Thursday, July 1, 2010

Is the Sierra Madre City Council Merely Rearranging the Deck Chairs on the Downtown Investors Club's Titanic?

Way back there in the year 2005 certain local folks were let in on a pretty sweet investment secret. It was something so good, and such an obvious winner, that nobody with an ounce of sense was going to want to miss out. That it was being offered sub rosa, and only to those connected local folks truly in the know, made it all the better. And they emptied their retirement accounts and invested deeply. It was easy money, and everybody was going to get paid.

Of course, that investment was the Downtown Specific Plan. Yet somehow things didn't quite work out as planned. And ever since that special moment in time there has been a small group of very anxious, and rather resentful, people who have had half a decade to dream of getting their money back.

Five years ago things were decidedly different, of course. The American banking system had obviously lost its collective mind and was lending vast sums of money for even less than it took to get it. The subprime mortgage mess being something the world has yet to get over, and might not for quite some time. And in its wake it left behind millions of foreclosures, vast seas of unsold condos and store fronts, and trillions upon trillions of dollars in serious new debt for the always generous Uncle Sugar.

But that was then. Now the Downtown Investors Club is back in power here in Sierra Madre. Their handpicked councilmembers are behaving as expected and pushing all the right buttons. The DIC waited a long while for this moment, and the time has come for them to reclaim the opportunities that were so unceremoniously ripped from their hands 5 years back. There is no way that they will fail to achieve the promise of investments made back then.

Except that there is this one little problem. It is no longer 2005, banks are no longer throwing their money at any fool with a blueprint and a lot, and even if they did who would be able to buy the resulting condos if somehow they were actually financed and built? You really couldn't find a worse time to try and make money out of the kinds of high-density downtown development so popular with our local investors half a decade ago.

This week the respected financial analyst John P. Hussman issued a Recession Warning. Now many folks who get their news from the popular sources might be thinking that this seems counterintuitive. Most believing that we were in a recession, and that we're now coming out of it. And that could very well be the case. But have you ever heard of the term double dip recession? Here is how they're reporting this story on Forbes.com:

Hussman Sounds Recession Bell - John Hussman, fund manager of Hussman Strategic Total Return (HSTRX) and Hussman Strategic Growth (HSGFX), is amping up his recession warnings, saying that, "based on evidence that has always and only been observed during or immediately prior to U.S. recessions, the U.S. economy appears headed into a second leg of an unusually challenging downturn"

Hussman recently noted that of the four pieces of his recession indicator, the only one not yet signalling a recession was the ISM Purchasing Managers Index, which needs to fall to 54 or lower. The most recent reading, from May, was well above that, at 59.7. But now, Hussman notes in his latest market commentary that the ECRI Weekly Leading Index, which has been a leading indicator for the ISM Index, has declined to -6.9%, a bad sign.

Now as bad and disheartening as that might sound, there is another report making the rounds this week. And this one is far worse.

Paul Krugman, Nobel Prize winning economist and New York Times columnist, declared in his June 27 column that the country is heading into what he fears might actually be a full blown depression.

The Third Depression - Recessions are common; depressions are rare. As far as I can tell, there were only two eras in economic history that were widely described as "depressions" at the time: the years of deflation and instability that followed the Panic of 1873 and the years of mass unemployment that followed the financial crisis of 1929-31.

Neither the long Depression of the 19th century nor the Great Depression of the 2oth was an era of nonstop decline - on the contrary, both included periods when the economy grew. But these episodes of improvement were never enough to undo the damage from the initial slump, and were followed by relapses.

We are now, I fear, in the early stages of a third depression. It will probably look more like the Long Depression than the much more severe Great Depression. But the cost - to the world economy and, above all, to the millions of lives blighted by the absence of jobs - will nonetheless be immense.

Some pretty sobering stuff.

So as our recently reorganized City Council works hard to bring the development dreams of the Downtown Investors Club to fruition, can it be this is really all in vain? That the worsening state of our economy precludes the kinds of things they might wish to do here? And all of the arrangements being made to benefit their invested supporters and patrons will never make it past the planning stage? Are they piping paper water to paper condos?

Can it be that all they're doing is rearranging the deck chairs on the Downtown Investment Club's Titanic?

51 comments:

  1. The answer to your last question, Crawford, is YES, they are only rearranging the deck chairs on the DIC's Titanic.

    Welcome to the long DEPRESSION Sierra Madre.
    Commercial real estate is in a depression right now. If you overbuild this town, all it will do is tank our home values.

    STOP THE INSANITY. No water rate (40%) hike!
    No new multi storied mixed use real estate downtown. No more destruction of our hillsides.
    No underground parking.
    No Bart (disgraced Titan Corp) Doyle style Eminent Domain.

    REMEMBER, Bart Doyle is in control of 4 of our council members, total control, him and his politician crook pals and crooked business pals totally control Buchanan, Mosca, Walsh and the Moron.

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  2. Will Joe Mosca be wearing the King's new clothes in the 5th of July Parade?

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  3. A year before people realized a major recession was about to hit, Don Watts was warning developer/ clients to sell. "Get out of land holdings, and that we were about to have a recession". Many didn't believe him, including all those realtor/ developers who were looking to make the "big money".
    Those who listened to him, have been thanking him for years now.
    The Downtown Investment Club membership, who are still hanging on, are either living in an alternate universe, like some City Councilmembers, or are not sane.
    Development is all about timing. Don said wait about 5 years minimum, then see. He said many of these people are blinded by the past. Promises made to people about making big money in development have been drugged by greed.

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  4. Maybe the name of our downtown should be changed to White Elephant Estates.

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  5. The City of Sierra Madre suppressed information on that water rate hike. There should have been a form/post card for people to send back if they protested the huge hike. It's perfectly fair for the city to state their case, why they need that big a rate, but very unfair to not let the PEOPLE decide for themselves.
    They clearly misrepresented this issue and I would not be a bit surprised if the a lawsuit against the city by the residents will be pending.

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  6. The state will be siphoning off 85 million dollars from CRA funding over the next two years, and with the major drop in local tax increment, many cities will be facing layoffs in bloated City Planning, Building Departments offices.
    The attention will then be on city employees trying to preserve jobs. Their own.

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  7. Our downtown property owners fall into two groups. The first group is people that have owned property in town for many years and really care about the town's future and the sucess of the business district. Some have even purchased property to keep it from being developed. The other group are the vultures who plan to develop and dump. Not all landowners are evil.

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  8. When does the Downtown Blight Ord. take effect?
    The SNF is an eyesore with weeds and boarded up windows.
    Who enforces it?

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  9. This economic decline will be a very long, dark decade. It will also help shut down the chain of overdevelopment starting at the top in Sacramento with Steinberg (SB 375) and his BIA and AFL-CIO juggernaut. There's no more golden eggs, and folks can go back to living a normal, sustainable life without the threat of constant takeover of residential and public spaces for private profit.

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  10. The hubris of Sacramento is being reeled in by some pretty harsh economic realities. Bad news for their obedient flacks on the Sierra Madre City Council.

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  11. Spoke to an educated but naive resident who checked the water rate propoganda on the city site. She believes the city and said "They are holding a meeting to let everyone know what is happening." If they say they need the money ... they must.

    God help us all. Yeah she voted for Mosca because she thought he was nice.

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  12. 9:06
    Thanks for your post. You are so right.
    There are two kinds of owners of downtown property.
    Two good people come to mind.
    Nancy Shollenberger and Mayor MaryAnn MacGillivray.
    These fine women are two of the very best in Sierra Madre. Both own rental property, Nancy owns commercial downtown and MaryAnn'a family owns residential rental property. Both ladies have given decades of honest dedicated service to Sierra Madre. Both could have profiteered off the DSP, but cared more about the town than their own profit. What a concept! Honest elected officials, a true rarity in Sierra Madre.
    They are the complete antithesis of the DICs. which include many ex-mayors and council people and their greedy pals.

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  13. Maybe the Downtown Investment Flub should apply to Washington for a bailout. Hopefully if they get the money they'll leave us alone.

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  14. Doncha know that's why the DIRTS had such a hard time rounding up potential City Council candidates? Form 700. It would have given up the names of the Montecito Development LLC investors. So, if your favorite former Mayor didn't run, it's a good guess they are an investor.

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  15. Great question Mr. Finewine.
    If Mosca is indeed wearing the Emperor's new clothes, keep you eyes open for the children that call out the truth.

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  16. Absolutely 9:06, there are good landowners, there are good developers and there are even good realtors who actually are community oriented.

    Sierra Madre just has a few too many of the other kind of landowners, developers and realtors.

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  17. Well, I guess that is a hidden benefit.

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  18. The question now is if there will be a truck big enough to properly transport the Emperor's throne. New clothes and all.

    Think there might be some room on the Stogiemens' flatbed?

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  19. When Greg Galletly, bankrupted lawsuited Greg, aka Dorn Platz, was being exposed for what he is/was by Pat Birdsall and others, one person got up and told the crowds to stop calling all developers evil. Her husband had been in development for 30 years and NEVER HAD A LAWSUIT.
    Honest developers exist, but must be an endangered species.

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  20. Judging by what Galletly did at One Carter, he was operating as more of a tree removal service than a developer.

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  21. Also a mountain decapitator.

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  22. Why are they raising water rates in these terrible times? It doesn't seem right to me!

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  23. The wise and sobering remarks by Hussman and Krugman bring to mind David Smith's remarks made before a reluctant majority of the city council around the dps/measurev time.
    Had that council prevailed, had Joe Mosca and John Buchanan succeeded in their development desires then, this city would be in a devastating condition, as Mr. Smith knew.

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  24. If the DSP had been built all that crap would be half empty and a part of some bank's federal bailout by now.

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  25. 1:07, there are projects to be done,the infrastructure does need repair,common sense dictates that we will need to spend money on that. The question is how much.
    The citizens do not trust the city staff or the city council majority,so this jacked up price is an insult.It's too much.
    The way in which the staff and city attorney went about this is an insult.Smacks of sneakiness.

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  26. 12:56, yes indeed. I remember her little talk. I felt sorry for her. He may never have been sued but he was an infamous womanizer and the builder of many questionable structures.

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  27. Projects were pulled out of the air in 2005; the "wish list" so to speak. Now five years later, when there's the possibility of EPA grant money, the big push to scare the rate payers into approving the whole shebang was too tempting. Public Works is looking to fund the Water Department for years to come and thus save its "fund" for projects for which there are no grant dollars and the General Fund won't be able to cover. Plain and simple. Get the residents to pay for it and save the water department revenue.

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  28. I am opposed to the tier system because it is nothing more than a consultant regurgitation in order to justify a paycheck.
    It was presented to us as ineffective as a conservation method.

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  29. Agreed, Ben. Don't we get charged more when we used more water now?

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  30. remember Vern HenselJuly 1, 2010 at 1:43 PM

    Hear, hear 1:28 so why all the added complication? Just what we need, more confusing water bills.

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  31. Planning Commission meeting, tonight, 7 p.m. One item on the agenda--house designs for Stonegate (formerly known at 1 Carter Ave.) Each house is to be individually designed and constructed as per the agreement, no "tract" look, no matter how expensive. And it is to conform to the new hillside standards for those lots in the HMZ. You can just bet that the new developers/owners representatives will push the limit to get more that they should be allowed.

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  32. A Communique From The Vern Hensel Liberation FrontJuly 1, 2010 at 1:57 PM

    NO WATER RATE HIKE!!!

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  33. channel 3 watcher when it's workingJuly 1, 2010 at 2:02 PM

    1:55, don't forget the developers' lawyers.
    An evening of lawyers and guidelines.
    I think our planning commission is up to the job, but everybody hold a good thought.

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  34. The agreements with One Stonehead were made under the old City Council. Is there anything to prevent the bobblehead council from worrying about whether the developer likes them or not?

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  35. Good question 2:06. Aren't there numerous legal documents that took many years to wrestle out covering that whole project ? Didn't city attorney Levin become a millionaire on those billing hours? You would think we're in good shape, but then again it is the inheritance from the notorious council of 2004.

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  36. Good question 9:06, when does the Blight Law take effect and when can we expect to see the SNF cleaned up? What about it Moran, Walsh, didn't you campaign on that issue? It's about time the City starts to enforce their ordinances.

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  37. As a former Planning Commissioner in another city, I can say for a fact that if there are concerns about the developers pushing the envelope on a project, people who know what they're talking about need to be present. It's tough to hold the line when nobody else in the room is covering your back, we need the residents there. There has to be a public record of specific concerns by the community, that's how it's created.

    Kudos to MaryAnn, by the way, she holds firm even as the thugs try to beat her up. Most people would cave.

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  38. The observation point on carterstonegate, once, maybe still, known as Lot 3, the most visible lot on the west ridge, is never to be built on thanks to MaryAnn. It ought to be called MaryAnn's Inspiration Point.

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  39. The word is that so far the new people ruining the hillsides have been much better than the last group.
    So let's hope that continues, and that unwanted development becomes if not palatable at least not disgusting.

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  40. We have some real toughies on the PC.
    In fact, I'd be willing to bet that the more they were pushed, the stronger they'd get.
    On the other hand, you never know what the lawyers, theirs and ours, will stir up....

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  41. Any chance the planning commish will make them build those houses underground?

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  42. long walk at 3:41

    Thanks for reminding us. Another great thing Mayor MaryAnn MacGillivray did for Sierra Madre!

    3:21:
    Kudos to Mayor MacGillivray! The thugs/dirts/barts/defamed her to the point of criminal slander. To think the dumb residents who believed a convicted crook, Susan Henderson and her LIES about MacGillivray and Shollenberger, is just disgusting.
    Shame on all you civic club and kiwanis fools.
    You now are responsible for the Bart Mosca/Bart Buchanan/Bart WALSH and Bart Moran gang of 4!
    Shame on all of you.
    Sierra Madre will be fortunate to survive.
    Pray for MacGillivray and her citizen's council.

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  43. Keep the comments coming. Keep the comments going at Council Meeting. When your stir the pot the "scum rises to the top"!

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  44. Our Planning Commission was great tonight. Pendleburry saw beyond what STAFF was pulling with the pictures contradicting the verbage. Thanks for catching their tricks.

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  45. The Planning Commission was certainly on their game tonight, and working with staff and legal progress was made. No small feat in this town. There was no trickery involved; just a commitment to accomplishing what was put before the Commission. Pendleberry is a great asset to the Planning Commission BECAUSE of his architectural background and experience. It's also good to remember that Sierra Madre does not have design review. It can be argued that tonight precedent was set in dictating the level of detail in exterior design of 28 houses to be built at Stonegate. Will that translate to a moratorium on faux stone throughout Sierra Madre? So you're adding a room to your little cottage and want to add some shutters. Will you be required to meet the same shutter standards as Stonegate? And for God's sake what was that craziness about requiring bamboo flooring? Tonight's Planning Commission was an example of all sides working for the common good. More Councils, Commissions, and committees should try it out!

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  46. Where was that vaunted planning commission when the Congs were building that school that wasn't a school?


    If I recall correctly a few of the commissioners were also really big fans of the DSP.

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  47. The Planning Commission is not the final authority - the council is.
    The PC is required to make findings and recommendations.
    They represent a variety of opinions, and it just comes down to whether you agree with the majority decision or not.
    I think they're the best working group SM has.
    Wish they had more authority.

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  48. Oh yeah you want the planning commission to have more authority???? Depends on the motives of who is on the commission. A lot of these commissioners were put on by the 2004, 2005 council so watch your building and planning codes for any changes. The citizens in 2006/2007 stopped several important changes that would have facilitated the Downtown Specific Plan that came before the P.C.

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  49. If the PC had more authority, the Carter project would have had to go back to the drawing board to have fewer houses, some of the huge homes in the canyon would not have been built, and Grove street's new castle would have been modified.

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  50. The Gang of 4 is dedicated to gentrifying Sierra Madre. Which in their dim witted purview means McMansions. They are convinced size matters.

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  51. Speaking of planning and development, I heard a wild rumor the other day that the Congregational Church was interested in the SNF.
    Anybody else heard that?

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