Speaking of property sales...

... have you seen the residential resale reports for Q2? Sales were slightly down statewide in Utah, although still up in Metro Salt Lake. The problem is what's happening elsewhere. Much of the market here is driven by money from sales in California, Nevada, and Arizona. All three are down precipitously. A significant part of the local gravy train has stopped running down the track. We aren't feeling it yet, but we will. All you real estate arbitragers (especially those who are my clients): get liquid.

Ka-Ching, Ka-Ching, Ka-Ching Went the Trolley

Wow, look at the latest property sale here in town. ScanlanKemperBard (SKB), essentially a real estate investment pool, has bought Trolley Square from Simon Property Group for $39.6 million and is planning another $40 million in renovations, starting with a facelift next year. Renovations also include a 50,000sf anchor building, new parking, and 150 condos.

Well, the place definitely needs parking, but I don't know about an anchor with a bunch of condos plopped on it. Sounds like it would dwarf everything else on the Square and would block the view of the landmark water tower, a real case of Stalinist planning aesthetics. Could definitely use new residential space in that neighborhood, though.

The real problem I see is that SKB is already talking about "improving the mix of tenants," which is Mall-fixer code for "We don't like small businesses and are going to run them out." If that's the plan, tenant and neighborhood groups need to get organized NOW. I know Daughter No. 2 will turn into a rabid dog if Black Chandelier is forced to close.

More on Kelo

Confession time. Before I was a lawyer, I was a journalist. Not much of an ethical change, I know, but at least lawyers don't pontificate daily on topics they are bone ignorant about, and if a lawyer lies, there is at least the remote possibility of disciplinary action, whereas the probable result for a lying journalist is a lucrative contract with Fox News.

The odd coincidence here is that jounalists are at their worst when reporting legal stories. In my roughly quarter-century of paying attention to such things, I have yet to see a news report of a court decision not completely bollocks at least one, significant point.

Today's Exhibit A: Steven Greenhut's tirade in the Orange County Register (The SL Trib also published it here.) completely misconstruing both Kelo and the Ohio Supreme Court's Norwood decision. First, Greenhut asserts that the SCOTUS should have found condemnation on behalf of private entities unconstitutional. Just how utilities, railroads, etc. would continue operating without this authority neither Greenhut nor any of the other nuts bashing on Kelo make clear. Could be because they are unclear on the concept. Greenhut goes on to congratulate the Ohio Supreme Court for finding that such condemnations are illegal. Too bad Greenhut never read the opinion, because if he had, he would have realized (assuming literacy on his part) that the Ohio SC made no such ruling. It ruled that economic benefit alone could not justify such a condemnation, but it left valid condemnations for health reasons or other demonstrable public purposes where the property ends up in private hands.

With reporting like this, it's no wonder the public has no idea what's going on.

Kelo at the state level

The Ohio State Supreme Court recently ruled that condemnation to support private development can not be based on economic benefits alone (Note the court did not hold that such condemnation was impermissible, just that it needed something other than purported economic benefits to justify it.).  Advocates such as Dana Berliner of the Institute for Justice immediately announced that this was a refutation of the U.S. Supreme Court's Kelo decision.  Of course these are the same people who screamed the SCOTUS was making new government authority when it decided Kelo.  Wrong on both counts.

The SCOTUS did not create the authority; the states did, in the early days of the Republic, and municipalities have been pushing the envelope of this authority for the last, several decades.  What the SCOTUS held was that the U.S. Constitution did not prohibit states from giving municipalities such authority.  In other words, the SCOTUS held that scope of condemnation authority is a state matter.  The Ohio Supreme Court's decision is in reality an affirmation of Kelo.

Speaking of Khashoggi...

...since Utah is rather isolated, it may have lost track of him after he made such hash of the Triad Center and it tanked in the bankruptcy court. Of course his arms dealing and his ties to Jim Critchfield, Kermit Roosevelt, and Bebe Rebozo are old news, and everyone ought to know that he was one of the major money shovelers for the Iran-Contra scam, but he was also arrested for fraud but aquitted in 1992 (Wonder if that result had anything to do with his long-standing status as a CIA asset. Think I need a foil beanie? Look up Barrick Gold some time.). It also appears his financial institutions provided cash for 9/11, mainly through Armenian connections. Other than that, he's kept a low profile lately. Oh, and his nephew Dodi Al-Fayed was the boyfriend who was killed with Princess Di.

Funny thing about real estate investment. You never know whom you'll run into, especially as the air becomes more rarefied.

City Centre

Well, it's August, and the weather still knows how to rain. One of my chief indicators of the real estate market has turned positive, namely I am once again receiving more erectile dysfunction spam than distressed real estate spam. Do I think the national picture is actually improving, though? Nah. ED is probably just getting worse.

Anyway, Price Prowswood sold City Centre (aka the Chamber of Commerce building) to Wasatch Commercial Management for a cool $50 million. That price tag better include the whole half-block. That project has been sideways from Day One. It was supposed to expand across the whole half-block but had the poor timing to run up against Adnan Khashoggi's Triad Center and the 10-year train wreck that was the Utah economy from the closing of Geneva and Kennecott until the Clinton administration (Remember broad-based, economic growth? Hate to burst the bubbles of all the FM 97.5 listeners, but it was all under Clinton, not Reagan, Bush I, or Bush II.). Dell Loy Hansen of Wasatch (which also owns the Wells Fargo Building [Is that the First Interstate Building? Hells Cargo has its name on so many buildings, it's hard to keep it straight. Beginning to look like Seattle.], the Ken Garff Building [aka First Security], and the Chase Tower) says they're dedicated to creating a vibrant, downtown core. More power to them. Hope they're remembering a residential element in their plans, otherwise, they might as well pile their money in the parking lot and light it on fire.