Hathaway Duke

Iftikhar Ahmad, 36, Stockton, California, pleaded guilty to two counts of mail fraud and one count of engaging in monetary transactions involving criminally derived property. The charges relate to a widespread mortgage fraud scheme centered in the Stoc…

Front and center in the business section today is a massive version of the photo above, via Star Tribune. Accompanied by an article with more detail on the ongoing saga down at the Sexton, where only 36 of 123 units are occupied, and the entire project is a messy tapestry of fraud, foreclosure, and lawsuits. “[The Sexton] doesn’t come up in conversations very often, but when it does, the comment usually is something like ‘That place is really a mess,’” Melchior said. We’d expect to see some indictments for some of the principal actors soon, and one wonders whether the Sexton Building will be given similar treatment as the TJ Waconia, and is being set up for city administration/ownership/receivorship. Sexton Building: That Place is a Mess [Strib]

By James E. Pugh

On April 22, 2008, the City of Los Angeles passed Ordinance No. 179820 and thereby established a city-wide “Green Building Program.”  The program is modeled after the U.S. Green Building Council’s Leadership in Energy and Environmental Design (“LEED”) building standards.  The program addresses five key areas including: (1) site location; (2) water efficiency; (3) energy and atmosphere; (4) materials and resources; and (5) indoor environmental quality.  The new ordinance amends the Los Angeles Municipal Code (“LAMC”) by adding new Sections 16.10 and 16.11, which will likely have a considerable affect on the type of developments the City will approve.

The program sets mandatory standards of sustainability for large projects.  In essence, the program provides that no building permit shall be issued for projects at or above 50,000 gross square feet of floor area unless “[t]he project applicant…demonstrates that the Project meets the intent [emphasis added] of the criteria for certification at the LEED certified level.”  See LAMC, Section 16.10 D.1.  Formal LEED certification, however, is not required.  The program applies to residential, non-residential, and mixed-use projects that fall within the square footage and height requirements established by the new law.  There are exemptions for projects dealing with historic resources or those projects that can be “grandfathered” based on plan check and entitlement status.  See LAMC, Section 16.10 F.1-5.  The program also incentives developers to build green by expediting projects that voluntarily commit to formal LEED silver or higher certification.

Overall, the Green Building Program could introduce another layer of entitlement complexity.  Nonetheless, it should also help the City accomplish its stated goal of reducing natural resource use, creating healthier living environments, and combating global climate change.  The new standards for non-residential and high-rise residential projects will be effective on November 1, 2008.  The standards will apply to low-rise residential projects on May 1, 2009.

For more information please contact James Pugh.  James E. Pugh is an associate in the Real Estate, Land Use and Environmental Practice Group in the firm’s Los Angeles office.

Greg Ip at the Wall Street Journal outlines the case for and against a “pause” in Fed Cuts after this week. Argument for further Cuts: “There’s probably a recession going on, and the Fed may want additional insurance that the recession does not become an escpecially severe one.” Argument against further cuts: “Additional interest rate cuts could be a little bit worrisome…it could for example lead to further weakness in the dollar, it could lead to futher upward pressure on commodity prices.” In other words, it all will boil down to what the Fed believes is a larger threat to the economy - inflation, or a recession? So far, the Federal Open Market Committee has come down frimly in the recession-is-the-biggest-threat camp. Greg also goes on to make what we think is the central point to this discussion: If we are in a recession, inflation should take care of itself, as it is awfully hard for inflation to persist in the face of slumping demand and zero or negative job growth. Awfully hard is not the same is impossible however, and much of the global rise in prices is a result of offshore demand, so the Fed is indeed in a precarious spot here. This week’s cut is a forgone conclusion, but the big news will be if the statement released at the conclusion of the Fed meeting signals an end to cuts. This would almost certainly send mortgage rates upward. Fed Weighs Pause After Next Cut [WSJ]

Last Week A thin economic calendar had bonds marching to the beat of the stock market, which posted small gains for the week (Dow up .3%, NASDAQ up .8%) The notion that inflation may remain elevated and tough to contain and that an end to the Fed easing cycle may be in sight caused mortgage rates to lose ground most of the week. The 30 year fixed rate conforming benchmark increased by .125%-.25%. This Week A shortgage of data will not be a problem this week, as the economic calendar is PACKED with high-impact reports, with the Federal Open Market Committee announcement smack in the middle of it. This will give the markets plenty of information to assimilate and could make for a volatile week. Mortgage bonds have been fairly range bound and creeping lower, causing a net-rise in mortgage rates over the past 5 weeks, so this week will give market participants a substantial chance to re-calibrate and set direction for prices as we march into spring proper. The Fed (meets Tue, Wed) is expected to cut the Federal Funds and discount rate by .25%. More important than the cut - remember mortgage rates often rise after a Fed cut - market participants will scrtunize the statement released on Wednesday for any hints that the Fed may be near the end of it’s easing binge. If there are any strong signals that the Fed is done easing, mortgage rates could rise significantly. Other key events on this week’s calendar are outlined in the table below, but the Core PCE (a measure of inflation) and the Jobs Report on Friday stand out to us as the two most important non-Fed data points to watch. A weak job report could help mortgage rates improve, while a “hot” read on inflation could push rates higher.

Richard Weldon Crowder, II, and Gary Mark Mills were sentenced by United States District Judge Jose E. Martinez to 108 months and 46 months imprisonment, respectively. Co-defendant Karen Lynn Sullivan was sentenced to 50 months’ imprisonment. The def…

Duane McKinney, 35, Washington, D.C., was found guilty by a jury in the U.S. District Court for the District of Columbia on charges of fraud, theft, and monetary transactions. Specifically, McKinney was found guilty of four counts of mail fraud, two …

If an organization was raffling off a $1.4 Million dollar home near Lake Minnetonka for charity, how many tickets would you buy? Unfortunately, we won’t get to see this play out: The state Gambling Control Board has blocked an Inver Grove Heights organization from raffling off a home near Lake Minnetonka worth $1.4 million. The proposal from CLIMB Theatre would have sold $20 raffle tickets for a chance to win the house. The group that puts on plays and teaches classes at schools had wanted to raise $200,000 for itself and $700,000 for more than 400 other nonprofits. What we’d like to know is who, when and why did someone donate a Million-dollar-plus home to a theater troupe specializing in childrens “education?” The obvious upside here? Fewer kids will have to suffer through these plays: CLIMB produces original plays and classes for K-12th grades on topics like: Bullying Prevention, Respect, Acceptance of Differences, Global Climate Change, Self-Control, Doing Your Best, Methamphetamine Prevention, Responsibility, Harassment Prevention, Cyberbullying Prevention, Friendship. Gambling Board Shuts Down Home Raffle [WCCO]

Citing a new national report on subprime mortgages, Arizona Attorney General Terry Goddard said that efforts of servicers and government officials to prevent foreclosures have increased but still fall short of the need to effectively respond to the for…

Berry Louidort, Lauren Jasky, and Ralph Michel, Palm Beach County, Florida were charged in a Criminal Complaint filed in federal court on April 22, 2008.  The defendants were arrested and are expected to make their initial appearances before Unite…