S1022 – Coming to a Foreclosed Home Near You

One of the sponsors of the bill, senator Raymond Lesniak (D-Union) portrayed the initiative as “a way to support property values and reduce crime by getting people into vacant homes, provide municipal tax revenues while stabilizing the housing market.” The other sponsors of the bill are senators Barbara Buono (D-Middlesex) and Assemblyman Jerry Green (D-Union).

This is the wrong approach to a dual problem: We have many foreclosed homes in New Jersey and we also have many people that for one reason or another can not afford a home. More foreclosed homes are coming down the pipe because the judicial moratorium on foreclosures has been lifted. As more homes are foreclosed, more people will become homeless.

S1022 will authorize the N.J. Housing and Mortgage Finance Agency (HMFA) – an independent authority with bonding capability as all independent authorities have – to create a corporation: The New Jersey Foreclosure Relief Corporation (NJFRC). NJFRC will start up with Council on Affordable Housing (COAH) funds frozen everywhere in the state. The life of this corporation is limited to 5 years but its effects will last 30 years. Its purpose will be to purchase foreclosed homes from the institutional owners (see banks) and…

“(2)   Every eligible property purchased pursuant to this act shall be restricted for occupancy as affordable housing for a period of 30 years.  The restriction shall be set forth in the deed and recorded in the office of the county recording officer of the county wherein the real estate is situated.  Affordability controls shall be imposed upon purchase and maintained upon transfer in accordance with the provisions of the Uniform Housing Affordability Controls promulgated by the agency.”

Municipalities will have the opportunity to purchase the home(s) but…

“8.    a.  A municipality that purchases an eligible property pursuant to this act shall sell and convey or lease the housing unit or units acquired within 60 days of the date of purchase, unless it is not possible to do so due to practical or market conditions.  In the event that an eligible property is not conveyed or leased within 180 days of the date of purchase, or remains vacant for a 180-day period during the pendency of affordability controls, the corporation, or the agency as successor to the corporation, may commence proceedings to take control of the property and to sell and convey or lease the property in furtherance of the purposes of this act and deed restrictions of record.”

And:

“b.    The governing body of a municipality that purchases an eligible property pursuant to this act may, by resolution, authorize the private sale and conveyance or the lease of a housing unit or units acquired pursuant to this act.  Every deed and rental agreement shall contain a provision specifying the requirement that the housing unit or units shall remain available to low and moderate income households for a period of at least 30 years.”

The houses so acquired will be sold or leased to families of low and moderate incomes plus individuals with special needs. They could also be used as half-way houses.

Individuals with special needs are defined in the bill as: “Individuals with mental illness, individuals with physical or developmental disabilities, and individuals in other emerging special needs groups identified by State agencies, who are at least 18 years of age if not part of a household. Special needs populations also include victims of domestic violence; ex-offenders; youth aging out of foster care; individuals and households who are homeless; and individuals with AIDS/HIV.”

I am not politically correct: I prefer an empty house to having bad neighbors. Better to be alone than in crappy company. That is how I think. I would not mind at all some of the categories mentioned in the above paragraph as neighbors but I would mind some of them. So would most people, including the sponsors of this bill. Nor have I much sympathy for the ultra-right wing Koch brothers (who oppose the bill) or for the former candidate for governor of New Jersey, Steve Lonegan (who also opposes the bill) yet I strangely find myself in their camp in this case. I believe the bill, if it becomes law, will have disastrous consequences for New Jersey and homeowners of New Jersey. If senator Lesniak seriously believes that planting a half-way house in an urban neighborhood or a suburb will increase the property values in the area, he should have his head examined.

I understand perfectly well that we have case law on the subject and that all the individuals mentioned above must live somewhere. It is an issue of humanity. But I also know that because most people function on the principle of not-in-my-backyard, property values will plummet wherever this new government “corporation” places one of its 30-year-deed-restricted houses. This will lead to lower property values, more foreclosures, and outright flight.

NJ Spotlight quotes Lonegan referring to this bill as “COAH on Steroids.” He is right. Christie, for his part, only cares about taking the COAH money to balance FY 2012-13 budget. He is seldom in New Jersey anyway.

I fear the HMFA will issue bonds once the COAH funds are used up and de facto this will become another fiscal liability for the State of New Jersey. Then the operation will become a bailout for banks and other investors who hold foreclosed property, all at the expense of taxpayers. New Jersey taxpayers will be hit twice: First they pay for it and second are imposed the neighbors they do not want.

Furthermore, the NJFRC would just become another little nest of political patronage.

The real and sustainable ways to help the housing industry and simultaneously those people of moderate income are to implement the reforms I propose. Among them are: a) Abolishing the property tax on primary residences of NJ taxpayers; b) Structural reforms in the extensive government apparatus of NJ abolishing one or more layers; c) Drastic increase in the minimum wage; d) State income tax code reform.

This is a bad bill for New Jersey. It will be a bad law if it becomes one.

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The human toll of the economic crisis

homeingreece

This is a brief follow-up to my recent post about suicide in Greece.

Two Greek educators – an elementary school teacher and a university professor – committed suicide this week.

The elementary school teacher, Savvas Metoikidis, was very politically active, taking part in protests and demonstrations over the past few years.  Aged 44, he hanged himself in a storeroom on Saturday.  Saturday marked the 45th anniversary of the military junta’s coup d’ etat in Greece, and he chose this day to protest the current situation in Greece with suicide.  He died in the village of Stavroupoli, near here in the region of Xanthi, in Thrace.  A tribute to him says

Savvas was always in the front line of our struggles, at strikes, in the small and large daily battles inside and outside the schools, fighting for the right to education for our children, for free public education, for…

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Student Debt Crisis Aggravated by Anemic Economy: My Views

Student debt has surpassed credit card debt in the U.S. and it now amounts to $ 1 trillion. Both political parties are exchanging barbs in Washington on this issue and, like everything else, it has become a political football. Both appear inclined to maintain the current interest rate of 3.4% but such move would benefit a small percentage of students; only those subsidized loans disbursed to undergraduates since July 1, 2011 qualify for the 3.4 percent rate. The loans made before are all at significant higher rates and the difference hovers around 3 percentage points, depending on the year when the loans were taken. My youngest son has all his loans at around 6.25% interest because he graduated in May 2011.

N.J. students hoping, praying for relief from soaring college loan rates | NJ.com.

Student Loan Debate Becomes Election-Year Fight – NYTimes.com

Of course, the sputtering economy aggravates the problem. Even though college graduates have better chances of finding employment than non-college job-seekers, they are often forced to take un-paid internships or menial jobs, notably in the services industry.

Governor Christie increased the aid to higher education by a bit in his budget proposal for 2012-2013 FY although his motivation seems to be more to sweeten the Rutgers-Camden/Rowan merger than any concern for students, or higher education for that matter. The budget is being currently debated in the Legislature and the center of the attention rests not of the students but on what kind of tax cut is included in the final budget.  Personally, the democrats’ plan, which involves cutting property taxes, benefits me more than the income tax proposed by Christie but neither proposal is likely to bring sustainable economic growth and put more fiscal stain on New Jersey: That means paying for the tax cut in the future.

Fiscally speaking, the State of New Jersey runs from crisis to crisis. Every budget year, the governor has to take from Peter to pay Paul. Often, budgets are balanced by sacrificing the future. That is not a responsible form of governing and I would not even call it government. It is irresponsible and in the particular case of governor Christie, it all appears geared toward building a political resume to seek higher office.

New Jersey already has the Higher Education Student Assistance Authority: http://www.hesaa.org/. Why we have a political authority – with the customary political patronage and unnecessary administrative expenses – to grant financial aid to college students when the DOE could pass the funds in block grants directly to our public colleges, earmarked for aid to students only, is a mystery to me. Whether the existence of this independent authority is required will be reviewed if I become governor. But the issues of lowering tuition cost and student financial aid rest on the health of the New Jersey economy.

In turn, economic growth in New Jersey will only happen if we implement the structural reforms I propose. There is no doubt that the state must play a very substantial role in supporting higher education. Perhaps the most important part of that support is making college affordable to students without mortgaging their future. Whether it is done through lower tuition, or aid, or both is relatively unimportant but it must be done because these young men and women are the future.

Public universities are not businesses and students are not consumers or products.

Finally, graduating students must encounter a lively job market when they graduate. But that is not likely to occur under the current tax and political structures we have in New Jersey today.

Christie, Norcross, Sweeney Plunge Ahead with Rutgers/Rowan Merger

Not many people have the fortune of being told the future. In this case, it is one possible future; only if I am elected governor of New Jersey in 2013.

To all the promoters of this shotgun marriage between Rutgers and Rowan I say this: If I win in 2013, there will be a new sheriff in town and the merger better be clean. Because the first marching orders that my new AG will receive are to thoroughly investigate the role of everyone involved with this deal. I mean everyone.

No stone will be left un-turned.

That is the possible future.

Stile: Christie sticking to education merger’s tight deadline : page all – NorthJersey.com.

Newark’s Revival Hinges on Tax and Political Reforms in New Jersey

The GDP of New Jersey is about $650 billion. The total amount of taxes  – including property and sales, user fees, and tolls – that New Jersey residents pay to the government are roughly 10% of that: $65 billion annually. A middle class and a great city are not created by decree. It is highly unlikely that the middle class can grow in Newark and bring gentrification to the city when the same middle class is under pressure everywhere else in New Jersey. The income tax cut proposed by governor Christie – if implemented – would be just another blow to it.

Cory Booker on Newark creating ‘village’ for teachers: ‘This is how we reinvent a great American city’ : page all – NorthJersey.com.

Building a “Teachers Village” in downtown Newark obviously does not hurt the city but it does not address the root causes of the difficulties Newark faces nor will remedy the chronic shortage of qualified teachers in the Newark Public School System. When it comes to teaching staff, Newark is a revolving door. The education reform and weakening of tenure proposed by the Christie administration will also worsen this situation. The village is a band-aid on a hemorrhaging wound.

This administration has launched a frontal assault against teachers during the last two years. Without either a reasonable degree of job security or much higher pay, teachers may not commit themselves, with their families, to Newark. To add to the issues of job insecurity and pay, I understand that the crime statistics in Newark are not the best by any means. That is a consideration that any teacher will take into account when looking at the perspective of teaching in or moving to Newark.

The administration is also dedicating public funds to the construction of 3 charter schools in the complex. Diverting public funds to build private schools is wrong but if being done through the NJ Schools Development Authority, NJSDA, one of the many authorities  that allegedly serves as a nest of political patronage and I believe should be abolished, it eliminates the legislative oversight.

But in any case, the New Jersey Legislature has opted to cooperate with the administration in many of these questionable plans.

We can not solve the serious problems affecting our urban centers without addressing the structural problems in the entire state. The main issues are: property taxes and the redundant layers of government which must be reduced although reforms must go well beyond those two points to turn the state around.

Note: Although I have written numerous articles that apply to Newark and other cities, this is the first which belongs exclusively to Newark. Accordingly, I have created a distinct category: Newark.

Did Christie’s “New Jersey Comeback” Ever Occur – Outside of His Mind?

New Jersey lost 11600 private sector jobs and added 3000 public positions in March. That is the opposite of the image Christie has been bragging about ad nauseam at every town-hall meeting and radio show since January this year. The March figures, even though reflecting a single month, are egg on his face.

Loss of 8,600 NJ jobs clouds economic picture : page all – NorthJersey.com.

Christie’s office referred questions on the job figures to New Jersey’s top economist at the Treasury Department, Charles Steindel, who admitted that there is a definite correlation between between employment and revenue. He did not say it but there are other correlations – sometimes I wonder if they understand them – such as that of employment and economic growth and with aggregate demand. Some are functions of the others.

Steindel said it is a long term relationship, and one month of bad job figures is not enough to redraw the state’s budgeting plan. Again, I must add, one month of good figures is no reason to open the champagne either.

“Data is volatile from month to month, it jumps up and down,” Steindel went on. “I think it’s a little hard to pin too much on the fact that you had a month where things seemed to go in the opposite direction.”

Mr. Steindel is assuming that the natural direction is forward. But there is no natural direction. The economy will move according to a given set of conditions. Those conditions, in New Jersey, do not favor growth. Steindel’s sentence should be corrected and say that we really do not know where the state economy is heading and should include the word stagnation. 

Although an economic failure of the Christie administration would facilitate my election, I do wish the New Jersey economy to improve. The problem is that I do not see real basis for optimism on such an expansion: Not with the current tax and government structures in New Jersey.

The stubbornly high unemployment rate – remains at 9% – betrays the governor’s portrayal of the state under his stewardship as an example of how to rebound the economy.

Christie is a lawyer who has decided to micromanage both education and the economy in New Jersey: That is a recipe for disaster because he is not qualified to do either. But he is not alone. Democrats are not far behind. In fact, he could not do many of the things he is doing without the complicity of at least some of the democrats in the NJ Legislature.

The loss of jobs is always deplorable. Even more deplorable is the rigidity and selfishness of the two political parties which rather see the state decay that give up their power and perks. We are governed by leeches. Significant structural changes in government and the tax system are desperately needed.

My entire economic revival program rests on the premise of increasing aggregate demand in New Jersey. Demand generates supply and increasing supply creates both jobs and wealth.

Taxation in New Jersey

We do not have a budget for FY 2012 yet (which runs from July 2012 through June 2013.) For FY 2012, governor Christie has proposed a higher budget of about $32 billion and also a 10% income tax cut. He expects that the New Jersey economy will grow as much as China’s. That is above 7%.

The budget which was approved by the Legislature for FY 2011 was about $29 billion and you can see the sources of that revenue and how it was spent in the pies below. The bottom-right pie shows legislature and Judiciary together but the Legislature takes about 2/3 of that amount – that is about $500 million. The Governor’s office consumes a bit below $ 100 million but that I know from a different source and it is not specified here.

I find both Legislature and Governor Office expenditures exorbitant.

If we add to that about $25 billion in property taxes we arrive at the sub-total amount of $55 billion that we New Jersey residents pay in taxes. About 10% of that goes to the counties. But we are not done yet.

Senator Sweeney has just introduced a bill which would include user fees charged by municipalities under the 2% property tax cap which became law last year. The bill is an attention seeker. Why? Because what municipalities will do is to drop those services which are most needed and residents will have to pay directly to the service providers – garbage collection for instance: Either people will have to hire their own private garbage collectors at higher cost and/or there will be more illegal garbage dumping everywhere.  Sweeney may be planning  to run for some higher office.

The total amount of user fees that New Jersey residents pay is near $10 billion per year. Therefore, the total amount of money that we all are forced to give the many governments of New Jersey is the eye-popping figure of almost $65 billion  yearly.

Bottom line: Government – or rather the political class benefiting from it – is financially suffocating the economy and people of New Jersey.

That is what I intend to correct if elected governor in 2013.