Tag: Real Estate

Not Enough Bullets

In the midst of rising Covid-19 cases, and an explosion of evictions, the CEO of Blackstone is crowing about jacking up rents across the country

Getting Wall Street and hedge funds out of real estate should to be a priority of the Biden and the Democratic Party.

It won’t be a priority, but it should be:

The world’s largest private equity firm has bankrolled campaigns against rent control and been accused by the United Nations of fueling a global housing crisis. Now, as millions are threatened with eviction during the pandemic, Blackstone’s top executive is openly bragging that the firm is making huge profits off of rent increases.

At the Goldman Sachs’ Financial Services Conference on December 9, Blackstone’s billionaire CEO Stephen Schwartzman boasted that after the 2008 financial crisis, his firm was able to cash in on the mortgage crisis. At the time, the company was able to buy up foreclosed homes and convert them into rental properties subsequently plagued by accusations of dilapidation and excessive fees — all while it received a big financial boost from the government. 

Schwartzman, a top Republican donor and close ally of President Trump, indicated his firm is positioning itself for a similar jackpot.

“You always have winners and losers — Blackstone was a huge winner coming out of the global financial crisis and I think something similar is going to happen,” he said.

Noting that about half of his private equity firm’s revenues are now from real estate, Schwarzman added: “We’re the largest owner of real estate in the private world. And that asset class has boomed with huge increases in rents, almost no occupancies, [and] rent collections from almost everyone.”


Blackstone has also been evicting residents during the pandemic, according to court filings compiled by the Private Equity Stakeholder Project. And Blackstone has faced a legal showdown with New York tenants at one of the city’s largest rental complexes, which it owns. There, the company has been trying to exempt thousands of units from rent regulation laws. The company has reportedly even kept Manhattan units empty rather than face rent control regulations.

During the Goldman Sachs conference, Schwarzman seemed to insinuate that his firm may buy up even more residential real estate to try to squeeze even more revenue out of renters in the pandemic-ravaged economy.

Wall Street is the enemy of a good and just society, and it should be treated as such.


Airbnb went to the Canadian government looking for Covid aid. The Canadian government made moves to end Airbnb’s tax evasion instead.

For the uninitiated, this is called, “Good government,” and we need to see more of this:

It’s about to get a lot more expensive to stay at short-term rentals in Canada as Ottawa announced a new tax on Airbnb and other short-term accommodation platforms.

“In order to ensure that the GST/HST applies consistently and effectively with respect to supplies of short-term accommodation in Canada facilitated by platforms, the Government proposes to apply the GST/HST on all supplies of short-term accommodation in Canada facilitated through a digital platform,” according to the federal government’s fiscal update released on Monday by Finance Minister Chrystia Freeland[1].

Platforms themselves will now be required to collect and remit those taxes in cases where property owners fail to do so.

“In these circumstances, the accommodation platform operator would be deemed to be the supplier of the short-term accommodation,” the update reads. “This approach recognizes their necessary and fundamental role in making these supplies, and limits administrative and compliance costs for the parties involved.”

One reason that short-term rentals have been cheaper than hotels is because hotels had to collect and pay sales tax while Airbnb didn’t.

Provinces or British Columbia, Quebec and Saskatchewan already apply a sales tax on Airbnb accommodation.


The tax will come as a major blow to Airbnb, who had asked for the government to bail out the platform’s hosts in April.

The Parliamentary Secretary for Housing Adam Vaughan dismissed that request with one word: “No”.


Support Your Local Police

Over at Mother Jones, they tell the story of  a police officer who resigned rather than act as a mercenary for real estate developers who wanted to expel minorities from a neighborhood:

Three years in, I had basically arrived—I had been transferred to the day shift. It was the premier shift. You wanted to get the day shift because those are the best hours, good days off.

On my beat, they started telling me: “We really want you to start policing this section of Boulevard and Ponce de Leon Avenue, basically the Bedford Pines Apartments. We think there are dope boys in there. We think there’s a lot of illegal activity happening and we want to really focus there. So we’re gonna put up signs that say you can’t park on the street. I want you to go and write tickets on every single car that’s on the street and I want you to get those cars out of there; if they don’t move, tow ’em. I want you to start running checks on everybody standing on the street; if they have got warrants, I want you to lock ’em up.”

It became this very aggressive policing strategy in the Bedford Pines. Which was strange. Because it was extremely rare for them to tell you to do anything. It’s unusual for them to give you very specific directions, and then for them to be very serious about it and follow up—I’d have supervisors show up and say, “Hey I drove by, there were some cars parked out there, did you ticket them?”

It made me very curious. So on my own time—I live in Atlanta, I live in the zone I policed, which is super rare—I drove over there and had a conversation with some people. I was like: “Hey, this is what I’m being asked to do. Why do you think that is? What’s going on?”

A homeowner in the area was very frank with me. He said the guys who own Bedford Pines got their tax bill last year, and their taxes were assessed based on all the gentrification that’s happening in the area. And so they wanted to move everybody out of these apartments and knock ’em down and rebuild these nice expensive apartments and the government said no. And so then they said, “Well, that’s ok, we’ll just increase the rent.” They tried to increase the rent and the Section 8 guys came back out and said, “No, you can’t do that either.”

The only way you can evict or do anything like that is if the person who owns the apartment is convicted of a felony. So the Bedford Pines guys just went to the police department and said: “We want you to police in here, and we’re going to give you a section of Bedford Pines to actually have office space. And I want you to lock up as many people as possible so we can make these apartments vacant and we can knock ’em down.”

I go to my supervisors: Is this what the case is? And they looked at me like, what are you, stupid? Of course, why else would we be doing this?


There was something about that that made me think now, when I clock into work, I’m not doing any good. I’m actually doing harm.


It dawned on me that the entire system, the entire thing, was just a sh%$ty mafia system. If you tried to do a good job and say, “I’m going to be a good cop, and I’m going to obey commands,” they would abandon you, charge you, leave you behind, and not even think twice. If you didn’t obey the rules, then they were gonna charge you for that. And if you tried to remain quiet and do your job, you are going to be a piece of modern-day redlining that way, too. There was no way that I could exist and feel good about it. And because I didn’t have to—and that’s the privilege part—I just decided not to.

When I told the department I was quitting, they said, “Good for you. If I could quit, I would quit.” My supervisor literally said: “Can we get together after work and you tell me what else I can do? I don’t know what else to do and I cannot stomach being here.”

The rest of the story is that when he quit, someone in the department swore out false allegations of child and pet abuse to harass him.

It is all, “Just a sh%$ty mafia system.”

Stopped Clock Again

Trump really does not give a sh%$ about people at risk of eviction, but he does have a very real low cunning regarding politics, and his order to use the CDC authority to prevent evictions is a smart move politically.

It’s not going to be renewed, because it expires after the election is over, and then, why bother?.

Still, it shows that he’s doing something while Congress is on vacation:

The Trump administration Tuesday announced a four-month halt on eviction proceedings against cash-strapped renters, invoking federal public health laws out of concern that a national homelessness crisis could worsen the country’s coronavirus outbreak.

The new moratorium seeks to cover families experiencing financial hardship as a result of the pandemic, aiming to help as many as 40 million Americans who are already struggling to pay their monthly housing costs in the midst of the worst economic crisis since the Great Depression, according to Treasury Secretary Steven Mnuchin, who referenced that an action was imminent earlier in the day.

The policy comes roughly a month after President Trump signed an executive order tasking the U.S. government, including the Centers for Disease Control and Prevention, with exploring ways to protect renters as talks broke down on Capitol Hill over a new round of coronavirus relief. Brian Morgenstern, a spokesman for the White House, said the goal has been to ensure that families “struggling to pay rent due to the coronavirus will not have to worry about being evicted and risk the further spreading of, or exposure to, the disease.”

Doing the right thing poorly and for the wrong reasons.

Only in America

I came across two stories within minutes of each other, the first reported that FHA mortgage delinquencies have hit record levels, and the second story reveals that home builder confidence in the US has hit a record high

This is a recipe for disaster:

Federal Housing Administration mortgages — the affordable path to homeownership for many first-time buyers, minorities and low-income Americans — now have the highest delinquency rate in at least four decades.

The share of late FHA loans rose to almost 16% in the second quarter, up from about 9.7% in the previous three months and the highest level in records dating back to 1979, the Mortgage Bankers Association said Monday. The delinquency rate for conventional loans, by comparison, was 6.7%.

Millions of Americans stopped paying their mortgages after losing jobs in the coronavirus crisis. Those on the lower end of the income scale are most likely to have FHA loans, which allow borrowers with shaky credit to buy homes with small down payments.

For now, most of them are protected from foreclosure by the federal forbearance program, in which borrowers with pandemic-related hardships can delay payments for as much as a year without penalty. As of Aug. 9, about 3.6 million homeowners were in forbearance, representing 7.2% of loans, the MBA said in a separate report. The share has decreased for nine straight weeks.

Note that even though interest rates are low, Fannie Mae and Freddie Mac have implemented a
0.5-percentage-point “adverse market” fee to account for the increase risk of default, but home builders are confident.

My guess is that they are expecting a taxpayer bailout of some sort:

U.S. home builder confidence rose for a third straight month in August to match its highest level ever as record-low interest rates spur buyer traffic, data released on Monday showed in the latest indication the housing market is a rare bright spot in the economic crisis triggered by the coronavirus pandemic.


The good folks at WeWork are predicting that they will be profitable by 2021.

Given the fact that they no longer have a nearly unlimited access to capital, and that there are already dozens, of companies providing exactly the same service, and they think that somehow or other they are going to be fabulously profitable.

They are just looking for their next bunch of marks to fleece:

WeWork is on track to have positive cash flow in 2021, a year ahead of schedule, after it cut its workforce by more than 8,000 people, renegotiated leases and sold off assets, its executive chairman said.

Marcelo Claure said in an interview that the SoftBank-backed office space provider had seen strong demand for its flexible work spaces since the start of the coronavirus pandemic.

In February, Mr Claure set a target of reaching operating profitability by the end of next year and he said WeWork remains on track to meet it.

The New York-based company, which aborted its hotly anticipated initial public offering last year, has moved aggressively to reduce its cash burn and shed costs. It has slashed its workforce from a high of 14,000 last year to 5,600 people, a figure that has not been previously disclosed.

“Everybody thought WeWork was mission impossible. [That we had] zero chance. And now, a year from now, you are going to see WeWork to basically be a profitable venture with an incredible diversity of assets,” said Mr Claure.

Seriously, why haven’t there been prosecutions over that sh%$?

This is a Chicken Egg Thing

It turns out that black home owners are assessed significantly higher property taxes than white home owners.

Obviously, racism figures prominently in this state of affairs, but the obvious question that is raised is whether this is an artifact of the communities in which they live, or does it effect people of color regardless of whether they live in largely segregated communities.

It turns out that it’s a bit of both:

We decompose this finding into two components. We show that slightly more than half of the assessment gap can be explained by between-neighborhood variation. Residential sorting by race in the U.S. means that the average black or Hispanic resident faces a different set of local attributes than a white resident does. Market prices appear to be substantially more sensitive to a wide range of observable neighborhood characteristics than assessed valuations. We use hedonic regressions to show that market prices and assessed values align well on home-level attributes, but diverge on tract-level characteristics. This mismatch, along with residential segregation patterns, generates 6–7 percentage points of the total tax burden inequality.

We show that the remaining 5–6 percentage points of inequality persists even within very small geography. We hypothesize that the main channel for this effect is racial differ- entials in property tax appeals. We use administrative data from Cook County, the second largest county in the US, to demonstrate that such racial differentials can exist: in Cook County, minority residents are 1% less likely to appeal; are 2% less likely to win an ap- peal; and conditional on success, receive a 2–3% smaller reduction. We then exploit racial changes in ownership around property transactions to test for racial differentials in assessment trajectories, and find patterns consistent with an appeals mechanism in the national data.

There are communities that target minorities in all sorts of nefarious ways, (Ferguson, MO) for revenue, AND individual black homeowners are simply charged more, and when they appeal property tax assessments they more likely to be denied.

This Is Going to Be Ugly

It now appears that office rents in Manhattan are set to fall by more than a quarter.

Considering the leverage of most developers, and the relatively short term of real estate loans, they typically have to be refinanced every 5 years, we are looking at a huge number of bad loans popping up in the not too distant future:

Manhattan’s office rents are likely to plummet to the lowest level since 2012 if the U.S. economy doesn’t recover quickly from the pandemic.

Asking rents could decline 26% to about $62.47 a square foot (roughly $672 per square meter) in a prolonged recession, according to a report from Savills. Rents haven’t fallen to that level since 2012, the real estate services firm said.

Savills’ research used indicators that it says are correlated to rental rates, including gross domestic product, unemployment and office vacancies in Manhattan.

Also, there is going to be a f%$# load of work from home which is likely to permanently depress office demand, because literally hundreds of thousands employers have discovered that you don’t have to have someone in the office 5 days a week. and that it saves them a fair chunk of change.

What Animal is Known for Leaving a Sinking Ship?

Well, the rats are bailing out in San Francisco, as the wealthy look to move out of the city now that they have made it into a hellscape of privilege:

Amid the depths of a global pandemic and financial downturn, the demand for real estate is unexpectedly rocketing in wealthy regions outside San Francisco, reports Bloomberg. Agents say that demand is soaring in affluent areas around the Bay Area such as Napa, Marin and further afield in Carmel, as people who have the means look to get away from the city. Meanwhile, the market in San Francisco and Alameda County is still well below where it was last year.

Elsewhere, Lake Tahoe has also seen a surge in real estate interest. The prospect of living out of the city on an alpine lake while maintaining a career is appealing for a new generation of young buyers, as many tech companies have signaled that remote work may be the new norm for a long time.

“I’ve never seen the demand higher for Marin County real estate than when COVID-19 hit,” Sotheby’s Josh Burns told Bloomberg this week, as real estate agents see a surprising uptick in wealthy buyers leaving San Francisco.


Meanwhile, the rental market in San Francisco has dropped significantly, with rates for one-bedroom apartments in the city dropping by 9.2% since June 2019, and hitting a three-year low.

However, buying a new home in an isolated haven in a nearby bucolic county is not an option for lower-income San Francisco residents, and some believe the trend is only exacerbating the wealth divide.

“This is an example of another way the most advantaged, the most affluent have isolated themselves from this latest crisis,” Patrick Sharkey, a sociology professor at Princeton University, told Bloomberg. “It’s a very small segment of the population that has another home that they can go take off to.”

The wealthy have made San Francisco unlivable, and not that it is, they are moving on leaving devastation in their wake.

The wealthy are to community as my cats are to their litter box.

Here We Go Again

This is what took down the markets in 2008-09, and it’s not surprising that they are doing this again, since Barack Obama and Eric “Place” Holder, steadfastly refused to prosecute.

No consequences, so they went back to ripping of the rest of us:

Among the toxic contributors to the financial crisis of 2008, few caused as much havoc as mortgages with dodgy numbers and inflated values. Huge quantities of them were assembled into securities that crashed and burned, damaging homeowners and investors alike. Afterward, reforms were promised. Never again, regulators vowed, would real estate financiers be able to fudge numbers and threaten the entire economy.

Twelve years later, there’s evidence something similar is happening again.

Some of the world’s biggest banks — including Wells Fargo and Deutsche Bank — as well as other lenders have engaged in a systematic fraud that allowed them to award borrowers bigger loans than were supported by their true financials, according to a previously unreported whistleblower complaint submitted to the Securities and Exchange Commission last year.

Whereas the fraud during the last crisis was in residential mortgages, the complaint claims this time it’s happening in commercial properties like office buildings, apartment complexes and retail centers. The complaint focuses on the loans that are gathered into pools whose worth can exceed $1 billion and turned into bonds sold to investors, known as CMBS (for commercial mortgage-backed securities).

Lenders and securities issuers have regularly altered financial data for commercial properties “without justification,” the complaint asserts, in ways that make the properties appear more valuable, and borrowers more creditworthy, than they actually are. As a result, it alleges, borrowers have qualified for commercial loans they normally would not have, with the investors who bought securities birthed from those loans none the wiser.

ProPublica closely examined six loans that were part of CMBS in recent years to see if their data resembles the pattern described by the whistleblower. What we found matched the allegations: The historical profits reported for some buildings were listed as much as 30% higher than the profits previously reported for the same buildings and same years when the property was part of an earlier CMBS. As a rough analogy, imagine a homeowner having stated in a mortgage application that his 2017 income was $100,000 only to claim during a later refinancing that his 2017 income was $130,000 — without acknowledging or explaining the change.

It’s “highly questionable” to alter past profits with no apparent explanation, said John Coffee, a professor at Columbia Law School and an expert in securities regulation. “I don’t understand why you can do that.”


The complaint suggests widespread efforts to make adjustments. Some expenses were erased from the ledger, for example, when a new loan was issued. Most changes were small; but a minor increase in profits can lead to approval for a significantly higher mortgage.

The result: Many properties may have borrowed more than they could afford to pay back — even before the pandemic rocked their businesses — making a CMBS crash both more likely and more damaging. “It’s a higher cliff from which they are falling,” Flynn said. “So the loss severity is going to be greater and the probability of default is going to be greater.”


After lobbying by commercial real estate organizations and advocacy by real estate investor and Trump ally Tom Barrack — who warned of a looming commercial mortgage crash — the Federal Reserve pledged in early April to prop up CMBS by loaning money to investors and letting them use their CMBS as collateral. The goal is to stabilize the market at a time when investors may be tempted to dump their securities, and also to support banks in issuing new bonds. (Barrack’s company, Colony Capital, has since defaulted on $3.2 billion in debt backed by hotel and health care properties, according to the Financial Times.)


The notion that profit figures for some buildings are pumped up is surprising, said Kevin Riordan, a finance professor at Montclair State University. It raises questions about whether the proper disclosures are being made.

Investors don’t comb through financial statements, added Riordan, who used to manage the CMBS portfolio for retirement fund giant TIAA-CREF. Instead, he said, they rely on summaries from investment banks and the credit ratings agencies that analyze the securities. To make wise decisions, investors’ information “out of the gate has to be pretty close to being right,” he said. “Otherwise you’re dealing with garbage. Garbage in, garbage out.”

Once again, they are robbing us blind, and the response of the powers that be will be to bail them out.

To quote the late Paul Volker, “The only useful thing banks have invented in the last 20 years is the ATM.”

A Well Deserved Comeuppance

One of the results of Airbnb is that there have been a whole bunch of people who have overextended to acquite properties for short term rentals, either by purchasing them, or by renting long term and subleasing short term for a premium.

This has had the effect of driving the costs of rentals up. (See here)

The pandemic lock-down is wiping out the people speculating on properties as pricey short term rentals:

For years, Cheryl Dopp considered the ding on her phone from a new Airbnb Inc. booking to be the sound of what she called “magical money.” A property she rented out in Jersey City, N.J., on Airbnb could gross more than $8,000 a month, she said, double what long-term tenants would pay.

Now, Ms. Dopp associates the dings with cancellations and financial misery. The 54-year-old information-technology contractor said she had about $10,000 in bookings evaporate overnight in March. She has $22,000 in monthly expenses for a largely Airbnb portfolio, she said, that included another Jersey City home and a house in Miami.

In her mind, the promise of more rental income offset the growing debt, she said. “I made a bargain with the devil.”

Ms. Dopp is part of an upper-crust dimension of the gig economy: property owners and speculators who bought or leased real estate in pursuit of Airbnb profits. Airbnb spawned a cottage industry of homeowners running their own property empires, turning the startup into a hotelier without any hotels.


In Nashville, Tenn., which grants permits to hosts, about a dozen of the city’s 3,600 nonowner-occupied listings—which include Airbnb properties—surfaced in the first days of April as advertisements for one-year leases on Zillow or Craigslist, according to Host Compliance LLC, a software provider tracking permits for the city. City leaders said they feared more would follow.

One of the apartments is in City View, a development with a swimming pool and rooftop views of downtown. When City View was completed in 2015, councilman Freddie O’Connell, who represents the district and has worked to rein in short-term rentals, hoped it would lure young professionals and families and help ease the city’s housing shortage. Instead, he said, it became a haven for short-term rentals.

Airbnb thought that they would help people rent out spare rooms or basement apartments, and instead it has become a vehicle for unproductive real estate arbitrage, because everything in the United States becomes a vehicle for unproductive arbitrage.

Hopefully, the pandemic, and the collapse of Airbnb, will result in a reduction in long term rents that have priced people out of housing.

Human Sacrifice, Dogs and Cats Living Together, Mass Hysteria

This is a scary

We now have the first GDP numbers for the first quarter of 2020, and it is down 4.8%.

When one considers the trend of 2% annualized, and the fact that the shutdowns, and hence the economic contraction, did not begin until March, it means that the month of March fell at something approaching a 60% annual rate.

Obviously, this won’t continue at this rate, but predictions are looking at a 30% contraction:

The longest economic expansion in US history officially came to an end on Wednesday when the commerce department announced the economy shrank 4.8% in the first three months of the year.

The economic slump, the steepest since the last recession in 2008, is just an early indicator of how severely the coronavirus pandemic has affected the US economy.

Much of the US economy shut down in March in an effort to contain the virus, triggering 26 million people to file for unemployment benefits and wiping out a decade of jobs gains, at the end of the first quarter. The next set of figures from the commerce department will more accurately reflect the true scale of its impact.

Kevin Hassett, senior economic adviser to the White House, has predicted gross domestic product (GDP) – the widest measure of the economy – could fall at an annualized rate of 30% in the next quarter. Goldman Sachs expects a 15% unemployment rate in the US by mid-year, up from 4.4% at present.

The fall is the sharpest quarterly decline in GDP since the end of 2008 when the economy contracted by an annualized rate of 8.4%. But on current forecasts the drop-off could soon rival the economic collapse of the Great Depression. In 1932 the US economy shrank 13% over the year.

 When one considers that pending home sales fell 25% month over month in March, this is going to get a LOT uglier before things turn up.

Also, with an additional 28 million people out of work, and a strong recovery, say 500K growth in non farm payrolls a month, something that has happened in only 15 months over the past 60 years, it would still take over a year for complete recovery.

Proof that AirBnB is Destroying Cities

In tourism-heavy cities (I used Nashville, Honolulu, New Orleans, and Savannah) the rental market is exploding, as AirBnB owners are suddenly forced to put their houses on the market.

This surge in supply is going to dramatically cut the rates of monthly rentals. pic.twitter.com/Zyh3AYouyH

— Shane Morris (@IamShaneMorris) March 22, 2020

For years, AirBnB lobbyists and “advocates of the free market” have argued that AirBnB has a negligible impact on the prices of rentals, arguing that they were two totally different commodities.

Now we’re seeing they were totally full of shit.

— Shane Morris (@IamShaneMorris) March 22, 2020

“BuT wHeRe WiLl peOplE sTaY wIThoUt aLL tHeSe sHoRT tErm RenTAlS?”

Hotels. That’s the answer. People will stay in hotels.

The coronavirus has put on full display, these houses and condos were ALWAYS reducing rental supply, and making housing less affordable.

— Shane Morris (@IamShaneMorris) March 22, 2020

Shane Morris did a drill down on Zillow data for furnished rentals, and found that there has been an explosion of long term rentals now that AirBnB has cratered. (Read the whole Twitter thread)

This is the real world experiment which shows that, notwithstanding the

It turns out that the service does take huge amounts of residential rental properties out of the market by moving them to short term rentals (hotels).

To those who argue that hotels take up space too, it should be noted that for a given area, a hotel will house tens, if not hundreds, of times more guests than an AirBnB listing.

People are buying converting residential rentals to hotels, or in an even more destabilizing development, long term renting properties to secretly sublease as AirBnB’s, which means that when there is a downturn, there are suddenly dozens of landlords who are about to discover that their “tenants” are actually speculators who are going to walk away from their leases.  (And I agrew tiht hte poster that, “The sudden collapse of AirBNB has been, legitimately, the funniest f%$#ing thing I’ve watched play out this past month.”

This will not end well, but it is the inevitable result of using regulatory arbitrage to facilitate leverage, speculation, and looting.

As I have noted before, the “sharing economy” has turned out to be little more than sucking the marrow out of society.

Authorities need to stop buying into the whole “internet disruption” bullsh%$.

All it does is enrich a few at the expense of the bulk of society.

Bernie’s Houses

One of the criticisms of Bernie Sanders is that he has 3 homes, his primary residence, his DC residence, and a vacation home, and that this is excessive for a self-proclaimed socialist.

The three houses combined have a value that is a rounding error for the homes of Obama, Clinton, or Biden, as this TikTok video shows:

Here are the homes of #obama #HillaryClinton and #BernieSanders . One is not like the others… Use this for those pesky rumors. pic.twitter.com/GRDEiLuEJB

— Biden's Hairy Leg 🦵🌹 (@BernieWon2016) January 4, 2020

Governor Ratf%$#

I am not a fan of Maryland Governor Larry Hogan.

He is implacably opposed to mass transit, and has made his political career on deliberately targeting minorities.

Well, now we learn that there is a corrupt method to his madness. The money hat he has diverted from mass transit, has gone to build roads going to his real estate holdings.

It appears that Donald Trump’s self dealing in office is not a norm that he has subverted.

It’s just what our corrupt political elites do:

For years, Never Trump Republicans have courted Larry Hogan to run for president. It’s easy to see why. He’s won two gubernatorial elections in Maryland, where Democrats outnumber Republicans two to one; he’s currently one of the most popular governors in America; and he’s widely viewed as a moderate who’s willing to reach across the aisle. The late-night talk-show host Seth Meyers recently described him as “a Republican who believes in climate change.” In June, he’s publishing a memoir—a move that suggests he’s laying the groundwork for a 2024 presidential bid. Last spring, he launched a national advocacy group, An America United, designed to break partisan gridlock and “bring people together to advance bold, common-sense solutions for all Americans.” Simply put, everything about Larry Hogan’s public image would lead you to believe he’s the opposite of Donald Trump.

But Hogan, it turns out, has more in common with Trump than his reputation suggests.

Both are real-estate executives who have refused to relinquish their private businesses while in office. Just as Trump maintained his ownership of the Trump Organization when he became president, Hogan maintained ownership of HOGAN, a multipurpose real-estate brokerage firm, when he became governor. Both have left close family members in charge of their businesses—Trump with his children; Hogan with his brother, Timothy—and created arrangements that allow them to be apprised of the company’s dealings. In other words, they have set up situations in which they can use their powerful government positions to increase their private profits.


Hogan has advanced a number of major state transportation projects that are near properties his company owns, a development that can boost the value of those properties. Before canceling the Red Line, he approved construction of an interchange down the road from a parcel of land his company controlled. Later, he approved millions of dollars in road and sidewalk improvements near property he had bought approximately two years earlier and was turning into a housing development.

Maryland law says that an official may not partake in a decision if the official or a qualifying relative—defined as a parent, spouse, child, or sibling—has an economic interest in the matter and the official or employee knows of the interest. These decisions “certainly seem to implicate the statute,” said Virginia Canter, the chief ethics counsel for Citizens for Responsibility and Ethics in Washington and a former ethics adviser for the International Monetary Fund. “It looks like there’s credible evidence of a violation.”


But Hogan has not revealed payments he has received from specific real-estate transactions while in office. “He’s getting paid by developers all across the state—who he’s in charge of regulating in one way or another—and the public has no idea who they are,” said Democrat John Willis, a former Maryland secretary of state and now a University of Baltimore politics professor and a historian of Maryland politics and government.


In February 2018, Maryland Matters, a state-based politics and policy website, reported that Hogan held ownership in a company called Brandywine Crossing Realty Partners LLC. The company was chartered on March 9, 2015, and it became a controlling partner for a parcel of land behind the Brandywine Crossing Shopping Center in Prince George’s County. The land was just down the road from a major state transportation project: a new highway interchange.


Multiple legislators said they were not informed of the governor’s nearby real-estate interests before voting on his transportation budget. “I certainly had none of this information when working on the budget committees or in discussions,” said Bill Ferguson, a Democratic Maryland state senator, when we spoke in September. (In October, Ferguson was selected to become the Maryland Senate’s next president.) “Had I known this information, I think there would have been much more targeted and purposeful questions about the necessity of projects that appear to have a financial benefit to the governor.” (Hogan listed his holdings in real-estate LLCs in his submission to the Maryland State Ethics Commission, filed 17 days after the legislature approved his first budget, but he did not identify specific properties, let alone the dates of acquisition.)


Experts I spoke with who reviewed Maryland’s ethics laws were alarmed by the Hogan administration’s decisions around Brandywine and other properties. Richard Painter, a professor of corporate law at the University of Minnesota Law School and a former chief ethics lawyer for President George W. Bush, said that Hogan should have been prohibited from participating in the decision. “The [ethics law] language suggests that he should recuse because the official or employee or qualifying relative—he himself—has an interest in the matter and he knows of the interest,” Painter told me.


Brandywine isn’t the only place where Hogan has advanced construction projects near his existing property interests. On November 12, 2014, just eight days after his election, Hogan’s company bought a parcel of land from Maryland’s State Highway Administration in Severn, Maryland, for $400,000. The sale was conducted through a public auction, and only one bid was made: by Timothy Hogan. In November 2014, HOGAN created a new LLC called the Villas at Severn Crest. Since Larry Hogan took office, the State Highway Administration has begun a number of transportation projects that could boost the value of that property, including intersection improvements and road resurfacing less than a mile away, which started in 2018.


But Hogan’s election came with an immediate complication: What would he do with his real-estate business? Maryland ethics law bans officials or employees from making decisions on matters in which they have an economic interest. But the law states that this prohibition does “not apply if participation is allowed as to officials and employees subject to the authority of the [Maryland State] Ethics Commission.” Hogan reached out to the ethics commission for advice.


In December 2015, Hogan entered into a trust agreement that he asserted would prevent conflicts of interest. On April 15, 2016, the trust was approved by the state ethics commission. Between Hogan’s inauguration and the trust agreement’s approval, the governor submitted two transportation budgets—including the one advancing the Brandywine interchange—and gained ownership of at least seven newly created real-estate LLCs. In other words, Hogan’s real-estate business was growing just as he was supposed to be separating himself from it.


But even after Hogan began talks with the ethics commission, there were signs that he had not made a clear break from his business. In February 2015, while serving as governor, Hogan himself announced a $3.4 million real-estate transaction in a press release issued by his private company. His administration began construction on projects near both the Villas at Severn Crest and the Riverfront at West Hyattsville after his trust went into place.


But Hogan’s trust is not blind. The ethics commission granted the governor a “financial-interest exemption,” which allows him to continue to own real-estate projects and to be apprised of his company’s business dealings, as well as how much money he’s making. In a letter to Lord, Hogan wrote that the arrangement “will not prevent me from requesting or receiving information about the status of the Hogan Companies . . . including the status of its current investments and, [sic] the identity of the investors and the locations of real property in which the Hogan Companies have an investment.”


But the trustees Hogan chose to manage his holdings are not just experts in the real-estate field—they are his previous business associates: Victor White, the chief operating officer of HOGAN; Jacob Ermer, the executive vice president of HOGAN; and David Weiss, a former broker at HOGAN. According to public records, all of them are Hogan campaign contributors. His brother, Timothy, is in charge of his company.

As governor, Hogan has maintained a close relationship with all four of these individuals. He had at least eight meetings with them between 2015 and 2018, according to his meeting calendar, obtained by the Washington Monthly through a Public Information Act request.


In its specific guidance to Hogan, the commission stated that Hogan could, and should, identify “a specific person within the Governor’s Office to act in his place on any such matters that come to the Office while he continues to retain his financial interest in his businesses.” Yet when I asked Ricci, Hogan’s spokesperson, if the governor had ever recused himself from a decision in his transportation budget that could impact his properties, he was clear that Hogan had not. “The answer is no,” Ricci said. “The governor does not make decisions on individual projects, so he has no decisions to recuse himself from.”


But Hogan has been, at best, silent over the president’s alleged violations of the Emoluments Clause. In fact, in 2018, he withheld $1 million from the Maryland attorney general’s office to stop a series of lawsuits against Trump, the most prominent of which alleged that the president was using his position to bolster his real-estate empire’s profits.

The governor justified his decision on fiscal grounds. “The administration takes its responsibility to find efficiency and savings in the state budget extremely seriously,” Doug Mayer, a spokesperson for Hogan at the time, told The Baltimore Sun. “This is a perfect example of that.”

Have I mentioned that Governor ratf%$# is a corrupt racist SOB who has no shame or decency?

Trump Abides

This is like the least surprising thing ever:

The Trump campaign is spending big money at the president’s properties, according to a review of Federal Election Commission data. Yet the records show that Donald Trump still has not donated any of his own funds to the campaign. That means America’s billionaire-in-chief has shifted $1.7 million from campaign donors into his private business.

Forbes first reported on this arrangement one year ago, when documents showed that Trump’s companies had taken in $1.1 million of campaign-donor money. By the end of 2018, that figure had climbed to $1.3 million. Subsequent disclosures show that more than $450,000 flowed into the Trump empire from January to September of this year.

The biggest beneficiary has been Trump Tower Commercial LLC, which controls the president’s famous Manhattan skyscraper. Trump still owns the entity, which has accepted $1.2 million in rent from the reelection effort and another $225,000 from the Republican National Committee. Since Trump became president, an estimated 1.6% of the tower’s revenue has come from either the RNC or the reelection campaign. The majority of Trump Tower’s income comes from Gucci, which leases 49,000 square feet of prime retail space on Fifth Avenue for roughly $21 million a year.

In the basement of Trump Tower, a much smaller space now serves as an official campaign store, selling hats, T-shirts, signs and other memorabilia. The rent payments for that space could be flowing through an entity called Trump Restaurants LLC, which has taken in $87,000 of rent since Trump became president. On a price-per-square-foot basis, the campaign may be paying more for that basement space than Gucci is paying for its street-level location upstairs. Smaller spaces tend to command higher rates, but the payments have nonetheless raised eyebrows.

This is why the impeachment investigation needs to go a lot deeper than it has.

There is way too much sleaze to uncover in just a few weeks of hearings.

Pity the Persecuted Billionaires

Pied-a-Terre is a tax on non primary residences, and in this case, and it would apply to purchases greater than $5 million.

Needless to say, real estate developers are completely losing their sh%$ over this:

New York’s pied-a-terre tax, left for dead earlier this year, is back on the table and the real estate industry is gearing up for a fight.

Fresh off imposing an increased “mansion tax” and eliminating privacy protections favored by well-heeled buyers, state lawmakers are reviving efforts to tax second-home purchases of $5 million or more.

There’s a growing desire among Democrats to address wealth inequality, and for them, the idea of slapping an annual tax on the uber rich who scoop up Manhattan apartments is long overdue. But for William Zeckendorf, whose firm built some of the city’s most expensive condo towers, the proposal is the wrong idea at the wrong time.

He and other developers — and the lawyers, appraisers and brokers who cater to millionaire clients — argue that going after pied-a-terre buyers would further dent demand in the already struggling luxury real estate market. Thousands of new high-end condos are on their way, adding to a glut, and takers for them have all but disappeared. New rules that promote a political environment where buyers feel targeted would push even more of them away, Zeckendorf said.

Zeckendorf’s clients use city roads, bridges, and services, but they do not pay city income tax.

F%$# Zeckendorf, and f%$# his clients.

New mansion and transfer tax surcharges, which took effect July 1, will raise an estimated $365 million annually, dedicated to shoring up the city’s crumbling transportation system. But there are more public-spending needs, and it makes sense for people who can afford the most expensive apartments to help foot the tab, said State Senator Brad Hoylman, a Manhattan Democrat.

Hoylman has been trying to pass a pied-a-terre tax since the heady condo boom days of 2014, when high-end buyers from other countries thought nothing of sheltering their millions in the safe harbor of Manhattan apartments.

“They use our system of laws to protect their international investment in real estate, and I think there should be a premium on that,” said Hoylman, who hasn’t yet released a revised version of the bill. “This is a way to capture that purchasing power and use it for some common good.”


If this can help stop New York from becoming London, where whole blocks are full of mansions that are empty most of the year.

Looks like Foreign Money Laundering is Tapering Off

At least in the New York City apartment market, where prices are falling of a cliff:

It’s a tough time to be a seller in Manhattan’s most-expensive neighborhoods, where price declines for previously owned apartments are accelerating.

In Tribeca, resale prices fell 28% year-over-year, the most for any neighborhood, to a median of $2.25 million in the third quarter, according to property listings website StreetEasy. Values in both Greenwich Village and Chelsea dropped 15%. The Upper West Side and the area that includes Soho were each down 14%.

As listings pile up across the borough, owners are starting to sense that the surest way to a deal is to lower their expectations of a hefty profit.

“Things that are selling are selling for lower prices, and expensive things, overall, are not selling,” said Grant Long, senior economist at StreetEasy.

One of the reasons for this is that people who are looking to hide overseas ill-gotten gains are looking at London, rather than the Big Apple, because they believe that a post-Brexit UK will be desperate and so will look the other way over suspicious real estate transfers.

As an aside, it took about 50 years for us to forget the lessons of the Great Depression, but we are on the path to repeat the Great Recession of 2008 11 years later.

Not Enough Bullets………

The con man who managed to extract billions of dollars from supposedly sophisticated venture capitalists, WeWork’s Adam Neumann, after managing to loot hundreds of millions of dollars in his scam, will now be payed $1,700,000,000.00 to go away.

This guy should be in jail, not walking away with billions:

WeWork’s co-founder Adam Neumann is in line for a $1.7bn (£1.3bn) payout as investors seize control of the troubled office rentals empire he co-founded and thousands of employees wait to hear if they will lose their jobs.

Neumann, 40, used to describe WeWork as “largest physical social network in the world” and a company so important it would one day solve the problem of orphaned children.

Now his business – once the US’s most valuable private company – is in crisis. And the only winner appears to be Neumann, who is reportedly stepping back from the corporate crisis he created with a lucrative deal that will hand him $1bn from the sale of his shares plus a $185m “consultancy fee” and a $500m line of credit.

Under the terms of a rescue deal first reported by The Wall Street Journal, SoftBank, the Japanese investment firm that is WeWork’s largest shareholder, will now take control of the company.


The payout to Neumann comes as WeWork weighs up sacking about 2,000 people. The redundancies are on hold while WeWork refinances but are expected soon and have triggered widespread bitterness among WeWork’s 15,000 employees. Many had expected to become millionaires when the company floated but now face losing their jobs. WeWork did not immediately return calls for comment.

As near as I can figure out, VC’s see never going to be profitable unicorns going profit as a way to extract money from idiots further down the line, and they have run out of idiots.

Once bitten, twice shy, I guess.