Foreclosing Down the House

Señor Briem is a glass half full kinda guy when it comes to the FORECLOSURE CRISIS IN PITTSBURGH. Or, maybe it's glass half empty... I suppose it depends on whether you want to have a glass full of foreclosures or a glass full of homeownership... My guess is that you don't want a whole lot of foreclosures unless you happen to be playing Monopoly and you've just landed on someone else's Boardwalk*...

Anyway, Chris argues that Pittsburgh, compared to the rest of the country, is not experiencing A MASSIVE NUMBER OF FORECLOSURES that are leaving THOUSANDS HOMELESS, or is even ON THE VERGE OF ANOTHER GREAT DEPRESSION and is TESTING THE VERY FABRIC OF CAPITALISM, but rather that the situation here is elevated by our standards, but manageable. Certainly it is not TIME TO CRACK EACH OTHERS SKULLS OPEN AND FEAST ON THE GOOEY MATTER INSIDE.

His counter example is Cleveland, which experienced 50,000 foreclosures in 2007... which is roughly 10% of all mortgages in the metro area (2000 Census) compared to 3.66% for the Pittsburgh metro area during the same period.

Not to say that Cleveland is necessarily the metro-region that we want to compare ourselves to... but in any case we ranked 86th out of 100 Cities for foreclosures in 2007. That's certainly good news.

This information, of course, sparks the question: could there be something that this region is doing (*gasp*) right for a change? Is Pennsylvania particularly restrictive on its lending practices so that usurious loans are prevented? Do we have a core of social services that are helping to prevent foreclosure through credit counseling and warnings about predatory lending? Or is it that housing here is just so dang inexpensive that you'd have to be really lazy or upside down to get foreclosed upon.

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*In either case, it pays to be the banker.

In a Foul Moody

I believe that I have been pretty consistent in my opposition to the Casino, any casino, in the City of Pittsburgh. In the long run, I think, the City is going to have to bear the brunt of a whole lot of negative externalities (traffic, crime, gambling/drug/alcohol addictions etc.), which were no countedt/will not be counted in the Financial Statements of PITG Gaming.

What profiteth a man that he gains $169 in tax relief but loseth his car stereo system to crack addled gambling addicts?*

And so on.

Actually, what would be worse (if there is such a thing as worse in this scenario) is a failed Casino in Pittsburgh. Apparently, both Moody's and Standard Poor's are a bit nervous that PITG is a big ol' dud. From Moody's:

The agency also assigned a 'B3' probability of default rating to the company and a 'Ba3' rating was assigned to its $10 million first lien three-year revolving credit facility and $370 million first lien three-year term loan, while a 'Caa1' was assigned to its $250 million second lien three-year credit facility.

Moody's added the rating outlook is stable, on hopes the Majestic Star Casino Pittsburgh casino project will be constructed on time and on budget, and that favourable demographics of the Pittsburgh gaming market along with the location of the casino itself will provide enough customer traffic and demand for PITG to ramp up successfully.

The stable rating outlook also considers the credit protection afforded by the interest reserves and construction contingencies that will be in place, Moody's added.

A Caa1 rating, by the way, is just slightly above the CaCa rating, which means that the company is full of crap.**

And from Standard Poor's:

The ratings agency has also assigned its ratings to PITG HoldCo's proposed $380 million senior secured first-lien credit facility, consisting of a $10 million revolving credit and a $370 million term loan, both due in 2011. The first-lien facility is rated 'B' with a recovery rating of '2', indicating the expectation for substantial (70-90 percent) recovery of principal in the event of a payment default.

S&P said it also rated the company's proposed $250 million senior secured second-lien term loan due 2011 'CCC' with a recovery rating of '6', indicating the expectation for negligible (0-10 percent) recovery.

The 'B-' corporate credit rating reflects the significant fixed-charge burden for the property, given the proposed financing structure that includes no cash equity and construction and start-up risks associated with the planned facility, among other factors, S&P said.

So, of course, you can see why Barden wanted to get out of his $3 Million commitment to the Hill District: he's going to need that money to pay off his debt service.

Now, while I'm sure that both S&P and Moody's have done their homework, there are a whole slew of issues that may still hold up the construction of the actual casino (including, but not limited to, the City Planning process, the Riverlife Taskforce Lawsuit, opposition from Northside Residents, and increasing construction costs). Considering that Barden has none (to repeat: NONE) of his own money in this project, and is solely relying on outside investment, I would worry that any increase in construction costs/delays in construction will just cause his interest expense on the project to balloon out of control. That doesn't even take into consideration the demand that may or may not materialize for slots only gambling or the competition that the Casino will have from West Virginia (who have table games now, apparently.)

So the scary thing right now is that Pittsburgh may end up with a cut rate casino that makes into, not a high class Las Vegas, but a cruddier version of Atlantic City.

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* Doug 4:19 1/2
** This is not true.

Middling Media Matters

Same minor story about a Pittsburgh History & Landmarks Foundation project in Market Square, but check out the slightly differing headlines:

Preservation group takes control of Market Square block

and

Rescue plan for Downtown's Market Square is expanding

Now guess which newspaper has a publisher who just happens to be chairman of PHLF (and, by extension the Savior of Downtown and Vanquisher of Tom Murphy).

Pecuniary Peculiarities

Saw this article in the P-G this afternoon:

Pittsburgh City Councilwoman Tonya Payne said today that she has a plan to fix and maintain the Hill District's damaged Freedom Corner monument that involves transferring ownership to the city and raising money for a trust fund...

The monument is owned by the Urban Redevelopment Authority and had been leased to, and maintained by, the Hill Community Development Corp. before that arrangement expired some time ago, Ms. Payne said today...

"Once it becomes city property, we can maintain it from the same fund with which we maintain other city monuments," she said. Then she will set up a trust fund that can only be spent on Freedom Corner's maintenance and improvement, and approach donors.
"It is a valued monument for the City of Pittsburgh that we can't afford to lose," she said. She said she moved $56,500 slated for unspecified work at Freedom Corner into the district improvement fund because she feared it could otherwise be snapped up for other projects outside of the Hill.

So let me get this straight:

Money that was earmarked for Freedom Corner, but not used, is going to be used to fund other projects in the 6th Councilmatic District. The property will be moved off the URA's books and onto the City's books. Money will now have to be raised to cover the additional expense that the City (I supposed Parks & Recreation) will now have to incur to keep the area maintained.

So really this is just moving money that was a restricted resource allocation to a specific project into a walking around fund, throwing the cost of the site back onto the books of the City, and a big F-you to the Councilwoman's enemies at (what's left of) the Hill CDC... especially those that are involved in the One Hill discussion.

Now, I'm no financial wizard or anything, so I'm really racking my brains to figure out how this is anything but a quick grab for cash by Ms. Payne in order to grease the wheels of her next council campaign... unless it really is just a big F-you.

John McCain's Sordid Past

Last night on CNN, Three Card Monte enthusiast Bill Bennett started up again with the guilt-by-association meme viz Obama and Bill Ayers, former leader of the Velvet Underground. Sorry, Weather Underground... one is obviously a radical 60s left group the other is a radical 60s rock group.

Donna Brazile then proceeded to get all up in Billy's grill, saying that if Obama then Clinton and McCain's prior associates too.

She has a point about McCain, of course. There's a whole slew of associations in McCain's past that he needs to account for.

Par example: McCain's home state of Arizona opposed (until the 1990s) the Martin Luther King Jr. holiday. McCain originally opposed the holiday, but later recanted his position. It can only be assumed, therefore, that the Senator must have had some acquaintances that were... let's say... a wee bit racist. Senator McCain must account for these friends and explain to us why their views haven't poisoned his outlook towards African-Americans.

Perhaps a more sinister example: McCain was born in the Panama Canal zone. The Panama Canal zone was later transfered by the US to Panama by Jimmy Carter. Jimmy Carter has recently been seen negotiating with Hamas, a known terrorist organization. McCain needs to answer the question as to why he allowed Hamas to gain access to the most vital intercostal waterway in the world.

But the most disturbing example: in 1967 McCain spent six weeks as the guest of the Viet-Cong where he made a propaganda video and learned first hand about torture. Can Senator McCain explain this relationship? What kind of anti-American deviancy was his mind poisoned with? Why is he trying to hide the fact that he was intimately connected with a group of people that systematically attacked and killed Americans throughout Vietnam? Shouldn't the media be covering this relationship a little more closely?

Just sayin'.

Pundits Sweep to Victory in PA Primary

(AP) Philadelphia - The mood in the Grand Ballroom of the Marriott Philadelphia Downtown was tense until around 9:04. A standing room only crowd of 2,950 people waited with baited breath as, on the large screen at the end of the hall, CNN's Wolf Blitzer announced his network's projection that Hillary Clinton had won the State of Pennsylvania.

Speaking from the rostrum, D. Allen Kosiyefsky founder and owner of popular internet political blog "The Beltway Bandits", called the announcement "A Victory for the cause of Punditry across this nation and a clear sign of the American Public."

"We came here today in the face of great odds, but, with your help, we have managed to squeeze out a win that will allow us to move on to Indiana, North Carolina, and even Puerto Rico, and to continue parsing demographics, citing anecdotes as proof, trivializing the significant, signifying the trivial, and generally fill up otherwise empty space across all media."

Many Pundits across the country had felt that a win by Obama would have put in jeopardy the ongoing narrative that had been constructed surrounding both he and Senator Clinton. The national narrative, which said that Clinton held an insurmountable lead in the Democratic Primary, had already been rewritten four months earlier after Obama's surprising finish in the Iowa caucuses. Other Pundits believed that even with a 5% margin of victory, the Clinton camp would have had to have pulled out of the race, citing a diminishing reserve of cash and an inability to connect with the average white male voter in a very blue collar, high school educated, barely-able-to-dress-one's-own-self, state.

With such a clear margin of victory, however, Pundits are looking forward to another two months of Democratic primaries to work on.

Adrianne Farfington, of the Farfington Plotz - an influential blog among liberals with too much time on their hands - called the extended primary "a relief".

"I think what most Americans don't realize is that punditry is literally keeping this country's economy afloat. With the loss of major manufacturing and the downturn in the housing industry, the only thing that we as a nation are actually producing is bloviation. In fact, we are the number one bloviaters in the world, followed distantly by the French, and the British. Indeed, with thousands of cable news channels and an uncountable number of websites, without punditry nearly 90% of "content" disappears. That immediately translates into a loss of billions of dollars in marketing and ad revenue that are churned out into the general economy. Ending the primary now means a 5 month lull in election related content, which could not be filled -- even by pictures of cats with captions on them"

Others disagree.

Barfy the Wondersponge, who is a regular poster on Farfington Plotz, argues that "TEH ELECTIONS ARE NOT ABOUT WHAT THE PUNDITS SAY BUT WHO WERE ARE VOTING FOR I THINK THAT YOU ALL ARE MISSING TEH POINT AND ARE RUINING AMERICA."

Mr. Kosiyefsky, however, remains optimistic.

"We're looking for a good run in Indiana. We think that Obama could pull this off, but it'll be a struggle, given the propensity of the urban areas to vote Democratic and the outlying areas to vote Republicans. However, with places like Bloomington and Gary, you're going to see a real focus on the effects of the economy. Indeed, 47% of voters, when asked, felt that the other 53% of voters didn't know what they were talking about. But hey! I have two more weeks to make up this shit; there's no need to shoot my wad now."

Vote, Dammit

Polls open at 7 a.m. and close at 8 p.m.

Anyone from the Commonwealth caught not voting, will not be allowed to post comments.

And don't think we couldn't find out...

Obama Web Cast

Just a quick observation about the Obama event at the Peterson Event Center in Oakland -- that's a pretty diverse dais up there: Barack, Michelle, Bob Casey, and Theresa Heinz Kerry.

That's three African-Americans and Bob Casey, if you're counting.

Victim 2008 - Dan Deasy Edition

Saw the following in someone's yard over the weekend and actually had to go back to get a picture:




Read it closely folks. See if you can spot the eror(s).

By now, of course, our regular readers know this means war... this time in easily forwardable Motivational Poster form:






















And Finally...