Avoiding 'Nomadic Thievery'

"We live in a gangster state, and our days of laughing at other countries are over."
-- Matt Tabbi, Rolling Stone

In the latest issue of Rolling Stone, Matt Taibbi has a caustic summary of the Jefferson County sewer fiasco that has reduced Birmingham, Ala. to "the status of an African debtor state." Today, every single resident of Birmingham, from new-born babes to the oldest nursing home resident, now owes Wall Street $4,800. ["Looting Main Street: How the Nation's Biggest Banks are Ripping Off American Cities with the Same Predatory Deals that Brought Down Greece"].

In Birmingham --

Here you can see a trail that leads directly from a billion-dollar predatory swap deal cooked up at the highest levels of America's biggest banks, across a vast fruited plain of bribes and felonies — "the price of doing business," as one JP Morgan banker says on tape — all the way down to [Birmingham resident] Lisa Pack's sewer bill and the mass layoffs in Birmingham.

Once you follow that trail and understand what took place in Jefferson County, there's really no room left for illusions. We live in a gangster state, and our days of laughing at other countries are over. It's our turn to get laughed at. In Birmingham, lots of people have gone to jail for the crime: More than 20 local officials and businessmen have been convicted of corruption in federal court. Last October... Birmingham's mayor was convicted of fraud and money-laundering for taking bribes funneled to him by Wall Street bankers — everything from Rolex watches to Ferragamo suits to cash. But those who greenlighted the bribes and profited most from the scam remain largely untouched. "It never gets back to JP Morgan," says Pack.

At the root of the scandal one finds--

• ordinary city department heads unable to understand the impossible complexities of financing contracts cooked up by Wall Street
• a local politically-connected fixer paid by Wall Street to offer 'consultant' expertise who recommends those contracts to municipal officials
  
• criminal bribes handed out like Easter candy by Wall Street to greedy local politicians
• good-ol'-boy pay-offs by one Wall Street bank to another Wall Street bank to preserve the first bank's lucrative monopoly on farming Birmingham residents for every last nickle they own, and
• predatory lending practices that "at one point" left Birmingham holding more worthless toxic credit default swaps than New York City.

It's a cautionary tale for any municipal board of modest talents with an ambitious development project that's spending oodles of money for nothing much visible in an effort to find financing from out-of-state sources who won't make their own financial statements public except to a limited number of insiders.

What you want to avoid is the Birmingham fiasco, where the bankers "find suckers in some municipal-finance department, corner them in complex lose-lose deals and flay them alive."

In a complete subversion of free-market principles, they take no risk, score deals based on political influence rather than competition, keep consumers in the dark — and walk away with big money. "It's not high finance," says Taylor, the former bond regulator. "It's low finance."

And even if the regulators manage to catch up with them billions of dollars later, the banks just pay a small fine and move on to the next scam. This isn't capitalism. It's nomadic thievery.

Pensacola Tip: Where to Make Powerful Friends

Apropos of what passes in Pensacola as local news worthy of big, bold headlines and editorial comment, we are reminded of a conversation we had over beers about a dozen years ago with a real estate developer. He had been in business in south Florida, he told us, "until the place got crapped up so bad by people like me that I couldn't stand it." So, he moved to Pensacola.

"Nobody knew me here. I needed to get in with the movers and shakers. You know, the people with the power and the money. So, the first thing I did was to join AA. Sure enough, that's where they all were. Never had a drinking problem in my life, to tell you the truth, but it was the best business decision I ever made."

Florida Court's Weird "Change of Mind"

In what is surely one of the weirdest events in state court history, today the Florida Supreme Court reversed its own county bond financing ruling of a year ago. The result will have long-lasting repercussions; not only for local government bond financing without voter approval but also, we suspect, for public perceptions about the rule of law under Florida's court system.

First Court Ruling

On September 6, 2007 -- a little more than a year ago -- the full seven-member state supreme court unanimously ruled that Escambia County was "without authority" to issue road-widening finance bonds for Perdido Key without first obtaining approval by popular referendum "as required by article VII, section 12 of the Florida Constitution."

The full text of that opinion has been scrubbed from the Florida Supreme Court web site. But it can still be found, for now, on the web site of the Miami Herald.

The opinion was written by Justice Kenneth Bell of Pensacola. All six other supreme court justices concurred in the decision.

As Justice Bell wrote for the court at the time --

The language of article VII, section 12 is plain and unambiguous. * * * [A]rticle VII, section 12 of the Florida Constitution provides as follows:

Counties, school districts, municipalities, special districts and local governmental bodies with taxing powers may issue bonds, certificates of indebtedness or any form of tax anticipation certificates, payable from ad valorem taxation and maturing more than twelve months after issuance only:

(a) to finance or refinance capital projects authorized by law and only when approved by vote of the electors who are owners of freeholds therein not wholly exempt from taxation; or

(b) to refund outstanding bonds and interest and redemption premium thereon at a lower net average interest cost rate.

Thus, article VII, section 12 plainly authorizes localities to issue long-term bonds "payable from ad valorem taxation" for the purpose of financing capital improvements only when "approved by vote of the electors."

The 2007 ruling was widely seen as a victory for citizens' right to vote before being saddled with taxes or destructive developments they may not desire. Local governmental units around the state, however, were upset. Many of them are seeking to jump-start big-ticket municipal projects. They expected to be free to hand the bill to taxpayers without letting them vote on it.

Locally, one such project put in jeopardy was the planned Pensacola Maritime Park. Although many community leaders favor it, the project also has substantial public opposition.

New Court Ruling

Today, however, Justice Charles Wells wrote a new opinion for the state supreme court in the same Perdido Key road case. This time, the court approved the bond action, although voters still have not approved it. The full text is here.

One year later! This could be a Guinness World Record for slow-motion change of mind.

The Tallahassee Democrat reports:

Now the court says financing schemes that use future property tax increases to pay off bonds are OK, changing utterly what a unanimous court said a year ago. It means local governments will have much greater latitude in approving millions of dollars of bonds for public projects without having to get voter approval.

Weirder and Weirder

But wait! There's more. In yet another odd twist, it turns out one of the supreme court justices signing onto the new opinion has been retired from the court for over a year!

Former Justice Raoul Cantero is listed in the new opinion as one of four judges who concurs in the result of the new, 2008, opinion. But Cantero retired September 4, 2007, -- over a year ago. That was just two days after the court published its first decision in the case and 16 days before September 20, when the first decision was finalized and released for publication.

Moreover, he has since joined the Miami law firm of White & Case. That firm's web site describes White & Case as representing --

public and privately held commercial businesses and financial institutions, as well as governments and state-owned entities, involved in sophisticated corporate and financial transactions and complex dispute resolution proceedings.

Do you suppose there might be, at a minimum, the appearance of a conflict of interest here? Only the firm's client list could tell us for sure.

Missing in Action

In yet another odd twist, Justice Bell, author of the original opinion, recused himself from participating in the reverse decision. No reason has been disclosed.

Justice Bell is only 52 years old. He has served on the court for not quite five years. Yet, earlier this year Bell announced he intends to retire in October and resume practicing law in Pensacola.

We doubt Justice Bell plans to hang out his own shingle as a solo practitioner. But finding a Pensacola corporate law firm that doesn't have ties to some interested party in this lawsuit will be quite a bit harder than scrubbing his old supreme court opinions from the web.

Justice Lewis wrote a dissent in which it is said a second judge, Chief Justice Peggy Quince, concurred. But Quince also is listed in today's court release as having concurred in part with the majority and dissented in part.

We can find no written opinion by Quince, as yet, explaining what the heck is up with that. Normally, a judge who concurs in part and dissents in part issues a separate opinion explaining which parts were which.

Understanding the Result

Tallahassee lawyer David Theriaque, representing the Escambia County citizen who lost the appeal today after winning it a year ago, told the Tallahassee paper, "I'm having a hard time understanding what they did."

That's because you're a lawyer, David. This is a decision only a politician can understand.

DEPT. OF CORRECTIONS

A commentator correctly points out that Justice Cantero retired in 2008, not 2007, although still well before the recent re-ruling was announced. The original Miami Herald article about his retirement in 2007 which misled us has been either scrubbed or redated by the newspaper.

Dogan's Done It - Again

Being a loyal reader of the Pensacola News Journal's Reginald Dogan, as we are, is like being a Chicago Cubs fan. No matter how fervently you wish them success, over time the odds are high that you're going to have your heart broken more often than not.

Take today, for instance. Coming off a win where Dogan hit it out of the park by showing what an unnecessary extravagance an $8-$10 million parking ramp would be on Pensacola Beach, he follows up with a breathtakingly bad idea: turn Pensacola Beach into Atlantic City so there will be a need for that parking ramp.

Our team writes:

For some people, the water and sand are enough attractions to bring them to the beach for a lifetime. But others, like me, want the bells and whistles.

We have a boardwalk that should be called a "boredwalk." It takes all of two minutes to cover the entire boardwalk that stretches, at best, about 300 yards.

There is a mix of shops and restaurants, but if you've been to a real boardwalk like Atlantic City or the Baltimore Harbor, you'll see how Pensacola pales in comparison.

Why do we have a Casino Beach without a casino? What good is a boardwalk that has only a few boards and a short walk?

Dogan then goes on to extol, among other monstrosities, shopping malls, 10,000 feet ampitheaters, and ferris wheels as the apotheosis of desirable beach development. Ferris wheels! Casinos??

"Don't misunderstand me," the columnist hastens to add. "Pensacola has a beautiful beach — if all you want is water and sand."

There's no possibility of misunderstanding you, Mr. Dogan. You are a Philistine with the environmental sensitivity of a bulldozer. Not to mention, you've done it again: you zigged when you should have been zagging. You engaged your keyboard before your brain knew what to write about.

Forget the fact that the News Journal has a venerable fifty-year history of advocating to preserve, not destroy, the natural wonders of Pensacola Beach against vulgar commercialization and destructive over-development. There's nothing that says a callow columnist can't try to tear down all the commendable works of J. Earle Bowden, one of the most esteemed newspaper editors in Florida history.

First, though, you really ought to read what Bowden and his allies endured to preserve just a small part of Santa Rosa Island for you to visit. As we have recalled before:

At the time, real estate development interests had visions -- and, indeed, a very specific blueprint -- for building a honky-tonk Disneyland penned by high-rise condos and hotels all the way down the 40-mile string of sand from Fort Pickens to Destin.

Read Bowden's book, The Sands of Time. Hunt down and take a look at the aerial map that circulated among real estate brokers back in the late 1960's, with its overlay showing their nightmarish visions of golf courses, casinos and, yes, even ferris wheels on Pensacola Beach. Ask around to find out how the old giant water slide on Pensacola Beach fared when the litigation was over, the enterprise was insolvent, and that mysterious fire broke out -- perhaps the only time in recorded history when a water slide burned to the ground.

That same incubus of cheap but destructive development ideas crawled out again a little more than a decade ago when the Island Authority contracted for an architect's plan to build a 3-story shopping mall right where Casino Beach sits today. Public outrage at the scheme to wall off Casino Beach from easy public view was so strong that even the Escambia County commissioners felt compelled to reject it. Indeed, they passed a resolution forbidding future commercial development of Casino Beach.

The main reason you have a "beautiful beach" to sniff at today, Mr. Dogan, is that voters and the Pensacola public at large have repeatedly rejected your vision and opted instead for the "water and sand" that you find so boring.

Mainlanders, island residents, and tourists alike all agree on one thing: it's a "beautiful" family beach we want, not another Destin, Panama City Beach, or Atlantic City.

Dogan's Razor

A little while ago, we gently tweaked PNJ columnist Reginald Dogan for putting his feet up on the desk and gathering wool when he should have been pounding shoe leather. So today, it's only fair to salute him for a whole week's worth of real-life social science research performed on Pensacola Beach.

He did it not with shoe leather, but on wheels. Translated from News Journalese into scientific gobbledegook, this is what happened:

The Experiment

Hypothesis: "The dearth of parking... [is] part of the reason why locals stay away from the beach."
Alternate hypothesis: "[A] lack of parking [is] driving away visitors."

Dogan made multiple visits to the beach daily and kept a journal over seven consecutive days. He noted time of day, ease of finding a parking space, location of the space, and general availability. Limited to the most popular Quietwater parking area of boardwalk shops, restaurants, and bars, these are the raw results of his scientific observations, reduced to their essence:

Mid-day Data

Mid-day visits: 6
Number of visits < 1 minute needed to find a parking space: 5
Number of visits > 1 minute needed to find a parking space: 1
Number of visits no commercial district parking space available: 0

Evening Data

Evening/Nighttime visits: 7
Number of visits < 1 minute needed to find a parking space: 5
Number of visits > 1 minute needed to find a parking space: 2
Number of visits no commercial district parking space available: 0

Over the course of the week on only Saturday night did Dogan encounter enough of a parking problem at Quietwater to "do the sensible thing" and cross the intersection to the larger Casino Beach parking lot. There, parking space remained so ample, he writes, "we could play a spirited game of flag football with room left for bleachers and a concession stand."

Tuesday night's "Bands on the Beach" event was the only occasion when Dogan found parking to be even moderately challenging. At that popular summer time event he recorded:

7:30 p.m.: There's not a parking spot in sight. Cars are double parked, lined against the fence and on the sidewalks.
* * *
After cruising through the Casino Beach parking lot, I find one spot in the Pensacola Beach Visitors Information Center lot.

Research Results

Dogan concludes, "There is a parking problem on the beach — a couple times a year, maybe." So much for Buck Lee's claim that the Santa Rosa Island Authority needs to build an "$8 to $10 million parking ramp."

Inspired by these results, we now propose a new hypothesis, suitable for rigorous testing and scientific verification by future students of Pensacola Beach who aspire to follow in the hallowed tradition of Prof. C. Northcoat Parkinson. We call it --

Dogan's Razor

New Hypothesis: The more money governmental authorities want to spend building"improvements" on Pensacola Beach, the less probable is the actual need.

The Name Game

If you manage to slog through the entirety of Sara Rabb's front-page Sunday News Journal report on the failed 2,718 acre "Jubilee" housing development in nearby Pace -- an area distinguished primarily by an abundance of fundamentalist churches, chemical plants, and cows -- what you might be left with is the impression that a lot of grown men were playing kiddie poker using toothpicks for chips.

That didn't stop them from making 10, 20, and 30 million dollar bets with each other and dreaming of "a glorious new community with more than 500 homes valued at up to $1.5 million."

But this is Northwest Florida. They needed Other People's Money to make it seem like real life.

Enter Barney Ng, son of Walter Ng, founder of RE Loans, LLC. He claims to have invented "a new product, a six year first trust deed that could be used for both residential and commercial property alike."

Mr. Ng is no stranger to strange investments. One of his companies just unloaded the dry-docked Queen Mary which, weirdly, has been serving as a Long Beach "ghost hotel" while the California bankruptcy court sorts through the wreckage. He also recently foreclosed on the failed Olympian Brewery in Tacoma.

Now, there's a poker player everyone wants to see come to the table late in the evening! And, indeed, it seems that Mr. Ng has been left holding the bag -- again.

Ng said he never intended to be more than an investor in the project, and now, he realizes he has inherited a development that is many, many millions of dollars over budget, and now, he realizes he has inherited a development that is many, many millions of dollars over budget.
* * *
Ng said he is in the midst of sorting through the project's financing, trying to determine which bills have been paid and which are still owed.

Reporter Rabb has some fun ticking through the various names the home town boys gave to their game. They went from "Governor's Club" to "Arcadia Mills" to "Jubilee" and now, apparently, "Contrada Hills."

Gosh, being a developer must be fun! You get to think up neat names and make 'billboards featuring boys, rabbits and girls' and stuff like that while waiting for the money to roll in from ... well, from somewhere or another.

Ng is now hoping "to get approval to create a community development district for the project, which is the subject of a hearing to be held Feb. 28 at the Santa Rosa County Courthouse."

Clearly, it's time for another name change. How about Potemkin Village?