Wednesday, March 17, 2010

Save $810k by reading the Leucadia Blog


The Leucadia Blog reported in 2008 that one of the newly built houses in the Nantucket development could not be occupied until local Development Maestro David Meyer built a "low income" housing unit for the subdivision. Well, that hasn't happened. (Interestingly, the home that housed a family that appeared to be very low income was leveled years ago).

The unoccupied "new" house went into foreclosure and was sold at auction. The Voice of San Diego has a great story (updated link) about some sucker buying the place for $810,000 thinking he was getting an awesome deal. He apparently didn't do the slightest bit of digging into the property or the history of the subdivision before buying the unusable house.

12 comments:

  1. There are 3 things here that should be considered;

    1.) The abandoned project is the result of foreclosure, legal actions and bankruptcy. Not the crash in local housing because it is actually quite stable.

    2.) This project also showcases the fallacy of affordable housing and density bonuses in new developments.

    As much as everyone screams about the density bonuses, they seldom work for the profit driven developer as seen in this project.

    3.) Stories from the Voice of San Diego should be viewed as a blog editorial rather than journalism. It's one thing to be critical but another to be utterly a pessimist.

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  2. Brett,

    The Voice of San Diego was the only major media outlet that consistently provided a quality valuation based analysis of the housing market going into the bubble before it popped. It was editorial. Everyone other media outlet consistently ran the national association realtor ’s shill's PR that its always a good time to buy real estate and that real estate always goes up.

    Please look at the history of this project. The foreclosure in this case is a result of a lack of occupancy sign off by the city, which is held up by the lack of an affordable unit not being built. Inconsistent with your comment, that low income unit was not a direct cost to the builder or the property owner because a third party, David Meyer, owns the low income lot.

    Having a third party like that was an issue that was brought up by the neighborhood and blown off by the city council. Neighbors were worried that we would end up with exactly what we got. An blighted house and no low income unit.

    It is insane for you to write that density bonuses seldom work. Few developers would do it then. Please do the math to prove it to us. How much value does a developer in Leucadia get with three extra lots? How much does it cost to bring in a prefab house for the low income unit? Looks to me that the developer ends with a huge profit margin for taking the density bonus.

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  3. LT,

    Some news sources are cheerleaders, (San Diego Daily Transcript), and some like the Voice only look for bad news.

    I'd challenge you with the same task and show me where the density bonuses have worked.

    I don't think people understand how much of an encumbrance it is to do affordable housing, and, it's not the bogey man many people think.

    However, the big question really is whether or not it is government's role to provide affordable housing or to let the market work? Seems to me that new construction is not the way to make affordable housing. So then, what is the best way and when/where is it acceptable?

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  4. Brett,

    Your last questions are very good.

    On the other hand, the onus is on you to do the math. You made the claim in the face of obvious evidence that professional bean counters think that density bonus is profitable. Most of the subdivisions going in Leucadia are density bonus. Density bonus is optional and that option is consistently taken because the developers expect to maximizes profit by using density bonus.

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  5. How accurate is Zillow? Cuz my house is on a tear!

    Bubble days are back baby.

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  6. The Voice of San Diego has been writing depressing stories about local real estate because they have been realistic.

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  7. I see nothing in the article in the Voice of San Diego that could be considered "blog editorial." I watch this project from the beginning, and the reporting is factual. Pessimistic? Even Michael Pattinson admits a completed project might have suffered a loss.

    The house in question needed a certificate of occupancy in order to be sold. Because David Meyer never built the low income unit, the project was incomplete. The owners of the house in question asked the city council to move the restriction to another house in the project. As a huge favor to David Meyer, the three men on the council voted approval. But there were questions about who owned the the other house. Barratt American? Or somebody else? The three men were mum. It's not surprising that Glenn Sabine didn't want to comment.

    I disagree that the density bonus doesn't work for the developer. It gives big concessions. David Meyer exploited it to the max. The low income unit was to be put in the Ecke Family Trust. When he couldn't build what he promised, he gave it back to Barratt. It worked out really good for Meyer.

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  8. The council voted to move the restriction to another house, which the owners of the first house said was owned by Barratt American. I checked the county property tax rolls and found it was owned by someone else with an Asian name. I sent an email to James Bond pointing out that what they had approved was not legal without consent of the other owner. He answered back that he would look into it. I never heard back from him.

    To this day I don't know how the problem was resolved. The city normally withholds a certificate of occupancy on one house until the project is finished. In this case it would have been the building of the density bonus unit that completed the project. It was never built.

    The policy came up again with the approval of the subdivision map for the Bahlmann property on Saxony Road. It was the same person requesting the map approval and density bonus. The Planning Commission turned it down. The person got approval on appeal.

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  9. ZZZZZZZZZZZZZZZZZZZZZZZZz

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  10. However, the big question really is whether or not we, as a society, wish it to be the government's role to incentivize affordable housing or to let the market work?

    fixed.

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  11. The corrected link makes a lot more sense now. Stocks, Bond, and Dalablabber never said a word after voting for the restriction switch. What happened Dan? Cat's got your tongue? They hoped silence would cover up their huge blunder caused by cronyism and favoritism. All citizens of Encinitas should wake up and vote the scoundrels out.

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  12. I call that development Rancho Tyvek Estates.

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