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Municipal property lien?



September 05, 2010 – Comments (8)

WTF...  Mish has a WTF article on a municipality disincorporating

One of the things that I repeatedly stated about why I removed myself from the market was my inability to predict where the dominos would or could fall with the massive global economic decline and massive levels of debt.

Well, the linked article has one Inever dreamed of, the municipality dissolving and then talk of the debt being attached to homeowners via liens.

One of the things that I have stated with respect to the enormous uncertainty of the market is to only own as much home as you need because as budgets run out of choices taxing homeowners more is simply a no brainer, it is coming.  But a lien on your home for municipal debt, and the possibility of it happening this soon, wow...

So, which is better, bankrupcy or disincorporating?

I am reminded of how in the 90s I was a campaign manager for a friend of mine running for city council in Vancouver.  My friend was quite insistent on doing things his way even if they were hopeless, for example, he was running under the Green Party under principal as that was what he believed in and I could not convince him if he truly wanted to be elected he needed to run under one of the two existing parties that actually got councilors elected, so no, he didn't get elected, but he did get more votes by a wide margin over all of the other candidates also not with one of the two parties.

But, I digress,  the experience of being his campagin manager made me look at the financial issues of Vancouver and I was shocked and horrified at what I found.  There was a referendum for $100 million of new debt and at the time 15% of the budget went to existing debt servicing.  What I discovered was that once the debt was there no obligation to ever retire the debt existed, so debt was piling up and over the years a larger and larger percent of revenue was going to debt servicing.  I lived in Burnaby at the time and immediately checked out Burnaby's finances as I was so shocked at what I had found in Vancouver.  Well, while Vancouver had half a billion of debt being rolled ove, Burnaby had a $200 million contingency fund.  They were almost debt-free, they were carrying $6 million of debt that was graducally being retired and set to be fully retired by the end of the year.

And now, get this, the two party lines that ran, one was considered socialist and the other considered business orientated.  Vancouver had been dominated for years by the business orientated political party whereas Burnaby had been dominated by the more socialist party.  That also completely confused for me the overall values towards each of the party lines, where I'd always been conditioned that the more socialist party was a bigger spender and more fiscally irresponsible, and that clearly was not what I found.

Currently, the same dork that was Mayor of Vancouver for the massive debt building year is now the Premier of the province, and low and behold, British Columbia debt levels in BC are at all time highs, and not just marginally higher, but massively higher.

But, people continue to not check out the issues, and why should they?  It took hours to research what I found.  So, once again it is back to the glory of ignorance.   The level of due diligence to actually make informed choices is such that we would never have time to do anything but research and even then, the mountain of due diligence would only have a small dent in that which we live our lives in the glory of ignorance.

8 Comments – Post Your Own

#1) On September 05, 2010 at 1:07 PM, dwot (29.13) wrote:

drat, *principle

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#2) On September 05, 2010 at 1:08 PM, dwot (29.13) wrote:

drat, *over

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#3) On September 05, 2010 at 1:10 PM, dwot (29.13) wrote:

drat, *gradually

oh well, can't fix errors found after posting...

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#4) On September 05, 2010 at 1:52 PM, starbucks4ever (89.52) wrote:

"because as budgets run out of choices taxing homeowners more is simply a no brainer, it is coming"

When I was younger, I saw an adventure movie, where the bad guy tries to run away in a boat with a suitcase of cash, and the boat gets filled with water, but the guy makes no attempt to bail it out or swim because he is holding the suitcase with his both hands, so he eventually disappears under water and the last thing that still floats is a pair of hands clutching at the dollar bills from the suitcase. So this is what you should expect from a homeowner government. First they will bankrupt the city, then the state, then the Federal government, then they will ruin the entire economy, then they will send their daughter to a work at a massage parlor, then they will sell their kidneys and balls and guts to raise cash, and then the last thing you will see floating is property values. I am afraid you will have to wait for that increase of property taxes much longer than you would care to wait.  

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#5) On September 05, 2010 at 2:37 PM, alstry (< 20) wrote:

This is just one example of COLLECTIVE INTERDEPENDENCE.......

There will be many more......joint and several liabilty is very powerful...especially for those that perceive themselves as wealthy.....

Why do you think a bunch of scientists, physicians, and attorneys formed the Institute of Alstrynomics.....all of this was easy to foresee.....if you simply thought about it....

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#6) On September 05, 2010 at 6:26 PM, Entrepreneur58 (37.83) wrote:

A piece of land was there a million years before you were born and it will still be there a million years after you are dead, so why do people think they can own real estate?  Its like a flea thinking it can own a dog.

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#7) On September 05, 2010 at 6:54 PM, dwot (29.13) wrote:

No way entrepreneur58, the dog will not be there in a million years :)

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#8) On September 11, 2010 at 8:09 PM, dinodelaurentis (86.27) wrote:

Arising Tide Raises All Ships... Lowers Them Also!

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