B12 Solipsism

Walk away from your negative equity house. Wow, that’s some harsh advice. Luckily I’m not in this situation, but I know some people who are. As Brett Arends writes, the economy is amoral, banks are not your friends, why should you be theirs?

Millions of Americans are now deeply underwater on their mortgage. If you’re among them, you need to stop living in a dream world and give serious thought to walking away from the debt.

No, you shouldn’t feel bad about it, and you shouldn’t feel guilty. The lenders would do the same to you—in a heartbeat. You need to put yourself and your family’s finances first.

How widespread is this? More than 11 million families are in “negative equity”—that is, they owe more on their home than it is worth—according to a report out this week by FirstAmerican Core Logic, a real-estate data firm. That’s a quarter of all families with mortgages. And for more than five million of those borrowers, the crisis is extreme: They are more than 25% underwater—the equivalent of having a $100,000 loan on a property now worth just $75,000 or less. That’s true for a fifth of mortgage holders in California, nearly a third in Florida and an incredible 50% in Nevada.

[Click to continue reading ROI: When It's OK to Walk Away From Your Home - WSJ.com]

If you are 25% underwater, your home would have to raise 33% in value before you break even. What’s the time frame of that? Will your home value increase 3% a year, every year? So when do the math to see when your equity is no longer “negative”, it isn’t pretty.

As far as legal consequences, there might not be any…

Are you worried about the legal consequences of walking away? Certainly, you should check with a lawyer before doing anything, but the consequences will probably be more limited than you think.

In “non-recourse” states, the mortgage lender may have no right to come after you for any shortfall. They may have no option but to take the home, sell it and eat the loss. According to a survey last year by the Federal Reserve Bank of Richmond, such states include negative-equity hot spots California and Arizona. Even in “recourse” states, lenders may have limited ability to come after you. Often they’d have to jump a lot of legal hurdles, and it’s just not worth it for them. They’re swamped with cases anyway.

“In my experience, right now they’re not really going after anyone,” says Richard Nemeth, a bankruptcy attorney in Cleveland. “They just don’t have the resources.”

So what are the non-recourse states, anyway?

Here’s one list, but I’d make sure to discuss options with a lawyer or two before doing any drastic deeds.

Alaska
Arizona
Arkansas
California
Colorado
District of Columbia (Washington DC)
Georgia
Hawaii
Idaho
Mississippi
Missouri
Montana (if non-judicial foreclosure is used)
Nevada – (lender can get a deficiency judgment)
New Hampshire
Oregon
Tennessee
Texas (lender can get a deficiency judgment)
Virginia
Washington
West Virginia

The following states allow non-judicial foreclosure:

Michigan
Minnesota
North Carolina
Rhode Island
South Dakota
Utah
Wyoming

[Click to continue reading WikiAnswers - Which states are non-recourse states for mortgage debt]

The 2,000 foot planned condo tower, designed by Calatrava, has been stuck at hole-in-the-ground status for a while now. [Wikipedia has a few photos, including this one]. Wonder if this latest surge will help complete the project?

[artist's rendition of the Spire, via Wikipedia]

The stalled construction of North America’s tallest building, a 150-story luxury residential tower planned for downtown, may get a boost from unionized construction workers desperate for jobs.

Any effort to save the Chicago Spire faces major hurdles, especially coming after a real-estate glut that flooded Chicago with new condos. Plans call for the 2,000-foot-high Spire to have nearly 1,200 units — more than are expected to be completed for the entire downtown area in 2010. Prices start at $750,000, with the bulk of the condos costing $2 million to $15 million.

Workers broke ground with great fanfare in 2007, but the project stalled last year amid the financial crisis when funding dried up. That left many doubtful that the Santiago Calatrava-designed tower would ever emerge from the circular foundation that sits about a block from Lake Michigan.

Now a group of union pension funds is conducting due diligence on a plan to lend $170 million to Irish developer Shelbourne Development Group, said Tom Villanova, president of the Chicago and Cook County Building and Construction Trades Council, which represents 24 unions with some 100,000 members.[Click to continue reading Push to Finish Tallest Tower - WSJ.com]
[Non-WSJ subscribers use this Digg-enabled link]

The Chicago Spire website is a flash-centric p.o.s., but if flash annoys you less than it annoys me, browse the Chicago Spire website here for lots of photos, descriptions and the like.

and the failed Olympics bid continues to have a ripple effect on the Chicago economy:

The Spire got an unlikely break in early October with the demise of Chicago’s hopes to host the 2016 Olympics. Mr. Villanova, who was on Chicago’s Olympic bid committee, said the unions had committed to help fund the Olympic Village to house athletes. “When that went south on us, we started focusing on the Spire project,” he said.

After cranking out an average of 4,500 new condo units a year downtown for the past four years, Chicago developers expect to complete 900 units next year and fewer than 100 in 2012, said Gail Lissner, vice president of Appraisal Research Counselors, a Chicago appraisal and consulting firm. “We don’t see cranes in the sky anymore,” Ms. Lisser said, which could mean the Spire would arrive in a much-changed market in four or five years.

Aqua Blue, originally uploaded by swanksalot.

really turning out to be an interesting building

View On Black

Here’s the last time I visited the building, prior to completion:

http://www.b12partners.net/wp/2008/10/08/aqua-project-delayed/

Awesome, Judge Schack is my new hero:

The judge, Arthur M. Schack, 64, fashions himself a judicial Don Quixote, tilting at the phalanxes of bankers, foreclosure facilitators and lawyers who file motions by the bale. While national debate focuses on bank bailouts and federal aid for homeowners that has been slow in coming, the hard reckonings of the foreclosure crisis are being made in courts like his, and Justice Schack’s sympathies are clear.

He has tossed out 46 of the 102 foreclosure motions that have come before him in the last two years. And his often scathing decisions, peppered with allusions to the Croesus-like wealth of bank presidents, have attracted the respectful attention of judges and lawyers from Florida to Ohio to California. At recent judicial conferences in Chicago and Arizona, several panelists praised his rulings as a possible national model.

…Justice Schack, like a handful of state and federal judges, has taken a magnifying glass to the mortgage industry. In the gilded haste of the past decade, bankers handed out millions of mortgages — with terms good, bad and exotically ugly — then repackaged those loans for sale to investors from Connecticut to Singapore. Sloppiness reigned. So many papers have been lost, signatures misplaced and documents dated inaccurately that it is often not clear which bank owns the mortgage.

Justice Schack’s take is straightforward, and sends a tremor through some bank suites: If a bank cannot prove ownership, it cannot foreclose.

“If you are going to take away someone’s house, everything should be legal and correct,” he said. “I’m a strange guy — I don’t want to put a family on the street unless it’s legitimate.”

[Click to continue reading As a Foreclosure Judge, Arthur Schack Tosses Out Cases, Brooklyn Style - NYTimes.com]

The bankers and real estate firms whine about his rulings of course, but the Judge is only following the law. I hope more judges follow Justice Schack’s model and stop turning a blind eye to the careless mistakes of greedy banks.

“To the extent that judges examine these papers, they find exactly the same errors that Judge Schack does,” said Katherine M. Porter, a visiting professor at the School of Law at the University of California, Berkeley, and a national expert in consumer credit law. “His rulings are hardly revolutionary; it’s unusual only because we so rarely hold large corporations to the rules.”

and that right there is the crux of our societal problem. Companies like Blackwater, Exxon Mobile, WalMart and General Electric that frequently break laws because they know the fines, if any, are going to be so small as to not even show up on a year-end balance sheet, companies like that should be forced to surrender their corporate charters. Hey, it’s capitalism, there will be new corporations to take their place.

[Summer Hoops, Rogers Park somewhere]

Sam Smith reports:

Has Dwyane Wade purchased his Chicago dream house as a prelude to signing a free agent contract with the Bulls next summer?
Or is Wade just a clever real estate speculator at a good time?

Prying eyes want to know. And at least basketball franchises in Chicago and Miami.

ChicagoMag.com’s real estate blog reported Monday that Wade has purchased a four story riverfront townhouse in Kinzie Park, which is just west of the Loop across the river from the East Bank Club. The price is said to be about $1.4 million, which hardly seems like what you’d pay for an occasional getaway place back in your hometown if you are planning to establish roots in Miami by signing a major extension.

[Click to continue reading Chicago Bulls Blog: Dwyane Wade buys $1.4 million Chicago townhouse]

Hey, DWade for Ben Gordon¹ is definite upgrade; even though Dwyane Wade is injury-prone, he is certainly one of the top guards in the NBA.

Sam Smith still doesn’t believe in outgoing links, but Google is² our friend:

The Kinzie Park townhouse is part of a development of former industrial parcels across the river from the East Bank Club that also includes high-rise condos. The townhouses have private yards fronting the river along a shared promenade. Wade bought a 3,900-square-foot unit with a two-car garage and a rooftop deck.

The property was on the market for almost a year, says the seller’s agent, Harold Blum, and it sat vacant for a while. “But then we furnished it and we got two offers,” says Blum, who would not reveal whether Wade’s offer was the higher of the two. Wade closed on the sale in late June, but information on the deal only surfaced recently at the Cook County Recorder of Deeds.

[Click to continue reading NBA and Olympic Star Buys in River North - Deal Estate - August 2009 - Chicago]

Coincidentally, Flickr-eeno phule and I were just walking past here a couple weeks ago, albeit on the other side of the river. It doesn’t look like I took any photos of this area, but then I didn’t see anything photo-worthy either. I’d like having DWade as a near-neighbor, not that I’m much of a celebrity stalker (well, except for the time Michelle Obama was eating across the street). The Chicago Bulls can dream, right?

1. who signed with the Detroit Pistons over the off-season [↩]
2. usually [↩]

[address listed as 358 W Harrison St, Chicago, IL, but I always think of it being on the corner of S. Canal and Van Buren - directly north of where Congress turns into the Eisenhower Expressway, aka I-290]

After 13 years of failed redevelopment efforts, the United States Postal Service is giving up and auctioning off its largest vacant property: the hulking 2.7-million-square-foot old central post office here.

The suggested opening bid for the auction is $300,000, which is less than an individual condominium goes for in many of the surrounding downtown buildings.

[Click to continue reading Bids Start at $300,000 for Chicago’s Old Post Office - NYTimes.com]

[corner of Van Buren and S. Canal]

The building is actually quite a lovely structure, I hope it doesn’t get torn down to have a mixed-use building in its place, or shudder, condos. The article doesn’t mention what property tax on it would be¹, but even annual maintenance, utility and security costs are nearly $2,5000,000

The behemoth, which is nine stories tall with 14-story corner towers, is several blocks southwest of the Loop, the downtown central business district. It was designed by Graham, Anderson, Probst & White in a Neoclassical Art Deco style and built in phases from 1921 to 1932. (Graham, Anderson is the firm responsible for Chicago landmarks like the Wrigley Building, the Civic Opera House and Union Station.) The total cost was $22 million.

A peculiarity of the building is that it was built using air rights over railroad tracks that terminate several blocks to the north, at Union Station, and so it has no basement. In addition, the Congress Expressway literally passes through the structure. The two-story-high tunnel carries six lanes of traffic.

I’ve never been inside², but I want to

“I miss the grandeur of the lobby,” said Musette Henley, who worked in the building in a variety of jobs from 1961 until its closing day and is now a customer relations representative in the new facility. “They don’t build buildings like that anymore.”

The imposing Neoclassical lobby at the north end of the building, which has cream-colored marble walls and an elaborate inlaid marble floor, is certainly a stunner: 340 feet long and 40 feet wide, with a towering 38-foot ceiling.

[Van Buren side]

–
couple other photos:


the Chicago River side

1. astronomical I assume [↩]
2. other than by watching the Batman movie, The Dark Knight [↩]

557 W Randolph St, formerly the headquarters of Zonta International, will be the new home of the 48,000 member Actor’s Equity Association.

Actors’ Equity Association, the union of professional actors and stage managers in the United States, has purchased its own building on Randolph Street just a block or two west of the core of Chicago’s theater district. And according to Steven DiPaola, the union’s assistant executive director for finance and administration, Equity is considering moving some of the union’s national back-office functions from New York to Chicago.

[From Actors' Equity buys a building in Chicago, will expand presence here | The Theater Loop - News from America's hottest theater city]

According to Chris Jones, the building at 557 W. Randolph was built in 1855, and is one of the few that survived the 1871 Chicago fire. I wonder if there will events held there? Celebrity sightings?

Oh joy, another skyscraper to impede our view.

[Crowne Plaza building at night]

A developer has announced plans to build the tallest building west of the Dan Ryan Expressway, a $150 million, 48-story apartment-hotel tower at West Madison and North Halsted streets. The announcement met mixed responses at an initial West Loop community meeting Tuesday night.

The development includes 48 floors of apartments atop a base with ground-level retail, six stories of parking and a ballroom that bridges to the nearby Crowne Plaza Hotel at 733 W. Madison St. David Friedman, the developer and hotel owner, has a target completion date of 2011 for the project.

Friedman, whose company FF Realty Inc. owns four luxury apartment buildings and five hotels – including the West Loop’s Crowne Plaza – will continue to hold meetings to gauge community reaction before applying for a new zoning designation that would allow the 500-foot structure. The proposed location, the Crowne Plaza parking lot, is currently zoned for buildings up to 300 feet in height.

[Click to continue reading 48-story West Loop tower pitched]

Greektown, as this part of the West Loop is often called, already suffers from traffic congestion; we shall see if the public parking proposed for this building will help.

The elliptical-shaped glass building would serve as an apartment-hotel, with amenities like room service and maid service, but unlike, for example, the Trump Tower building – a downtown condo-hotel complex completed this year – its 514 residential units, a mixture of studios and one and two bedrooms, will be leased. Typically, only half of luxury renters require parking, so some of the six-story lot’s 553 spaces would be public parking, a growing necessity in the West Loop, where expensive hourly fees in garages and meters are draining drivers’ wallets.

My neighbor, Donnie Madia¹ wants to open a “green” bed and breakfast over in my old stomping grounds (I lived on Paulina and Cortez in the mid-1990s). Cool, hope he succeeds.

A local builder would like to covert a building near Division and Paulina into a boutique, eco-friendly hotel with retail offerings.

Dan Sheehy of Third Coast Construction imagines the project including a small restaurant on the first floor, shopping and a 13-room hotel.

Sheehy and his partners want to develop the project in the building at 1659 W. Division, which currently houses Pump Shoes and Accessories. The shoe store is under a long term lease.

If the plans are approved by 1st Ward Alderman Manny Flores and the city council, construction isn’t expected to begin for 14 to 16 months.

Sheehy presented his plans to neighbors at a recent meeting of the East Village Association, and got a warm response.

Previously, the EVA board unanimously voted not to oppose a special-use zoning permit that the hotel would need to open. After a half hour presentation, EVA’s general membership unanimously agreed with the board’s decision.

“The entrance to the building will be on Paulina Ave., giving the hotel a ‘neighborhood feel,’” Sheehy said at the meeting.

“We love the building and we’re not going to tear it down,” Sheehy said. “It’s almost like a call-back – we’re going to re-create it.” The building had in the ’70s functioned as a tavern and a restaurant.

Sheehy, who focuses on sustainable developments, is planning to pursue Leadership in Energy and Environmental Design, or LEED, certification for the building and expedite processing of building permits through the city’s green permit program.

[Click to continue reading Imagining a 'modern day' bed and breakfast]

1. of Blackbird, Avec and The Publican fame [↩]

International design firm IDEO moves to the West Loop, well one office at least

Palo Alto, Calif.-based industrial design firm IDEO is increasing the size of its local office about 25%, to 20,442 square feet, as part of a move from Evanston to the building, 626 W. Jackson Blvd.
IDEO, whose design credits include the standup toothpaste tube, has signed a 10-year lease for the top two floors of the eight-story structure, says Menahem Deitcher, managing principal with office leasing firm Deitcher Group LLC, which is partners with Sterling Bay in the deal. He adds that they have another deal pending for one tenant to lease the second, third and fourth floors.
IDEO’s move-in date is June 1, Mr. Deitcher says.

…

Founded in 1991, IDEO has 550 employees and six other offices, including two overseas. In addition to the toothpaste tube, the company also designed Apple Inc.’s first mouse, the Eclipse 500 Very Light Jet cabin and the Samsung LCD monitor.

[From Product designer moving to former CHA headquarters - Chicago Real Estate Daily]

I know I have a photo of this place, I’ll have to delve into my archives

update 127/09:
Ha, I knew I had a snapshot of 626 W Jackson…

MillerCoors¹ is moving headquarters from Milwaukee to Chicago:

[Chicago River just south of Jackson]

MillerCoors announced Wednesday that it has signed a 15-year lease agreement for nearly 130,000 square feet of office space for its new headquarters location at 250 S. Wacker Drive in downtown Chicago.

In July, following the closing of a transaction to combine the U.S. and Puerto Rico operations of Milwaukee-based Miller Brewing Co. and Coors Brewing Company of Golden, Colo., the newly formed MillerCoors selected Chicago as the home city for its corporate headquarters.

MillerCoors selected the West Loop high-rise office building because of its “dynamic environment for employees and visitors, access to public transportation, green space, and surrounding amenities,” MillerCoors management said.

The new location provides a unique opportunity to establish MillerCoors identity as a beer company in downtown Chicago, MillerCoors chief executive officer Leo Kiely said.

“We are a beer company and you’ll know that as soon as you walk through the doors of our Chicago headquarters,” said Kiely. “The offices will showcase our brands and create a work environment that inspires our employees’ passion for beer.”

MillerCoors will be the largest tenant in the building housing nearly 400 employees on eight floors. The headquarters will house a majority of MillerCoors senior executives, as well as marketing, human resources, legal, finance, information technology and communications divisions.

Chicago-based architecture and interior design firm VOA has been selected for the interior design and construction of the headquarters.

As part of the project, VOA will develop sustainable and environmentally responsible designs.

[From MillerCoors selects Chicago headquarters site - The Business Journal of Milwaukee: ]

(h/t Colonel Tribune’s twitter feed)

Minor quibble, I consider the Chicago River the demarcation between the Loop and the West Loop, and 250 S. Wacker is on the east of the river, not the west.

View Larger Map

[Chicago River, near Jackson and Wacker]

1. what a lame-o name [↩]

Received this letter in the mail the other day.

In accordance with the requirements for an amendment to the Chicago Zoning Ordinance, please be informed that on or about September 3, 2008, the undersigned will file an application for a change in zoning from DC-12 Downtown Core District to a DX-12 Downtown Mixed-Use District and then to a Residential-Business Planned Development on behalf of JRC 108 Jefferson LLC, whose address is 401 North Michigan Avenue, Suite 1300, Chicago, Illinois 60611 (the “Applicant”), for the property located at 108 North Jefferson Street, Chicago, Illinois (the “Property”). The Property is owned by the Applicant and JRC Jefferson DAS, LLC, JRC Jefferson JJO, LLC and JRC Jefferson EMP, LLC. …

The Property is currently improved with a non-accessory surface-level parking lot. The Applicant proposes to construct a 41-story building on the Property containing ground floor business uses, five floors of office space, accessory off-street parking spaces and 311 dwelling units, which must be processed as a Planned Development pursuant to the Chicago Zoning Ordinance.

[108 North Jefferson, Chicago, IL 60661]

Oh boy, more people are moving in, Ma. Where does all the cash come from to convert every single parking lot into a 40 story high rise? I thought real estate development was in a down-turn? There is the Catalyst, right across the street from this newly proposed building, R+D 659, the Emerald, and probably others. An amazing boom happening in my zip code.

Surprising to nobody, really, sports stadiums are one of the biggest swindles of the 21st century.

New York Assemblyman Richard Brodsky, D-Westchester, released a report Tuesday that said the city of New York played games with the assessed value of the new Yankee Stadium to get tax breaks for the team.

A legislative report says the public is paying up and getting nothing in return but higher ticket prices. City and team: It’s not true

The report, by the Assembly Corporations, Authorities and Commissions Committee, which Brodsky chairs, also says the city promised the stadium project would create 1,000 permanent new jobs in order to win approval for massive public subsidies, and that the actual number of permanent new jobs being created is 15.

The report says the taxpayer price tag for building the stadium is somewhere between $550 million and $850 million. In exchange, Brodsky points out, the Yankees have raised ticket prices by orders of magnitude, something the city has made no effort to stop.

“The price of tickets to the new Yankee Stadium is a matter of legitimate public concern, given the enormous public subsidies involved,” Brodsky wrote.

[From Yankee Stadium shocker: Taxpayers fleeced? - King Kaufman's Sports Daily - Salon]

The swindle works so well because there is always a second-string city somewhere who can be used as leverage (like when the Seattle Sonics got moved to BFE Oklahoma ). If city governments stood strong, the owners of the teams would end up financing the stadiums: the owners want to own a team, owners shouldn’t depend upon taxpayer largesse to fund the team’s building.

In this case, Mayor Bloomberg (and Rudy 9-11 before him) and the Yankees made all sorts of grandiose claims that the stadium would be a boon to the economy, and of course, it isn’t, and won’t be much different than the previous stadium, other than making more money for the owners.

[Sin Will Find You Out, somewhere near 54th Street, Hells Kitchen, who really remembers anymore. Scanned 35mm print, circa 1995]

I like this quote too:

Denny Hocking, who was an all-talk, no-hit utility infielder for the Minnesota Twins in 2002 when Forbes magazine published a report calling into question the claims of commissioner Bud Selig that Major League Baseball was losing money hand over fist.

“Gee,” Hocking said, “should I believe a magazine that spends 365 days a year researching finances, or a guy who has zero credibility?”

Some of the principals have changed in this case, but the principle is the same.

Nice. I suspect there was some shady doings when our building was turned into Condo, circa 1997. Over the years, we’ve discovered all sorts of not-to-code problems (wrong size electrical conduit, faulty plumbing, etc.), I would be curious to see who the inspector was who signed off on the obvious not-code elements.

A one-time City of Chicago plumbing inspector testified Tuesday that he took bribes “almost daily” from contractors and passed a cut of some of the payoffs to his supervisor in the Buildings Department.

Travis Echols, testifying at the trial of the supervisor, Gregory Toran, told a federal jury how Toran reacted when he was promoted and became an office-bound boss unable to conduct inspections in the field.

“He said, ‘Throw me a bone,’ ” testified Echols, adding that meant to cut Toran in on bribes Echols would receive to sign permits that landed on Toran’s desk.

…

Toran went on trial Tuesday at the Dirksen U.S. Courthouse on charges of attempted extortion, accused of pocketing hundreds of dollars in bribes that Echols told him was coming from contractors who wanted subpar work overlooked. Turning a blind eye to violations was just part of the job and meant hundreds of dollars in extra cash, Echols said.

[From Former city inspector testifies he took bribes and gave a portion to his supervisor -- chicagotribune.com]

[Skull and Concrete]

No wonder the housing market is in such flux.

Houston is famous for having a patchwork quilt of zoning regulations, and a subsequent crazy mess of an urban jungle. If Chicago Aldermen don’t watch out, we’ll end up in the same dire predicament: having a city without rhyme or reason, loved by nobody except developers, and their politician puppies.

In the ongoing “Neighborhoods for Sale” series, the Tribune has documented an insiders’ game in which aldermen rake in millions of dollars in campaign cash from developers, zoning lawyers and architects while often overriding the concerns of homeowners and city planners. Out-of-scale buildings leave existing homes in their shadows, the result of nearly 6,000 council-approved zoning changes in the last 10 years that have transformed neighborhoods.

The results of this patchwork approach to development have been jarring, with mini-mansions replacing modest bungalows and condo blocks rising over increasingly traffic-choked streets.

The Tribune has found that zoning rules have been ignored or changed to make it easier for developers and harder for residents to have a meaningful say in what gets built on their streets.

Developers commonly fail to put up signs required by law to notify neighbors of proposed zoning changes. Neighbors frequently don’t get letters notifying them of nearby projects.

And if they manage to learn of pending proposals and attend the City Hall hearings, they may find themselves prohibited from asking questions of developers and aldermen.

For a street-level view of how the code really works, look at the 50th Ward and the story of the proposed seven-story senior housing complex the City Council recently approved at the behest of Ald. Bernard Stone.

[From Who calls the shots in your back yard? Not you. -- chicagotribune.com]

[A now-destroyed building, replaced by a 20 story residential building, still being constructed, called R+D 659]

There are rumors that a a large building¹ is being planned on the NW corner of Jefferson and Randolph: large enough that the historic Crane’s Alley might be appropriated. Our Alderman, Brendan Reilly, claims to know nothing about it. We shall see.

1. either a hotel, or a 40 story structure, I’ve heard both [↩]