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Show - Standard-Examiner Sunday, March 29, 1992 3D Property owned by RTC as of Dec. 31, 1991: Total assets: $140 billion properties; book vaiue 11,474; $2.99 billion 12,251; $1.96 billion 13,746; $7. Sillion East North Central Southwest have quest > new West rum- Qinia. 5,430; $3.94 billion East: Alabama, Connecticut, Delaware, Florida, Georgia, Maine, Maryland, Massachusetts, New Hampshire, New Jersey, New York, North Carolina, Pennsylvania, Rhode Island, South Carolina, Tennessee, Vermont, Virginia, West Vir- con-# n the hone hone B North Central: Alaska, Arkansas, Idaho,Illinois, indiana, lowa, Kansas, Kentucky, Louisiana, Michigan, Minnesota, Mississippi, Missouri, Montana , Nebraska, North Dakota, Ohio, Oklahoma, Oregon, South Dakota, Washington, Seuthwest: Texas West: Arizona, California, Colorado, Hawaii, Nevada, New Mexico, Utah. yhich were quip- ging | Bhi in ther Even whenthe Resolution Trust Corporation and a community wors at their creative and cooperative best, some issues are insouuble: the entities are simply at cross purposes with each other. What’s best for the RTC is not necessarily good for the community, and vice versa. The RTC, for instance, takes a fire-sale approach to selling much of its real estate. The prices on properties that don’t sell at the asking price within 30 days are slashed by 20 percent; after six months, they are slashed again by 40 percent. Savvy investors, knowing the | policy, often wait until prices are .. their lowest before making a bid. This policy reduces property values overall, and, when the RTC owns a lot of properties in one community, it depresses a locality’s iax revenues as well. For example, the top price of condominiums in one neighborhood in Austin, Texas, had already > st- juip= Bells &T’s Y. ul sing i] ony | get Hen’ be1pa-, ign, competitive rates, with » ° the securityof knowing ; Governing Magazine uSi- ; ' You always know where you are in Colorado Springs: The Front Range of the Rockies stands as a sentinel along the city’s western flank. From the eastern city limits, you can see Pike’s Peak. your deposits are insured up to $100,000 by the FDIC.We're solid. And knowledgeable. Colonial Nationa! Financial Corp.is a s fs usi-, § bid ut- It’s a good thing, because there isn’t much else worth seeing on the east side of Colorado Springs. It is mostly empty grassland. That didn’t stop Frank Aries, a § 19 ler, y's ler nd pan- within the city on the east side of town. rid ri] The grand plan, however, was not to be. When the local economy R°s took a dive, so did Frank Aries. he, His enormous empty site, known as the Banning-Lewis Ranch, re-. verted to the Western Savings and Loan Association of Phoenix, which held the mortgage. When Western went bankrupt, the ranch, which represents a full third of the city’s territory, came under the control of the Resoiution -Frust Corporation, the federal nt se ch es er _ agencycreatea to mopup thereal 22 <$tate messleft behind by the mas®ve failure of the nation’s S&Ls. The Banning-Lewis Ranch is now the biggest and costliest chunk of real estate on the RTCrolls. 2ON- jon. ‘on) fiate the But that’s not all the RTC owns in Colorado Springs. As in localities throughout the country, the agency controls smaller parcels of land all over town: hundreds of single-family homes and apartment houses, plus shopping centers, of- ne art- fice buildings and warehouses. | a this huge volume of foreclosed properties — $16 billion worth nationwide at the latest count — quickly and for the best price possi- The RTCis charged with selling at ble. But its mission isn’t just a challenge for the agency. It’s also a epapep- refused to make good on late fees and interest on its overdue debt.It has engaged in marathon argu- ments with local officials about special assessments that private property owners have to pay but from which the RTC has excused itseif. It has slashed prices onits for-sale properties in a way that un- dermines local property values. And frequently, it has exasperated communities by refusing to answer questions or take any actions atall. For the most part, it bas been But identifying properties often is problems with the RTC. There continue to be complaints about the RTC’s slow payment oftaxes andits refusal to pay late fees, peaalties and special assessments. The agencyreleased a policy statement last year reiterating its intention to Pay property taxes “when they. |; come due” and to pay claims for. delinquencies “as promptly as is consistent with sound business’ practices.” : The National League of Cities ar- _ wound up in its own red tape. “Decisions aren’t made,” com- gues, however, that the RTCstateplains Robert Isaac, the mayor of ment, while an improvement in Colorado Springs. “Agreements clarifying policies, still does not can’t be carried out.” Isaac spilled out all those frustrations and more when he testified before the U.S. House Banking Committee last July. His testimony may have helped trigger a change, for the situation seems to be improving in Colorado Springs — not by leaps and bounds, but in small yet noticeable steps. And that is be- ginning to be true for a growing numberoflocalities. Someofthe forward motion has to do with accommodations the RTC has been making in its proce- promise “timely” payment. Aud in the same statement, the RTC exemptsitself from fines or penalties and other similar costs that state laws sometimes impose on losers in a tax dispute. That issue maybe clarified by a | case working its way through ihe court system in Texas. The case, which is on appeal and is likely candidate for U.S. Supreme Court review, pits the Irving Independent School District and Dallas County : local officials simply learning to ‘ live with a landlord none of them - ever wanted. . The problems aren’t all of the ‘ RTC’s making. When the agency : was set up in 1989, it inherited ‘hundreds of defunct S&Ls and $500 billion worth of deeply troubled assets, the bulk of which was made upofsecurities and a portion of which was real estate. It had a staff of accountants and bureaucrats, few of whom had the ance Corporation, the RTC’s par- foreclosed property. The case revolves around the FDIC’s refusal to pay penalties, interest and collection costs on taxes it waslate in remitting. The outcome of the case could have enormousimplications for lo- cal governments. “If the courts say the federal agency is responsible for paying penalties and interest,” says the school district’s attorney, Christopher Caso, “perhaps we’il see a wheeling-and-dealing expertise that greater ability of local governments $pells survival and profit in the real estate industry. « cc Oo 1 Onia | to collect the’r much-needed tax revenuea lot faster.” « Annual Yield Annual Yield* . N a t 1ond | "Interest compounded dailyif held to Substantial penalty for early ey 448 East 6400 South- Suite150 - Salt Lake City, Utah. 84107 Its not too early to think about Christmas shopping. 5 7-Month CD Put some moneyin Valley Bank’s 7-month Certificate of Deposit and you'll have more moneyforholiday shopping. With an annual interest rate of 4.6% and a minimum deposit of $500,there isn’t another savings plan at any other bank in town that even comes close. And. with a 7- month term, your investmentwill payoffalong about November or December — just in ume for Christmas. Keepin mind, too, that your deposit is protected by the Federal Deposit Insurance Corporation. An interest penaltyis required for early withdrawal. Call our Ogdenoffice at 621-7268, our Riverdale office at 621-8652, or visit our nearestoffice for a little help with Holiday against the Federal Deposit Insur- dures. And someofit is a result of ent and forerunner in taking over /6 aes D> tax was owed on those properties, to whom it was owed and when payment was due. just the beginning of a locality’s U.U Call 1-800-788-2632 empty office buildings or half-built. resorts it had inherited from a particular S&L, let alone how much cials are gaining experience working on their mutual problems and with each other. A Ail, ou skte ee But its problems were more complicated than that. The properties were owned by institutions that were now defunct and whose record-keeping had been less than’ perfect. It was often difficult for the agency to determine exactly which the RTC has loomed over commu- nities across America like the Landlord from Hell: It has failed to pay its property taxes on time, and Annual Rate Source: Governing Magazine The RTC data system is improv- /0 . 0.07% 9.20% value of assets the RTC inherited from failed institutions would be around 15 percent of pre-bankruptcy estimates. By the end of 1990, those losses were averaging 31 percent. ing, the backlog of foreclosed assets is finally being compiled, and more seasoned RTC staff and local offi- American Aasnnaell Heart <6 Month Certificate \. @!n the beginning, estimates “ cities, the way in which the agency deals with its properties affects the lifedlood of a locality. During its two years of existence, Annual Rate were that the loss in assessed The problem of determining just what properties the RTC owns has begun to clear up in someregions. Mm armata aa 2U lion in losses. massive headache for local govern- ment. With the RTC owning as much as 40 percent of the land in some price cuts. Call one of our CustomerService Representatives todayto find out moreabout us and our competitive CD's. Or stop by any weekday from 9 a.m. to4 p.m. in the past two years. wAs 2 bank, the RTC ranks just below the world’s top 10. One step aheadofit is the German Deutsche Bank. wihe RTC is the fastest growing agency in the federal government. On its second anniversary, its personnel rolls listed 7,000 employees, including 500 iawyers. How bad is bad? When the RTC wascreated in 1989, estimates were that it wouid have to resolve the failure of 400 to 500 institutions that accounted for losses of some $50 billion. By the fall of 1991, those numbers stood at 1,000 institutions with $200bil- shopping. Would your bank do that? \\ valley Bank MEMBER FC * the present real estate market, that cannot be done without substantial subsidiary of ADVANTACorp., a $1.7 billionfinancial services organization, with over two million customersnationwide. win terms of assets, the Resolution Trust Corporation is the fourth largest company in the country, bigger than either General Electric or American Express. It has grownto that size developer with “vision,” from buying 24,000 acres ofit in 1985 for a hyperinflated $240 million. Colorado Springs was in the midst of a boom that looked like it could support Aries’ plan to build a new city af" How big is big? o Q o selling off as much property as it can as quickly as possible. Given A ah interest compounded daily*, but you also have By PENELOPE LEMOV Beyond that, the RTC has been -°-12- Month Certificate ou notonly get encircles RTC, stifles sales Jaby ying: property values then dropped about 30 percent, with property tax assessments — and revenue — following suit. A spokesman for the RTC in Austin was not unsympathetic to the city’s plight, but pointed out that there was a legitimate question to be raised: Was the RTCselling properties for too little, or had the original builder been selling them for too much? > yz) m ~« charged by law with the mission of around $30,000. Neighborhood to $60,000 in 1990. When the RTC snarled red tape Ss to took over, it kept marking down empty units until they sold for fallen from $95,000 a unit in 1985 Source: Resolution Trust Corp. the § ‘its. Governing Magazine Reai estate breakdown Commercial: 6,000 properties worth $7.4 billion Land: 15,700 properties worth $7.0 billion Residential: 21,400 properties worth $1.5 billion stem Uv Si a I ha Ils by > breakdown: Caen Ps Ds) Buyers wait until prices dro; RTC is criticized for letting property go for too little Real estate: $16 billion place Ps = ‘Prices siashed on foreclosed properties _RTC property } ” e |