August 31st, 2011

Further evidence that Sharma should be fired

And, possibly, a _whole_ lot of other people at S&P.

http://www.businessweek.com/news/2011-08-30/subprime-mortgage-bonds-get-aaa-rating-from-s-p-denied-to-u-s-.html

Same article here:

http://www.bloomberg.com/news/2011-08-31/subprime-mortgage-bonds-getting-aaa-rating-s-p-denies-to-u-s-treasuries.html

The rationale being used for rating these AAA are the usual: the loans won't all go bad at once, and the AAA portion is tiny and unlikely to be chewed on anyway.

Bloomberg TV coverage likes this quote:

"“These are errors that could cause airplanes to crash if this was aerospace engineering,” said Sylvain Raynes, a principal at R&R Consulting in New York and a former analyst at Moody’s Investors Service."

There's a theory about rating sovereign debt that says (I'm summarizing very crudely here) that anything denominated in or sufficiently dependent upon that sovereign continuing functioning must be rated no higher than the sovereign debt. When S&P downgraded US debt, a bunch of other people looked at stuff they were rating to figure out if they should down-adjust it to reflect that downgrade. I'm not sure anyone really followed through on it, tho, particularly after Fitch and Moody's decided not to wade into that particular pond.

I've tried really hard to understand MBSs and CMBSs. I can produce approximately the same level of soundbite summary in any given instance that any of the punditry can, but I don't feel like I have an understanding of that kind of securitization that gives me any confidence that risk in the underlying security "goes away". These things work on the you-don't-have-to-outrun-the-bear-just-the-guy-you're-hiking-with theory. Unfortunately, where there's one bear to outrun, there might be more.

Whyte on Solar Easements

p 277 of _City_

"One way to purchase sunlight is through a solar easement. You buy from a house owner a binding agreement that he will not add anything to his house that would block the passage of sunlight to yours." This is sort of a crappy summary, because several of these laws are more about trees than they are about house modifications, but I don't know precisely which ones he looked at when he was researching this book nor exactly what the statutes said at the time. And one thing I know about researching what laws _used_ to say is that it's often of hard to track down.

"There is another approach and it avoids compensation. The model for this is New Mexico's statute... These statutes invoke the who-was-first principle of Western water-rights law, or Doctrine of Prior Appropriation. The statutes provide that the first man to install a solar collector has first call on the sun and will continue to."

Again, not a terrific summary: you have to file for it and that's not a trivial process and you have to define your path/angle in some detail.

"It is quite a conferral. ... [an owner] could seriously impede subsequent development and impair their property rights."

"There is not enough experience yet for firm conclusions, but I would guess that the easement approach will prove sound, if limited, and that the prior-appropriation approach will not. I would also guess that the easement approach will prove most useful in conserving sunlight for sunlight's sake and that its main application will be in cities."

In order to _get_ an easement, you have to negotiate in a binding, legal, file with the recorder sort of way, with any neighbors. Whyte thinks someone is going to do this to guarantee that they have sunlight, not for power, but just for sunlight, and to do this _in advance_ of someone directly threatening that access (because when the developer owns the property and plans to build believe me you won't be able to buy the easement then). The only thing that could convince someone to go through the hassle of negotiating for and filing the easement is that they are planning to spend tens of thousands of dollars on a solar installation and they don't want the neighbors trees to block it in five years, which they predictably _will do_, but which you can pay the neighbors to agree to cut down if you plan ahead of time.

New Mexico's approach seems to be holding up fine, and the current energy environment suggests that's not going to change.

I think this is actually a classic example of bias (not the "he/his" for property owner, altho that is grating, too). If you haven't lived with prior appropriation rules, they just don't seem real. But if you _have_ lived with prior appropriation rules, you know just how inflexible they can be, particularly since they only tend to get invoked when the pressure is on.

google demapped, find AvalonBay's Extra Place

http://ny.curbed.com/tags/extra-place

This will likely be heavily ETAd as I figure out what happened.

http://www.dnainfo.com/20110607/lower-east-side-east-village/east-village-developer-outlines-plan-for-longdormant-alley-extra-place

http://eastvillage.thelocal.nytimes.com/2011/06/10/a-new-plan-for-extra-place-takes-shape/

I particularly like this:

“I wish Extra Place was what it was 10 years ago, but that’s never happening,” Mr. Hollander said.

when contemplated against this:

"But fear not, Bowery nostalgists, "the doorway that serves as a small shelter... where, depending on the day, you can find used condoms and needles, is still in use as a toilet." Phew!"

Ah, perspective. I still cannot tell if the alley was ever demapped or not.

new housing in Acton

I was looking at recent property sales in Acton.

http://www.newenglandmoves.com/real-estate/property/80-harris-st-acton-ma-01720/land/mls-70957652/607353?pos=1&search=6db4b29ecb642b924a7bb8b7e54ece89b53ae171

Sorry about that. It works for me and I'm having trouble trimming it. Maybe you can find a better site:

$1,710,000 (Listed for $2,000,000)
80 Harris St., Acton, MA 01720
Land
7.42 Acres | MLS# 70957652

Anyway. Here's what is happening there:

http://www.thevillagesatmonumentplace.com/siteplan.html

From the first page:

"#3 JUST REDUCED Now $529K!!!"

Let's take that $500K as a nice round figure, giving 13.5 million for selling it out. But it isn't cheap to build in Metrowest; how much might they make on this? Here's one way to find out.

Even allowing for maxing out the finishes (which is unlikely), they should still make a couple million; if they don't max out the finishes, they should make even more.