NO MONEY DOWN — FOR DOCTORS Who’s still able to get jumbo mortgages from banks with no down payment required? Why, borrowers in “lucrative professions” of course, explains Nancy Sarnoff. She profiles a CPA and a tax attorney who were recently offered a million-dollar loan with no money down and no mortgage insurance requirement — from BBVA Compass — to help them purchase their West University home. Among the more prized groups for such “professional mortgages”: doctors and dentists. Such programs are often targeted toward cash-poor graduates just out of medical school, and don’t take student loan payments into account.” [Houston Chronicle]
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Tag: Financing
LIGHT RAIL CONSTRUCTION SLOWDOWN Metro officials say they’re still confident that the $800 million federal grant necessary to complete the North and Southeast lines is forthcoming, but the transportation agency has already begun slowing the pace of construction in response to a $49 million budget shortfall: “So far, officials said, the work that has been put off has been minimal on the North line, which is expected to run from north Houston to the Texas Medical Center and Reliant Park. Metro has delayed road reconstruction work on Fulton Street and has put off awarding a contract for the expansion and construction of a rail facility on Fannin at the south end of the line near Reliant Park and the 610 Loop. Those delays could just mark the beginning, Metro’s Acting President and CEO George Greanias said.†[Houston Chronicle, previously on Swamplot]
METRO’S CASH CRUNCH Metro’s unrestricted cash investment portfolio is now down to $76 million, but the transportation agency is carrying a grand total of $190 million in short-term debt, reports the Examiner Newspapers’ Michael Reed. A separate pool of money has already been committed to construction of several new light-rail lines, but the liquidity problems may still affect Metro’s ability to obtain federal funding for some of the lines: “As a condition of receiving funding as part the Federal Transit Authority’s New Starts program, which includes the already-under-construction North and Southeast lines, an applicant must receive at least a ‘medium’ accumulated rating based on five categories. One of the categories, ‘current operating financial condition’ requires a liquidity ratio (cash, accounts receivable and nonrestricted investment portfolio vs. current liabilities) of at least 1-to-1 to avoid receiving a ‘low’ rating for that category. Based on the June 2010 unaudited report, Metro’s rating for 2009 appeared to be about 0.79-to-1, having fallen from 1.55-to-1 in 2007 to 1.03-to-1 in 2008, according to Metro financial reports for those years.” [River Oaks Examiner] Update, 1:40 pm: Metro’s board just announced the agency will have a $49 million budget shortfall this year.
COMMENT OF THE DAY: THE HIGH COST OF BUILDING SMALL “As a homeowner in the Heights I agree that scale is a factor in new construction but I would like to point out one important financial reality. It is next to impossible to finance the new construction of a smaller home. Given that the average lot costs $250,000 and the average cost to build new is another $135 per square foot, a new 1200 sf “Bungalow†will set you back $412,000 plus. You are now sitting in a new bungalow with a total cost of $343 per square foot. The average appraised value of homes in the Heights is around $200 – $225 per square foot. Banks will not finance this project unless you make up the difference in cash, so your looking at bringing $162,000 to the closing table plus a 20% down payment. Hopefully the HAHC realizes this reality and continues to allow larger homes to be built. There has to be a happy medium square footage wise. It is also important to point out that it is not cheap to do a major renovation to an existing bungalow. If you want to redo the plumbing, electrical, insulation, sheet rock etc you soon find yourself spending more for the renovation than you would spend on a new home. Many of the “remodels†are simply saving the studs and the sub floor, I don’t see the value in such a “preservationâ€. And once again, the banks simply will not finance a project that is not in line with the local comps.” [chester, commenting on Big Changes for Houston’s Preservation Ordinance? Mayor Parker Wants a Temporary Ban on Those 90-Day Exemptions]
Renovations are scheduled to begin in the next few weeks on Downtown’s Houston House Apartments at 1617 Fannin, according to a notice distributed to residents yesterday:
These renovations will include, but are not limited to ALL APARTMENT UNIT INTERIORS, plumbing, HVAC system, domestic hot water, sprinkler systems, the lobby, 9th and 10th floors and the building’s exterior. There will be significant additions to our amenities as well.
Here’s the fun part: Everybody gets to relocate!
THE CASE OF THE UNUSUALLY HELPFUL CONTRACTOR Melvin Lendall Brown, owner of a local unincorporated business he called Brownstone Construction, provided an unusually complete range of services to his clients. The Justice Dept. announced his guilty plea — to a single count of wire fraud — earlier this week: “Brown and others recruited and solicited individuals with good credit to act as borrowers in applications for residential mortgage loans to purchase one or more of those properties, even though the borrowers had no intention of making payments on the mortgage loans. Brown, aided and abetted by at least one other person, made representations to each borrower, including that he would buy the home in the borrower’s name, make any monthly mortgage payments, find others to live in the home and pay monthly rent, take the home out of the borrower’s name after a period of time as well as compensate the borrower. Brown and others caused Uniform Residential Loan Applications to be made in the names of the borrowers that overstated their employment income and other assets, understated or omitted their debts and other liabilities, falsely represented that the borrowers leased the homes in which they resided and received income from the rent, and falsely claimed that the borrowers intended to occupy the newly purchased homes. Because of the fraudulent information, the lenders made decisions to approve the applications and fund the loans. In support of those fraudulent loan applications, false and fraudulent documents were submitted, including sham lease agreements and bogus employment information. Brown also provided funds to the borrowers to use for deposits toward the purchases of those homes and for closing fees, and he often appeared with the borrowers at the closings.” [FBI Houston, via InSite]
Houston’s City Council voted 13-2 yesterday to sell the former Compaq Center to the nation’s largest megachurch for a grand total of $7.5 million dollars. Sure, that’s considerably less than the $22.6 million the city would have received for a 30-year extension of Lakewood Church’s current lease on what used to be homecourt of the Houston Rockets. But the city wouldn’t see the beginning of that income stream for 24 years, and it might be a full 54 years before the city could get the building and those 7 acres of Greenway Plaza land back — presuming either is worth anything at all by then. And really, who’s even going to want to be around this city in 2064?
That $7.5 million isn’t exactly chump change, either. If each of the church’s approximately 43,500 weekly visitors throws a dollar into one of those collection buckets, it’ll take them all of 3 and a half years just to pay the darn thing off!
But did the city even have a choice in the matter?
TRYING TO PRESERVE PRESERVE LAND A year and a half after Hurricane Ike, what’s going on with Marquette Investments’ “The Preserve at West Beach” development plan for a huge chunk of Galveston’s West End? Here’s an update on a piece of it: “Last year, the environmental group Artist Boat applied for $11 million in federal Hazard Mitigation Grant Program money to buy 343 acres of bay-front land from developer Marquette Land Investments. Gov. Rick Perry rejected the application, even though island leaders and environmentalists flooded his office with e-mails, letters and faxes urging him to save one of the island’s most ecologically diverse tracts. . . . Now, Artist Boat and the city of Galveston are working together to secure a $3 million Coastal and Estuarine Land Conservation Program grant, administered by the National Oceanic and Atmospheric Association. The grant application was submitted Thursday. . . . [Artist Boat Executive Director Karla]Klay said the National Oceanic and Atmospheric Association will announce the winners of the grant within six to nine months. Darren Sloniger and his partners at Marquette agreed to provide $3 million in matching land value if Klay and the city get the grant. If that happens, the city would hold the title to one-third of the 343-acre site, which sits east of 11 Mile Road and north of Settegast Road. Marquette intended to turn the site into a 35-acre marina and residential subdivision. The property is part of a 1,058-acre development that will include a 15-story resort hotel, 4,000 condominiums and houses and an 18-hole golf course.” [Galveston County Daily News]
Whatever obstacles were standing in the way of county commissioner El Franco Lee agreeing to Harris County participation in the East Downtown TIRZ — the last piece of the funding puzzle needed for the Houston Dynamo to get its new soccer stadium — appear to have fallen. A number of votes will need to take place before construction can start on the site bounded by Texas, Dowling, Hutchins, and Walker streets just east of Downtown. But media reports indicate the long-stalled project now has sufficient government support to move forward:
The city and county have asked the [Harris County-Houston Sports Authority] to take over lease negotiations with the Dynamo, oversee the construction project and act as property manager upon the stadium’s completion.
If the authority approves the request, City Council is expected to vote on the agreement March 31, followed by a Commissioner’s Court vote expected on April 13. If all is approved as planned, the two parties would turn the land over to the Dynamo for construction on Oct. 1, and the stadium is scheduled for completion April 1, 2012, just in time for the Dynamo season to begin.
- City, county strike potential Dynamo stadium deal [Houston Chronicle]
- Icken: Dynamo stadium could be ‘done deal’ by September [Houston Business Journal]
- Previously on Swamplot: Deep Inside City and County Negotiations for an East Downtown Dynamo Stadium, Boxing Out Dynamo Stadium, Dynamo Downtown Dinghy: All Aboard, Quick! and A First Glimpse of the New Dynamo Stadium
Rendering of Dynamo Stadium: Populous
COMMENT OF THE DAY: WHERE THE WATER AND THE MONEY WERE “wow. in 2007 lenders doing 66% debt on raw land. raw land that looks flood prone. wow.” [JPSivco, commenting on Pearland Heads Cut Off: The WaterLight District’s Giant Presidential Bust]
The property intended to be home to the Waterlights District — the proposed mixed-use shopping and eating extravaganzorama in Pearland — has been posted for foreclosure by its main creditor, Amegy Bank. The 1.9 million-sq.-ft. development was to feature condos, luxury apartments, office buildings, retail space, restaurants, 2 hotels, a conference facility, a “water wall,” and a Venice-like “Grand Canal.”
The site, off the Shadow Creek Pkwy. exit on the west side of Hwy. 288, has been marked for more than 2 years now by a curious semicircle of David Adickes sculptures, a preview of the development’s Presidential Park and Gardens. That park was to feature giant white busts of all 38 U.S. Presidents. But unlike Adickes other presidential suite, I-45’s Mount Rush Hour just north of Downtown Houston — in which each of the sculptor’s busts rests on its own podium — in the Waterlights grouping the 7 Presidents moved to the site appear from the freeway to be buried in the earth up to their chests, somehow managing to keep their heads above the often-times-soggy land around them. Yes, it was the perfect marker for a freeway-side development buried in debt and treading quicksand just to keep itself afloat:
MAYOR PARKER: MAYBE WE CAN’T BUILD THE UNIVERSITY OR UPTOWN LIGHT RAIL LINES Suddenly, 2 of Metro’s 5 planned new light-rail lines are looking a lot less inevitable: “Parker said members of her transition team have ‘drilled down’ into Metro’s finances and she now feels comfortable only with the funding plans of three rail lines: the East End, North and Southeast. Construction on those lines is under way. Parker’s goal is to make sure those three lines are built “very, very rapidly,†she said. The other two, the Uptown and University lines, ‘are lines that I want to see built, but until we can finalize all the numbers, and some of them are still moving, I’m not going to commit to whether that is possible.’†[Houston Chronicle]
When last we looked in on the stalled Dynamo Stadium deal for East Downtown, Commissioner El Franco Lee was holding the ball. Today, the HBJ‘s Ford Gunter provides a few clues about the dealmaking behind the scenes:
Lee has steadfastly refused to comment on the issue, and did not respond to interview requests. Speaking in Lee’s place during several recent interviews, [Harris County Community Services Dept. Director David] Turkel has become more guarded, citing the delicate situation and his desire to avoid hampering a possible agreement. In a nutshell, though, Lee wants concessions from the city and the team that he has not yet received.
“Lee is not comfortable putting it on the agenda as is, because it will get voted down,†Turkel says.
For one, the county is looking at who will own the stadium after the lease runs out in about 30 years, and how that would affect a deal in which the city would buy out the county’s share. Precinct 2 Commissioner Sylvia Garcia wants Dynamo family ticket packs priced comparably to movie tickets, which has been more or less agreed upon.
What is Lee really after?
COMMENT OF THE DAY: THE WILSHIRE VILLAGE CAPER “Cohen is a limited partner and Dilick is the general partner. That helps explain why last February Dilick was telling people they were evicted and Cohen was telling them they could stay. Dilick is the GP and gets to call the shots. Who knows how or for how much Dilick became the GP (remember the rumors of tax delinquencies and Cohen seeking a bailout a few years back?) but I do recall Dilick surfacing in 2006 with his plan for putting a high rise there. That’s also the same time he started taking out loans on the property. So, my theory is that Dilick acquires his position as part of deal to help Cohen pay his taxes while maintaining partial ownership, uses the property as a piggy bank, comes to realize his development plans are going nowhere and he can’t find a buyer, can’t pay his loans because he couldn’t sell the property or make it profitable enough to cover his loans, defaults on his $13 million in loans, and tries every trick in the book to find a buyer and avoid foreclosure (including taking affirmative steps toward marketing the property, such as demolition, in an effort to satisfy lenders that money is on the way).” [Cap’n McBarnacle, commenting on Comment of the Day: The Ghost of Wilshire Village]
River Oaks Examiner reporter Mike Reed makes a valiant stab at deciphering the latest twists in the ongoing legal battle between the owner of the 7.68-acre site at the corner of West Alabama and Dunlavy where the Wilshire Village Apartments stood until last summer and Wedge Real Estate Finance, the lender that’s been trying since then to foreclose on the property. All that time, Matthew Dilick, the managing partner of property owner Alabama & Dunlavy Ltd., has been using a portfolio of delaying tactics to forestall foreclosure — hoping to sell or refinance the property before it’s taken from him and “two unnamed limited partners.”
According to Wedge, a Feb. 2 foreclosure sale marked the fourth month in a row such a sale had been scheduled, only to be halted by court actions.
Conspicuous among the court documents was a check for $1 million from Tour Partners Ltd., of Spring, Texas, to Wedge, dated Jan. 29 with “Alabama Dunlavy funding†written on it. The address on the check matches that of the Augusta Pines Golf Club.
The president of Tour Funding, Dennis Wilkerson, who signed the check, did not return calls from the Examiner. Neither did attorneys for either party in the lawsuit and foreclosure proceedings.
However, a few pieces of the puzzle were available through court documents:
Negotiation to lease the property for use as an H-E-B grocery store have been conducted by a “purchaser†identified as R.H. Abercrombie.
- Wilshire Village fate: Legal moves, H-E-B overtures [River Oaks Examiner]
- Wilshire Village coverage [Swamplot]
Photo: Swamplot inbox
