Money world

In the city of St. Louis, there is no bigger land-owner than the city of St. Louis.

Over the past four decades, the city has accumulated more than 11,000 parcels of real estate that no one else wants, long-empty houses and thousands of vacant lots, big downtown buildings and even a 30-acre cemetery. It sells some parcels every month and accumulates more after five annual tax sales. But most of the land just sits, waiting.

Last week’s deal to sell more than 1,200 parcels on the near north side to developer Paul McKee highlights the potential for this “land-banking.” McKee, who already owns 800 parcels in the area, will be able to market more and larger sites to potential tenants for his massive NorthSide Regeneration project under the deal. It’s progress, says the city.

But as land banks bloom from New York to Nebraska, St. Louis’ experience illustrates two simple facts: That this practice is no panacea for blight and that any real progress requires lots of patience.

St. Louis has been banking land since 1971. Residents and businesses were fleeing for the suburbs, leaving behind crumbling buildings with unpaid taxes. The city wanted a central repository to hold that property, clear the title, maintain it, and sell it to someone to redevelop. The Land Reutilization Authority — the nation’s first city-run land bank — was born.

LRA started taking properties that went unsold at St. Louis sheriff’s office tax sales, and its inventory quickly ballooned into the thousands. Despite a constant churn of sales, inventory has stayed high ever since. Today, the LRA and two smaller land banks own 11,136 parcels, more than two square miles of ground; they’ll still own 9,900 after the NorthSide sale closes. Mowing and maintaining all this costs $2.7 million a year.

The authority has some success stories, such as the old City Hospital — now high-end condos — and large-scale rebuilding in the Gate District and Gaslight Square. But it still has vast holdings, especially in battered sections of north St. Louis, neighborhoods such as The Ville, Hyde Park and Wells Goodfellow, where as much as one-fifth of all real estate is owned by LRA. Much of the land is vacant lots, but there are also plenty of empty buildings, with crumbling roofs, patchy walls and the LRA’s trademark dark red boards over the doors.

The trouble, said Otis Williams, who oversees the authority for St. Louis Development Corp., is that there just isn’t much interest in these properties, even at a price tag of just a few thousand dollars.

“The goal is to get each of them back on the tax rolls,” Williams said. “The problem we have is the market. There’s a real lack of demand.”

But some say the LRA holds on to too much property for too long.

Every month, at a meeting in a downtown office building, the LRA considers offers. Typically it receives dozens. Some are from people who want to buy the plot next to their house for a sideyard. Some come from rehabbers who want to turn a shell into apartments, or people looking for an affordable way to purchase a home.

In a report last year, free-market thinktank the Show-Me Institute combed through eight years of LRA records, and found that the agency rejected more than 40 percent of purchase offers, often saying the land was being held for “future development.” In some cases, LRA turned down offers for the same property several times.

That seems to run counter to the goal of putting property back on the tax rolls and getting it redeveloped, said Audrey Spalding, the Show-Me policy analyst who led the study.

“When you turn down an offer to purchase property today in the hopes of a future, better development tomorrow, you are turning down a certain offer, and property tax revenue, in the hopes that a future offer will materialize,” Spalding said. “In this economy, such a bet is ill-advised.”

Williams said the LRA weighs a number of factors, including the potential for future development and whether the buyer’s plan for the site fits the city’s plan for the area no fax pay day loan. But, he said, a major reason why sales get turned down is because the buyer doesn’t have the resources to redevelop the property.

“We’re not going to sell to just anybody,” he said. “They’ve got to be able to do something with it.

If not, he said, it’s quite possible that the land will just wind up back with LRA a few years down the road, maybe in worse shape than it is now. The LRA has changed policies in one regard, though. Williams said it has tried to sell more land as side yards, and to neighborhood groups that want to create community gardens and parks.

‘BANKING’ TREND

In the meantime, new land banks — often with more powers than the LRA — are sprouting up across the country.

Michigan now has 41 land banks, and Ohio has expanded its land-banking programs. New York is readying to launch them in five cities this year, proposals are before state lawmakers now in Pennsylvania, Georgia and Nebraska, and Kansas City officials are asking the Missouri General Assembly to create one there.

“More states are really recognizing that vacant and abandoned properties impose tremendous costs on their cities and their neighborhoods,” said Frank Alexander, a law professor at Emory University in Atlanta who works on land bank legislation. “(Land banks) can step in where there’s no market.”

Most of these new banks would be more powerful than the LRA, with access to more funds to rehab or demolish buildings and clean up sites for reuse. New York law gives land banks the right to all land that is seized for unpaid property taxes, not just the sites left over after investors have picked over sheriff auctions — which is how St. Louis’ LRA accumulates most of its land.

That’s huge, said Dan Kildee, who developed the land bank in Genesee County, Mich. — home of Flint — because it means land banks get some good properties to work with, too.

“The land bank gets to be the smartest and luckiest speculator,” Kildee said. Then they can market the properties or partner with nonprofit groups or developers to rebuild them. And more sales means more money for demolition of properties that can’t be rebuilt.

Funding demolition has been a challenge in St. Louis. It costs about $8,000 for LRA to knock down a structure, and it owns roughly 2,000. In recent years, the agency has demolished 200 to 240 buildings a year, though that number plunged to 142 in 2010 because of budget cuts. Other cities — most notably Detroit — have used federal money designed for foreclosure relief to knock down thousands of houses. St. Louis used most of that money on rehab work. The LRA does, though, plan to spend much of the $3.2 million its getting from McKee on much-needed demolition.

Take the 3300 block of Blair Avenue in Hyde Park, where the shells of three LRA-owned brick four-families sit crumbling in a row, their roofs gone and brick walls caving in. Across the street, another LRA house, this one of blue shingles, sits empty, its roof rotting. On a recent afternoon, a boy played in a fort built of mattresses in the yard. Otherwise the street was dead.

Just a few blocks away, construction crews are working, rehabbing 27 buildings scattered across several blocks in a project called Hyde Park South. When they’re done, there will be 50 affordable apartments.

Most of the buildings were bought from the LRA, said Michele Duffe, a development consultant who is working on the project, and the former LRA director herself. Duffe’s firm and the development arm of nearby Bethlehem Lutheran Church have built 206 units of housing in the neighborhood, with 40 more in the pipeline.

Buying all those parcels from individual owners, instead of a land bank, said Duffe, would have been impossible.

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China is clamping down on overcapacity in the world

Iran is poised to greatly expand uranium enrichment at a fortified underground bunker to a point that would boost how quickly it could make nuclear warheads, diplomats tell The Associated Press.

They said Tehran has put finishing touches for the installation of thousands of new-generation centrifuges at the cavernous facility _ machines that can produce enriched uranium much more quickly and efficiently than its present machines.

While saying that the electrical circuitry, piping and supporting equipment for the new centrifuges was now in place, the diplomats emphasized that Tehran had not started installing the new machines at its Fordo facility and could not say whether it was planning to.

Still, the senior diplomats _ who asked for anonymity because their information was privileged _ suggested that Tehran would have little reason to prepare the ground for the better centrifuges unless it planned to operate them. They spoke in recent interviews _ the last one Saturday.

The reported work at Fordo appeared to reflect Iran’s determination to forge ahead with nuclear activity that could be used to make atomic arms despite rapidly escalating international sanctions and the latent threat of an Israeli military strike on its nuclear facilities.

Fordo could be used to make fissile warhead material even without such an upgrade, the diplomats said.

They said that although older than Iran’s new generation machines, the centrifuges now operating there can be reconfigured within days to make such material because they already are enriching to 20 percent _ a level that can be boosted quickly to weapons-grade quality.

Their comments appeared to represent the first time anyone had quantified the time it would take to reconfigure the Fordo centrifuges into machines making weapons-grade material.

In contrast, Iran’s older enrichment site at Natanz is producing uranium at 3.4 percent, a level normally used to power reactors. While that too could be turned into weapons-grade uranium, reassembling from low to weapons-grade production is complex, and retooling the thousands of centrifuges at Natanz would likely take weeks.

The diplomats’ recent comments came as International Atomic Energy Agency inspectors are scheduled to visit Tehran on Sunday. Their trip _ the second this month _ is another attempt to break more than three years of Iranian stonewalling about allegations that Tehran has _ or is _ secretly working on nuclear weapons that would be armed with uranium enriched to 90 percent or more.

Diplomats accredited to the IAEA expect little from that visit. They told the AP that _ as before _ Iran was refusing to allow the agency experts to visit Parchin, the suspected site of explosives testing for a nuclear weapon and had turned down other key requests made by the experts.

Iranian officials deny nuclear weapons aspirations, saying the claims are based on bogus intelligence from the U.S. and Israel.

But IAEA chief Yukiya Amano has said there are increasing indications of such activity. His concerns were outlined in 13-page summary late last year listing clandestine activities that either can be used in civilian or military nuclear programs, or “are specific to nuclear weapons.”

Among these were indications that Iran has conducted high explosives testing and detonator development to set off a nuclear charge, as well as computer modeling of a core of a nuclear warhead. The report also cited preparatory work for a nuclear weapons test and development of a nuclear payload for Iran’s Shahab 3 intermediate range missile _ a weapon that could reach Israel.

Iran says it is enriching only to make nuclear fuel. But because enrichment can also create fissile warhead material, the U.N. Security Council has imposed sanctions on Tehran in a failed attempt to force it to stop.

More recently, the U.S., the European Union and other Western allies have either tightened up their own sanctions or rapidly put new penalties in place striking at the heart of Iran’s oil exports lifeline and its financial system.

The most recent squeeze on Iran was announced Friday, when SWIFT, a financial clearinghouse used by virtually every country and major corporation in the world, agreed to shut out the Islamic Republic from its network.

Diplomats say the choke-holds are being applied in part to persuade Israel to hold off on potential military strikes on Iranian nuclear facilities _ among them Fordo, a main Israeli concern because it is dug deep into a mountain and could be impervious to the most powerful bunker busting bombs.

Diplomats told the AP earlier this month that Iran had added two new series or cascades of old-generation IR-1 centrifuges to its Fordo operation, meaning 348 centrifuges were now operating in four cascades.

Olli Heinonen, who retired last year as the IAEA’s chief Iran inspector, recently estimated that these machines, and two other cascades at Natanz can produce around 15 kilograms (more than 30 pounds) of 20-percent enriched uranium a month, using Iran’s tons of low-enriched uranium as feedstock.

The low and higher enriched uranium now being produced “provides the basic material needed to produce four to five nuclear weapons,” Heinonen said.

But he suggested “an altogether different scenario” _ a much quicker pace of enrichment to levels easily turned into weapons-capable uranium if Iran starts using newer, more powerful centrifuges at Fordo. That, said the diplomats, is exactly what Iran appears to be on the verge of doing by finishing preparatory work recently for new centrifuge installations.

Fordo, which can house 3,000 centrifuges, was confidentially revealed to the IAEA by Iran in 2009, just days before the U.S. and Britain jointly announced its existence.

Iran announced last year that it would move its 20-percent uranium production to Fordo from Natanz and sharply boost capacity. It started making higher grade material two years ago saying it needed it to fuel a research reactor.

But the U.S. and others question the rationale, pointing out that Iran rejected offers of foreign fuel supplies for that reactor and is making more of the higher-enriched material than that small reactor needs.

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Spain’s three top banks said Tuesday they will set aside an additional euro6.1 billion ($8 billion) to meet a new government demand for all banks to boost their buffers against troubled real estate assets.

Banco Santander, Europe’s biggest bank by market capitalization, said it would make allowance for an extra euro2.3 billion ($3 billion) buffer to meet the government requirement. It said the amount will be partially covered through anticipated capital gains, including euro900 million ($1.2 billion) from the sale of Banco Santander Colombia.

Banco Santander SA said in a statement the new reserve comes on top of euro1.8 billion ($2.4 billion) charged against the bank’s 2011 financial results.

Spain last week ordered banks to raise euro50 billion ($65.6 billion) to protect themselves against troubled real estate assets from a domestic construction boom that went bust business cards.

The country’s second bank, Banco Bilbao Vizcaya Argentaria SA, said it would be setting aside euro1.4 billion ($1.8 billion) to boost its cover of toxic assets. BBVA said it would be able to absorb the total sum in 2012 thanks to its strong results.

CaixaBank SA, Spain’s No. 3 bank, will designate euro2.4 billion ($3.2 billion) in additional reserves.

Spanish banks have about euro175 billion ($229.5 billion) in troubled holdings. The bank reform require institutions to increase provisions for troubled assets from 30 percent to up to 80 percent of book value, creating the incentive for them to sell them off.

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China announced more help Wednesday for its struggling private business sector, unveiling a $2.5 billion fund to finance new small businesses and promising tax breaks and more lending for entrepreneurs.

The Cabinet announcement was one of the first concrete measures announced by the government following repeated pledges to help entrepreneurs who have been squeezed by a slump in U.S. and European demand and curbs on bank lending.

Entrepreneurs generate most of China’s new jobs and wealth, but thousands have been driven out of business. The survivors have slashed payrolls, raising concern among China’s communist leaders about possible unrest.

A Cabinet statement issued after a meeting led by Premier Wen Jiabao, the country’s top economic official, said small companies were essential to helping China keep growth fast and stable despite the global downturn.

The government will create a 15 billion yuan ($2.5 billion) fund “primarily to support the start-up of small and micro-enterprises,” it said.

It gave no details but also promised a cut in taxes and fees and said small businesses will be guaranteed a portion of government purchases of goods and services.

Beijing ordered the state-owned banking industry to lend freely to help China’s economy rebound from the 2008 global crisis. But it clamped down on credit to preventing overheating after annual economic growth soared above 10 percent in 2010.

Economic growth fell to a 2 1/2-year low of 8.9 percent in the final quarter of 2011.

Two surveys released Wednesday gave mixed signals on manufacturing activity in January but both showed it largely unchanged.

The state-affiliated China Federation of Logistics and Purchasing said its purchasing managers index rose 0.2 points to 50.5 from December’s 50.3 on a 100-point scale on which numbers above 50 indicate growth.

HSBC Corp. said its HSBC China Manufacturing PMI was little changed at 48.8 from December’s 48.7, suggesting a “moderate deterioration.”

The credit clampdown battered entrepreneurs as banks channeled their limited lending to politically favored government companies. Entrepreneurs turned to high-interest underground lenders. Thousands went bankrupt, leaving employees and suppliers unpaid.

The government responded in October by ordering banks to step up lending to small businesses, though it is unclear whether credit has increased.

Wednesday’s statement promised to create more small-scale financial institutions to serve entrepreneurs and rural companies.

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Wendy’s Co. says its adjusted earnings fell 29.5 percent in the fourth quarter, while its revenue rose 5.6 percent,

The hamburger chain said Monday its income from continuing operations was $4.3 million in the period ended Jan. 1. That was down from $6.1 million a year ago.

The adjusted number stripped out one-time charges like costs related to selling Arby’s and writing down the value of some assets. The company didn’t report what net income would be if those charges were factored in.

Earnings were 4 cents per share, in line with the predictions of analysts polled by FactSet. After adjusting for the one-time charges, earnings were 1 cent per share.

Wendy’s says revenue rose to $615 million, beating the $613 million predicted by analysts polled by FactSet. More visitors and higher prices helped.

Shares fell 2 percent in early trading to $5.10.

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Jan. 29 (Bloomberg) –Indonesia may sustain its economic growth, Trade Minister Gita Wirjawan said, as

Kia has announced the recall of nearly 146,000 vehicles with faulty airbag systems.

The models affected are the 2006-2008 Kia Optima and the 2007-2008 Kia Rondo. Due to a flawed spring system that may become damaged over time, the driver’s side airbag in these cars may not deploy properly in the event of a crash, the National Highway Traffic Safety Administration said in a recall alert.

Kia reported the problem last week, and the recall is expected to begin in March, NHTSA said. Customers affected can have the problem fixed at dealerships free of charge.

Kia said in a statement that it was not aware of any injuries or airbag non-deployments associated with the problem to date payday loans. The issue was discovered "as a result of the regular monitoring of field data to ensure product quality," the company said.

For more information, car owners can contact NHTSA’s vehicle safety hotline at 1-888-327-4236 or visit www.safecar.gov. They can also call Kia’s Consumer Assistance Center at 1-800-333-4542 

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Funds that give everyone from retirees to money managers easier access to junk bonds are fueling the biggest price swings in more than two years after their buying power surged tenfold.

Exchange-traded funds that track high-yield bond indexes exceed $22 billion, up from about $2 billion three years ago.

While that’s just 2 percent of the $1 trillion in U.S. corporate speculative-grade debt outstanding, ETFs are among the biggest holders of benchmark securities, including those of casino owner Caesars Entertainment Corp. and HCA Inc.

ETFs, which drew scrutiny last year as riskier versions emerged, are adding to volatility because of rules that promote trading. A measure of price swings for junk bonds was seven times higher in November than May, making it harder for the neediest borrowers to raise capital guaranteed high risk personal loans.

Their influence in the market for high-yield, high-risk debt is becoming similar to what ETFs, which have grown to $1.5 trillion from $109 billion in 10 years, have done in other assets.

While cash has poured into ETFs, they haven’t outperformed. Speculative-grade bonds on average returned 40 percent since April 2007, compared with 36.3 percent for investment-grade debt and 37.3 percent for U.S. Treasuries, according to Bank of America Merrill Lynch index data.

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