Financial Mines

News and notes from the business reporters for the Connecticut Media Group.

Archive for the ‘Economy’ Category

Conn. tweaks collective bargaining rules

Tuesday, May 21, 2013 by:Rob Varnon

New tweaks in collective bargaining rights in the state could force employers to post notices in break rooms announcing when employees can vote in a union.

The State Labor Department is holding a public hearing on June 10, at 10 a.m. at the Department of Labor, 200 Folly Brook Road, Wethersfield, where the public can comment on some of the proposed changes to the Connecticut State Board of Labor Relations regulations.

Some of the changes are truly technical and involve when to use lower case or upper-case letters, others are more substantive and involve when the clock starts on petitions and details on what kinds of activity are considered interference.

Secret ballots are required under the proposal, but there is an interesting provision governing the voting rights of people who either the union or employer object to being part of a collective bargaining unit. Those poor saps are allowed to vote, but must place their ballot in a sealed envelope until their status is determined.

Thuggery on either side is right out under the rules.

For more info, visit the DOL.

Malloy peddles $3 million to Cannondale to move to Wilton

Friday, May 10, 2013 by:Rob Varnon

Gov. Dannel P. Malloy opened the bank of Connecticut to Cannondale this week, providing the bicycle maker with a $3 million loan, $2 million of which will be forgiven, if the company creates 75 jobs when it moves from Bethel to Wilton.

While plenty of people are down on Connecticut, it ranked for the sixth worst place to do business according to a recent survey of CEOs, Malloy has been willing to put the state’s money where his mouth is and give it to companies to stay and expand here.

(Malloy likes to say Connecticut is open for business.)

Cannondale, a division of Montreal-based Dorel, plans on using the money to purchase office equipment and IT systems when it moves 145 employees to the new office in Wilton.

The bond commission will have to approve the deal, which provides the loan over 10 years at 2 percent interest. But, if Cannondale creates 75 new jobs over the next four years, the state will forgive $2 million.

Dorel, Cannondale’s parent corporation, reported on Thursday net income of $22.3 million for the first quarter of this year. Bad weather hurt bicycle sales and cut into revenue the company reported. Besides Cannondale, Dorel owns several prominent bike brands, including Schwinn and Mongoose.

Harrisburg a cautionary tale for bond investors and mayors

Tuesday, May 7, 2013 by:Rob Varnon

The SEC slapped Harrisburg, PA, with a cease and desist order Monday, saying the city’s government for allegedly violating securities law.

Regulators found that city officials failed to come clean about the dire debt trouble at its Resource Recovery Facility and its general financial health while issuing bonds. This all happened in 2009 and since then , Harrisburg has been placed in receivership. Yup, PA’s capital is in bankruptcy.

At any event, the SEC pointed out that the Mayor at the time of the problem failed to properly disclose the scope of the problem and in fact the city misled investors on several occasions. One of the major issues that haunted Harrisburg was having a debt level eight times expected revenue. In the end, the city missed about $13.9 million in bond payments.

The SEC also criticized the city on how it handled its budget, knowing the Authority running the Resource Recovery Facility was in trouble. Here’s an excerpt from the SEC’s findings:

On November 25, 2008, the Harrisburg administration submitted a proposed 2009
Budget to City Council, which was approved on December 22, 2008 (”2009 Budget”). The 2009
Budget included $63 million of general fund expenditures. At the time, Harrisburg’s 2009 Budget
and its accompanying transmittal letter were accessible on Harrisburg’s website. By the time the
2009 Budget was passed, Harrisburg was aware of the Authority’s projected budget deficits and
that Dauphin County was challenging the rate increase. As a result, the Authority was unlikely to
have sufficient revenues to pay its 2009 debt service obligations. Harrisburg’s 2009 Budget, as
adopted, did not include funds for debt guarantee payments for the RRF, raising questions as to
whether it would fulfill its obligations under those guarantees. Nevertheless, at the beginning of
the year, Harrisburg administration officials informally set aside $2.1 million of its surplus reserves
in anticipation of potentially having to make those guarantee payments.

The SEC issued guidelines to municipalities regarding their obligations under the Securities Act. It’ll be interesting to see how this case affects future disclosures among Connecticut and municipalities around the country. The Mines fully expects investors will be digging even deeper into muni financials after this.

UBS to move jobs to …(Drum roll)

Monday, May 6, 2013 by:Rob Varnon

Some might call it luck, but Gov. Malloy’s UBS deal looks divine.

Hey, things broke right for the Guv this time as Bloomberg reported this weekend, that UBS is going to move jobs out of New York City and into Stamford. Maybe.

We checked with UBS and the company seemed perplexed that Stamford was mentioned as a destination for employment growth. Bloomberg also cites a real estate pro who says UBS will move some work to the Avenue of the Americas.

Later, UBS said it will honor its agreement with the state but would not comment on any movement of employees. Here’s what we found out officially. Mining some of our sources around town, it sounds like some jobs are coming back to Stamford, but not a flood of them.

Still if the initial report is right, things look good for Gov. Dannel P. Malloy.

Remember Gov. Malloy, fresh off his win in the election, confronted some bad news in his first year in office when UBS was allegedly going to move out of Stamford. He slipped the Swiss banking giant a sweet $20 million loan to keep about 2,000 employees in the City that Works through 2017.

Word was that some execs’ spouses didn’t like their significant others telling people they didn’t work in NYC. But Bloomberg is saying that the bank wants to trim some real estate costs.

Anyway, stay tuned for more.

And yes, for those devout Miniacs, we are back this week after a break. Sorry for the interruption of your news.

Rising prices and foreclosure backlog present challenges to housing

Friday, April 26, 2013 by:Rob Varnon

CoreLogic reported its February figures for forelcosures in Fairfield County and Connecticut. We’re not going to make a big deal out of this as it follows a full week after RealtyTrac reported March figures, which were astoundingly high.

But both reports show the region and state still has a problem with foreclosures heading into the heart of what’s expected to be one of the best years for sales in the state in a while. Combining this with the increased bidding on houses, there could be some issues getting mortgages approved in some of the more competitive markets going forward.

CoreLogic said while the state and county’s foreclosure rates both fell, they remained above 4 percent while the national rate was 2.85 percent.

Mortgage counselors working for some of the area’s nonprofits report that people are still fighting tooth and nail to keep homes in a tough economy. Job loss, frozen incomes and other economic issues are still leaving some people short in this economy. The 90 day delinquency rate on mortgages in Connecticut and Fairfield County both topped 7 percent while the national rate was barely above 6.

The continued foreclosures and pressure on some homeowners could check the rise in home prices here, which might actually stop the market from outpacing consumers’ incomes this summer.

That’s a problem in a market that’s surged largely on pent-up demand from people who deferred buying during the recession.

One concern of economists is he lack of growth in jobs and incomes in the last several years means, after pent-up demand for homes in the market is sated, you might be left with fewer people who can actually afford to buy a home.

And beyond this issue is the appraisal. As several realtors have noted, multiple bids are coming in for some homes, yet appraisers remain conservative, which could present challenges if the appraisals don’t match offer prices.

Housing itself remains one of the keys to the economic health of the nation, but the housing recovery is supported by jobs, income and credit.

Some of these issues are good ones to have in a market, multiple bids in particular. As the year moves on, we’ll see if our good problems outweigh the bad ones.

California-based firm expands its housing data biz with Case-Shiller acquisition

Thursday, April 25, 2013 by:Rob Varnon

CoreLogic, a real estate analytics and database firm based in Irvine, Calif, acquired Case-Shiller from Wisconsin based Fiserve for $6 million.

It’s further proof of the value of data in dealing with an industry that can be so emotional as people buy and sell homes.

Case-Shiller, which provides a series of indexes covering housing prices, was born out of the economic studies of two New England professors and a newly minted Yale MBA grad in 1991.

Robert Shiller, an economics professor at Yale and one of the leading authorities on behavioral economics, joined forces with Wellesley Economics Professor Karl Case, who was studying housing prices in Boston to author several papers. Then Allan Weiss, who was earning his MBA at Yale joined the two to help form a company to provide information on real estate prices to clients. The three formed Case Shiller Weiss operating for more than a decade. They sold the company to Fiserv in 2002, which licensed the information to Standard & Poor’s.

CoreLogic said it will rebrand the index as the CoreLogic Case Shiller Index, but the S&P Case-Shiller will continue. CoreLogic, which has an index series of its own, will continue that series as well.

March home sales flat as prices flirt with income threshold

Monday, April 22, 2013 by:Rob Varnon

The National Association of Realtors reported Monday that sales of existing homes were slightly down in March, compared to February, but up more than 10 percent from a year ago.

NAR said there has been a 25 percent increase in people out shopping for homes, but a decrease in the number of homes on the market is pressuring prices upward. In fact, they were up 12 percent from a year ago.

It’s just one month’s worth of data, and most experts are saying they see this as a pause before the big push into spring and summer for housing, but we couldn’t help but dig up a few numbers of our own to see where housing prices sit with income levels.

While interest rates are at all time lows, allowing people to maybe buy more house than they used to, we decided to compare what the median household income could afford for a home using a conservative, but established method, (the old you can afford a mortgage at 3-times your income) versus what the actual median sales prices are.

Here’s what we found.

Nationally, the median sales price for a home was $184,300. The national median income is about $50,443, which means the median family could afford up to buy a $188,189 home provided they have a 20 percent down payment.

In Connecticut, the median sales price for a home has been running around $240,000 while the median income is about $66,748. Which means the median family could buy a house priced at $248,244 if they have 20 percent to put down.

Both state and national sales prices are awfully close to that key income threshold that could come into play as people think about what they can afford and whether they want to take out a loan. But whether that’s playing into the market right now, or will, remains to be seen.

Connecticut’s cities bear brunt of unemployment

Friday, April 19, 2013 by:Rob Varnon

Unemployment rates in Connecticut’s cities are more than double those of many suburbs as the slow pace of job recovery continues to lag in the state’s urban centers.

Of the state’s major cities, Stamford had an unemployment rate of 7 percent, while Hartford had more than double that rate at 15.1 percent. The City of Danbury registered an unemployment rate of 6.6 percent.

The State Labor Department released the March unemployment numbers for the 169 municipalities Friday. The Danbury metro region had the lowest rate as a region, but not a single of the towns in that area had unemployment rates below 6 percent. According to the report, 24 municipalities reported unemployment rates below 6 percent, with Union and Avon both solidly below 5 percent. This report is not indicative of where people work. Instead, it measures whether residents of these communities have jobs.

Here’s the list of lowest unemployment rates and highest. If you’re town isn’t on either list it means, it wasn’t among the highest or it didn’t drop below 6 percent.

Lowest

Union 4.4 percent
Avon 4.8 percent
Woodbridge 5.2
Glastonbury 5.2
Willington 5.4
Chester 5.4
New Canaan 5.5
Ridgefield 5.5
Weston 5.6
Simsbury 5.6
Easton 5.7
Wilton 5.7
Haddam 5.7
Hebron 5.7
Colebrook 5.7
Roxbury 5.7
Washington 5.7
Darien 5.8
Greenwich 5.8
Madison 5.8
Salisbury 5.8
Orange 5.8
Kent 5.8
Tolland 5.9

Highest

Hartford 15.1 percent
Waterbury 13.1
Bridgeport 12.5
New Haven 11.6
New Britain 11.3
New London 11.3

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