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Wednesday, July 31, 2024

L.A. Officials Reject Newsom Order To Clear Out Homeless Encampments

 Via Headline USA,

Los Angeles officials are pushing back on California Gov. Gavin Newsom’s order this month to start clearing homeless encampments, arguing the effort to clean up the city’s streets won’t work.

I do not believe that it is ultimately a solution to homelessness,” said Democrat Mayor Karen Bass, according to the Denver Gazette

“How are they supposed to pay for their ticket, and what happens when they don’t pay?” she continued. “Does it go into a warrant and give us an excuse to incarcerate somebody?” 

Los Angeles County Supervisors Chair Lindsey Horvath agreed with Bass, calling the order to clear out homeless camps “unconscionable.” The solution to homelessness is not “arrest,” she insisted. “It is not pushing people from community to community.”

Horvath also accused Newsom of setting a troubling precedent.

“The criminalization of homelessness and poverty is dangerous,” she said. “It does not work, and it will not stand in Los Angeles County.”

Newsom issued the executive order last month after the U.S. Supreme Court released a decision giving local officials more power to remove those illegally living on the streets and camping out in public parks.

Local governments are not legally obligated to follow Newsom’s order, but failure to do so could result in critical funds potentially being withheld.

This executive order directs state agencies to move urgently to address dangerous encampments while supporting and assisting the individuals living in them—and provides guidance for cities and counties to do the same,” Newson said in a statement. “There are simply no more excuses. It’s time for everyone to do their part.”

Horvath warned Los Angeles officials would not tolerate a funding cut from Newsom’s government.

“I don’t think that threatening funding at a time where we’re trying to get more people served and more people housed is a place that anybody wants to be in,” she said.

California has the largest homeless population in the country, with more than 180,000 people in the state estimated to be living on the streets.

https://www.zerohedge.com/political/la-officials-reject-newsom-order-clear-out-homeless-encampments

Monday, July 29, 2024

San Diego Postpones Discussion On 1,000-Bed Shelter Proposal To September

 by Sophie Li via The Epoch Times,

Discussion on San Diego’s plan to lease and convert a commercial building into a long-term 1,000-bed homeless shelter and resource center is now postponed until September, the mayor announced July 25.

The San Diego City Council voted 7–2 on July 22 to revisit the topic later, and Mayor Todd Gloria said Thursday that the decision to further delay the discussion was made to allow additional time for project review.

Concerns that have been raised by the council include property rent, operational cost, and insufficient analysis of the leasing terms.

According to Mr. Gloria, during the delay, city officials will work with the city attorney’s office regarding such feedback and will also convene a working group to develop a design and preliminary operations plan.

“As Mayor, I am resolute in further expanding shelter because the status quo on our streets is unacceptable,” Mr. Gloria said in a statement.

Under a 30-year lease agreement, the city plans to renovate a commercial building in the city’s Middletown area, near the airport, into a homeless shelter campus. The facility will include a commercial kitchen, laundry facilities, dining areas, recreation spaces, and showers.

In addition to providing shelter, the project will offer job training, meals, housing navigation, and behavioral health support.

The 65,000-square-foot property, located at Kettner Boulevard and Vine Street, covers 1.8 acres and includes a two-story building with 134 parking spaces.

The city council’s vote on July 22 instructed city attorneys and staff to prepare an analysis of the lease before its July 30 meeting.

While some councilors remain open to further discussions on the project, councilors Vivian Moreno and Kent Lee both voted against doing so, citing concerns that the terms presented in the lease are financially irresponsible.

“The real estate transaction that is at hand is not one that truly does protect the taxpayers,” Mr. Lee said during the meeting.

“The only responsible thing to do to protect our taxpayers, in not simply just to prolong this discussion, it would be to actually reject these lease terms.”

Councilors who voted to continue deliberations also expressed concerns about what they said was an insufficient analysis of the lease terms and the project’s costs.

Last week, the city’s Office of Independent Budget Analyst raised questions about the project’s affordability.

Over the city’s lease term, the cost is expected to be $72 million.

Instead, the budget analyst proposed that the city could save $15.7 million by purchasing the property and then renovating it.

However, according to the mayor, the property is currently not available for sale.

The analysts’ report highlighted concerns about “significant upfront and ongoing costs,” including rent, lease operations, tenant improvements, and program expenses.

The mayor’s office estimates that facility maintenance costs will reach $12.5 million over the lease term, with an additional $26.4 million needed annually for operational expenses.

San Diego Mayor Todd Gloria speaks at the press conference at H Barracks on June 6, 2024. (Jane Yang/The Epoch Times)

The report also detailed a monthly cost of $32,000, covering property taxes, maintenance, utilities, and insurance.

Analysts also said that these costs exceed the budget currently allocatedfor homeless programs for the 2025 fiscal year.

Currently, under the lease agreement, the city is responsible for upgrading the structure to meet the shelter’s needs. However, the councilors argued that such upgrades should not be the city’s responsibility as a tenant.

“I do not believe that we should be using taxpayer money to fix [the property owner’s] roof,” Councilwoman Marni von Wilpert said.

Some councilors indicated they might support the project if the terms were revised.

The mayor asked the council for more specific bargaining points the following day.

“My administration is happy to continue refining the current proposal, but council members must provide specific negotiating points, which I am immediately requesting from them,” Mr. Gloria said in a statement on July 23.

No specific date has been set for further discussions. The council is in recess in August.

https://www.zerohedge.com/political/san-diego-postpones-discussion-1000-bed-shelter-proposal-september

Sunday, July 28, 2024

US homeowners insurance underwriting loss in 2023 was worst this century

 When the rising cost of property and catastrophe reinsurance in the United States gets called out as affecting the affordability of insurance, commentators would do well to remember just how poorly US homeowners property insurance underwriters have performed.

Reinsurance pricing is often cited as having a negative effect on the affordability of homeowners insurance in the United States, in particular in catastrophe exposed states such as Florida and California.

But the way reinsurance pricing has been rising is not at all surprising, when you consider just how unprofitable the homeowners insurance business has become.

Rating agency AM Best highlighted this today, in reporting that last year the United States homeowner’s insurance segment experienced its worst underwriting results since at least 2000.

In fact, the segment suffered a $15.2 billion underwriting loss in 2023, which was more than double the losses seen in the previous year.

AM Best explained that the 2023 loss was also the worst experienced this century, with $14.8 billion in losses in 2011 the next highest figure.

The rating agency notes that continued shifts in population towards catastrophe prone regions of the US, is a key driver.

“The U.S. population overall grew 7.4% between 2010-2020 but rose 10.2% in the South and 9.2% in the West during the period,” David Blades, associate director, Industry Research and Analytics, AM Best explained. “Population trends show residents increasingly moving toward regions that are more prone to hurricanes, severe convective storms or even wildfires.”

It’s not just the population shifts though, it’s also the increasing values-at-risk of natural catastrophes and severe weather, with inflation a further driver, that are driving loss potential higher in catastrophe prone regions.

“A growing population means an even larger rise in real property development and thus in insured values,” added Christopher Graham, senior industry analyst, AM Best. “Construction in catastrophe-prone areas adds to flood risk. It also increases the risk of wildfires in areas prone to them due to human activity, as well as utility companies.”

AM Best said that the direct combined ratio for homeowners insurance in 17 US states in 2023 surpassed the breakeven threshold of 100.

Since 2017, the number of states recording underwriting losses has been in double digits every year except 2019 and 2021. Prior to 2017, the count had consistently been in the single digits, AM Best explained.

The rating agency notes that, “this increase is more evidence of the impact that climate risks and population migration has had on the homeowners segment’s results.”

AM Best said that loss ratios are likely to remain pressured, also citing the more challenging reinsurance environment, which is clearly a response to insurers poor performance and also the fact more losses were previously being passed to reinsurers, until the reset in reinsurance attachments and terms that occurred over the last couple of years.

Underscoring just how bad things are in US homeowners insurance segment, AM Best said that, “a return to underwriting profitability for the segment over the near term is unlikely.”

Which, for reinsurance companies and ILS fund managers, makes selectivity of partners and the terms of coverage offered absolutely critical.

It’s unfair to tar all US homeowners writers with the same brush, as many are delivering profitable underwriting results. But still, maintaining an adequate share of losses, between primary insurers and reinsurance capital is very important.

Also critical is that there is no return to soft market terms and conditions, with very low attachments.

It’s important to look at the drivers behind the higher reinsurance rates and tougher coverage terms, of which the unprofitable performance of homeowners books of business is one of the most important.

While this is a challenge for primary insurers, there is a need to demonstrate the long-term profitability of portfolios in order to encourage better pricing and terms from capital providers.

As such, capital and capacity partnerships may become key going forwards and this could be a way for reinsurers and ILS funds to get clearer visibility into how homeowners businesses perform, which should ultimately benefit the buyers of reinsurance when renewals come around.

https://www.artemis.bm/news/us-homeowners-insurance-underwriting-loss-in-2023-was-worst-this-century/

Saturday, July 27, 2024

Barcelona wants to get rid of short-term rental units. Will other tourist destinations too?

 Imagine planning a vacation and not being able to check Airbnb or another online booking site for an apartment in which to spend a few days walking, shopping and eating among the locals. Would a hotel do?

That's the future confronting visitors to central Barcelona in four years. To safeguard and expand the housing supply for full-time residents, local authorities want to rid the Spanish city known for its architecture, beaches and Catalan culture of the 10,000 apartments licensed as short-term rentals.

Barcelona City Hall announced last month that it would not renew any tourist apartment licenses after they expire in 2028. Deputy Mayor Laia Bonet said the city wants tourism, which accounts for 15% of the local economy, but must help residents cope with skyrocketing rents and real estate prices.

“Our housing emergency obligates us, forces us, to change the way we do things and to put the priority on housing above our policies for accommodating tourists,” Bonet told The Associated Press.

Property owners plan to fight the decision, arguing that eliminating short-term rentals would threaten their livelihoods and leave the city without enough temporary lodging: Some 2.5 million tourists stayed in an apartment last year, according to the Association of Tourist Apartments of Barcelona, also known as Apartur.

Residents of the city, which has a population of about 1.6 million, have campaigned against “overtourism” for several years, but the anti-tourism sentiment has grown more heated: During a protest in Barcelona's Las Ramblas district this month, some participants shouted “Go home!” and squirted water pistols at people seated at outdoor tables.

Residential real estate prices in Barcelona have increased by an average of 38% over the past decade, a period in which the average rent soared by 68%, according to the municipal government. Like in other popular urban areas, many young people who grew up there struggle to afford a place of their own. Authorities say a lack of supply is partly to blame.

A global dilemma

Other cities around the world also are struggling to reconcile the housing needs of year-round residents, the rights of landlords and the allure of the economic benefits that being a top tourist destination can bring.

Measures to limit the free-for-all of investors converting apartments into holiday rentals have included partial bans, caps on the number of days units can be let out and registration requirements for frequent hosts.

New York cracked down on short-term apartment rentals in September with rules requiring owners to remain in their residence when they host overnight visitors and capping the number of guests at two. Maui's mayor said last month that he wants to end condo rentals to tourists to help deal with a housing shortage made worse by last year's devastating fire on the Hawaiian island.

In Italy, a 2022 amendment to national legislation allowed the lagoon city of Venice to limit short-term rentals, but the city administration has not acted on it.

Before moving to eradicate tourist apartments altogether, Barcelona officials tried more limited approaches. Its previous mayor, a former housing activist, made several moves to regulate the market, including a ban on the rental of individual rooms in apartments for stays under 31 days in 2020. The city also has moved aggressively to get unlicensed tourist apartments removed from online platforms.

“We have accumulated lots of know-how in Barcelona that we are ready to share with other cities that want to have this debate,” Bonet said.

What's at stake for owners

The decision in Barcelona was made possible after the government of Catalonia, the northeast region of which Barcelona is the capital, passed a law year year stating that current licenses for tourist apartments would expire by 2028 in areas determined to have shortages of affordable housing.

Local governments that want to renew the licenses must demonstrate that doing so is compatible with locals being able to find affordable housing. Barcelona City Hall said it wasn't.

Spain’s conservative opposition party is challenging the regional law in the country's Constitutional Court, alleging that the law infringes on property rights and economic liberty. Apartur, which represents 400 owners of short-term rental units in Barcelona, argues the industry has become a scapegoat in a city that has not granted any new tourist apartment licenses since 2014.

Bonaventura Durall runs a company that owns and rents out 52 apartments near Barcelona’s beachfront. Forty of the apartments are located in a building that his business and others built in 2010 to tap into the growing short-term rental industry. He says the municipal government's plan to phase out vacation rentals is unfair and puts his business and its 16 employees at risk.

“There is an investment behind this that has created jobs and tax revenues and a way of life, which will now have its wings clipped,” Durall said. "This is like you go to a bar and take away its liquor license or you take away a taxi driver's permit to drive a taxi.”

Critics also say the move amounts to Barcelona exercising eminent domain and will inevitably create a black market of unregulated vacation rentals. Bonet, the deputy mayor, denies that City Hall is expropriating anyone's property.

“We are not saying that these apartments will disappear and therefore the owners of these apartments can’t generate revenue from them,” Bonet said. “They will have the same assets, but they will have to put them to the use they were originally built for, which is to house families.”

The limits of the sharing economy

Ignasi Martí, director of the Observatory for Dignified Housing at Spain’s Esade business and law school, said that in addition to likely facing legal hurdles, the initiative would at most only dent rental costs.

Most studies indicate that Barcelona needs about 60,000 new housing units to meet current demand, he said.

But Martí thinks that removing tourists from residential buildings could improve the daily lives of people who call the city home.

“Take the case of a mother who needs to leave her child with a neighbor. If she lives in a building with tourist apartments, she knows that she can’t count on them,” he said. “Tourist apartments undoubtedly have repercussions in the possibility of creating ties, solidarity or making friends, beyond the issue of noise and people coming and going at any hour."

Esther Roset, a 68-year-old retired bank worker, thinks so, too. She has spent years complaining about the tourist apartment above her home. Some guests have done things like vomit off the balcony, brought in prostitutes and opened a fire extinguisher in the stairwell.

Apartur argues that such behavior is rare, in party because of Barcelona's strict regulations.

Roset has other tourist-related pet peeves, such as the expensive food joints catering to foreigners that have swept away the traditional bars where she could get a simple sandwich. She pointed to three nearby restaurants that specialize in brunch. Roset, like most Spaniards, doesn’t do brunch.

“I shouldn’t have to leave. This is my apartment. If the tourists who came behaved, OK, but one out of every 10 doesn’t,” she said. “At the end, I will have to follow the advice of a lawyer and hang a sheet from my balcony with the message ‘Tourist go home.’”

https://www.yahoo.com/news/barcelona-wants-rid-short-term-051708470.html

US Office Loan Pain Is Only Starting to Ramp Up

 

  • More than $94 billion of US CRE is currently distressed
  • Pimco says lenders will ‘face the music’ as loans mature

Any hopes that falling borrowing costs would stem the pain from the US office downturn were swept away this week.

Deutsche Bank AG set aside more money for souring US commercial real estate loans, while a Blackstone Inc. mortgage trust slashed its dividend. New York Community Bancorp’s shares then plunged the most since the last bout of CRE-related turmoil in March after provisions for losses came in at more than double the average expected by analysts.

https://www.bloomberg.com/news/articles/2024-07-27/us-office-loan-pain-is-only-starting-to-ramp-up-credit-weekly

Wednesday, July 17, 2024

1000s Of Marylanders Furious on Eminent Domain Risk For New Transmission for AI Data Centers

 Thousands of Marylanders are discovering firsthand the dark side of 'The Next AI Trade,' in which power grids must be upgraded and expanded to handle increased load demand from AI data centers and other electrification trends. This expansion involves eminent domain and the destruction of farmland and forests.

Strict climate change rules from progressive lawmakers in Annapolis are some of the main drivers in the chaos unfolding across three counties in the blue state, as these rules discourage the development of new fossil fuel power plants, forcing power companies to expand transmission systems to import electricity from surrounding states versus building clean NatGas power generators with carbon capture systems near areas where AI data centers are being constructed. 

Pro-subs are all too familiar with our 'powering up America' theme dubbed the "The Next AI Trade." However, the situation playing out in Maryland has revealed a dark side to this theme, which we were the first to report last week in a note titled "Dark Side Of 'The Next AI Trade': Seizing Private Property For Transmission Lines." 

The evolving situation in Maryland involves a group called "Stop MPRP." MPRP stands for "Maryland Piedmont Reliability Project," which is a project that plans to upgrade the region's 500,000-volt transmission system that runs across three counties: Frederick, Baltimore, and Carroll. The upgrades will ensure enough power is imported from surrounding states to supply new AI data centers coming online in southern Frederick County. 

Stop MPRP has over 8,000 furious Marylanders who are quickly organizing to oppose the MPRP project because they say it's a massive "land grab that will not benefit our community while devastating businesses, farms, and property values." 

In recent weeks, hundreds of Marylanders, if not more, in all three counties have met with local government and power company officials to discuss the project - as many are concerned about plunging land values, destruction of farms and forests, and high risk of eminent domain. 

Local news WMAR interviewed second-generation farmer Brandon Troy, who said the high-voltage power lines will run directly through his farm. 

"What they basically want to do is come from over the hill there and come straight across everything, come across the crop land, across the wetlands and up in here to our pastures to basically cross us," Troy told WMAR, adding, "You couldn't pick a wider swath through our farm." He warned his property value would tank if these power lines were built. 

In a recent note titled "Maryland 'Can't Import Itself Out Of Energy Crisis' Amid Urgent Need To Boost In-State Power Generation," we discussed Maryland's struggling energy utility system. Due to strict green policies, the state attempts to resolve its power crisis by importing energy from neighboring states rather than developing in-state power generation capabilities.

The dark side of the Next AI Trade will involve land grabs, and Marylanders are some of the first to figure out this unfortunate reality. However, we suspect if Annapolis had common sense, there wouldn't be a need for new massive transmission lines because NatGas power generators could be built down the street from the data centers. 

"Current views along the proposed route," one landowner said. 

Another person said, "Here is what they intend to ruin for me..." 

"Just a couple of views that we will lose if this happens," another landowner said. 

Great job, Democrats. Your green policies are backfiring, causing anxiety among landowners.

https://www.zerohedge.com/markets/thousands-marylanders-furious-about-eminent-domain-risk-new-transmission-line-powering-ai

Housing costs have nearly doubled in swing states since 2020

 Monthly housing costs have skyrocketed in recent years. Now, homebuyers in the states that will decide the upcoming presidential election are paying almost double what they were four years ago, according to new Redfin data.

The median monthly housing payment in battleground states has nearly doubled since the 2020 election, increasing 92% to an all-time high of $2,161.

Home prices in swing states are also up, rising nearly 40% since the last election to a record high of $316,063 in 2024, the report found.

Redfin’s analysis of housing and income data examined trends in red and blue states as well as seven swing states: Arizona, Nevada, Wisconsin, Michigan, Pennsylvania, Georgia and North Carolina.

Since 2020, housing costs have risen faster than incomes and that’s made the typical swing-state home unaffordable for the average family. These days a swing-state family has to earn $86,421 if they want to spend less than 30% of their income on payments for the median-priced home, nearly double the $45,140 they needed to earn in 2020. 

That shift could have a major impact on the upcoming election as voters continue to think about which candidate will improve their standard of living.

“Voters in swing states care about housing affordability because soaring home prices and mortgage rates, along with a shortage of homes for sale, have made homeownership feel impossible for some Americans,” Redfin senior economist Elijah De La Campa said in a statement.

Recent polling suggests swing state voters prefer former president Donald Trump over President Joe Biden when it comes to the economy but on housing specifically, the two are essentially tied.

As for red and blue states, the Redfin report shows housing costs have surged in both. The median housing payment in red states is $2,066, up 95% since 2020. In blue states, monthly payments are even higher ($3,311) though they haven’t risen as much (83%).

Even so, red states like Texas and Florida have shown more willingness to build and are adding more new homes than anywhere else in the country, outpacing more populated states like California.

In March, Biden unveiled a series of proposals aimed at making housing more affordable, including a plan to build over two million homes.

The president has also called on Congress to pass legislation that would bar corporate landlords who raise rent more than 5% a year from certain tax advantages, though homebuilders warn that could discourage developers from building new units and hamper inventory further. 

Meanwhile, the GOP’s 2024 platform, vows to make housing more affordable by opening “limited portions of Federal Lands to allow for new home construction,” promoting homeownership through tax incentives and cutting “unnecessary regulations that raise housing costs.”

Both Trump and Biden have hiked tariffs on lumber, steel and other building materials that have helped drive up housing costs.

Housing affordability was also an issue when Trump and Biden faced off in 2020. During Trump’s time in office, from 2016 to 2020, the median home price in swing states shot up 40%, Redfin noted. However, part of that was because the pandemic housing boom had already started.

https://thehill.com/changing-america/respect/poverty/4776229-housing-costs-have-nearly-doubled-in-swing-states-since-2020/

Tuesday, July 16, 2024

'Biden’s rent cap plan'