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In a letter to a group of founders and shareholders, New York-based asset management firm Sculptor Capital Management said their request to inspect the company’s books and records pertaining to its acquisition by Rithm Capital was “improper” and motivated by founder Daniel Och’s “long-standing resentment” of being exited from the company.
Sculptor also said in the letter sent on Tuesday that Och and the other shareholders have requested millions of dollars in cash for legal expenses incurred during the process of being acquired by Rithm Capital. Och and shareholders also requested a prepayment related to a tax agreement tied to the company’s IPO in 2007.
Och, shareholders and Rithm Capital did not reply to requests for comment.
The letter from Sculptor is the latest chapter of a dispute between the asset management firm, Och and other shareholders since Rithm — the real estate investment trust that operates NewRez, Caliber and several other businesses —announced a deal to acquire Sculptor for $639 million in July. If regulators approve, it will bring Sculptor’s $34 billion in assets under management to Rithm.
“While ostensibly requesting information about the sales process described in the Company’s preliminary proxy statement, your Demand for books and records is set against historical context that makes clear that purpose is pretextual, and that the true purpose is the continuation of what the company views as Mr. Och’s well-publicized, years’ long smear campaign against the Company’s management,” the letter states.
Och, who founded Sculptor in 1994, stepped down as CEO in 2018. In 2016, an Africa-based subsidiary entered into an agreement with the Department of Justice (DOJ) to pay a criminal penalty of more than $213 million in connection with a bribery scheme involving officials in the Democratic Republic of Congo and Libya.
Och, who is still an active shareholder, and other former executives sued the firm in 2022 over CEO Jimmy Levin’s $145.8 million compensation.
Och, who was previously a mentor to Levin, now finds himself on the opposite side of a dispute with Levin in which the Rithm deal is a key issue.
On August 16, a group of shareholders, including Och, Harold Kelly, Richard Lyon, James O’Conner and Zoltan Varga, sent a letter to Sculptor’s special committee of the board of directors saying the deal with Rithm “substantially undervalues the company.”
They noted that on December 17, 2021, when “the Board of Directors approved the exorbitant compensation package” for Levin, the stock was trading at $20.02.
“Just over 18 months later, the Board now has approved a deal that would pay the public shareholders $11.15 per share, just a fraction of what the stock was once worth.”
In the letter, Och and the other shareholders said they were working with Rithm to see whether deal terms could be improved. Absent “material changes,” the group will “vigorously oppose this transaction,” they wrote.
On August 21, Sculptor replied in a proxy statement that it received multiple takeover bids higher than the Rithm offer, some valuing the company at more than $700 million. Sculptor did not accept these bids due to burdensome conditions, lack of secured financing, or, according to the company, because Och and other founding partners rejected its terms.
Och and other shareholders, in subsequent correspondence, demanded that Sculptor release books and records on August 22.
“The suggestion that there were other credible bids that provided greater value and certainty of closing, with or without current management, is distorted — no such bid exists,” Sculptor said in response to the request. “Nor does Rithm’s bid crystallize supposed losses from the adoption of Mr. Levin’s compensation package. Mr. Levin has also agreed to substantial reductions in his compensation to support a Rithm transaction.”
Sculptor said in its letter that Och and the other shareholders asked Rithm to agree to advance tens of millions of dollars as a prepayment at the favorable discount rate of the company’s Tax Receivable Agreement.
Och and shareholders also demanded Rithm pay an additional $5.5 million in cash for the group’s legal expenses supposedly incurred in connection with the company’s sales process.
“The transaction under discussion between the Och Group and Rithm would have included the option for a rollover in order to allow you to avoid recognizing significant taxable gain received in the transaction. Notably missing from those discussions were meaningful concessions by any of you for the benefit of public stockholders,” Sculptor states in its letter.
Source: housingwire.com
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David Holland: I started in the business in 2000 right out of college, for lack of a better thing to do. I started studying for the L stats for law school and realized I wasn’t cut out to be an attorney, so I got into the mortgage business, lived in my grandparents’ basement for almost … [Read more…]
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If you think this year has been slow in mortgage land, don’t ask what next year has in store.
A new forecast released by the Mortgage Bankers Association (MBA) this morning doesn’t paint a pretty picture for 2014.
In fact, the industry group sees residential loan origination volume falling 32% from 2013 to $1.2 trillion.
That compares to its upwardly revised estimate of $1.7 trillion for 2013, which is up from $1.6 trillion thanks to recently released HMDA data.
It’s Not for a Lack of Buyers
But don’t blame home purchase activity. Loans taken out to acquire a home are expected to increase nine percent next year.
While seemingly weak, it’s more an inventory issue than anything else. There are probably tons of people out there willing to buy homes, but availability continues to be a major roadblock.
This is partially because homeowners are holding on now and waiting for future gains before listing their properties, now that the worst has seemingly come and gone.
All that said, the MBA sees purchase originations rising to $723 billion in 2014 from $661 billion this year.
For 2015, they see marginal improvement, with purchases growing to $796 billion.
Refis to Take a Back Seat
As I’ve noted for a while now, refinance activity has been cooling and is expected to lose its stranglehold on the market in the very near future.
Unfortunately, most borrowers that could refinance their mortgages already did, which would explain all those recent bank layoffs.
And things are expected to slow down even more over the next couple years.
The MBA sees refinance activity dropping a hefty 57% to $463 billion in 2014 from $1.08 trillion this year.
In 2015, refi volume is slated to fall to $433 billion, meaning purchase loans will come somewhat close to doubling refinance activity.
As alluded to earlier, as home prices rise, home sales will increase because more sellers will have the required home equity to make the move.
There will also be a smaller share of investors and all-cash buyers, so purchase mortgages will get a boost that way as well.
Additionally, the higher home prices will be accompanied by higher loan-to-value ratios as buyers struggle to come in with large enough down payments to keep LTVs low.
That’s good news for private mortgage insurers, though the death of the 3% down mortgage will require that borrowers put down 5% or head over to the FHA for financing.
Mortgage Rates Still Expected to Hit 5% Next Year
We’ve heard it year after year, yet mortgage rates continue to defy the laws of gravity.
The MBA, like just pretty much everyone else, expects 30-year fixed mortgage rates to rise above 5% next year, and then to increase to around 5.3% by the end of 2015.
While this is still close to rock bottom, it would represent a near 1% increase above current rates, which have since pulled back thanks to continued MBS buying via the Fed.
As rates rise, refinances are obviously expected to slow, with home equity loans gaining market share as borrowers elect to keep their first mortgages intact.
HARP activity is projected to be weak in 2014 as well, with the MBA apparently coming to terms with the fact that those who haven’t taken advantage of the program thus far probably won’t ever do so.
However, they do see a small boost at the end of 2015 when the program finally comes to a close.
And perhaps the new cutoff date based on the loan closing will provide a little bump for HARP this year and early next year.
Sadly, the MBA doesn’t seem to believe in HARP 3, if this forecast is any indication.
Source: thetruthaboutmortgage.com
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The pile of lawsuits facing Gary Keller and the real estate firm he co-founded, Keller Williams, just got larger. Former KW CEO John Davis filed his second lawsuit against the firm on Wednesday in the Western District of Texas.
In the filings, which name Keller Williams, Keller, former KW president Josh Team, Business MAPS Ltd. and Business MAPS Management LLC as defendants, Davis alleges that the defendants inflated key profitability metrics including company sales and profits to convince individuals to purchase Keller Williams Regions and Market Centers.
According to the filing, after the franchisees signed a contract, the defendants then required franchisees to adopt KWRI’s present market cap, which is the fee agents pay their market centers. Davis alleges that these fees went to increasing technology fees and the purchase of “unneeded goods and services” from KWRI-owned and affiliated companies, such as MAPS training and coaching.
“Nothing in the individual franchise agreements gave Keller or KWRI the power to set market caps themselves for independently owned and operated Market Centers,” the complaint states. “Indeed, in recommending specific and universal Market Center cap amounts, Keller was overstepping the franchisee’s role in leading an independently owned and operated Market Center.”
In addition, Davis claims that franchisees were required to purchase Keller’s books.
After signing the franchise agreement, if a franchisee attempted to move away from the KW system, the lawsuit alleges that they were forced to sell their Region or Market Center, and that Keller and KWRI interfered with any attempt to sell the franchise for market value, forcing the Region or Market Center owners to sell their franchises to Keller or other KWRI members at “extremely depreciated prices.”
In total, the lawsuit makes two civil Racketeer Influenced and Corrupt Organizations (RICO) claims, one Sherman Act restraint upon commerce claim, one intentional fraud in the inducement claim and one breach of contract claim against the defendants.
“Through this scheme, KWRI itself and the other Defendants suffer no loss, and only gains, from the harm caused to the individual owners,” the filing states. “In total, Defendants’ scheme has caused franchisees to lose hundreds of millions of dollars in total. Unless stopped, Defendants will continue to subject franchisees to the same scheme for the purposes of substantial interest and profit.”
Davis is seeking a jury trial and damages worth millions of dollars.
This latest lawsuit comes just three months after a judge in Texas granted Keller’s motion to dismiss Davis’ appeal, ordering Davis to settle his $300 million fraud claim against KW, Keller and Team through arbitration.
Originally filed in the fall of 2022, Davis’ initial lawsuit was prompted by Davis’ desire to “restore his reputation and clear his good name” after sexual misconduct allegations against him surfaced in the spring of 2022.
According to the initial complaint, Davis resigned from his position at Keller Williams in January 2019 due to a disagreement with Keller over a business strategy that he felt would hurt the income generated by Keller Williams offices.
In response to his resignation, Davis alleged that Keller and Team smeared him and withheld Inga Dow’s accusations of sexual misconduct from him as he was negotiating the sale of his KW market center regions following his resignation. This resulted in tens of millions in financial losses, according to Davis.
“This is yet another attempt by John Davis to smear Keller Williams in the press under the guise of a lawsuit. Two federal courts previously directed him to bring his claims [to] arbitration,” Darryl Frost, a Keller Williams spokesperson, wrote in an email discussing Davis’ August 2023 lawsuit. “Mr. Davis has ignored those courts. We will continue to act professionally, follow the law, and aggressively defend these baseless claims.”
In March, Colleen and Bart Basinski, former Keller Williams Market Center owners in Illinois and Indiana, and partial owners of a third Market Center in Southern California, filed their own lawsuit against KW, Keller and other top brokerage executives, alleging that they faced constant pressure from Keller, Marc King, and co-defendants Dan Holt, who is the regional director of Keller William’s Mid America Region, and Colette Ching, the regional director of Southern California, to alter their business operations, despite parameters set up in their franchise agreement, and adhere to Keller’s plans to lower Market Center caps in 2020.
The Basinskis’ case is still open.
Source: housingwire.com
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Affordable starter homes for first-time buyers are in great demand this year, leading to shrinking inventories and a competitive market. That means that buyers’ options are limited. This leads to increased competition for those homes that are available, spurring bidding wars and pricing out entry-level buyers.
A recent analysis by Zillow found that there were 8.6 percent fewer homes on the market in January 2016 than a year ago. Sellers have more negotiating power in competitive cities, mostly in the West, where job markets are hot, and demand for housing is heavy.
Buyers competing in a tight market must be prepared. They should get pre-approved for a mortgage and know their maximum price before house shopping so they can make a competitive offer. They should also take another look at their must-have list and decide where they’re willing to compromise, if necessary.
Here are five surefire signs that you are facing a competitive market for buyers.
1. Short time on market.
The fastest and easiest way to tell if sales are hot in your local market is to measure how quickly properties in your price range are selling. You can get a sense of the demand by simply tracking listings on real estate web sites.
A more accurate method is to review “median days on market” data from your local multiple listing service. You may not be able to access this data yourself, but your real estate agent should be able to get it for you. Look at the monthly and the year to year trends for the Zip codes where you are looking. If houses are selling in three months, that is clearly a seller’s market; in two months or less, you are probably looking at a hot, competitive market.
Another measure of demand is called “months’ supply.” It represents the number of months for the current inventory available for sale at the current rate of demand. A months’ supply of six months is considered balanced; the smaller the months’ supply, the hotter the market.
2. Jumps in sales.
An easy way to take your market’s temperature is to compare the current monthly sales rate to one or two years previous. Sales vary seasonally, but not over 5 percent when compared to the same month a year earlier.
If you see sales jump 10 percent or more, your market is taking off, and inventories may not be keeping up with demand, which is going to make it competitive for buyers. Follow local data on Zip codes or neighborhoods available on real estate listing sites, or ask your agent for information on sales trends.
3. List-to-price ratio.
When homes start selling at prices higher than their listing prices, it is a sure bet you are in a competitive market. If the list-to-price ratio is above 100%, the home sold for more than the list price. If it is less than 100%, the home sold for less than the list price.
MLSs make this statistic available to their members on a monthly basis, so you can get the data from your agent. Some also release it publicly. Some real estate web sites report local list-to-price ratios.
4. Deadlines on offers.
When sellers start placing deadlines for offers on their listings, obviously they are expecting more than one bid and they see no reason to extend the selling period. When you see a listing with deadlines, prepare for battle if you want the house.
5. Cash offers.
Cash offers, as opposed to offers financed by mortgages, are very attractive to sellers because they do not have to take the chance that a buyer’s financing will fall through or that an appraisal will come in low, and the seller might be asked to lower the price to save the deal.
In lower tier price ranges, many cash offers come from investors who are planning to flip the house or convert it into a rental. An increase in cash offers are a sign that competition is stiff. MLSs compile data on cash sales in local communities and Zip codes and you can get the information from your agent.
Soaring sales, prices above list, days on the market below two months, months’ supply below four months, cut-off dates—these are signs that buyers will likely face multi-bid situations. Be ready to move fast with the best offer you can make and be patient if the right deal takes months to appear. Even so, never bid on a house you do not like—you might end up living in it for many years to come.
Source: totalmortgage.com
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To say 2013 has been a good year for real estate would be an understatement. A huge one…
Over the past 12 months, home prices have risen by double digits throughout much of the nation and most who listed their home during that time were met with a bidding war.
And often times these bidders were so motivated to buy that the sales price would far exceed the list price.
It’s as if today’s home buyer is willing to pay future prices just to get in, whether that’s because mortgage rates are super cheap, or simply a return of the bubble mentality.
In California, 49.5% of homes sold so far in 2013 went above asking price, which is nearly double the share seen in 2012 (25.9%), according to the 2013 Annual Housing Market Survey released by the California Association of Realtors.
If you go back to 2011, the share of homes sold above list was just 16.6%. In other words, housing took off from its bottom fast, and never looked back.
For the record, the long-term average share of homes sold above list has been 18% (over the past 20 years). So yes, real estate is hot in the Golden State and elsewhere.
In fact, some sizzling markets like Dallas and Denver are at new all-time highs. Who would have thought that just a year or two ago?
The scary part is the chart above shows a huge drop-off after such a stellar year, which makes me wonder if 2014 and beyond will be flat or even negative in some markets.
While there are stories of epic battles that pushed prices up more than $100,000, most homes that did sell above list in California this year only went for about 5% more.
72% of Home Sales Received Multiple Offers
The reason so many homes went for more than their asking price was because more than seven out of 10 received multiple offers.
And the reason most had multiple bids was due to a shortage of inventory, which continues to be an issue in desirable markets nationwide.
[Homeowners Are Waiting for Prices to Rise Before Listing Their Properties]
In fact, each sold home received an average of 5.7 offers, up from 4.2 offers in 2012 and 3.5 in 2011.
In 2012, only 57% of homes received multiple offers. At that time, prospective buyers still weren’t quite sure we had hit the bottom.
CAR noted that the share of homes receiving multiple bids was the highest in at least 15 years.
Breaking it down further, REOs and short sales saw the most competition, with 91% and 75% receiving more than one offer, respectively.
That compares to 71% of REOs and 66% of short sales a year earlier. About 70% of equity sales (those not underwater) involved multiple bids, up from 51% in 2012.
It’s Becoming a Renter Nation
While home sales are up, it’s not first-time home buyers or everyday Joes acquiring their dream homes.
Rather, it’s investors and overseas buyers snagging properties on the cheap and renting them out.
Per the survey, 19% of home sales went to investors in 2013, up from 16% last year and nearly triple the rate seen a decade ago.
Meanwhile, overseas buyers scooped up eight percent of all sales, up from 5.8% in 2012 and the third successive increase.
Sure, some plan to live in the homes, but nearly one-third plan to rent them out.
Overall, cash buyers (typically investors) accounted for more than a quarter of home sales in California, down slightly from a year ago, but triple the rate seen in 2001 and well above the 15.1% average seen since 1998.
So the composition of the housing market is changing quite a bit, despite the seemingly positive news. Investors are squeezing out traditional buyers, which will likely create a unique environment in coming years.
Source: thetruthaboutmortgage.com
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This again points to the fact that renting is here to stay and could, in the foreseeable future, take up a greater footprint. Currently about 44 million U.S. households, or about 36%, are renters.
A hedge against a downturn
And therein lies the opportunity: to assist with all types of housing needs, including rentals. Many real estate agents may shy away from working with landlords and renters. But incorporating this large market segment into their business models creates a hedge against a downturn in the sales market, particularly at a time when the average rent in the U.S. stands at $2,053, up from $1,580 four years ago.
This makes rentals even more appealing for agents as commissions are usually based on the rent price. Data shows that the estimated annual rental commission potential in the U.S. totals $30 billion when taking the total number of rentals, average rents, and commissions into consideration.
But rental commissions are only part of the story. Helping a landlord or renter can create loyalty and a lifelong client. Many renters will eventually move toward purchasing a house, considering that 95% still desire to purchase a home. Agents who work with rentals will be best-served in nurturing clients before other agents even enter the picture.
Once renters are ready to purchase a home, they are likely to turn to people they know, like, and trust. Forward-thinking real estate agents can play a pivotal part in a renter’s journey by providing guidance on topics such as affordability or even rent payment reporting to boost credit scores.
Agents who seize rental opportunities can make income where others cannot and in the process will create loyal clients they can help for years to come, regardless of mortgage rate fluctuations.
Michael Lucarelli is the CEO and co-founder of RentSpree.
This column does not necessarily reflect the opinion of HousingWire’s editorial department and its owners.
To contact the author of this story:
Michael Lucarelli at [email protected]
To contact the editor responsible for this story:
Tracey Velt at [email protected]
Source: housingwire.com
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For years, residents in Solano County heard about a mysterious group buying up thousands of acres of farmland and making millionaires out of property owners. The agricultural land had been owned by the same families for decades — some of it for more than a century.
But the company, Flannery Associates, did not say what its plans were for the land, dotted with towering wind turbines and sheep grazing on pastureland. It paid several times market value and made offers on properties that were not for sale, according to officials familiar with the land purchases.
Then, last week, a survey was sent to residents asking them what they thought about “a new city with tens of thousands of new homes, a large solar energy farm, orchards with over a million new trees, and over ten thousand acres of new parks and open space,” according to a screenshot of the survey shared with the Los Angeles Times.
That’s when it became clear that Flannery Associates had big plans for the rural landscape.
Over a five-year period, the company became the largest landowner in Solano County after purchasing more than 55,000 acres of undeveloped land. The company has paid more than $800 million since 2018, according to court records.
U.S. Rep. John Garamendi, who represents the region, said for years he and other officials were unable to determine who was behind the dizzying land grab. Flannery Associates has purchased land that was restricted to open space and agricultural purposes under a state conservation program.
The company seeks to rezone the land, which would require approval by multiple state and county agencies and wouldn’t be as simple as asking residents to vote on the issue, officials familiar with the process said. But the lack of residential zoning in the area does not seem to be a factor for Flannery Associates.
Since its buying jag began, the company has filed suit in federal court against a group of families the firm purchased property from, seeking $510 million. Flannery Associates claims the families conspired to inflate their property values in a scheme to get more money.
Garamendi (D-Walnut Grove) lambasted the company for how it has handled the purchases and for not working with local residents.
“Flannery Associates is using secrecy, bully and mobster tactics to force generational farm families to sell,” Garamendi said during an informational committee hearing on Tuesday that addressed the company’s actions.
For years, residents and politicians speculated that Flannery Associates was backed by foreign investors seeking to spy on Travis Air Force Base. Located in Solano County, the base is one of the busiest military facilities in the nation. Most of the land surrounding the base is now owned by Flannery Associates, according to county documents.
Some of the company’s financial backers were revealed in an article last week by the New York Times, and they include a cadre of tech entrepreneurs and venture capitalists.
On the eastern end of Solano County, the city of Rio Vista is now surrounded by Flannery Associates land. Mayor Ronald Kott said that, like many Solano County officials, he had not been approached by anyone from the company to discuss plans for the land.
Although he’s now aware of the company’s goals and some of the financial backers, he’s still unsure how his city of 10,000 residents found itself surrounded by land owned by a group of tech billionaires.
“I have more questions than answers,” Kott said. “Our destiny is going to be determined by whatever they’re going to do.”
Flannery Associates has said little since it was formed as a limited liability company in the state of Delaware in 2018. The company’s actions were first reported by ABC7’s San Francisco Bay Area news station, KGO, which said a mysterious company was purchasing large amounts of land.
Flannery Associates is led by Jan Sramek, a former Goldman Sachs investor who found fame and fortune by the time he was 22, according to a 2010 Business Insider article. Sramek previously worked out of Goldman’s offices in London, but his LinkedIn profile now lists Fairfield, Calif., in Solano County as his primary location.
In a self-help book he co-wrote, Sramek says if given the chance to give his younger self a bit of advice, he would quote Ayn Rand: “The question isn’t who is going to let me; it’s who is going to stop me.”
He did not immediately respond to requests for comment.
For years, Garamendi and U.S. Rep Mike Thompson (D-St. Helena) tried to pierce through the opaque veil that surrounded Flannery Associates. Then, in the last week, representatives of the company attempted to arrange sit-down meetings with the Congress members and the survey was sent out to residents.
The survey said that the issue of a new city might be on next year’s ballot, which was news to Garamendi and Thompson. There have been no efforts made by any groups to get a new measure on the ballot for this project, according to officials. The survey also said the developers would replace the county’s existing aqueduct — calling it “one of the most polluted in California” — generate tax revenue for schools and be entirely funded by private sector money.
Thompson said the company’s actions had raised food and national security concerns. He’s asked the U.S. Air Force, the Treasury Department, the Defense Department and the FBI to investigate the land purchases. Thompson met with representatives from the company, including Sramek, according to KGO.
“And I don’t think they had a clear understanding of the significance of livestock in Solano County,” Thompson said. “And it was my impression that they kind of pooh-poohed the agricultural value of the land.”
Garamendi plans to meet with representatives from Flannery Associates at a later time, according to his office.
Solano County Supervisor Monica Brown is not familiar with Silicon Valley and spent most of her professional career as a schoolteacher. She heard from friends who received the survey and wondered if the company had the best interests of the county’s current residents in mind.
“We’re growing food and helping people. Why would you stop economic growth like that?” she told the Los Angeles Times. “Why would they spend $800 million and not be transparent about it?”
Flannery Associates has purchased more than 140 parcels of land, according to court records and county assessor data. That number is growing every day, officials say.
But in its lawsuit, the company claims that it overpaid and is seeking to claw back some of its money.
Attorneys for Flannery Associates have referenced personal relationships and text messages among neighbors in court documents — neighbors who could be influenced, they argue, by a scheme to drive up asking prices for the land.
The lawsuit has had a chilling effect on some landowners in the Montezuma Hills and Jebson Prairie area of the county. Multiple residents in the area declined to comment about the company for fear of being named in a lawsuit.
Others who spoke on condition of anonymity to avoid retaliation by the company say they feel as though Flannery Associates will target anyone who speaks out about the company’s aggressive tactics to buy land.
Garamendi called the lawsuit a “heavy-handed, despicable intimidation tactic.” He said that the company managed to purchase all the land without any of the current governmental safeguards in place to flag the issue. He said that, in the future, information about large land sales, and who is buying and selling, would be vital for lawmakers and residents.
Thompson introduced a bill that was inspired by the Flannery Associates land purchases that would provide more effective tools for state agencies to investigate large land sales.
Through a spokesperson, Flannery Associates said members of the company “care deeply about the future of Solano County and California and believe their best days are ahead.”
The company said the project aims to bring “good-paying jobs, affordable housing, clean energy, sustainable infrastructure, open space, and a healthy environment” to Solano County.
“We are excited to start working with residents and elected officials, as well as with Travis Air Force Base, on making that happen,” spokesperson Brian Brokaw said.
The company says it resorted to secrecy while purchasing the land to avoid rampant real estate speculation. But it has not disclosed specific details about the scope of its project. Representatives for Flannery Associates are meeting with community leaders to present their vision, according to Brokaw.
Michael Moritz, venture capitalist and longtime San Francisco resident, is one of the financial backers behind the company. In a 2017 email viewed by the New York Times, Moritz described an opportunity to invest in a new California city. He explained how investors could transform farmland into a bustling metropolis.
Sequoia Heritage, the $15-billion wealth management firm Moritz founded in 2010, did not immediately respond to requests for comment.
But in a February New York Times opinion piece, Moritz described some of his frustration with San Francisco and how the city had become “a prize example of how we Democrats have become our own worst enemy.”
He described legislators who deceived voters with tweaks and rule changes to the city’s charter so they could stay in power and drive seismic shifts in the local government.
“The core of the issue, in San Francisco and other cities, is that government is more malleable at the city level than at higher levels of government,” Moritz wrote. “If the U.S. Constitution requires decades and a chisel and hammer to change, San Francisco’s City Charter is like a live Google doc controlled by manipulative copy editors.”
Other financial backers with Flannery Associates include LinkedIn co-founder Reid Hoffman; Andreessen Horowitz venture capital firm investors Marc Andreessen and Chris Dixon; payments company Stripe co-founders Patrick and John Collison; Emerson Collective founder Laurene Powell Jobs; and entrepreneurs turned investors Nat Friedman and Daniel Gross, a Flannery Associates spokesperson confirmed.
Although those names were not repeated at an agricultural committee hearing on Tuesday, lawmakers were thinking of the financial backers’ actions.
Flannery Associates’ land buys threaten the makeup of eastern Solano County, mainly the land under the California Land Conservation Act, which sets aside properties for agricultural purposes and open space. The penalty for not obeying that policy does not seem to dissuade Flannery Associates, former West Sacramento Mayor Christopher Cabaldon said during the committee hearing.
The act, also known as the Williamson Act, can include a fee for the incompatible structures built on the land. For billionaire property owners, that could just be seen as the price of doing business.
“In some sense,” he said, the conservation program has “been like a flag that says, ‘Buy here.’”
The Flannery Associates project illustrates just how weak current tools are for dealing with a project of this size. Secrecy further hampers state regulators unaware of a buyer’s intent for the land, Cabaldon said.
Brokaw, the Flannery Associates spokesperson, said the company wouldn’t comment on specific issues brought up during the committee hearing but was meeting with county and state leaders to address their concerns.
Officials and landowners worry that much of the infrastructure needed to build a new city is just not present in eastern Solano County. And an influx of development would almost certainly drive out any farmers from the region.
But another scenario that could present itself is Flannery Associates moving ahead with its project only to have it fall apart years later.
“Even if the project is rejected locally … you can’t reset the clock,” Cabaldon said. “You cannot turn it back and say, ‘OK, no harm, no foul. Let’s just return to the way that this community was two years ago.’ Because the owners will be gone, the family farmers will have left.”
Times staff writers Jessica Garrison and Ryan Fonseca contributed to this report.
Source: latimes.com
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As the fall elections near, a host of issues important to renters, homeowners, and the nation’s housing economy await attention. So far the focus has been on other national priorities, but a number of major problems confront the housing sector.
Important Housing Issues
The housing industry was a major contributing factor in the recession, and even now it remains essential to the health of our economy. Here are some of the most pressing needs:
- Rising demand and inadequate inventories are driving up rents and home prices simultaneously, leaving consumers with few choices for affordable housing in the nation’s hottest housing markets.
- Most homeowners still live in houses that are worth less than they were worth in 2006. Millions of homeowners are still recovering from the worst housing crash since the Great Depression, especially those who live the heartland where prices are rising slower than costs and in foreclosure-ravaged states like Florida and Nevada.
- Crippling levels of student loan debt, the legacy of soaring college costs, have postponed or ended the homeownership dreams of millions of educated young adults.
- Soaring land prices and restrictive zoning and siting laws are making it nearly impossible to build affordable high-density rental or condo housing in the core cities and inner suburbs.
- Homeownership is lower than it has been in 50 years.
- The housing sector should be an engine of economic growth, averaging at least 1.6 million units a year over the next decade but so far it has accounted for just 2.8 percent of annual GDP this decade, significantly less than the 4.3 percent share averaged in the 1980s and 1990s.
- Taken over by the government in 2009, the huge companies that own half the nation’s mortgages, Freddie Mac and Fannie Mae, are still in limbo. In seven years, the Congress nor the White House have not been able to agree on what their roles should be. One result is the lack of a vibrant private label secondary mortgage market to provide much-needed credit for housing expansion.
Where We Stand Now
Some of these issues have lingered for years; some are new. All of them are taking their toll on the national standard of living.
Though the politicians who win elections may or may not be good for housing, there is new evidence that elections themselves are a good thing for home sales.
In an analysis of home sales dating back to 1990, the California Association of Realtors found that the sales growth is usually positive during an election year. In fact, C.A.R. found that growth in home sales at the end of an election year actually outperforms non-election years by 7.1 percentage points.
During the past five election cycles, sales in the final months of the year picked up, rising by 5.3 percent on average compared with -1.8 percent during non-election years. With the exception of December 2004, every single month of the final quarter saw robust growth in home sales during election years.
The pattern for California home prices is similar. C.A.R. also found little evidence of a negative effect on home prices during an election year. In fact, home price growth in California during the past five election cycles was slightly better than the long-run average of 5.6 percent.
Again, the effects were most pronounced during the final months of the year when demand—and therefore, upward pressure on prices—were boosted by roughly 5.6 percentage points following the elections.
The Verdict?
Too soon to tell. Candidates need to address housing issues before we can make guesses about the future. On the bright side, though, election season may give parts of the country a small boost.
Source: totalmortgage.com