Throwing Good Money After Bad

A report from WPTV in Florida. “A condo owner from Stuart is turning to WPTV to help her efforts to bring condo associations together from the Treasure Coast to Palm Beach County. Darlene VanRiper is a resident at Harborage Condos and on the board of the building’s condominium association. VanRiper said an engineer came out and recommended $6,480,000 worth of repairs to the buildings to meet SIRS needs. She said that’d average an extra $3,000 more per resident every month. ‘If those fees keep going up like that, I’m not sure if I can do it,’ resident Candy Raulerson said. ‘I would have to budget and rethink everything. You think about seniors too. … It’s going to impact them greatly. I can’t imagine them being able to afford it, somebody living on Social Security.'”

From USA Today. “Getting pummeled again and again by hurricanes has left many in Florida’s Taylor County tired, alarmed and apprehensive after the latest forecast showing a possible Category 3 storm might hit the area this week. There was so much damage in Perry that locals joked their slogan had become ‘Blue Tarp City.’ Those blue tarps were still on roofs in neighborhoods across town when Hurricane Debby, a Category 1, hit the county in August. Michelle Curtis has worked in the forestry industry for more than 50 years, and said the region is still reeling from the one – two punch Idalia and Debby delivered. ‘They didn’t have insurance to repair them,’ Curtis said.”

The Portsmouth Herald in New Hampshire. “Condo owners at Dunvegan Woods are reeling after learning the late president of their association allegedly embezzled hundreds of thousands of dollars, leaving the complex with only a few thousand dollars in the bank. The community features 110 two-bedroom condos, currently priced between $400,000 and $500,000. ‘It appears,’ the letter states, ‘that Mr. Simard misappropriated Association funds for personal benefit, and Mr. Simard’s actions have seriously depleted the capital reserve fund.’ ‘The board understands this is a very difficult situation,’ the letter stated. ‘The unit owners have a right to be angry and upset.’ Many attendees at the meeting voiced their frustration over years of neglected maintenance on the units, stating Simard repeatedly postponed their repair requests. Although embezzling from an employer is a criminal act, since Simard is dead, he can’t be charged or brought to justice to be made to reimburse the association.”

The Nantucket Current in Massachusetts. “Fugitive Aspen investor Daniel Burrell was arrested on Nantucket late Friday morning on a warrant out of Las Vegas, where he is alleged to have written a bad check to a casino for $1.5 million, just one day after his island mansion was sold at a foreclosure auction. Wanted by law enforcement authorities in Colorado and Nevada, the law finally caught up with the Yale-educated businessman on Nantucket. Burrell previously had warrants out for his arrest in Pitkin County Colorado for allegedly defaulting on over $75 million in bank loans he used to pay off divorce payments, buy a yacht, and purchase luxury homes. One of those homes was located at 3 Brewster Road on Nantucket, a property that was sold at a foreclosure auction on Thursday for $12,525,000.”

“Burrell has been facing lawsuits from several banks over the past two years, including First Western Trust Bank, which filed a complaint in November of 2023 alleging that Burrell owes more than $50 million in business and construction loans. Bank of America also filed a lawsuit against him for just under $4.5 million. Earlier this summer, Burrell had a mechanic’s lien placed on his 3 Brewster Road home for withholding over $26,000 from an island contractor for work done on the property.”

The Gothamist. “The indictment of South Jersey political boss George Norcross provides new evidence of how he wielded political power in Camden, creating a patronage pipeline that placed his allies in well-paying, influential jobs. George Norcross, his brother Philip, former Camden Mayor Dana Redd, and three others are charged with running a criminal enterprise that used political power to steal property and development rights along the Camden waterfront from the rightful owners. At the center of the indictment is Cooper’s Ferry Partnership, a nonprofit economic development organization that works closely with Camden city officials to recruit new businesses and fund improvement projects. ‘This is for our friends,’ George Norcross allegedly declared in a private meeting, referring to tax incentives tied to the project.”

Hawaii News Now. “Two medical doctors who helped secure funding for a methadone clinic and treatment center in downtown Honolulu accused a partner in the business of taking that money to buy luxury items for herself instead. Dr. William Forsythe, who lives in Washington state but is licensed to practice in Hawaii, and Dr. Ronald Baird, a family physician in Utah, were able to open more than 40 successful drug rehab clinics in 20 different states. The doctors were introduced to Phyllis Rooney, a licensed mental health counselor based in Honolulu. The doctors co-signed a loan using their homes as collateral, and that allowed Rooney to secure a bank loan, about $250,000.”

“Forsythe said he started getting letters from the bank and then the landlord from the clinic location. Baird said he feared losing his home when ‘the lender started threatening foreclosure.’ The detective found that Rooney’s application for the loan ‘showed signs of possible alteration or misrepresentation.’ Also in the police report, Rooney was accused of using the money not for the addiction center but for ‘the purchase of motor vehicles, luxury housing, luxury vacations, and services such as private chefs and child-care services’ instead of the center. ‘We’re like, holy cow, we just got taken to the cleaners, and we’re on the hook for it,’ Forsythe said.”

The Real Deal on California. “Hawkins Way Capital has paid $46.25 million to buy a 159-unit student-oriented apartment building in Berkeley. The Beverly Hills-based investor bought the six-story Varsity Berkeley complex at 2024 Durant Avenue, just south of Downtown, the San Francisco Business Times reported. The seller was Cornerstone Real Estate Advisers, based in Connecticut. The deal at Durant, between Milvia Street and Shattuck Avenue, works out to $290,881 per unit. Cornerstone, a unit of North Carolina-based Barings, bought the newly built complex in 2015 for $51 million, or $320,754 per unit.”

The San Francisco Chronicle in California. “Spurred by June’s U.S. Supreme Court ruling allowing governments to sweep out homeless encampments without having to first offer shelter, Central Valley jurisdictions from tiny Turlock to the wide San Joaquin County are passing and enforcing stringent bans on any type of camping or loitering on public land. The biggest city in the valley, Fresno, has embraced perhaps the most aggressive actions of all — well beyond measures taken by its counterparts to the northwest like San Francisco and San Jose. On Monday, Fresno Mayor Jerry Dyer said he plans to add more teeth to the ban by ordering the police department to arrest the most troublesome, continuously service-resistant homeless people in Fresno. It could mean scores of people tossed in jail.”

“‘They’re the ones who are defiant,’ Dyer told the Chronicle. ‘They’re the ones that continually show up at public places and set up their tents after they’ve been asked not to. They’re the ones that are continually lying in front of businesses, defecating on the sidewalks or in front of the business or urinating on the walls of the businesses, breaking out windows of businesses, stealing copper wire from businesses.'”

“For Robert Lopez, owner of the Something Extra gift shop, anything is better than what has been tried. In the past 20 years, he said, the homeless population has mushroomed so much ‘it’s out of control.’ ‘At least they’re trying to do something other than just accommodate the homeless,’ he said. ‘You can’t help someone who doesn’t want to help themselves, and most of what I see is young people on drugs. I’m not rude, and I hand out a dollar now and then, but it’s very sad. The best thing to do, I guess, is to kick the pile and have them run in different directions. And then say, ‘if you want the help, take the help.’ They need counseling. Maybe this will force them to make the right choices.'”

The Wall Street Journal. “Commercial-real-estate owners are cheering as interest rates finally start to fall. Yet relief is coming too late for many highly indebted property investors like the owners of 145 South Wells, an office tower in downtown Chicago. Daniel Moceri, a building-security entrepreneur turned developer, and his partners completed the 20-story tower in January 2020. By the end of 2023, the co-working company had left the building. The interest rate for the loan backing the property shot up to more than 10%. Moceri, who didn’t respond to requests for comment, lost the property to lenders in July.”

“Many owners of apartment buildings, hotels and other real estate took advantage of rock-bottom rates a few years ago, loading up on debt when borrowing was cheap. After rates soared starting in early 2022, they missed payments and had to hope their creditors would extend deadlines. Tides Equities, a privately held company based in Los Angeles, is one of the biggest apartment landlords in the Southwest. Along roadways leading out of cities like Phoenix and Dallas, the Tides signs became a sight as common as Arby’s or Pizza Hut. Some of those signs are about to come down. Around a dozen Tides buildings have entered foreclosure or a similar process this year. A handful already have been turned over to lenders. Analysts have flagged other Tides buildings for income that is too low to cover debts.”

“Hotel owner Ashford Hospitality Trust viewed floating-rate debt as a safe option. When economic times were bad and hotel room rates fell, interest rates would also likely decline, the company reasoned. Lower rates alone wouldn’t have been enough to save the hotels, said Stephen Zsigray, Ashford’s chief executive. The company had to choose between defaulting or making payments on properties already underwater—’essentially ‘throwing good money after bad,’ he said.”

Money Canada. “A new report by McGill professor Dr. David Wachsmuth quantifies the role commercial short-term rental (STR) regulations have played in stabilizing rent prices across Ontario. It also reveals the growth of those same STRs has cost Ontarians $1.6 billion since 2017, thanks to significant rent increases. A staggering 41% of Airbnb listings in Ontario are operated by commercial hosts who convert residential properties into ‘ghost hotels,’ with the top 10% of commercial hosts generating 44% of total STR revenue in the province. ‘This report is groundbreaking because it’s the first study in Canada to demonstrate a causal link between commercial STR operations and rent increases across municipalities,’ said Thorben Wieditz, executive director of Fairbnb Canada Network. ‘It is based on peer-reviewed academic research, providing undeniable evidence that commercial STRs have driven up rents.Housing planned, approved, and built to accommodate Ontario residents should not be repurposed as ghost hotels.'”

Western Australia Today. “Families traumatised by decades of what they describe as ‘ticking time-bomb’ plumbing pipes are pleading for compassion after being excluded from a deal to remediate leaky newer homes. The state government industry deal with pipe manufacturer Iplex and several WA builders was announced in August after an allegedly bad batch of polybutylene pipes made with a faulty resin were installed in homes between 2017-2022. Since August, more than 20 homeowners outside the claim period contacted this masthead to share how catastrophic leaks had led to a living nightmare. One of those is Joan Wotton who bought her 2003-built Butler home in 2007. Since then, the family has seen half the house torn apart and put back together again after four separate leaks.”

“The family now turns the mains water off whenever they leave the house for more than a day. ‘It’s like living in a ticking time-bomb, wondering when the next one might be,’ Wotton said. ‘It’s the stress – when we had to have all the floors ripped up we had to have all the skirting boards taken off, trades in and out, dehumidifiers running, separate people to paint, it went on for months.’ Shane and Julie of Donnybrook – who asked their last names not be used – estimated insurance costs to fix 13 separate pipe failures in their 2005-built home have run into the hundreds of thousands, with the couple themselves footing about $10,000 over that time. ‘We are one of the thousands of WA homes that have Iplex polybutylene piping installed in their homes,’ Shane said. ‘We, and at least five other Donnybrook locals that I’m aware of, are stricken with this time bomb in our homes.'”

“WA builder BGC, which is not taking part in the industry deal despite building up to 65 per cent of the homes impacted, has highly criticised the industry response. BGC said the deal’s $180 million package to fix impacted homes was wildly underestimated – instead suggesting costs could blow out to more than $1.2 billion. Damian Batajtis, co-owner of Wizard Leak Detection, claims the pipes have a 10-year lifespan, with inherent flaws that leave them susceptible to cracking and splitting, particularly when exposed to certain chemicals and environmental factors. Batajtis said if the estimates included homes built before 2017, costs could escalate on an ‘economy ruining’ scale. ‘Our research shows more like $44 billion,’ he said. ‘It’s everywhere from Joondalup to Mandurah, to mansions to high-rise apartments – the only place I don’t think they’ve put it is in hospitals, veterinary clinics and places that sustain life, thank God.'”