Reno Real Estate Logic

Two of the Reno City Council members have recommended defaulting on $73 million in bonds that they approved to build the “ballroom” and the “events center” and this is unbelievable. The logic is to avoid paying a hefty $125k per week on the interest. The other option is to give control of the secured property to the banks for management (which they deserve) and negotiate an interest rate reduction.

Just the thought that two members of the city council which were not identified in the RGJ yesterday, even thought that this could be a viable solution is way off course. As a city, we need to protect and be accountable for our financial responsibilities period. Negotiate with the banks but don’t become “runners”, yikes!

The Bank of America is stationed to come to the rescue by putting hefty demands for conversion of the auction bonds in January from a variable 15% interest to conventional fixed rate with B of A.  The new bond agreement is expected to be in the council chambers by January 14, 2009.

Bank of America wants to have a senior position for the cities sales taxes, this way they can be assured that those on the council that want to simply “default” cannot. My recommendation, sell the property the city owns that is capable of burning up these bonds and let free enterprise take it’s course. Get out of debt and let the developers develop downtown Reno.

The Reno Housing Authority has been given or granted the opportunity to start purchasing foreclosed homes with the $5 million dollar federal money that has been allocated to Washoe County.

The focus of the Housing Authority is to purchase, fix up, re-sell or lease these homes so that the neighbors and hoods will be protected. The Reno City Council has given the Reno Housing Authority $588k already to start buying distressed properties in the Oliver/Montello neighborhoods. Good news for the new year folks. Neighborhood blight only creates more problems including crime and devaulation of property.

Of the $5 million, the Sky Vista development in Stead has been earmarked $2 million in acquisitions in that neighborhood alone. The money has to be spent within 18 months and at this rate I hope that they spend it all since we won’t see a dime come back our way for a long time. The program is officially launched February 1, 2009. I just got off the phone with David Morton the executive director for the Reno Housing Authority and he has a big job ahead of him with lots of resources and talented people to assist. Thank You!

This should be a wonderful jump start for the citizens of Reno who have endured a lot and now looks like there is hope on the horizon. Thanks Reno City Council and the Reno Housing Authority for taking the initiative to make a change for the better.

It’s on hold, The Waterfront project, a $150 million dollar river front project that has been geared to be a 34 story building with shops, restaurants on a 3.5 acre parcel. The news is that the owner Nello Gonfiantini III wants to lease out a space for a restaurant and let the project grow from there.

Downtown has been hit hard with the problems for new development financing especially for condos. It seems like all the projects are on a holding pattern until the market rebounds, but when it does, it’s going to look like a little Chicago downtown.

The Montage has announced that they are doing a work out with Corus Bank for a “deed in lieu of foreclosure”, the premiere condo project by L3Development was once thought to be the most upscale and pricey downtown units in Reno. Penthouse digs were going for an incredible $2.6 million. It will be interesting to see the prices when the bank takes over and how fast the project will recover.

Other developers are on the ropes, including the Belvedere which was the old Sundowner Casino turned condo project. It’s got problems with over 200 liens and 2 notices of foreclosure. This should be a easy property to pick up if you want to hold on for a couple of years.

The Wingfield Towers are asking for a two year extension. That’s smart planning and hopefully the city will grant Dr. Ilieuscu the time since the project is gorgeous and would certainly make a statement for the city center.

I still believe in the downtown and with so many promising new venues going up including our baseball stadium, I know that things will ultimately work out for the city. Keep the projects on the boards and let’s roll the dice.

 Here’s a marvelous video musical message for the holidays which circles you around the globe. Let’s make a difference this coming year in someone’s life…

Check it out. Too cool.

http://www.youtube.com/watch?v=Us-TVg40ExM

Another scam hit the press today, in fact another government official in a little place North of Reno called Panther Valley where the former Treasurer of the Panther Valley Water Users Association has siphoned off a cool $2 million in his embezzlement scheme, thanks Robert Klein for making the headlines, especially at Christmas.

With Mr. Klein avoiding prosecution by fleeing the area, I just wondering if we will ever get to the bottom of this tsunami of scams which have been hitting us from every angle for months now across the globe.

Just recently Washoe County got a check for $2 million of the $2,214,215 that Paul Orphan embezzled who was a county water resource engineer with a bad gambling habit that no one at the casinos cared to check on for us citizens. He is now serving a 30 year prison term which calcs out to 12 years or sooner he will be scot free.

Amazing. Plus, 4 employees of the Truckee Carson Irrigation District were busted for “allegedly” falsifying records to secure additional water supplies from guess who? The US Government….Martial Law anyone?

 Martial law is the system of rules that takes effect when the military takes control of the normal administration of justice.

Martial law is sometimes imposed during wars or occupations in the absence of any other civil government. Examples of this form of military rule include Germany and Japan after World War II or the American South during the early stages of Reconstruction. In addition it is used by governments to enforce their rule, for example after a coup d’état (Thailand 2006), when threatened by popular protests (Tiananmen Square protests of 1989), or to crack down on the opposition (Poland 1981). Martial law can also be declared in cases of major natural disasters; however most countries use a different legal construct, such as a “state of emergency“.

In many countries martial law imposes particular rules, one of which is curfew. Often, under this system, the administration of justice is left to a military tribunal, called a court-martial. The suspension of the writ of habeas corpus is likely to occur.

America Will Soon Owe More Than Its Citizens Are Worth
December 15, 2008

The sum of America’s debts and other financial commitments is about to exceed the collective net worth of its citizens, PGPF has calculated. Growth in the government’s unfunded promises for social insurance programs such as Medicare, combined with a drop in Americans’ net worth due mainly to lower home equity values, is causing this unprecedented shift.

PGPF’s calculations are based on the new consolidated federal financial statements as of September 30, 2008 and do not reflect the additional toll taken by more recent market declines, bailout packages, and record October and November deficits. The statements show an estimated $56.4 trillion in debts, liabilities, and promises for Medicare and Social Security versus a total household net worth of $56.5 trillion.

Since its launch in July 2008, the Peter G. Peterson Foundation has invested nearly $11 million in grants to raise awareness of, and seek solutions to the fiscal challenges posed by the rising costs of health care and retirement and near-zero household savings rate.

Related link: Press Release - America Will Soon Owe More Than Its Citizens Are Worth

Nevada has become the new poster child for economic disaster and on Tuesday our politicians told a congressional panel that the $700 Billion Dollar Federal Bailout has done “little to reverse the trend” and state banking commissioner George Burns said, “in short, our economy has gone from the fastest growing in the nation to amongst the worst.” At least for Vegas.

So what’s the solution? Let’s play Powerball. The esteemed Assemblywoman, Ellen Kovisto D-Las Vegas has officially sent a formal request to Chancellor Jim Rogers to amend our state constitution to allow for lotteries. This little widget in the constitution will create an additional $100 million for the state coffers and an estimated $7.3 billion over time with $1.6 billion allocated for education alone.

With the Nevada Public Employees Retirement System posting a $4 billion dollar loss since July, I think it is time to rethink how the casinos are blocking Powerball from being played in Nevada.

I’m all over buying a winning ticket here at my corner 7/11. Hey Ellen, get this amendment passed and next I want a state lottery for homes. Go girl go.

 Happy Holidays!

Everyday that I open the  Wall Street Journal, it looks like the world is caving in on itself with new revelations about highly placed or positioned executives that are literally ruining the lives of millions of people and today Bernard L. Madoff who “helped start NASDAQ” has been quoted by two of his senior officials that his company was a giant PONZI SCHEME…Look, he has spent $50 billion dollars of OPM which will soon  bankrupt a zillion people. The back lash of his actions will probably not be known for years and although he was charged with criminal securities fraud, I have seen others get off the hook and would not be surprised if Madoff does too.

What gives? I have been a victim of a brutal ponzi with USA Capital here in Nevada which bilked a cazillion dollars from people like me who invested in first trust deeds across the nation, primarily in commercial properties. When we found out that the owners were circling the globe in fancy jets with blonds, brunettes and redheads, it was obvious that we were sunk.

I’m reeling from that hoax still and then it was the crash of the financial markets and don’t tell me that there wasn’t a computer generated hypothesis on this happening including the date, time and minute of the global derailment. Then we have the car industry needing boatloads of money for the big three guys.

Now this recent PONZI SCHEME. What is going to be coming next? Do you think that it’s time to put some of these guys permanently behind bars where they could be used as basket balls for the inmates? I’m getting really tired of these new revelations and something has just got to change. Where did the the flower children go?

The news on the streets has been so awful with all the bad press about the housing market but there is a giant Rainbow still hovering over us and that is Federal Housing Administration is still offering home loans with just 3.5% down and this can be supplemented with a gift loan from your parents, in-laws or Santa Claus for that matter.

With prices of homes at an all time low, it’s a bargain these days to own and to have the tax write off to boot. Never have I seen such an opportunity to own real estate at prices so low that it boggles the contractors minds that I work with, since it costs them more to build these days then to buy ready built.

Check out the guidelines and then call me. Homes up to $417K are available under the program, anywhere in Reno or Sparks.

 Effective with Federal Housing Administration (FHA) case number assignment dates on or after January 1, 2009, the down payment and maximum mortgage amounts for FHA loans are revised.

Summary

FHA down payment and maximum mortgage amounts are revised as follows:

• Down payment requirements are revised to require that the customer pay an amount not less than 3.5% of the lesser of the appraised value or the sales price, minus any required adjustments on purchase transactions. The down payment amount is in addition to any customer closing costs, prepays, or discounts. Guidelines relating to the source of the down payment and seller contributions remain the same.
• Refinances are not subject to the 3.5% down payment, and the calculation for Loan-to-Value (LTV) remains the same. The loan amount, including the up-front mortgage insurance premium (UFMIP) financed cannot exceed 100% of the appraised value.
• New purchase LTV limitations are 96.5% for all states with financed UFMIP not to exceed 100%.

Note: The new maximum LTV guidelines do not apply to Section 203(h), Section 203(k), and FHA’s Energy Efficient Mortgage (EEM) programs. If the U.S. Department of Housing and Urban Development (HUD) adds any additional sections of the act to the policy, CMD will communicate those changes.

Important Points to Remember

• To remain eligible for the lower 3% required investment, the case number must be assigned before January 1, 2009.
• Guidelines relating to the source of down payment are unchanged. For example, acceptable gift funds can still be used for the 3.5% down payment (required investment) and / or closing costs.
• Closing costs can no longer be financed or considered part of your required investment.
• Whether purchase or refinance, the loan amount, including the UFMIP financed, cannot exceed 100% of the appraised value or purchase price (the lower of the two amounts, if applicable).