Building Permit Fee Waiver program will continue to be in effect on both residential and non-residential construction for permits issued by September 30, 2012.

Water and Sewer Impact Fees are assessed and collected by Toho Water Authority (TWA) and can be contacted at 407-944-5000.

Permanent Moratorium Up for a Vote

Now, Osceola is considering making that temporary waiver of impact fees into a permanent moratorium.  It's hopefully up for a vote next month. 

Expect it to pass: with a moratorium, it does not mean that the county will never have the power to assess impact fees in the future, but it does mean that builders and developers can count on the fact that for the near future, Osceola County may be a cheaper option for a project than other parts of the state that are still assessing impact fees on new growth.

Coy Koontz is taking his case to the United States Supreme Court.  For those in Florida real estate development, Koontz's fight with the St. Johns River Water Management District is well known.  They've been fighting in the courts for years. 

To read the prior case history, check the various appellate cases (there are Koontz II, Koontz IV, etc.) and this latest high court decision made in November 2011:  the Florida Supreme Court's opinion in St. Johns River Water Management District v. Koontz.

What's the fight about?

From the Florida Supreme Court's recent decision, citing with approval the synopsis provided by the lower Florida district court:

This case involves a landowner, Mr. Koontz, who, in 1994, requested permits from [St. Johns] so that he could develop a greater portion of his commercial property than was authorized by existing regulation. . . . Based on the permit denial, Mr. Koontz brought an inverse condemnation claim asserting an improper "exaction" by [St. Johns].

In the most general sense, an "exaction" is a condition sought by a governmental entity in exchange for its authorization to allow some use of land that the government has otherwise restricted. Even though the government may have the authority to deny a proposed use outright, under the exactions theory of takings jurisprudence, it may not attach arbitrary conditions to issuance of a permit.

In relating the circumstances giving rise to this case, the trial court explained:

The subject property is located south of State Road. 50, immediately east of the eastern extension of the East-West Expressway in Orange County. The original. plaintiff, Coy Koontz, has owned the subject property since 1972. In 1987, a portion of the original acreage[2] adjacent to Highway 50 was condemned, leaving Mr. Koontz with 14.2 acres. There is a 100-foot wide transmission line easement of Florida Power Corporation running parallel to and about 300 feet south of Highway 50, that is kept cleared and mowed by Florida Power. . . .

. . . .

All but approximately 1.4 acres of the tract lies within a Riparian Habitat Protection Zone (RHPZ) of the Econlockhatchee River Hydrological Basin and is subject to jurisdiction of the St. Johns River Water Management District.

In 1994, Koontz sought approval from [St. Johns]. for a 3.7 acre development area adjacent to Highway 50, of which 3.4 acres were wetlands and .3 acres were uplands.

In his concurring opinion in Koontz II, Judge Pleus explained the positions [advanced] by the parties during the permit approval process:

Koontz proposed to develop 3.7 acres closest to Highway 50, back to and including the power line easement. In order to develop his property, he sought a management and storage of surface waters permit to dredge three and one quarter acres of wetlands. A staffer from St. Johns agreed to recommend approval if Koontz would deed the remaining portion of his property into a conservation area and perform offsite mitigation by either replacing culverts four and one-half miles southeast of his property or plug certain drainage canals on other property some seven miles away. Alternatively, St. Johns demanded that Koontz reduce his development to one acre and turn the remaining 14 acres into a deed-restricted conservation area. Koontz agreed to deed his excess property into conservation status but refused St. Johns' demands for offsite mitigation or reduction of his development from three and seven-tenths acres to one acre. Consequently, St. Johns denied his permit applications.

Id. at 1269 (Pleus, J., concurring specially). In its orders denying the permits, [St. Johns] said that Mr. Koontz's proposed development would adversely impact Riparian Habitat Protection Zone ["RHPZ"] fish and wildlife, and that the purpose of the mitigation was to offset that impact.

After hearing conflicting evidence, the trial court concluded that [St. Johns] had effected a taking of Mr. Koontz's property . . . . In reaching this conclusion, the trial court applied the constitutional standards enunciated by the Supreme Court in Nollan and Dolan. In Nollan, with respect to discretionary decisions to issue permits, the Supreme Court held that the government could impose a condition on the issuance of the permit without effecting a taking requiring just compensation if the condition "serves the same governmental purpose as the developmental ban." 483 U.S. at 837. This test is referred to as the "essential nexus" test. In Dolan, the Court added the requirement that, for such a condition to be constitutional, there must also be a "rough proportionality" between the condition and the impact of the proposed development....

The Importance of Koontz v. St. Johns River Water Management District to Florida Land Development.

This controversy is hinged upon an application by a Florida land developer for a development permit.  Mr. Koontz planned to develop around 4 acres of land along Orange County State Road 50; Florida law required that he apply with the local water management district for a permit to do so, since his plan would include filling wetlands for the development project (his acreage is wetlands as defined under Florida law).

This was back in 1994.  The St. Johns River Water Management District denied his application. 

Koontz fought the denial, arguing that the Water Management District had illegally taken the property.  At first he won: the initial fight before a state circuit court judge had Koontz in the victory circle and the district being ordered to pay around $375,000 to the landowner for the temporary taking. 

Needless to say, SJRWMD chose to appeal the decision rather than pay for the taking.  And so it goes, with the fight moving to Washington D.C. here in 2012, some 18 years later. (The elder Koontz has passed away; Koontz Jr., his son, continues the fight.)

The Pacific Legal Foundation has gotten involved now, too.  They've asked for the U.S. Supreme Court review, arguing that this case is worthy of the Court's time and consideration because it represents essentially an "unconstitutional shakedown" by government.

Right now, Florida's water management districts are having to make due on much less since Florida Governor Rick Scott instituted drastic budget reductions.  Taxation was cut.  The water management districts have been criticised for a lack of consistency in permitting across the state, too.  Was the Koontz permit denial a "shakedown" - if so, imagine the developers around the state that believe they've faced similar "shakedowns" over the years. 

Lots of eyes are on this case.  To follow the case before the United States Supreme Court, go here, and to learn if the Supremes will agree with the Florida Circuit Court view or the Florida Supreme Court perspective, stay tuned.   

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.

This article explores the potential investment opportunities available to UK-based investors within the Florida real estate market. It is written by a representative of Harworth Estates as a guest post by a Florida real estate expert.

Why Florida?

For many years, Florida has been a key part of the UK tourism industry, in terms of getting many Britons onto the aeroplane and visiting that part of the United States. Alongside this, the state has been one of the primary destinations for UK residents looking to emigrate to the US, as many get a taste for the lifestyle on offer in that part of the world.

A number of years ago, there were large swathes of investment into Florida, particularly the Orlando area, from UK based investors. Currently, real estate prices in Florida are at a low, meaning that there is now an excellent opportunity for further investment in the area. Given the close association Florida has with the UK, there are definitely profitable investments to be made by those looking to either begin or expand their property portfolio.

What To Buy

What is unique about the current situation in Florida is that the real estate prices have dropped in many areas. From an investment perspective, a real focus on residential properties and developments is much likely to deliver equitable returns over a longer-term period. In this part of the world, the beauty is that a residential property can be bought simply to sell on, or to be used as a holiday villa for use by tourists. For the UK investor, this provides a simple vehicle for developing a consistent revenue stream from their investment into Florida’s residential property market. In an environment where more and more individuals are seeking alternatives to traditional package holidays offered by tourism companies, being able to offer a trustworthy, domestic business proposition with regards to a holiday across the Atlantic will be extremely attractive to many holidaymakers.

While the residential market is the biggest opportunity currently in Florida, there is also potential in commercial property across the state, so wherever your business and investment interests lie, there is likely to be a gap in the market on which you can capitalise.

Marketing Your Property

Let’s face it, this is Florida we’re talking about, so anyone in the UK looking to holiday there knows what it is about. What you need to consider is how you intend to market your property, whether for sale or for rent as a tourist option. The biggest factor influencing this will be the location, so it is imperative you know where you want to buy. Do your research and ask yourself honestly if it works. The property in Cape Coral may look great, but if your target market want to visit Orlando, is the three hour journey likely to encourage them to do business with you?

I think we both know the answer to that!!

This article is a guest post from Harworth Estates. Harworth Estates are one of the largest landowners in the UK with access to over 30,000 acres of land. They provide residential and commercial properties for sale, industrial units, offices and development land.

Florida's construction industry gives lots of people jobs as well as providing all of us with new roads, homes, stores, schools, and such.  If the construction industry is hurting, then we're all hurting in the short run and the long term. 

Bad News for Florida's Construction Industry

So, the latest information from the Associated General Contractors of America is something that those in the know will consider, and the AGCA is reporting that construction employment in the State of Florida hit a record low -- the lowest it's been since 1990.

AGCA reports that Florida construction jobs dropped 7.3% from 2011 to 2012 and merited the number one spot in the country for the state with most lost construction jobs during the time period. 

Read the AGCA press release here. 

However, things may not be as dismal as pondering these construction numbers might lead you to believe. 

Good News for Florida Real Estate Market

Other studies are being released this month, and from the University of Florida there comes the UF Commercial Real Estate Sentiment Index, which brings good news for the Florida real estate industry.  According to the University of Florida research, the state's real estate market is doing better than it's been doing in the past 5 years.

Here, the Kelley A. Bergstrom Center for Real Estate Studies at UF’s Warrington College points to things like more lending opportunities, as well as an upswing in land development of both condo projects and single family home communities.  Employment numbers looked better, too, as did the occupancy rates for Florida office buildings.

To read the University of Florida executive summary of its findings, go here. 

To download a pdf of the UF 2012 Study itself, go here.

So, what to expect?

From the UF Report, the prediction for Florida is given as follows:

"Overall the future is looking brighter for Florida real estate, however uncertainty remains. Expect a continued slow and sometimes sluggish recovery until after the presidential elections in November."

Things do appear better than they have been in the past: we're seeing positive movement and industry insiders in Florida commercial real estate development are cautiously optimistic.  Do the construction numbers give pause?  Perhaps. 

However, construction is happening here in Florida -- we've got really low construction costs right now.  That's a good thing.

Florida will return to a healthy and vibrant economy.  We know this.  We'll get there. 

Looks like Florida is getting popular in real estate investment circles again.  Builders are building, planning to build, looking for places to build.  It's an amazing thing to consider, given the past few years of dire straits. At least for certain parts of Florida, things are looking very good for real estate development.

Home Builders Are Excited About Florida - and Developments are Happening Throughout the State 

Just last week we posted about how Lake Nona's having a $40 million dollar custom home development arise from the efforts of Meritage Homes. Meritage is a long farther along than lots of other builders and developers: Meritage is breaking ground, things are go for their new custom home community.

Additionally, Hispanic Business is reporting on several different builders around the state that are reporting a definite recovery is underway for them. Among them: GL Homes;  joint venture Stiles Corp.; CC Devco;  and Standard Pacific Homes of California. 

Read the details of their survey here.

NuWire Is Advising Investors to Look at Fort Myers, Miami, and Orlando

Over in the money media, investment gurus are advising their followers to consider certain areas of Florida for real estate investment now.  The Big Three, according to NuWire, are Fort Myers, Miami, and Orlando.

From NuWire, in an article entitled "Best Florida Real Estate Markets For 2012," and written by a senior partner at Hanover Companies, it still appears that parts of Florida are not good investments but others are ripe for savvy investment.  Three others, specifically. 

Hanover Companies are a group of real estate investors, fund advisors, property managers or developers operating as a group since 1969, and their overlapping expertise in financing and real estate industries should be noted.  Hanover gives its reasons for choosing these three areas of Florida, and they include things like rising prices and falling inventory.  For details, check out the NuWire article.

Lake Nona Should Be On Every Florida Real Estate Investor's Radar

Meanwhile, in Central Florida things are happening near Orlando that every investor should understand: Lake Nona is a big, big deal that seems to be flying under a lot of radar.  We post about Lake Nona regularly, e.g., "Orlando's Lake Nona Medical City: Real Estate Development That Should Get More Appreciation in the Media."  It's our opinion that Lake Nona will be at the apex of Florida real estate development in the next few years. 

For those who aren't familiar with Lake Nona, consider this information taken from the May 9, 2012, Wall Street Journal's Market Watch:

Just east of Orlando's international airport, the state-of-the-art community of Lake Nona is quickly developing with billions of dollars in new facilities, thousands of high-value jobs and modern neighborhoods.

The 7,000-acre master-planned Lake Nona community will provide healthy living and sustainability products for residents and businesses working with GE solutions.

"Our collaboration with GE brings a global perspective to Lake Nona that is helping us achieve a level of efficiency unmatched in the region," said Lake Nona President Jim Zboril. "With the help of GE's emerging, innovative products, Lake Nona is quickly becoming a showplace for cutting-edge, sustainable design. GE's products will play a key role in Lake Nona's orientation for healthy living and sustainability, making a meaningful difference in energy use and health outcomes at Lake Nona."

...

With more than $2 billion in active construction, millions of square feet of new educational, health and life science research facilities and thousands of new residences, Lake Nona has become a bright star during trying economic times.

"GE works to provide clean energy and affordable healthcare offerings," said Luis Ramirez, CEO of GE Energy's Industrial Solutions business. "Lake Nona is an opportunity to put those offerings and technology to work. We look forward to seeing this community grow."

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!

It can be argued that no organization knows Florida real estate better than Florida Realtors (formerly known as the Florida Association of Realtors).  So, when Florida Realtors issues a release complete with its in-house economist giving optimistic projections about the housing industry and the banking industry to boot, then hands down this has got to be our "news release of the week."  

You can read the report referenced in the news release here.

Here from the Florida Realtors on May 4, 2012:

Florida Realtors®: Fla. 'Shadow' Inventory Easing, Growing Demand Should Absorb Supply

ORLANDO, Fla., May 4, 2012 /PRNewswire-USNewswire/ --

Fear of the unknown and what lurks in the shadows may be common, but it's greatly overrated when it comes to the "shadow inventory" of Florida's real estate market, says Florida Realtors® Chief Economist Dr. John Tuccillo.

"The fear is that the inventory of delinquent and foreclosed loans will be released onto an already weakened market," Tuccillo says, explaining the findings of a new report conducted by the Florida Industry Data and Analysis department. "But the reality appears to be different, even in Florida where distressed properties make up a significant portion of the market."

Tuccillo points out that lenders have no reason to flood the state's real estate market with more homes if doing so would drive prices down and impact the lender's profit. While some worry that lenders were holding back on purpose, Florida Realtors chief economist says that's not the case – the large number of distressed properties on hold was "largely the result of confusion over the rules of the game, and thus missteps by the lenders."

The study, "The Distressed Property Market and Shadow Inventory in Florida: Estimates and Analysis," reviewed data from Multiple Listing Service (MLS) providers around the state, along with data provided by CoreLogic, a statistical analysis company.

Tuccillo says, "We looked at the recent history of distressed property listings and transactions relative to normal market data, as well as estimates for the shadow inventory, and came to some conclusions about the likely course for the future."

Some of the study's findings include:

• While Florida remains one of the nation's hardest-hit states for distressed property sales, distressed property sales and listings have declined since late 2010, except for single-family-home short sales.
• Average prices for distressed and normal property sales have been stabilizing.
• In general, Realtors in Florida and lenders have learned how to cope with distressed properties in a way that stabilizes the market.
• Florida's highest percentage of distressed property (compared to total listings) occurs in the I-4 corridor and Southeast Florida; the lowest percentage occurs in Northwest Florida.
• Florida's shadow inventory was 550,000 units at the end of 2011, a decline of about 9 percent from its peak in the first quarter of 2010.
• Currently, the flow of new seriously delinquent (90 days or more) loans moving into the shadow inventory is offset by the roughly equal flow of distressed sales (short sales and REOs).
• The number of foreclosures and REOs was significantly lower in February of 2012 than one year earlier, suggesting slower shadow inventory growth.

Tuccillo predicts that while distressed properties will be a significant feature of the Florida real estate market over the next 10 years, it will be considered just one property type that a buyer can consider – one that has its own unique sales techniques and documentation.

The full report is available on Florida Realtors' member website, floridarealtors.org, at http://www.floridarealtors.org/Research/index.cfm; look under Research Reports, Residential, to select "The Distressed Property Market and Shadow Inventory in Florida: Estimates and Analysis."

Florida Realtors®, formerly known as the Florida Association of Realtors®, serves as the voice for real estate in Florida. It provides programs, services, continuing education, research and legislative representation to its 115,000 members in 63 boards/associations. Florida Realtors® Media Center website is available at http://media.floridarealtors.org.

SOURCE Florida Realtors

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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. 

Reports are suggesting that the Florida residential real estate market has hit bottom and is beginning to bounce back, which is good news for all Floridians - and once it's clear that Florida homes are steadily selling again with Florida home loans being made to Florida home and condo buyers, then it will be great news. 

Right now, here are several news reports pointing to a turnaround in the Florida residential real estate market:

1.  Florida Realtors has released its latest reports on the Florida housing market for March 2012, which show not only an upturn in the number of sales (pending) but higher median prices for those Florida homes.  From their news release:

“With the continued steep decline of inventory, historically low interest rates and buyers no longer willing to wait on the sidelines, Florida’s real estate market continues on its road to recovery,” says 2012 Florida Realtors President Summer Greene, regional manager of Better Homes and Gardens Real Estate Florida 1st in Fort Lauderdale. “The latest numbers show that pending sales are up almost 30 percent for single-family homes and almost 20 percent for townhomes and condos.”

2.  Zillow reports that home prices are rising again in parts of Florida, including specifically Broward County, Miami-Dade County, and Palm Beach County.  In their Zillow Home Value Index, statistics are supporting predictions that 2012 will see a steady but slow rise in Florida residential real estate prices. 

According to Zillow's study, Florida prices have hit their low and things are looking good for 2012 as the year when Florida home prices began bouncing back. 

3.  The Orlando Business Journal is reporting that bidding wars are springing up in Central Florida among homebuilders who are fighting for developed lots in the Orlando area.  According to the news story, this may not be a battle fought with the same intensity as Florida experienced in its heyday of 2004-2005, but it's a bidding battle nevertheless. 

Something we haven't seen in awhile, right?  Bid battles for developed lots in Florida, that's a good sign.

More good news from the OBJ:  they are reporting that already this year (2012), three Central Florida homebuilders spent $20.8 million on 263 home lots in Orange County.

4.  The Federal Reserve has released its April report with encouraging news about financing availability for home loans in Florida and across the country.  According to the Federal Reserve report issued yesterday, there is an increase in borrowers wanting prime residential mortgages.   This means that banks are expected to start issuing more home loans over the rest of 2012.   

Combine these four separate news stories and you'll find hope that Florida residential real estate industry has seen its worst and we're at the brink of a better economy - not just in Florida home building and home sales, but in real estate and other areas of the Florida economy, too. 

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 series of announcements from Orlando International Airport that have been released recently, describing not only the increase in traffic at Orlando International Airport, but the international traffic that is coming into Orlando now:

4/11/2012 - Special Events Lead to February Increase in Passengers at Orlando International Airport

ORLANDO, FL. - It was an eventful February at Orlando International Airport (MCO). Ten separate airlines boosted the number of flights coming into Orlando International for the month. In total, an additional 113 flights per week helped push traffic up by nearly five and half percent for the month. The new flights represent both national and international destinations including Halifax, Nova Scotia; Montego Bay, Jamaica; London, England; Dallas, Texas; and Los Angeles, California just to name a few.

"The combination of the National Basketball Association (NBA) All-Star game, Speedweek events, The National Association for Stock Car Auto Racing (NASCAR) Daytona 500, The Disney Princess Half-Marathon and strong spring break travel this February spurred both international and domestic traffic increases," says Phil Brown, Executive Director of the Greater Orlando Aviation Authority.

Another event 825 miles away also helped to boost traffic. The city with the largest increase in service for the month, with 18 new weekly flights, was Indianapolis, which just so happened to host Super Bowl 46 in February.

February 2012 Statistical Data:

• Overall traffic improved 5.46 percent for the month
• International traffic climbed 11.4 7 percent to 284,616
• Domestic traffic saw an increase of 4.83 percent to 2,570,637
• In all 2.8 million travelers, 2,855,253 moved through Orlando International Airport

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 3/19/2012 - "The Orlando Experience" A Hit With International Travelers

Orlando International Airport's (MCO) commitment to passenger convenience and customer service continues to impress global travelers. In a recent survey by one of Europe's largest online travel agencies, Orlando International ranked 5th worldwide in the category of Waiting Lounges.

eDreams.com reported it received thousands of responses from fliers throughout its 19-country operating area, who actually traveled through the airports they reviewed, and MCO finished with an average score of 4.31 out of a possible 5 points. A total of only .23 points separated the top five airports in Seoul, Singapore, Munich, Thailand and Orlando. Customers were asked to rate various aspects of airports including their services, shopping, restaurants, bars and waiting areas.

"We have facilities that capture the unique character of Central Florida known as "The Orlando Experience". In addition, with visitor-friendly amenities, including 70 retail and 57 restaurant locations, MCO offers customers multiple opportunities to relax comfortably before continuing their travel experience," said Greater Orlando Aviation Authority Executive Director, Phil Brown.

To see the full survey, go to: http://www.edreams.com/flights/airports/best-airports/

In addition to pleasing customers while they visit, Orlando International also excelled in keeping them on schedule. According to FlightStats, MCO's on-time arrival percentage ranked fifth best among the world's busiest airports.

In February of 2012, 86.35 percent of flights into Orlando International Airport arrived on time. Tokyo International Airport had the best performance for the month with an on-time percentage of 94.34 percent.

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 4/18/2012 - GOAA Board Selects New Chairman

ORLANDO, FL - At its April meeting, the Greater Orlando Aviation Authority (GOAA) selected Orlando attorney Frank Kruppenbacher as the new Chairman of the board that manages operations and policy for Orlando International and Orlando Executive Airports. The seven-member board is comprised of five appointees by the Governor of the state of Florida and one elected official each from the Orange County Commission and the Orlando City Council. Kruppenbacher succeeds banker Cesar E. Calvet, who served as Chairman since April of 2010.

Mr. Kruppenbacher currently serves as a gubernatorial appointee on the Greater Orlando Aviation Authority Board among other high profile positions in the state.

In accepting the election, Mr. Kruppenbacher thanked Cesar Calvet for his service as Chairman and acknowledged that he had set the bar high.

Other GOAA Board Officers elected include Dr. Jason Pirozzolo, Vice Chairman; Cesar Calvet, Treasurer; Phil Brown, Secretary; and Dayci Burnette-Snyder, Assistant Secretary.

In October of 2008, Mr. Kruppenbacher was appointed to the Florida Commission on Ethics by then Florida House Speaker, now U.S. Senator Marco Rubio. He previously served on The Florida Commission on Sales Tax Reform as an appointee of Governor Jeb Bush. Mr. Kruppenbacher served as President of the Greater Orlando Chamber of Commerce; was a member of the Orange County Ethics & Campaign Finance Reform Task Force appointed by the Chief Judge of the Ninth Judicial Circuit of Florida; Orange County Oversight Committee; the first Orange County Charter Commission; Central Florida Zoological Board; Orange County Convention & Visitor Bureau Board and the Oversight Board of the Orange County Sheriff’s Office.

Orlando International Airport comprises nearly 14,000 acres of land and accommodates more than 35 million passengers annually.

Composition of the GOAA Board is as follows:

Frank Kruppenbacher, Dr. Jason Pirozzolo, Cesar Calvet, Orlando Mayor Buddy Dyer, Orange County Mayor Teresa Jacobs, Jose Colon and James Palmer.

The Greater Orlando Aviation Authority was established as an agency of the city in 1957 and later amended under an Operation and Use agreement dated September 27, 1976, which transferred to the Authority the responsibility to oversee all aviation activity for the city’s two airports, Orlando International and Orlando Executive. The five members appointed by the Governor may serve two four-year terms. Each Mayor serves two-year terms as long as they are in office. The Chairman is elected by the Board for a two-year term and may serve up to four consecutive terms.

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For more information, contact Carolyn Fennell or Rod Johnson in the Office of Public Affairs for the Greater Orlando Aviation Authority at 407-825-2055.

Florida real estate development lawyer Rosa Eckstein Schechter says growing media excitement over Florida’s economic future can be supported with concrete examples of blossoming growth in several markets and a variety of industries.

“The growing excitement over the future of Florida’s real estate market isn’t just optimism. It can be supported by concrete examples of growth that point to a brighter future for Florida’s economy. There is a clear shift in the market, and we are seeing increased activity and signs of sustainable economic progress across the board.”

Reacting to notables like Donald Trump forecasting great things for Florida’s future real estate market, Miami real estate attorney Rosa Eckstein Schechter takes things one step further by providing concrete illustrations of Florida surviving one of the bleakest real estate economic periods in modern times.

“There are definite signs of shifting winds in the Florida real estate market, with positive movement in several different sectors and industries that impact not only Florida real estate but the economy of the state as a whole,” says University of Miami Law and Harvard University graduate Rosa Schechter of Eckstein Schechter Law.

Included among those illustrations of an economy that is bouncing back are the following events according to real estate expert Schechter:

1. Wall Street, through investment banks and private groups, is looking to buy blocks of residential properties from Florida’s hard hit financial institutions, in what Forbes magazine dubbed this week “REO Bulk Buying,” and the sale of these shadow inventories will help free Florida lenders to do what they do best: lend money for economic growth;

2. Builders are beginning to build again: e.g., the Daily Business Review reported a few days ago that Lennar Homes is seeing a surge in home sales, experiencing its strongest quarter sales since 2008. There is growing competition among builders for prime locations;

3. More traditional residential deals are being made for high-end homes in a number of affluent Miami-area communities including Coral Gables, Pinecrest, and Aventura. One example: the recent Key Biscayne sale of a private residence for $8 million as reported in the Daily Business Review.

4. Small companies are hiring again. The Sun Sentinel reported on April 4 that forty percent of small business owners plain to hire during the next six months in Florida.

5. The 2011 Florida Community Planning Act reforms succeeded in empowering municipalities with the ability to facilitate development in their areas, and these local governments have not only acknowledged their new-found power but have swiftly exercised it. Developers are finding cities ready for growth and willing to cooperate and create a synergy for efficient permitting and best development practices.

In Florida land development, how traffic moves through an area is important - and years in advance of any roadway being constructed, there are land planners who work hard to determine where roads (highways, streets, etc.) are going to be needed.  With the 2011 Florida Community Planning Act reforms, governing that land planning rests with local governments, not the State of Florida, and now we are beginning to see more of how the FCPA is working, including Florida Statute 163.3164.

Consider Pasco's Right of Way Corridor Preservation Ordinance

Over in Pasco County, there is an ordinance that has been on the books since 2005, requiring land owners to slice off a part of their tract for the use of the county if that section overlaps the county's map of future roadways.  If the county plans on maybe building a traffic route across that land, be it a small road or a huge highway, then the ordinance requires the landowner to know that official plan and to develop their real estate accordingly.

(To read the Pasco County Strategic Plan, go here to download a .pdf of the 44 page document.)

Of course, the Powers that Be over in Pasco don't want to be considered as power-hungry bureaucrats, scheming ways to take land from citizens under the banner of "public ordinance."  First of all, they've written into the ordinance a couple of ways for land owners to get around the requirement.

First, the 2005 Ordinance does allow land owners to be exceptions to its general rule: under its language, the ordinance allows property owners to seek a variance because in their circumstances, application of the ordinance will result in an unacceptable burden. 

Even if the burden won't be agregious, land owners are allowed to request that it not apply to their tract if they can show there really isn't going to be enough traffic in the future to merit its application on their land.  (In other words, challenge the land plan's accuracy in their location.)

Why have the Road Expansion Ordinance in the First Place?

Land planners think these things are a good idea and so do a lot of government folk.  By asking land owners in their jurisdiction to allot a part of their acreage to the possibility of a future county roadway coming through it, millions of dollars of taxpayer money is saved.  Why? 

The ordinance, as applied, saves lots of money that would otherwise be used to buy right of ways on land tracts to make room for the new highway.  Right of way purchases can make up a big chunk of the price tag for any new roadway absent these sorts of manuevers.  Impact fees go up, accordingly, or sometimes, if the price is too high, the roads just don't get built. 

And in Pasco, this could be very important since Pasco is seeing lots of real estate development these days.  Things are looking bright over in Pasco County, growth-wise. 

Hillcrest Properties Challenges Pasco County Land Ordinance

However, there are those that argue against this kind of ordinance.  Their position is that these ordinances really ask the landowner to donate a part of his land to the government, without compensation.  That's against the constitution. 

This argument has been successfully made by Hillcrest Properties, as owner of 16 acres of commercial real estate near San Antonio in Pasco County, a tract that is near Interstate 75 on Old Pasco Road. 

Right now, Hillcrest Properties has legally challenged Pasco's Right of Way Corridor Preservation Ordinance in federal court and U.S. Magistrate Thomas B. McCoun III (a Florida native) has ruled in Hillcrest's favor, finding that the Pasco Ordinance is an unlawful attempt to get around eminent domain requirements in violation of the federal constitutional prohibition of the government taking private property without just compensation.

Magistrate McCoun's determination is being reviewed by U.S. District Judge Steven Merryday of the United States District Court for the Middle District of Florida, Tampa Division. 

While everyone waits for Florida Governor Rick Scott to sign HB503 into law, and it's expected that Scott will do so - no veto here - Florida real estate developers and those who work with land development are becoming more and more excited about this new law.  (See our last post for full coverage of the bill itself, including the Florida Legislature's Bill Summary.)

What's the big deal about HB503?

Originating with Panama City Representative in the Florida House Jimmy Patronis, HB503 does a fruit basket turnover of Florida's environmental permitting laws.  For some, this bill is just one more example of the current Tallahassee trend of overhauling state regulations and throwing a lot of longstanding laws out (for more on that, check out my short ebook on last year's Florida Community  Planning Act).

Last year's CPA booted 25 years of land reform laws out the window.  Many are already crediting Tallahassee legislative housecleaning with an increase in state real estate development and land investment.  Things are looking better now, we're getting to be cautiously optimistic about Florida's future, and HB503 coattails on this statehouse activity by impacting things like water management districts in a good way.  

Lots of people anticipate good things to come from HB503.

For example, the solid waste management industry is happy with HB503 because it will help them, doing things like uping from 10 to 20 years the terms of permit extension of solid waste management facilities with leachate collection systems.  (Facilities without leachate collection systems also see their terms double, from 5 to 10 years.)

Everyone in the Florida House was happy with HB503, since in passed by unanimous vote back in February with Patrois explaining that the new law is just "common sense." Democrats and Republicans both thought HB503 was a smart move. 

Environmentalists dropped their opposition to the bill after HB503 was amended to address their concerns. 

The news media reports that HB503 acts to effectively clean up the environmental permitting process, doing several things like stopping local government honchos from forcing developers to have some sort of state permit before they can get a local development permit. (Big help for real estate development here in Florida.) 

HB503 also is being reported as gutting the need for approval from a government agency before building small stormwater projects.  Good for development, again. 

The bill is also getting news coverage for its establishing new, longer deadlines for some kinds of environmental resource permits.  Again, nice for development efficiency. 

Of course, not everyone is happy about HB503: Environmental Activists Ask Governor Scott to Veto HB503

Right now, there is an online petition that seeks support for Governor Rick Scott to veto HB503 because they are arguing that the new law acting together with SB716 would kill the Biscayne Bay Aquatic Preserve Act and they are concerned that the movement of raw sewage from Miami Beach to the Viriginia Key Waste Water Treatment Plant will harm Biscayne Bay and its beaches. 

Don't count on Governor Scott to veto HB503. 

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.

Among the things that we monitor on this blog are two things: (1) the actual growth in foreign investment throughout Florida, particularly the Miami area and (2) the media coverage of the international investor interest in Miami and the surrounding South Florida properties, both commercial and residential.

A few weeks ago, Forbes reported to its readers about Miami being the target for a lot of foreign investors.  (For details, read our February 16, 2012 post.)

Maybe Forbes stumbled upon a hot topic - or maybe there is just a lot of chatter and actual events worthy of news coverage in the past few weeks, because more and more publications are providing coverage on foreign buyers coming to Florida and especially Miami to buy real estate.

Consider the article in yesterday's International Business Times entitled, "Cash paying Latin American property investors invade Florida real estate market." There, the influx of real estate buyers of Miami real estate from Brazil and Venezuela is discussed as a big reason that Florida can look forward to a better real estate year in 2012. 

The article explains that buyers from a variety of Latin American countries, accustomed to buying land with cash and not a mortgage, are flocking to Miami to buy property they consider to be at bargain prices.   The article quotes a source at the Miami Association of Realtors that the top country for bringing real estate buyers to the Miami area is Venezuela with Brazil and Argentina coming in second and third.

Note:  If you visit the Miami Association of Realtors' website you can read and download a report entitled "Profile of International Home Buying Activity 2011" prepared by the National Association of Realtors. 

The NAR national study found over 70 countries have been represented in foreign buyers purchasing real estate here in 2011 and that the top five were Canada, Mexico, China, Great Britian (the United Kingdom), and India.  Their researched found that buyers from these five countries bought 53 percent of the real estate transactions involving international buyers - and that many of these foreign buys were in Florida. 

Another recent news article takes a different perspective on things and asks "What makes Miami a hot spot for international real estate," Local experts like Greg Freedman, developer of Trump Hollywood and also a BH3 partner; Paola Garcia-Carrillo, Vizcaya Residential Sales Director; and Shawn Vardi, President of Think Properties were all interviewed for their take on why Miami real estate is so popular with foreign real estate buyers. 

Each gives his own opinion on why the Miami area is such a beacon for international investors - but each agrees that this is just the beginning of the foreign buying of South Florida real estate.

In conjunction with this news coverage, real estate industry professionals are issuing their own press releases that are confirming the long-term, extended interest of foreign buyers in Miami real estate.  For example, in news release this morning, Emilio Cardenal, Executive President of Interinvestments Realty® states:

“We expect in the years to come, that the foreign buyers shall to continue to drive the real estate market in South Florida. Consequently, our future plans are geared to serve the International buyer sector. We are currently in the process of selecting our new Broker-affiliates in Europe and Asia which we will be added to our exclusive Brokers’ Network....”

Tip of the Iceberg of Foreign International Interest

Obviously, more and more people both in the state of Florida as well as across the country and around the world are becoming aware of the skyrocketing foreign buyer interest in Florida real estate, particular Miami real estate properties.  In tandem with that influx of needed and welcome investment, local real estate professionals are gearing their operations to make things easy and efficient for their foreign clientele.

It will be more and more important for Miami area service providers - like our firm, as well as brokers, etc. - to accommodate the international client.  This is all very good for our community. 

Florida developers and Florida real estate investors are monitoring not only what happens on appeal in the case of Lakeview Reserve HOA vs. Maronda Homes but also what the Florida Legislature is doing with HB 1013 and its Senate version, SB 1196.  Florida community interest groups are also watching closely, sitting on the other side of the fight from Florida developers. 

All this activity in both the Florida courts and the Florida statehouse has to do with one big issue -- who will bear financial responsibility for defects in certain community improvements -- sidewalks, driveways, drainage ditches, utilities, roadways, and other parts of a neighborhood that are important to its livability but are not tied to one specific tract or home.  

In Lakeview Reserve HOA, Florida's Fifth Circuit Court of Appeals reviewed and disagreed with the trial court's decision that a homeowners' association was not responsible for certain defects in community improvements.

The court found an implied warranty under Florida common law existed.  In doing so, the appellate court built new Florida common law regarding implied warranties.  

In sum, the appellate court concurred that a homeowners' association can pursue a legal claim for breach of  common law implied warranties of fitness and merchantability (i.e., habitability) against a real estate developer for certain defects in community improvements (in the case, it was a residential subdivision with defective roads, drainage, retention ponds and underground pipes).

From the opinion:  

...we also reject the Developer's argument that extending the implied warranties is a matter for the legislature. In the absence of a legislative pronouncement, we are free to apply common law, and this is a case of application of common law warranties. In fact, Gable I applied common law warranties in a condominium case before the legislature first enacted warranties for condominiums in section 718.203, Florida Statutes (1976). For similar reasons, we reject the Association's application of cases extending implied warranties to the common areas in condominiums as we find those cases inapplicable precisely because those cases are decided on statutory grounds, not available here.

 

Now, while the Florida Supreme Court is being asked to review the Fifth Circuit's decision regarding implied warranties, the legislative branch is taking the matter into its own hands with the pending legislation.  HB 1013 and SB 1196, if passed, will specify that real estate developers are not legally responsible (warranting) these kinds of construction defects.

From the perspective of Florida land developers, the Florida legislature is taking needed action in this extremely bad economy to protect real estate investment and development in the State of Florida.  Freedom from expansion of current law regarding defects in sidewalks, etc., can be more than a minor issue - it can sometimes become so serious as to risk the bankrupting of a developer in this economic environment. 

Which is why the Florida Legislature is taking action to protect future real estate development in this state. Florida developers need to know that warranty law is firm, not fluctuating, in this economy. 

These proposed new laws by definition do not remove longstanding implied warranties; despite some critics, the Florida legislation isn't giving developers a free ride from any responsibility for community improvements.  

What these proposed new laws do is simply stop the judiciary from expanding that implied warranty under the common law.  From the bill text of HB 1013:

WHEREAS, the Florida Legislature finds, as a matter of public policy, that the Maronda case goes beyond the fundamental protections that are necessary for a purchaser of a new home and that form the basis for imposing an implied warranty of fitness and merchantability or habitability for a new home, and creates uncertainty in the state's fragile real estate and construction industry, and

WHEREAS, it is the intent of the Legislature to reject the decision by the Fifth District Court of Appeal in the Maronda case insofar as it expands the doctrine of implied warranty and fitness and merchantability or habitability for a new home to include essential services as defined by the court, NOW THEREFORE,....

 

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

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This week, Iowa Attorney General Tom Miller issued a statement that almost every state in the union will be signing the settlement deal hammered out between the various state attorneys general and the Top Five mortgage lenders/servicers in the country over ForeclosureGate.  Miller hasn't released a list of the names of those states yet, however.  There are some states that aren't taking the deal.

We do know the lenders involved: 

• Ally Financial
• Bank of America
• Citigroup
• JPMorgan Chase
• Wells Fargo.

We also know that the door has closed on the states, since the sign-on deadline has passed (it was extended to give states more time to agree to the deal, and that extension period is over).  States are either in or out on the joint state-federal mortgage servicing settlement.

Finally, we know that Florida is a part of the deal.  Not because Florida has announced this, per se, but because Florida Attorney General Pam Bondi has been active in pushing for this deal.

Florida AG Bondi not only helped broker the deal, she has been vocal about states like California and Delaware that haven't joined the team and instead, have rejected the ForeclosureGate deal. 

What's her position?  Bondi's take is that Florida has been hit hard by ForeclosureGate and the housing crisis and the State of Florida needs this deal done and some solid foreclosure relief.  She's pushing for this deal to get done because her stance is that this will help our Florida real estate market and accordingly, the entire Florida economy.

Expect the Deal to get Done. 

Will it be the Magic Bullet for our Florida economy?  Time will tell; however, there are many factors at play here - including things like international influence on our state's real estate economy, interest rates both here and abroad, the bottlenecked Florida foreclosure docket, etc. - so it may be overly optimistic to think that this settlement agreement will be magic.  Helpful, yes.  Magic, no.

For more on the Attorney General Settlement with the Big Mortgage Servicers, read our earlier posts on the issues involved. 

Market reports are confirming the great amount of international interest in Florida real estate investment and development.  In the last quarter of 2011, one report reveals that Florida took the lion's share in foreign investor interest from the rest of the United States, as over one-third of all international investment queries targeted this one state.  Florida.

What is bringing so many foreign investors to Florida?  Of course our state is beautiful, with miles and miles of sandy beaches.  Of course Florida is culturally inviting: many different nationalities make their home here - especially Spanish-speaking ones.

However, one major factor may well be the proactive way that the State of Florida is working to court foreign investors and international development.  A prime example of this is the massive deregulation efforts that became effective this past summer.

I have written a short e-article that summarizes what this summer's reforms are  - and what they can mean to savvy land developers and real estate investors in an e-book available on Amazon.com.   Entitled Florida Community Planning Act and Florida Real Estate Investment: 2011 and Beyond, it is priced for easy access to everyone at $2.99 and right now, it's available to read for free to those with an Amazon Prime membership.

The book is intended to help foreign and domestic real estate investors learn more about how legal burdens have been lifted from them by the Florida Legislature and how they can benefit from this reform.  Information is provided in English and Spanish.

I invite you to read Florida Community Planning Act and Florida Real Estate Investment: 2011 and Beyond.

Fitch Ratings is an internationally known and globally respected ratings agency that began back in December 1913 as a New York publisher of financial statistics, but you may know it best as the first to use the "AAA" ratings system.  Today, Fitch is recognized as an independent expert in the analysis of financial securities.

On January 6, 2012, Fitch issued its latest opinion on the impact that FATCA is already having on the American financial industry, in an article entitled, "New US Tax Rules Could Prompt Foreign Deposit Outflow."

Fitch Ratings acknowledges that Foreign Account Tax Compliance Act of 2010 (FATCA)'s future impact on U.S. banks is "tough to gauge" at this juncture.  Most would agree; right now, with an effective date in 2013, the real result of FATCA is still unclear, it's a murky vision in a crystal ball. 

Fitch sees a risk that lots of foreign deposits could leave the States if foreign deep pocket depositors not in favor of increased transparency seek to move their money out of American banks.  Easy enough to do if they choose to do so. 

Importantly for South Florida, Fitch points out two things:  first, American banks are against FATCA and they have been fighting against it - if for no other reason than the financial industry is facing enough uncertainty in its future right now, and FATCA needlessly adds more fog on their horizon.  As well as increased regulatory stress.

Fitch opines that low interest rates in the United States balance against the risk of rich, wealthy foreign banking customers having a FATCA bank run on U.S. banks.  In Fitch's words, "...we feel a low interest rate environment would diminish any pinch felt by banks regarding current cost of funds stemming from foreign deposits."

As for Florida (along with California, Texas, and New Mexico), Fitch acknowledges there's a bigger risk for a big loss in foreign deposits, in part because Florida and these three other states "tend to rely heavily on community bank businesses versus larger institutional firms."  Using estimates from the Florida Bankers Association ($60-100 billion foreign deposits), almost 20% of Florida's total deposits are foreign. 

Given that one-fifth of the bank deposit pie, Florida in Fitch's opinion, should not be harmed: "...we feel the impact of a potential shift in foreign deposits for US banks would not be significant."

Let's hope that Fitch is right - because 20% of Florida bank deposits is a mighty big number.

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.  

South Florida is geographically blessed with a tropical climate and a continuous ocean breeze that lets us enjoy the outdoors even during the warmest days of summer. Those who live here, however, have learned that part of living in a tropical coastal climate means being vigilant of major weather events, particularly during hurricane season.

In 1926, many South Floridians were caught by surprise and tragedy.  Those of us that are blessed to live here in Miami have all heard the stories of the Great Hurricane.  

Since then, technology and government services have developed to mobilize our community and prepare us all for weather events with admirable efficiency.  Miami and South Florida are grateful for their efforts, including those of the NOAA (source of this image).

I was in Miami in 1992 during Hurricane Andrew, a fierce storm in its own right.  It was a terrifying experience that I will never forget.

For those folk who have lived in Miami for a long time, we all understand and respect the forces of nature. And hopefully, we all appreciate the importance of land investment and real estate development, which work together to build and grow our beautiful hometown - just like they did back in the 1920s and 1930s after the Great Hurricane had done its worst. 

Source: NOAA Public Domain

Here's an aerial view of South Florida's well known Government Cut when it was just literally and only that - a cut.

Here in Miami today, we know Government Cut as a modern, colorful passageway for tourists, tradesmen, and boaters to enjoy our waters and landscape.

Government Cut - now surrounded by a landscape of buildings, beaches and activity, is really a symbol of how Miami, a sleepy town at the tip of the Florida peninsula, has grown into an international urban center. 

It's also another example of how real estate investment and land development, over time, can benefit the entire community.  What would Miami be today without Government Cut?

Source:  Wikimedia Commons public domain

Downtown Miami in 1896 looks like something out of Little House on the Prairie, doesn' it?  Interesting to see how Florida real estate investment and land development has taken this scene: today, it has evolved into a bustling commercial, urban center.

South Florida developers appear to be bringing another transformation. If Genting's Resorts World Miami proposal is approved, downtown Miami will be transformed again, into a bustling international capital for tourism.

We will see what the future brings.

Source: Wikipedia Commons, public domain   

In a November 22, 2011 report entitled,“Interim Status Report: Foreclosure-Related Consent Orders,” the federal government via its Office of the Comptroller of the Currency (OCC) is sharing its latest report card on the twelve (12) banks' and mortgage servicers' efforts to meet the requirments of the April 2011 Consent Orders to fix ForeclosureGate and all its problematic foreclosure practices.

The report can be downloaded as a pdf file online at the OCC site.

Within it, there is a summary of what has been done thus far.  Athough it is an interim report, it does provide signifcant information regarding a work in process that the OCC predicts will have the efforts to correct ForeclosureGate "...substantially complete in the first part of 2012, [while] other longer term initiatives will continue through the balance of 2012."

For those interested in what the federal government is doing regarding ForeclosureGate, the OCC has also set up a website dedicated to the fight against ForeclosureGate and its ramifications on the national economy and the housing crisis.  This is also maintained by the OCC and can be viewed here.

Also revealed in this November 2011 status report by the feds is the actual release of the engagement letters signed by the banks and mortgage servicers with the consultants that are reviewing and analyzing the past two years worth of foreclosures (go here to read the letters themselves), where the consultants detail exactly what they are doing and how long they think they will need to accomplish their tasks:

Bank | Independent Third Party Consultant

Aurora Bank: Allonhill, LLC 

Bank of America: Promontory Financial Group, LLC 

CitiBank: PricewaterhouseCoopers, LLP 

EverBank: Clayton Services, LLC 

HSBC: Ernst & Young, LLP 

JPMorgan Chase: Deloitte & Touche, LLP 

MetLife Bank: Ernst & Young, LLP 

OneWest: Navigant Consulting, Inc. 

PNC: Promontory Financial Group, LLC 

Sovereign: Treliant Risk Advisors, LLC 

US Bank: PricewaterhouseCoopers, LLP 

Wells Fargo: Promontory Financial Group, LLC 

Here in Miami, those involved in real estate investment and land development had one eye on Tallahassee yesterday, as the Florida Senate's Committee on Regulated Industries began its consideration of casino legislation - which means, of course, the Florida Legislature is making decisions about Miami's future and the proposed three resort-casinos to be built here, starting with Genting's Resorts World Miami.

Specifically, committee debate began yesterday - including the taking of testimony - in the drafting and approval of Florida legislation that would allow these Vegas-style resorts here in Florida. 

You can read the minutes of the meeting or watch a podcast of the entire proceeding this week over at the Florida Senate website.

While many industry experts view the three resort-casinos as economic powerhouses for Miami and South Florida, there are those that do not want the Florida Legislature to approve this land development. Look closely and you will find, as expected, that many of the opponents have vested interests in challenging the resort casinos.

It's really no big surprise that one of the loudest voices is the already-operating casino here, which would be faced with all this competition, the Seminole Tribe, and that casinos operating in Las Vegas are none too happy to hear that beautiful, sunny, oceanfront Miami might have swanky casinos to tempt visitors that might otherwise visit Vegas. 

Yesterday, testimony began where all these voices would be heard by the Committee.  Already presenting the Genting position, Colin Au, president of Resorts World Americas, one of the world's largest gaming companies.  Au explained:

• the 3 proposed Vegas-style resort casinos are expected to 100,000 permanent jobs in the Miami area;
• the 3 proposed Vegas-style resort casinos will provide 50,000 construction jobs for the Miami area;
• they will bring $10 billion to the local Miami economy; and
• it is reasonable to expect that they will draw approximately 6 million new tourists to Miami (with all their tourist dollars) each year.

Look around.  These resort-casinos are an economic game-changer for our stalled economy  - people out of work will get jobs, new businesses will be born and existing businesses will get a boost.   Do they need to be heavily regulated? Sure. Do we need to have vigorous debate to make sure that our environment is protected, that our infrastructure is adequate (or is improved so that it becomes adequate) and that the ultimate product is consistent with Miami's culture and community? Absolutely.  Should we demand from our government the continuous and strict enforcement of controls to make sure that the casino element is mimized, that tax revenues benefit the people of Florida, and that the resort is in every way both first class and complementary to our landscape? No question. 

That's what land development and real estate is all about -- building better lives for people -- and it's important that this legislation get passed.  Miami needs this. 

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.

In today's Housing Wire, there's news that a deal has been reached in the Big Bank - AG Settlement of ForeclosureGate issues and the numbers seem to jive with the earlier reporting in the New York Times by Gretchen Morgenson (see our earlier post for details). 

Sounds like the tracks are being repaired and the financing industry train is about to get back on the tracks, right?  Maybe not.

Today, just as Ally Financial announced its $210 Million loss in the third quarter of 2011, its Chief Executive Officer, Michael Carpenter, stated publicly that Ally Financial is not happy with the proposed settlement and Ally Financial is NOT going to make that deal with the AGs because it's not good business for Ally.

That's right: Ally Financial appears to have thrown down the gauntlet and announced Ally is ready for a courtroom battle rather than take the deal that is being described in the New York Times and Housing Wire.

Why?  Ally Financial doesn't like the numbers.  Ally's CEO is telling Ally investors that it's Ally's position that the settlement, as it stands right now, is not in the best interests of its shareholders and while this decision may mean incurring legal fees, Ally sees the "aggravation" of a legal fight as a better alternative that signing off on the AG proposal.  

Ally Points Out the Duty to Foreclose Placed Upon Banks

And, here's the key.  As CEO Carpenter points out in his statements to the press, financial institutions that are in the mortgage business have a duty to foreclose when mortgages are delinquent for a set period of time. 

The banks have a legal duty to do so; they answer to their shareholders.  Where would we be right now if these mortgage servicers had just sat back and refused to foreclose on the defaulting loans? 

ForeclosureGate was not the result of evildoing greed: it was the result of banks (and their lawyers and servicing companies) being blindsided by the HUGE, unprecedented number of loans that went belly up.  For whatever reason, people stopped making their home loan payments and the banks were left between a rock and a hard place: they are fiduciaries to their shareholders, after all.

Ally Financial Ready for the Courtroom?

Ally Financial seems to have done its homework here, purporting to have reviewed its foreclosure cases for exposure in the ForeclosureGate mess.  Out of 25,000 foreclosure cases Ally reviewed, it found that each case had a mortgage that had been delinquent for at least one year.  

Therefore, after a year with no payments on the loan, Ally is revealing its defense to any lawsuits that might be filed against it:  it was fulfilling a legal duty to foreclose because the home owners had stopped paying on their loan contract.  Period.

Will the other Big Banks follow Ally's lead?  Will the state AGs just start suing?  Will everyone calm down and get back to the table and iron out a deal? 

It's too soon to tell.  However, one thing's for sure:  one of the reasons cited by Ally Financial for its $210,000,000 loss this quarter is a decline in its mortgage servicing rights valuation.  It's a leaky boat right now. 

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 casinos, like the one proposed for Genting's Resorts World Miami, are one step closer to reality as Florida legislators will begin consideration of a new bill designed to regulate these new Vega-like, resort-style casinos here in the Sunshine State.

It's expected that Florida House Rep. Erik Fresen (R-Miami) and Florida State Senator Ellyn Bogdanoff (R-Fort Lauderdale) will debut their joint effort in a proposal that would impose state regulation on gambling in these swank casinos in much the same way that has proven successful in places like Las Vegas and Atlantic City. 

This would include a Florida gaming commission to oversee things.  Following Nevada's example, Florida offiicials would be able to monitor the casino operations in detail worthy of a television drama - casino operators would have to understand that they would lose some privacy in exchange for being allowed to profit from gambling operations here, since the state would be able to check their bank accounts, etc., without the usual legal hurdles.

Gambling Industry Optimistic About Future, Looking to Florida

Meanwhile, industry insider Peter Amsel reported last week that the recent three-day Global Gaming Expo (G2E) found gaming industry leaders excited about the future, with a whopping 77% of those surveyed believing that 2012 would be better than 2011, and 80% thinking that their industry would "kick into a higher gear" in 2012. 

And, the eyes of the gaming industry are looking at Florida.  Specifically, there is a lot of interest not only in what Genting is accomplishing here, but what the Las Vegas Sands will be doing in Florida.

The Las Vegas Sands has been interested in Florida land development for awhile.  Stories about the Las Vegas Sands wanting to invest in Miami with a Sands resort-type casino have been part of industry chatter for a long time now.

However, as Amsel points out, the recent ruling by the First District Court of Appeals that a voter referendum is not legally required before Florida legislation can okay casino gambling in the state means that the gambling industry's fires are stoked.  

The debate now should not be whether there will be casino gambling, but what industry leaders will be developing Florida property into Florida casino resorts. 

Right now, the State of Florida is one of many states requiring lenders seeking to foreclose on a property for nonpayment of a mortgage note to do so via a formal legal process.  A lawsuit must be filed.  An official order signed by a judge must be obtained, approving of the foreclosure itself. 

This is the way that things have been done in Florida for many years.  Now, Governor Rick Scott and several key members of the Florida Legislature want that to change.  And, it looks like their campaign may succeed - meaning that in the near future, Florida will be a non-judicial foreclosure state. 

Why Should Florida Change From a Judicial Foreclosure State?

The Governor's position is simple.  There are so many foreclosure actions that have been filed in Florida courthouses that the system has become overwhelmed.  Lane Wright, press secretary to Governor Scott, has explained to one Florida newspaper that they are finding it's taking over 600 days for a foreclosure to be processed, start to finish, in Florida. 

That's almost 2 years. 

The Governor's position is that when there is this big of a bottleneck, then citizens are hurt because lenders get stuck and aren't able to go about their business, making new loans. Their position is that judicial foreclosures are stalling our economic recovery, so it's time to simplify the process.

Critics Challenge The Wisdom of This Change

This is not an easy sell in Tallahassee.  Last year, a bill to change Florida to a nonjudicial foreclosure state died in the Legislature.  The Governor is returning now, his second time at bat on this controversial issue. 

Many do not believe that moving the foreclosure process outside the courthouse is smart for Florida.  They argue that doing so removes needed oversight, and gives even more power to the lenders at the expense of the homeowners, a situation where there is already an imbalance of negotiating power. 

A bigger concern: money.  Courts profit from foreclosure actions.  In bad economic times, what are the various counties to do if they no longer have incoming revenue from foreclosure fees?

What Will Happen?  There Will Be Some Change in the System - But It's Missing the Bigger Issue

It's taking years, not months, for Florida banks to complete the foreclosure process right now in Florida.  No one can argue that this is a big problem -- both for the lender as well as the homeowner.

Some are already looking for ways to get some change here, to get things moving forward, with one suggestion now on the table being segregating foreclosures into contested and noncontested matters. When the homeowner is not contesting the foreclosure, the lender would be allowed to institute a process outside the courtroom, foreclosing on homes in a manner analogous to the established process used now to repo motor vehicles. 

Still, the elephant in the room is the lenders' crisis situation, not the one down at the courthouse.  Banks are buckling from the tremendous number of mortgages that have defaulted -- left holding the bag not only on unpaid notes but on dealing with real estate when banks never were in the business of being real estate investors, land developers, or landlords. 

Add to that volume of defaults the problems of servicers and lawyers snowballing the crisis with robosigning and fraudulent acts, and lenders go into a whole new level of crisis. 

There's more.  People are still defaulting.  In a recent article in the Sun Sentinel, an elderly couple admits that they are not paying their note and have no intention of doing so.  They're waiting for the foreclosure notice; in fact, they are waiting to be forced out. 

Looking to the courthouse backlog may be needed, but it's not the solution to Florida's foreclosure crisis and it will not solve the banking crisis we are experiencing. Banks are stuck because their customers are breaching their loan agreements in unprecedented numbers. This is the problem that has thrown the Florida economy into the ditch, and we're not rebounding until it's dealt with.

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. 

WPBT2 will broadcast "Mexico, The Royal Tour" once more (it was already aired here in Miami on September 21st and 25th): on Tuesday, September 29th at 2AM.  It's worth your time to watch this wonderful, one hour show and we encourage you to record this program for future viewings with your and your family - as well as your business colleagues. 

Please Watch "Mexico, The Royal Tour" - For Business and For Pleasure

There's something for everyone here - this program is not just for kids or those who love to travel.  This one hour tour of Mexico, given to host Peter Greenberg by Mexico's President, Felipe Calderon, is an education to those here in South Florida and Miami who are doing business with Mexican investors and Mexican businesses. 

I was born in Mexico, and share a love of the country with my family and friends.  However, many in South Florida unfortunately are not aware of Mexico's complexities, her beauty, and the depth of her culture. 

Travelers to South Florida in wintertime, for example, are shocked to find that it does get cold here in February - and not everyone on the sandy beaches looks like they just walked off the set of hit TV shows like CSI: Miami or Burn Notice. 

President Calderon Serves as Tour Guide to Many Spectacular Places

In this one hour television show, viewers are given a glimpse into multifacted, marvelous Mexico - something that those who love Mexico will find charming.  For those who don't know Mexico as well, they will walk away with a new-found appreciation for the country.  Something that might serve them in good stead when they are dealing with Mexicans coming into our area to invest or do business: there is a reason why Mexicans adore Mexico. 

Details are here, in the press release from President Felipe Calderon:

“Mexico, The Royal Tour” Program Presented

07 Sep 2011 | Comunicado

Press Release 166/11Tourism Secretariat

Mexico City

 • The aim is to boost promotion abroad and show the wealth of Mexico’s tourist attractions.

• The program will have a potential audience of 100 million persons in the United States and 300 million persons abroad.

• The Mexican president decided to take part in this enormous effort.

In order to boost promotion abroad and show the wealth of Mexico’s tourist attractions, the Tourism Secretariat presented the “Mexico the Royal Tour” program, produced by the US television network PBS.

Tourism Secretariat Gloria Guevara Manzo explained that the program was recorded to support tourism in Mexico, which is why Mexican President Felipe Calderón agreed to participate in this project. This confirms his commitment to an activity on which millions of Mexicans depend.

The Sectur director explained that The Royal Tour is one of the most successful programs in the world for tourist promotion, since in the four countries where the program was previously recorded (Jordan, New Zealand, Peru and Jamaica), tourist promotion has been boosted internationally, attracting a large number of tourists.

The president announced that the program will have a potential audience of 100 million persons in the United States and 300 million persons in the rest of the world.

Accompanied by the Assistant Director General of Tourist Promotion in Mexico (CPTM), Guevara Manzo said that tourism is a national priority, which is why this type of initiative is being carried out to attract larger numbers of visitors.

As a result, 2011 was declared Tourism Year in Mexico and the National Tourism Agreement was signed, establishing the basis to position Mexico as one of the world’s five most popular tourist destinations.

The Sectur director explained that this initiative will enable us to attract more national and foreign tourists, which, in addition to increasing tourist spending, will encourage job creation in an activity that currently employs 7.5 million Mexicans.

Gloria Manzo said that the production of this program did not entail any cost for the Mexican government, since it had the support of three sponsors.

The program highlights t Mexican food, as well as the promotion of destinations belonging to the cultural, adventure and nature tourism sectors.

This program was recorded in ten days, during which the production team visited Baja California Sur, Campeche, Chiapas, Chihuahua, Mexico City, Mexico State, Jalisco, Michoacán, Quintana Roo, San Luis Potosí and Yucatán.

The tourism secretariat said that many other countries have tried to have this program recorded, such as Brazil, a country Mexico managed to beat as regards time.

Once the Royal Tour was persuaded to record its program in Mexico, the production firm proposed the tourist destinations to be recorded and we decided on them together.

Assistant Director General of the Mexican Tourist Board, Rodolfo López Negrete, said that the Royal Tour reinforces the campaigns to promote Mexico in international markets.

The aim of this television program, explained López Negrete, is to show the world part of our wealth of tourist attractions, as well as the activities that can be carried out in Mexico.

Last evening, the Federal Reserve Bank of San Francisco released its economic letter analysis entitled "Cap Rates and Commercial Property Prices," written by Bart Hobijn, John Krainer and David Lang (read the report here in its entirety) which brings much needed good news to anyone involved in the commercial real estate industry in Miami, Tampa, Fort Lauderdale, or anywhere else in Florida or the rest of the United States.

According to the San Francisco Federal Reserve analysis, real estate investors should see a tremendous "rebound" in our commercial real estate markets.

Written by FedReserve economists, the prediction is based upon their review of capitalization rates, using capitalization rates as a means of determining expected returns on commercial real estate properties in the future.  From the report:

Commercial real estate capitalization rates have been found to be good indicators of expected returns in commercial properties. Recent declines in these cap rates appear to be signaling a commercial real estate rebound, indicating improved investor expectations of price growth in the market. Movements in national cap rates are the predominant drivers of changes in cap rates in local markets. Therefore, the anticipated commercial real estate rebound is likely to be widespread across many metropolitan areas.

News is spreading around the country, as different regions determine how good the news is for them

Already picked up by the wires, real estate industry leaders in different parts of the country are reviewing the Federal Reserve's analysis in detail, to determine how good the news is for them.  This "rebound" will be better for some parts of the country than others, and some parts of the State of Florida are predicted to fare better in this commercial real estate rebound than others.

Housing Wire points out that prices are predicted to rise about 2% more in places like Kansas City and Austin, Texas, than the national trend.  And, from within the economists' letter itself, the study - while good news for all of us - predicts that Fort Lauderdale commercial real estate will be recovering better than Tampa or Miami (see its Figure 3, National and city-specific components of office cap rates, 2011:Q1).

In today's Rio Times, there is an article written by Brennan Stark entitled "Dollar Climbs to R$1.70 Against the Real: Daily," which points to a critical component of Florida real estate investment and land development today: how much value can foreign currency get a foreign investor here in South Florida in 2011? 

One part of that answer is the price tag on the real estate and land being sold here (there are so many bargains).  Another is the currency rate: how much can the foreign investor expect to get for his peso or real or shekel?

According to Mr. Stark's article, the Brazil Real has fallen in comparison to the U.S. Dollar and it's suggested that this is due to money being moved away from Greece and Italy and into the more stable U.S. marketplace.  It's not a big drop, and Brazilians are still getting a lot more for their reals here than they can get for them back in Brazil (see our earlier post, "Brazil Discovers South Florida Real Estate Bargains and Bloomberg Notices.") 

As for Israel, right now 1 New Shekels (ILS) goes for .27 USD (US Dollars) while you can get 12.48 Mexico Pesos for 1 USD. We should expect a continued rise in the power of both these national currencies in the Florida marketplace, based upon industry projections.

Foreign Currency to US Dollar Currency Converter

Interested in determining the exchange rate of a foreign currency to the US Dollar?  Calculate it here:

Currency conversion powered by coinmill.com.

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. 

Last week, we discussed the latest analysis of the South Florida commercial property market and the good news that industry leaders believe that commercial real estate has turned the corner here in the Miami-Dade | South Florida area.  (For details read our post entitled, "Miami Commercial Real Estate Turns the Economic Corner According to New Report by CB Richard Ellis.")

Today, we're seeing corresponding industry analysis being discussed and weighed as it regards the South Florida residential real estate market -- which is a big deal in the Miami marketplace what with the upsurge in foreign interest in our community's beachfront and waterfront condominiums.  However, indicators do not appear to be as clear for residential real estate as commercial property here in South Florida.

Standard & Poor/Case-Shiller vs. Federal Housing  Finance Agency Perspectives

Two new reports have been released regarding the local residential real estate market, and they are not jiving.  First, the Standard & Poor /Case-Shiller release was issued today.  It is good news: according to Case-Shiller, things are looking up. 

Meanwhile, the Federal Housing Finance Agency has also recently released its quarterly housing index, and while the FHFA is said to follow the same steps as Case-Shiller, i.e., creating an index through a comparison of past sales prices to present sales prices in the region, the federal agency numbers are not as optimistic.

What Case-Shiller’s Index Reports About South Florida Residential Real Estate

The well-respected Case-Shiller Index is published each month on the morning of the last Tuesday of the month, with the goal of recording and reporting single-family home prices in selected metropolitan areas across the country.  The home prices are collected and then compared with prior data already on file for each community as well as the nation overall.

Analysis is given for the state of the home real estate market in each of the metro areas.  Case-Shiller then provides an overall, value-weighted average of the selected metropolitan areas' indices for an overall index value (showing appreciation or depreciation in home prices as rated against a base value of 100 set in January 2000). 

What FHFA's Index Reports About South Florida Residential Real Estate

The Federal Housing Finance Agency provides its HPI Index quarterly, not monthly, also providing a record and review of single-family home sales prices across the country.  It takes its data from a similar batch of metropolitan areas ("metropolitan statistical areas") but also includes sales prices from the 9 divisions of the Census Bureau, and from each of the fifty states along with the District of Columbia.  

The FHFA's home price index is also a weighted index, describing itself as a "...weighted, repeat-sales index, meaning that it measures average price changes in repeat sales or refinancings on the same properties."  The FHFA includes in its calculations mortgages have been purchased or securitized by Fannie Mae or Freddie Mac.  From the FHFA site:

"The HPI serves as a timely, accurate indicator of house price trends at various geographic levels. Because of the breadth of the sample, it provides more information than is available in other house price indexes. It also provides housing economists with an improved analytical tool that is useful for estimating changes in the rates of mortgage defaults, prepayments and housing affordability in specific geographic areas."

What Can We Take From These Two Studies?

This morning's Case-Shiller index reports two months of increasing residential real estate values in our local area, while the FHFA index shows falling numbers. Today, the two indices do not paint parallel pictures.

As reported by Douglas Hanks of the Miami Herald in an article today, "Searching for a bottom in housing prices in South Florida," the media focuses upon Case-Shiller much more than the federal home price index and the Case-Shiller report is encouraging. We should expect to read about the Case-Shiller numbers more than the FHFA Index.

Still, neither home price index is painting a rosy picture for residential real estate in South Florida these days.  While industry analysts may be forecasting a brighter future for commercial property in our area, the residential market is still fighting to turn its corner.

On Tuesday, Pultizer-Prize winning journalist Gretchen Morgenson's article "Attorney General of N.Y. Is Said to Face Pressure on Bank Foreclosure Deal," was published in the New York Times and the next day, the New York Times published its editorial,"It's a Flawed Settlement," opining that the New York AG should persevere in his fight against this deal getting done. 

The firestorm this has sparked is still spreading across the country. 

Why? It may end up being the death knell to the national attorneys general ForeclosureGate settlement with the nation's biggest mortgage lenders - which would have a significant impact on Florida.

In her expose, Ms. Morgenson reveals that Obama Administration has been pulling its Executive Branch strings to get the Attorney General for the State of New York, Eric Schneiderman, to stop resisting the finalization of the AG - Big Bank Deal. 

According to Ms. Morgenson's investigations, the NY Attorney General as well as some of the other Attorneys General involved in the negotiations with the lenders, are not too keen on the current deal sitting on the table because it would bar their states from going after the banks under their state laws, including specifically alleged illegalities that occurred during the sales of mortgage-backed securities.  Joining these AGs in their opposition to the proposed deal are various consumer advocate groups and the like. 

Their position:  the deal lets the banks walk with merely a hand slap and it bars the states from instituting their own actions against the lenders. 

The New York Times story reveals that behind the scenes, White House representatives have been contacting the NY Attorney General as well as these consumer  advocates and others who share Mr. Schneiderman's concern - trying to convince them to get Eric Schneiderman to go along with the proposed deal.  And according to Ms. Morgenson, the White House calls began after officials from the Big Banks asked Shaun Donovan, Secretary of Housing and Urban Development, to help get the contrary NY Attorney General in line. 

Mr. Donovan did admit to the NYT that he had discussed the deal with Mr. Schneiderman - but his position was that he was motivated by a need to help troubled homeowners, not banks. 

What Is On The Table?

The top prosecutors from all fifty states and representatives of the federal government have negotiated with the major lenders involved in the ForeclosureGate crisis to find a settlement agreement that would rectify improprieties that have resulted from widespread activities that include robosigning and false filings (including forged real estate documents and the like).   

In March 2011, basic terms of the proposed deal were released by the group, where big national lenders (e.g., Bank of America, Citi, JPMorgan Chase, Wells Fargo) would pay approximately $20 billion into a fund that would be used to help homeowners who had been harmed by the foreclosure crisis.  In exchange for the money, the lenders would receive releases -- and that's the problem: how big should those releases be?

The deal on the table has each state's attorney general agreeing to release the lenders from any other claims based upon the bad acts addressed in the negotiations (robosigning, etc.).  The lenders would be freed from future lawsuits in exchange for putting the billions of dollars into the fund. 

Here's Where It Hits Florida - Banking Business Is Needed Here

It's true that Florida may have substantial claims against these lenders -- claims that former Florida Attorney General Bill McCollum began investigating last fall (see our discussion "Real Estate Transactions: Florida Attorney General Spearheading Foreclosuregate Investigation - All Other State Attorneys General May Follow Bill McCollum's Lead.")  It's also true that counties have lost significant filing fee revenue, etc., from the ForeclosureGate practices that they'd like to get back (see last week's post, "Suing MERS: Calif Case Reaches Supreme Court and States, Counties Pursue Claims for Lost Fees - But Whose Pockets Would Pay Their Damage Claims?")

However, these prosecutions would seek to bring more money from the lender's pockets into the government's pockets for distribution as the state or county entity saw fit.  Meanwhile, as the Federal Reserve's Kathryn Wilde points out, these lenders are the very same banks that Florida citizens (and elsewhere in the country) depend upon not only as depositors but as home buyers and businesspeople who need solid banking business upon which they can depend. 

What the NYT reveals may be accurate, but in the bigger picture, does this help Florida?  How much money is in the lender's pockets and by taking that cash in claims filed by the government(s), how free will those lenders be to participate in the crucial role of getting Florida's economy out of its dire straits?  Banks aren't bottomless pits of cash - and if they are forced to pay federal settlements, state claims, county claims, both as direct defendants and as indirect defendants (i.e., MERS ownership), then how long does that keep South Florida down?

The news this week is filled with various articles discussing the new foreclosure statistics that have been released for the second quarter of 2011 by RealtyTrac, covering the rate of national foreclosure filings where Florida has always been vying for one of the top spots. 

Just where do we stand, here in South Florida, in recovering from the Foreclosure crisis? 

1.  Mortgage Rates are at Record-Breaking Lows (If You Can Qualify)

This morning, USA Today reports that mortgage rates are extremely low - even at record lows - which means mortgage money is cheap for those who can meet the current standards for getting a home loan.  That's not many people right now. 

Just how low are those mortgage rates?  According to USA Today, we're seeing 5.82% for a fixed mortgage rate.  This is great news for those with solid income streams and high credit ratings. 

2. RealtyTrac Quarterly Reports Show Florida Still Hurting - But Gives Some Encouraging News for the Country

RealtyTrac's latest reports (covered by several media stories) keeps Florida in the lead as the state with the highest rate of mortgage loan delinquencies.  Florida is number one with 13.91%; Nevada is a close second at 13.04%; and California comes in at third with 7.83%.  Notice that Florida is close to double the delinquency rate of California. 

According to Consumer Affairs, reviewing the totality of RealtyTrac's reports as they were released this week actually hints at light at the end of the tunnel.  RealtyTrac is reporting that foreclosures were at a 44-month low in July 2011.  Foreclosures were down 35% from July 2010 to July 2011 nationally.

Sounds hopeful, until you consider that national numbers don't reflect the reality that different states are suffering more than others from the Foreclosure Crisis - and Florida has been one of the hardest hit. 

Consumer Affairs does point out that according to RealtyTrac,

1. There were a total of 22,377 Florida properties with foreclosure filings in July, down six percent from June and down 57 percent from July 2010;
2. Initial default notices and scheduled auctions in Florida were both down on a monthly and annual basis in July; and
3. REO (bank-owned properties) activity increased 8% from June 2011 but was still down 55 percent from July 2010.

3.  We Can't Get Distracted by False Hope in Falling Foreclosure Filings

Put that together, and Floridians are still having trouble making their mortgage payments and there are still a lot of foreclosure filings happening here in the Sunshine State, though banks seem to be foreclosing less. 

However, the falling foreclosure numbers are in many ways false hope.  The banks still have tremendous shadow inventories - large numbers of homes on their books that are not appearing in MLS - and now, banks are wary of foreclosing because of continued allegations of robo-sigining. As RealtyTrac's CEO James J. Saccacio explains:

Unfortunately, the falloff in foreclosures is not based on a robust recovery in the housing market but on short-term interventions and delays that will extend the current housing market woes into 2012 and beyond.

4.  Where We Stand in August 2011

Florida, particularly South Florida, is still in a real estate crisis and experts predict it will take a couple of years for Florida to win its battle over this downturn.  For those who can afford to buy real estate here, particularly those foreign investors in Israel, Brazil, Mexico, and Canada, this may be extremely good news. 

Looks like there are going to be lots and lots of good bargains here in beautiful South Florida for those with the wherewithal to purchase them. 

Meanwhile, Florida homeowners are still facing underwater mortgages (or the possibility of one, as fair market values decrease) and Florida lenders are still fighting both ForeclosureGate defense issues as well as the cold reality that they've got lots of homes on their books just setting there, and lots more that may be added if delinquencies continue to rise. 

Watch the RealtyTrac Video Synopsis of its July 2011 Foreclosure Report here:

This week David Streitfield's article, "Affluent Buyers Reviving Market for Miami Homes," was published in the New York Times -- which can only mean even more potential investors in Miami real estate will be aware of the inticing deals to be had here in South Florida for beautiful, oceanfront condos in one of the most cosmopolitan of cities. 

Word of Mouth for Miami Real Estate Bargains Is Good for Florida

In his article, Mr. Streitfield points out that the current ForeclosureGate situation -- where lenders are setting on their inventories and moving slow on pending and possible foreclosures because of robo-signing legality concerns -- has actually benefited the Florida real estate market because supply has shrunk ... and investors from other parts of the country and other parts of the world are taking advantage of the properties here, where local buyers are finding it hard to find lending. 

Brazil, Mexico, Latin America, Canada and Israel Are All Buying South Florida Real Estate

Bottom line, while the banks set on that real estate inventory and don't offer many home loans, foreign investors (as we've been discussing - those from Brazil, Mexico, and Israel among other countries) are coming to town and finding great real estate deals to be had - either for second homes, or rental investments. 

It's true that it is a great time to invest in Florida real estate if you have the funds to do so.  Bargains on very beautiful property abound right now.

However, as we've discussed before - the Shadow Inventory looms.  The banks are sitting on a lot of property - condos, homes, lots, etc. - that is not listed in the MLS and isn't for sale now.  Vacant properties that locals recognize because they have popped up everywhere. 

What will happen to that Shadow Inventory?  Rumors are that the federal government wants to find ways to rent those properties. 

What happens to the banks and home loans to Americans?  That's a more difficult question to answer. 

Tuesday's news of a Reuters expose that robosigning (and other forms of faulty and flawed foreclosure procedures) is still happening not only went viral among the financial and real estate industries, it has caught the attention of Congress. 

(For details on what robosigning involves, see our earlier post, "Defining RoboSigning: What Exactly Is RoboSigning and Why Is Everyone So Upset About It?")

As we noted on Tuesday, if extensive robosigning and other forms of impropriety are indeed continuing in the Florida real estate arena, much less on a national scale, then this is extremely serious and could have severe, negative ramifications on Florida's attempts to escape and recover from our Great Recession.  To have Congress investigating may alone have a negative impact on our financial community; however, that horse has already left the barn. 

Today, in BusinessWeek, it is reported that Senator Sherrod Brown (D-OH), chairperson of the Financial Institutions and Consumer Protection Subcommittee, has announced that his  subcommittee will hold a hearing to investigate this robo-signing allegation. 

The Senate's Financial Institutions and Consumer Protection Subcommittee is one of several subcommittees of the powerful Banking, Housing and Urban Affairs Committee of the United States Senate. 

Over in the House of Representatives, Representative Maxine Waters (D-CA) has voiced her concerns to the press and as a senior member of the House Committee on Financial Services, it's to be expected that her committee will also be looking into robosigning and current foreclosure practices in the country today. Representative Waters also looks to be putting pressure on the Executive Branch, telling the media that since the Office of the Comptroller of the Currency, or the OCC, is legally the federal regulator for banks, the OCC has a duty to investigate the situation.

Yesterday, Representative Waters released her letter to the Chairman of the Federal Reserve Board, Ben Bernanke; the Acting Comptroller of the Currency, John Walsh; and the Acting Chairman of the Federal Deposit Insurance Corporation, Martin Gruenberg (review the actual correspondence online here), which is joined by eleven of her colleagues in both the House and Senate, calling for an immediate investigation into the robosigning situation.  Here is the text of Representative Waters news release and call to arms:

Washington, Jul 20 -

“Recent news reports indicate that ‘robo-signing’ and other improper, and potentially illegal, practices continue unabated despite mortgage servicers pledging to regulators months ago that they would stop,” Congresswoman Waters noted. “It’s clear that, despite claims that they take these issues seriously, the banking regulators have failed to put an end to these predatory practices. It is therefore essential that documents submitted by banks to regulators regarding their mortgage servicing practices be made public, so that Congress and the public can hold servicers accountable.

"Enforcement actions were initiated by federal regulators because of the “robo-signing” scandal from last year, which revealed many servicers were wrongfully foreclosing on homeowners and not following existing foreclosure procedures and laws. Robo-signing is when banks falsely swear that they have reviewed property documents that are necessary to foreclose on a homeowner’s house. Recently both the Associated Press and Reuters reported that despite regulators’ assurances to the contrary, illegal robo-signing allegedly remains rampant in both foreclosure and non-foreclosure cases.

"The request for disclosures is also based upon concern over the fact the consultants performing foreclosure reviews have conflicts of interest since they are chosen by the mortgage servicers they are hired to investigate and have done past or future business with those same mortgage servicers. Members of Congress are requesting public release of Engagement Letters, Action Plans, Foreclosure Reviews, and other plans, policies, or processes submitted by mortgage servicers or third-party servicers to ensure that abuses in foreclosure practices are not being ignored by the review process.

“When the consumer protection performance reviews of banks are being conducted by outside consultants hand-picked by the banks themselves, I must question the regulators’ process. We need to shine more light on this issue to hold both the servicers, and their regulators, accountable,” Congresswoman Waters said.

"When news reports on robo-signing surfaced in November 2010, Congresswoman Waters immediately wrote to major mortgage servicers and the regulators of servicers asking for a foreclosure moratorium pending a comprehensive examination of servicer practices. Congresswoman Waters also held the first Congressional hearing in the House on robo-signing and wrongful foreclosures in November 2010, and she continues to press banking regulators for more aggressive action on servicing fraud.

The letter is signed by Representatives Frank, Ellison, Grijalva, Watt, Clay, Gutierrez, Miller (NC), Brown, Kaptur, Schakowsky, and Woolsey. The companion letter in the Senate has been signed by Senators Blumenthal, Franken, Akaka, Begich, Sanders, Cantwell, Tester, Rockefeller and Sherrod Brown. 

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. 

Times are tough in Florida and many things are being done in both the public and private sectors to fight and win against the "Great Recession."  This week, news has started trickling in that suggests some light at the end of the tunnel.  Consider this:

1.  From the Naples News, we know that several developments will be proceeding in South Florida with homes projected to be ready for sale in 1 -5 years.  These include:

• Hacienda Lakes in Collier County (plan approved by the Southwest Florida Regional Planning Council)
• Alico West in Lee County (plan approved by county and state officials); 
• Sabal Bay in Collier County (approvals in process);
• Big Cypress in Collier County(approvals in process).

2.  The Naples News also reports that well known developer The Ronto Group has requested a ten year extension on its huge planned development on Bonita Beach Road to gain back the extra time at the end of the project that had been lost in the lull brought on by the recession. 

Moving back the deadline brings things back to a status quo as development chugs forward on The Rondo Group's planned development of a huge golf course and residential community.  Rondo representatives are telling the media that lots of homes are going to be built within the next year in their new Bonita Beach Road project.

3. Up in Jacksonville, commercial interests are seeing a big spurt as the Florida Times Union reports that it's a go for a new "superport" to be built,  a bookend to Keystone Industries' recently debuted shipping terminal over in Talleyrand.  

The new development wll be ten times the size of the Talleyrand terminal and it will have a manufacturing plant that will bring new jobs to the area (in addition to all that cargo work that will need workers to be hired).  This means literally thousands of new jobs in the long run for this area after the project is built, and lots of jobs in the short terms as construction begins on the new Superport. 

Mortgage fraud is a national problem that's getting more and more rampant in our area, according to  Interthinx, a company that periodically releases its research analysis of national fraud numbers.

Its warnings are particularly dire for the Miami area, where South Florida's ranking 2nd in the country for mortgage fraud risk in 2011.  Last year, that ranking was 20, making South Florida the only area in the country with a significant increase in mortgage fraud. 

You can read the Interthinx Mortgage Fraud Risk Report for the first quarter of 2011 here (downloadable pdf format).

The report is dealing with housing scams, and the study focuses upon a review of mortgage applications provided by cooperating lenders.  Interthink scans the applications for red flags that suggest something is not quite right in an application, using its internally devised system of mortgage fraud indicators.  The report itself measures (1) overall fraud as well as four subsets:  (a) property valuation fraud; (b) identity theft; (3) occupancy fraud; and (4) falsified income reports. 

Our local area is number 1 in all these rankings, except for the falsified income report frauds.

When considering occupancy fraud, identity fraud, and property valuation fraud, things may need to be clarified.  In many cases, fraud is very much what we think it is - scam artists falsifying documents, hiding relevant information, and wrecking havock with the lending community.  There are, however, instances where the fraud is to some extent more benevolent (though fraud nonetheless).  In these cases (and this happens often in South Florida), the "fraud" is really an attempt by family members to help eachother out, in transactions where individuals close on homes that become theirs, with mortgages that are kept current. 

It is true that mortgage fraud in this area is rampant.  There are con artists taking advantage of buyers from foreign countries as well as other parts of the country (in addition to Floridians), and general mortgage fraud that fits into the category of classic white collar crime - falsifying information, hinding information, and creating deals for short term transactional profit - at the expense of others and of our economy at large. It's good to make everyone aware of these scams.

However, this new Fraud Report provides numbers that also incorporate family members that are trying to help loved ones stay in their homes, however fraudulent their actions may be.  These instances do not reflect a danger to the investing public at large, and potential buyers and investors should not be swayed by the Fraud Danger that is being discussed as being overwhelming here in South Florida.

There may be a lot of hinky mortgage applications in South Florida right now; however, in our Great Recession there are lots of applications that are disingenuous as family members try and help each other out. 

These fathers and brothers and sisters and cousins are not a danger to the incoming investor, and that should be considered when pondering the impact of this new Fraud Report.

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 the new Community Planning Act, the State of Florida is no longer regulating and overseeing land development in Florida, and that includes decisions on where the Urban Development Boundary will be, and what gets built outside of the UDB.  Now, the local government will be responsible for those decisions -- and that means it's now part of the job for the new mayor of Miami-Dade County. 

Who is the new mayor?  We won't know until the runoff later this month. 

On June 28, 2011, Julio Robaina and Carlos Gimenez will face a runoff election for Mayor of Miami-Dade County.  Robiana is a former city mayor (Hialeah, Florida) and Gimenez is a former county commissioner (Miami-Dade) so either man, if elected, will not be new to the business of local government.

The key for real estate investors and land developers is what the future of real estate development in the Miami metroplex.  What will happen to the Urban Development Boundary once the new mayor is elected?

This week, the Miami Herald reported on a meeting held between these two candidates and several groups concerned about the Florida environment, particularly the Miami area, where the environmental interests outlined their concerns to the two candidates in the hopes that the new local government will not lessen the growth management regulations that had been in place under the old state law. 

Not too long ago, conservationists had a friend in the Governor's office.  In 2009, Governor Crist forbid by executive order Miami Dade County Commissioners' attempt to move the Urban Development Boundary so that it overlapped into the Everglades National Park and its wetlands so developers could build a Lowe's shopping plaza.  With Florida's current governor, Rick Scott, times have changed.  The Florida lawmakers are concerned with fighting the Great Recession and in passing the Community Planning Act, this type of state intervention is a thing of the past.   

Accordingly, environmentalists consider the Urban Development Boundary an election issue, and it's not the first time that the UDB has been a factor in a local government election.  Back in 2005, there was a big "Hold the Line" fight in Miami where development was seen as dangerous to the community and the UDB an important tool in keeping back real estate interests. 

What is the Urban Development Boundary? 

Also known as an "urban growth boundary," this is a line drawn on a map as a legal boundary that determines land use in the given area.  On one side of the line, real estate development can be "high density," and on the other side, it cannot.  UDBs are zoning laws designed to protect a community from rampant, uncontrolled urban growth or "urban sprawl."

Will the new Miami Mayor allow the UDB to be changed in order to help land developers from Florida, the United States, Mexico, and Latin America built in the Miami area -- bringing much needed jobs and revenue into our community?  Let's hope so. 

Remember, the Community Planning Act doesn't bar a challenge to a development on environmental grounds, it merely places the burden of any challenge upon the conservationists to prove harm will occur instead of the old way of doing things, where the developer was under the burden of proving a negative: that there would be no harm. 

Moving the UDB does not doom Miami's natural beauty.  It does help Miami become more attractive to real estate investors - and that's so very important in today's economy. 

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.

For those of us with longstanding ties to Mexico (I was born there), the story that appeared in Wednesday's Miami Herald was not big news; however, the fact that there are a growing number of investors in Mexico, Central America, and Latin America that are interested in investing large sums of money in Florida - particularly South Florida - may be a big surprise to some Floridians.

(You can read the May 25, 2011 story entitled "Mexican investors see Miami as safe haven for their money" and written by Alfonso Chardy of the Miami Herald online for free.)

East Coast Opportunity (ECO) Opens Offices in Miami

Given, it is news that three men from Mexico are doing business over in the Latitude Building (in the Brickell district) as executives of the East Coast Opportunity Group.  Mario Alonso, Emilio Braun Burillo and Iñaki Negrete helm the Miami Office; their company LinkedIn page (still being built) has Kelly P. as their office manager for almost a year now.  

ECO will be working with Mexican investors (and other foreign investors) to find and buy real estate properties that they believe to be good deals with the ability to turn a nice profit for them.  They'll sell some, they'll rent some. 

Mexico Has Seen Florida As An Investment Opportunity For Some Time

Mexican capital has been flowing into Florida in search of good real estate investment opportunities for some time now.  Back in January 2011, for example, the South Florida Business Journal covered the saving of the 396 Alhambra Circle renovation in Coral Gables by Grupo JB, a division of Agave Group of Mexico. 

Seems that it was only because the Mexican investors were able to infuse the $130 million project with funds that the development of the office tower (and garage) gained sufficient financing to be completed.

Agave Group may ring familiar to Florida real estate readers: Grupo JB, via its Agave Acquistions, bought significant office space (17 office condos) in the SBS Tower on Bayshore Drive in Coconut Grove last year. 

Ties Between Florida and Mexico are Growing

The Miami Herald story focuses upon ECO as being part of a growing trend of American businesses seeking to help Mexican investors find properties here in the United States; however, the Herald's article discusses the motivation as being Mexico businessmen seeking to escape growing violence at home.

Is this true?

Maybe the truth is that Florida real estate is at Clearance Sale Prices

The reality may well be that savvy Mexico investors (remember this is the homeland of Carlos Slim) see Florida as a place where great real estate bargains await - given our bad economy and no light at the end of the tunnel (yet).

Another contributing factor that is bringing Mexican business into Florida: ease of doing business.  Florida, and especially the Miami area, is well connected to Mexico and all of Latin America. 

• Families share ties in Florida and Mexico (mine do). 
• Businesses in Miami speak Spanish and English (e.g., both my paralegal and I are fluent in Spanish).
• Local communities, especially in South Florida, provide Latin American visitors with touches of home, from restaurants serving recipes originating in Mexico, etc., to stores that provide Mexican products for visitors who prefer their brands from home

Kirk Fordham, Chief Executive Officer of the Everglades Foundation has written a letter to Governor Rick Scott, asking Governor Scott to veto one of the gazillion new laws coming to him for approval from the Florida Legislature that are designed to help heal our economically-hurting state.  There's also been a press conference. 

Specifically, the Everglades Foundation is asking Governor Scott to veto SB 2142.  You can download the letter and read the whole thing over at the Miami Herald's Naked Politics blog. 

The proposed law involves the state's water management rules and you can read SB 2142 here.  This is the text of what Governor Scott is being asked to sign - or veto.

SB 2142 - Florida Water Management Policy Changes

The new law will do several things.  One key point:  unlike some of the other laws going into effect these days, this law does not end or limit state regulatory powers. 

SB 2142 will increase the power of state government to review and to nix the budgets of our water management districts by allowing the Florida Legislature as well as the governor the right to this level of oversight.  It's true that the bill is curtailing some state-level regulatory authority, in a way:  the governor's power over state water management is arguably being weakened.

So, why is the Everglades Foundation upset that there's going to be Legislative oversight of Florida waterways? 

You'd think that this group would welcome the state legislature here, the idea being more regulation rather than less when natural resources are concerned, but no.  Seems their position is that  SB 2142 is going to muddy things up money-wise, especially.

Seems SB 2142 will allow the Florida Legislature to limit the amount of money that the water management districts can collect in ad valorem taxes - and it gives the Legislative Budget Commission the power to line-item veto each district's budget.  These are seen as dangerous and wrong by the conservationists here.

Bottom line, however, is this legislation along with many of the other laws that Governor Scott is being asked to sign into law deal with the economic crisis that our state is facing and money is the focus.  Ad valorem tax money controls are what the legislators would focus upon, presumably, not tying the hands of the water districts. 

Property taxes mean little without corresponding property values.  The reality of the Florida Foreclosure mess and the decline in our state's fair market property values is one of the reasons our economy has suffered. Floridians have seen their property values plummet - and they are clammoring for some relief, and for economic growth.  In increasing the oversight over future property taxation, this bill is addressing an issue of key economic concern to our state.

We're in big trouble and SB 2142 is one more brick in the wall designed to stop the economic downturn. 

Governor Scott is going to sign this bill into law.  Watch.

This week, it was unanimously approved (7-0) that land developers' growth impact fees in Orange County, Florida, would be slashed by 25% and that they would also see a 50% cut in the charges assessed against them for school impact (a charge for new home builders theoretically paralleling the new kid population accompanying those new houses). 

This is good for Orange County land development.  Land developers should be more interested in doing business in the Orlando area - which means that the community will reap new jobs and correlated business that comes with new land projects.  

This makes sense from another perspective, too.  What with the economic morass we're all experiencing, those fees placed upon land developers don't jive with today's actual costs.  It doesn't cost the same to build a road or put in a park now as it did five years ago.  Orange County is simply being fair here, updating things to reflect today's realities.

Permitting Services Office Opens This Week in Orlando

Another friendly gesture: Orange County debuted its one-stop permitting office this week, located in the county administration building at 201 S. Rosalind Avenue. You can find directions to the new place on Google Maps.

There was a nice ribbon cutting ceremony by the Mayor.  All the Commissioners showed up, and the media came, too.  Nice. 

For those in the know, this is great: in the past, land developers in Orlando had to hassle with going to any number of county offices to get permits for utilities, right-of-way, docks, etc.  Now, everything is under one roof. 

There's more.  They have free Wi-Fi at this new One-Stop Permitting Services Office.   They're not offering any free coffee, though.  At least, not yet. 

Last week, the wave of legislation designed to lessen Florida's involvement in land development and thereby free the economy to move forward with real estate development began to finalize as Governor Scott signed HB 7001 into law on April 27, 2011.  (Read the law and follow its history from inception to effective date here.)

What Does the New Law Mean to Florida Land Development?

HB 7001 was effective as law the minute that the Governor signed on the dotted line.  Which means that today, among other things, local governments -- and not the State of Florida -- are now the governing bodies deciding how much land developers must pay for things like upgrading roads. 

The new law also creates standards for urban areas.  These are designated by state law; "dense urban land area" is defined by Section 163.3164(34) of the Florida Statutes. 

Effective last week, the Growth Management Law also changed land-use planning in the State of Florida.  Now, instead of going to the Florida Department of Community Affairs with land-use plan changes for the DCA's okay, developers will go to local governments for their approval of the alterations. 

Details Available from the State of Florida Online If You Want to Read the Details

1.  The summary analysis of the new law provided by the Florida House of Representative's Economic Affairs Committee provides the following (you can read the full 14 page legislative analysis here):

This bill reenacts portions of existing law most closely related to comprehensive planning and land development amended by Chapter 2009-96, Laws of Florida, (Committee Substitute for Committee Substitute for Senate Bill 360) passed by the Legislature in 2009. Since that time, the law has been the subject of ongoing litigation regarding its constitutionality; specifically, regarding allegations that it violated the single subject and mandates provisions of the Florida Constitution. This litigation has created uncertainty among local governments, developers, and private interests regarding the provisions of law amended by CS/CS/SB 360.

This bill does not change current law, but simply reenacts the portions of existing law most closely related to comprehensive planning and land development amended by CS/CS/SB 360, in an effort to remove uncertainty and address alleged constitutional defects relating to the single subject requirement in Article III, section 6, of the Florida Constitution.

In an effort to remove uncertainty and address allegations that CS/CS/SB 360 violated the mandates provision of the Florida Constitution found in Article VII, section 18(a), this bill reenacts provisions of existing law that have been challenged in court as an unconstitutional mandate on counties and municipalities. To the extent any of those provisions are held by a court of last resort as unconstitutional, a two-thirds vote of the membership of each house would be necessary to have the legislation binding on counties and municipalities, in the absence of one of the other conditions provided for in Article VII, section 18, of the Florida Constitution.

The bill states that it fulfills an important state interest. The portions of existing law reenacted by this bill address several areas related to comprehensive planning and land development including: Urban Service Areas and Dense Urban Land Areas (DULAs). Transportation Concurrency. Developments of Regional Impact (DRIs). Financial Feasibility Requirements. School Concurrency. Permit Extensions. Impact Fee Notice and Concurrent Zoning. Dispute Resolution.

See the “Current Situation” section for a detailed analysis of the portions of existing law reenacted by this bill.

This bill is to take effect upon becoming law, and those portions amended or created by Chapter 2009-96, Laws of Florida, are retroactive to June 1, 2009. If a court of last resort finds retroactive application unconstitutional, this bill is to apply prospectively from the date it becomes law.

 

2.  Urban Areas in Florida, designated by the Florida Department of Community Affairs for 2010, are as follows (go to the site for the full listing):

Pursuant to Section 163.3164(34), Florida Statutes, the Florida Legislative Office of Economic and Demographic Research transmitted to the Department of Community Affairs on June 30, 2010, a list of counties and municipalities qualifying as dense urban land areas. The Department posted this list on its Web site on July 7, 2010.

The jurisdictions listed below have been identified by the Legislative Office of Economic and Demographic Research based on April 1, 2009 population estimates and the statutory definition as follows (see Section 163.3164, Florida Statutes - Local Government Comprehensive Planning and Land Development Regulation Act; definitions ). Dense urban land area is defined by Section 163.3164(34), Florida Statutes to mean:

a.  A municipality that has an average of at least 1,000 people per square mile of land area and a minimum total population of at least 5,000;

b.  A county, including the municipalities located therein, which has an average of at least 1,000 people per square mile of land area; or

c.  A county, including the municipalities located therein, which has a population of at least 1 million.

An asterisk (*) indicates that the municipality is included based on conditions (b) or (c) and may or may not meet condition (a) alone.

 

It's not a surprise to anyone that the new Governor of Florida is a fan of deregulation, and that  lawmakers in Tallahassee have been proposing a series of laws aimed at deregulating Florida land development that conform to Governor Rick Scott's vision of less government for a better economy. 

It's also no surprise that lots of people are very concerned about what this hands-off approach will mean for Florida's future -- just read through the comments to our recent posts concerning the proposed deregulation of travel agencies, landscape architects, and the like to get a gist of what's going on here. 

Proposed Laws Will Deregulate Florida Land Development:  HB 7129 and SB1122

This month, proposed legislation is traveling through the Florida Legislature that has lots of conservation groups very upset because these laws, if they become a reality, will substantially deregulate land development in Florida. There are active campaigns to stop this from happening.

HB 7129 and SB 1122 are the two versions of this new deregulation legislation, and you can read the full text of these proposed laws online:

Read HB 7129 - and follow its progress through the Florida Legislative process here.

Read SB 1122 - and follow its progress through the Florida Legislative process here.

These two bills do not propose the exact same legislation.  Admittedly, each offers some sweet stuff for developers that consider themselves to be heavily regulated by Florida laws today.

The House version, for example, would cut back on state review of local land use decisions (e.g., those that currently halt development in the wetlands) and it would free counties to approve development plans whenever they choose to do so (right now, they can only do this biannually).  The House Bill also frees land developers from some of the burden of having to pay for the defined cost of urban sprawl (concurrency) of roads, parks, etc.

What Do The Proposed New Laws Do For Florida Land Development?

Governor Scott and his followers take the position that removing 25-year old growth management laws will free private enterprise to move forward, boosting the local economy in various ways - including creating more jobs for out of work Floridians.

We need jobs.  Land development generates jobs: building, construction,  surveying, engineering, etc., and after that, work in the various concerns that have been created: salespeople, waitpersons, valets, office workers, teachers, and more.  Less law will mean more incentives for investors to develop commercial properties here in Florida -- and residential ones, as well.  

This is necessary for Florida's economy.  No one is really debating that Florida's economy needs help, and needs help badly. 

However, conservationists are terrified of the aftermath if the proposed deregulation becomes law. 

Environmentalists point with fear at what might happen to the Florida Everglades.  National groups, like the Sierra Club, are worried that deregulating Florida land developers will effectively erase protections that have been in place for over two decades -- and that precious natural resources are being sacrified because of economic panic. 

They are instituting campaigns (write your representative type stuff) to thwart the deregulation proposals.  To learn more about their position, read the opinion piece published in the Palm Beach Post by a representative of 1000 Friends for Florida.  To report that the opposition is riled up is an understatement.

New Laws Don't Stop Regulation -- Cities and Counties are Free to Regulate Development in Their Area

However, what is missing in the fight is recognition that the proposed laws do not mean a free-for-all for land developers in this state.  Instead, consider this:

1.  the proposals may help environmentally in some situations, because current laws that attempted to protect against urban sprawl in the past actually pushed land development into rural areas where there was less legal regulatory protection, causing an invasion of development into pristine natural areas that might otherwise been left alone.

2.  the proposals simply release the state from some legal oversight burdens; the ability of local counties, cities, etc. to regulate land development remains.  Some areas may even become more regulated as a result of these new laws if the community is willing to enact statutes and regulations to protect the local area.

Water as a limited resource here in Florida may seem ludricrous to many -- after all, the state is literally surrounded by water: there's the Atlantic Ocean; there's the Gulf of Mexico.  And then, Florida is blessed with lots of internal waterways, too.  Beautiful rivers like the Alafia. 

There's no desert here.  To consider that Floridians might face a problem of water scarcity seems irrational, right?  Except it's true.  The lack of good, clear, usable water is a growing concern for our state.  It's a big deal.

Florida Legislature Already Promoting Conservation and Reuse of Water

The Florida Legislature has passed laws that serve to protect and promote water throughout the state.  Florida Statute 403.064, for example, provides: 

(1) The encouragement and promotion of water conservation, and reuse of reclaimed water, as defined by the department, are state objectives and are considered to be in the public interest. The Legislature finds that the reuse of reclaimed water is a critical component of meeting the state's existing and future water supply needs while sustaining natural systems. The Legislature further finds that for those wastewater treatment plants permitted and operated under an approved reuse program by the department, the reclaimed water shall be considered environmentally acceptable and not a threat to public health and safety. The Legislature encourages the development of incentive-based programs for reuse implementation.

The Problem of Reusing Water - Treated Sewage Water is Still Sewage

In the Sun Sentinel this week, reporter Larry Barszewski covers the issues of water reuse in a story entitled, "Water reuse is South Florida priority."  In particular, the article focuses upon efforts to increase the amount water reuse in South Florida - which is well behind other areas of the state in H2O conservation.

There are two main reasons for Florida to use treated sewage water for things like watering the local baseball fields: (1) conserving water available for us to drink, cook with, etc., and (2) protecting our waterways - particularly the Atlantic Ocean - from the impact of wastewater being dumped into their flow. 

As the Sun Sentinel points out, lots of folk aren't too keen on sewage, no matter how clean it may be at the point of reuse. 

Nevertheless, here in South Florida, the time has come for treated sewage water to be implemented into all our lives.  While other parts of the state reuse up to 75% of their sewage water, Miami-Dade and Broward Counties are currently using almost zip of their available wastewater.   That's going to change.

The Florida Department of Environmental Protection is going to see to it.  The Florida DEP has its own water reuse agency, dedicated to maximizing the reuse of sewage water throughout the state.  Legal deadlines have already been established, with 2025 the absolute deadline, statewide.

The Water Reuse Program in Florida will be forcing land development as well as private citizens throughout South Florida into the reuse of treated sewage water.  It is seen as being in the best interests of the state, and we must all work together toward that end.

For more on the Florida Water Reuse Program, check out ProtectingOurWater.org.

Today, lots of things are happening in the news that will have a big impact on Florida real estate. Big things, with consequences both short term and long term.  Consider the following:

1. Possible Shutdown of the Federal Government on Friday, April 8, 2011

FloridaRealtors.org has published a list of how the potential shutdown of the federal government tomorrow may impact the Florida real estate market.  From their information, for example:

• Federal Housing Administration (FHA)  -- FHA will not make new loans, but it will continue basic operations regarding paying claims and collecting premiums, as well as running its REO portfolio.
• Internal Revenue Service (IRS) -- The IRS will stop all refunds as well as working on income tax returns. 

Secretary of the Department of Housing and Urban Development, Shaun Donovan, told Congress today that the shutdown would essentially force lenders to stop making home loans if the FHA is put on hold tomorrow. 

This is bad news for Florida, where we need every home loan made as soon as possible. Florida banks do not need another hit right now, they are in enough of a crisis-mode already. 

2.  Commercial Leasing - Blockbuster Sold on Auction Block to DISH Network

Blockbuster video stores were very popular across the country at one time; now, they are empty spaces with "for rent" signs replacing the movie posters on their front windows.  On the auction block, Blockbuster, Inc. was purchased today by DISH Network, which reports it will fill some of those empty spaces with its own product, selling DISH systems from storefronts.  Meanwhile, commercial leasing looks to rumors like those coming out of Memphis, where companies like Chipotle Mexican Grill and Five Guys Burgers are considering leasing out the old Blockbuster sites. 

That's good news for Florida commercial leasing, if it's true and it pans out. Commercial leasing in Florida today already has a lot of prime locations to show prospective lessees -- the idea that national chains are interested in filling those Blockbuster spots is good for us. 

3.  Trulia Report Reveals Millions Lost to Miami Economy as Home Prices Plummet

In a report released today by Trulia, it seems that Miami homeowners are growing so desparate to sell their homes that they have dropped their sales price by 11% in the past year, which totals to a tremendous amount of money taken out of the real estate market in just the Miami-Dade area.  The 11% price cut was the second-highest slash in the country, according to the Truvia statistics: only Detriot sellers cut more, coming in at 19%.  Bad news for us. 

It goes without saying that this money is now lost to the Florida economy - permanently.  No one expects these home prices to rebound before they sell, and it's only the shortsighted that don't consider that the money leaving the buyer's pocket enters the seller's, where it will be invested and spent - which helps Florida's economy. 

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. 

A bill that would remove the State of Florida from overseeing and regulating a wide variety of business activities is moving through the Florida Legislature right now -- and it's so comprehensive that even the industry leaders currently subject to agency oversight are denouncing the proposed law as bad for Florida. 

As reported in today's Orlando Sentinel in a story by Jason Garcia entitled, "Some industries balk at giant deregulation bill in Florida House ," the bill is big - it's 281 pages long, and even lots of businesses don't like it.

Garcia reports that over 30 representatives (lobbyists and others) have gone before the House Business and Consumer Affairs Subcommittee to give their testimony of how bad things could get if the Florida state government were to exit the building in these various industries.  Even Disney had a man go before the committee, warning of land fraud temptations without Florida's oversight of time shares. (Disney's big into the time share condo business.)

What the Deregulation Bill Proposes to Do

It's a budget cutting manuever that would take the State of Florida out of the business of overseeing and regulating 25+ professions and industries operating for profit in this state -- including home inspectors, time-shares, condos, landscape architects, professional surveyors, professional mappers, and other real estate related industries as well as businesses like auto mechanics and travel agencies. 

For example, here's what is being considered regarding architects.

Architects - Currently, an Architect business must be licensed by the state, unless exempt from licensure, in addition to the requirement that the individual be licensed. Persons currently exempt from licensure include anyone who makes plans and specifications for, or supervises the erection, enlargement, or alteration of:

1. Any building upon any farm for the use of any farmer, regardless ofthecost of the building;

2. Anyone-family or two-family residence building, townhouse, or domesticoutbuilding appurtenant to any one-family or two-family residence, regardless of cost; or

3. Any other type ofbuilding costing less than $25,000, except a school,auditorium, or other building intended for public use, provided that theservices of a registered architect shall not be required for minor school projects.

The proposal is to eliminate business license equirements for sole proprietorships for individuals licensed as Architects.

Florida isn't new to deregulation -- Governor Crist made lots of headlines in 2009 regarding the extent that the State of Florida would regulate the commercial insurance industry.  There was also lots of controversy over the extent that Florida should or would oversee the telecommunications industry in the state.

However, with the new shift in power up in Tallahassee, and Governor Scott's stated intention to run the State of Florida like a business, wide-spread deregulation like this may not face the big fight that it has seen in past years. 

Deregulation From a Land Development Perspective

Land developers often find state regulations to be time-consuming and expensive, but all reputable real estate professionals still respect the reality that there are those that push the edge of the envelope (or go past it) for the sake of profit.  No one wants to open the door to a free-for-all here in Florida, just because the state is in economic hard times.

So, is this massive deregulation good for Florida?  Many respected business professionals think not.  Consider what's being done here.  Specifically, the government would be hands-off regarding the following industries:

1. Athlete Agents

2. Auctioneers

3. Auctioneer Apprentices

4. Barbers

5. Body Wrappers

6. Business Opportunities

7. Cattle Owners with Officially Registered Brands

8. Charitable Organizations

9. Community Association Managers/Finns

10. Condominiums and Cooperatives

11. Dance Studios

12. Employee Leasing Companies

13. Hair Braiders

14. Hair Wrappers

15. Health Studios

16. Home Inspectors

17. Interior Designers

18. Intrastate Movers

19. Landscape Architects

20. Manicurists

21. Mobile Home Lots

22. Mold Related Services

23. Motor Vehicle Repair Shops

24. Professional Geology

25. Professional Surveyors and Mappers

26. Rooming Houses

27. Sellers ofTravel

28. Specialty Salons (Manicurists, Pedicurists, Nail Extensions)

29. Talent Agents

30. Telemarketing

31. Timeshares

32. Yacht and Ship Brokers

33. Television Tube Labeling (HB 4013 by Eisnaugle-Reported Favorably by BCA

Subcommittee on 2/8/11)

34. Contract Commissions (HB 4023 by Plakon- Reported Favorably by BCA

Subcommittee on 2/8/11)

35. Water Vending Machines (HB 4009 by Workman- Reported Favorably by BCA

Subcommittee on 2/8/11)

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.