Posts Tagged ‘Connecticut’


Tuesday, November 29th, 2011

Posted by Leonard Steinberg on November 29th, 2011

The winners of the $ 254 million record-breaking POWERBALL lottery identified themselves in Connecticut: the three money managers won a combined $ 108 million after taxes (that’s a lot of taxes!). They bought just one ticket, with numbers selected by the computer. Well, not exactly….it appears these 3 guys are fronting for a very wealthy guy who does not want the exposure. Maybe this win highlights the similarities between lotteries and capitalism:  Winner takes all? And if the winner is super-wealthy, he wants to conceal the wealth as much as possible and minimize the tax exposure. What amazes me is the comments attached to the online press reports about this win: Many feel this win is unfair as the winner is already rather wealthy. Really?  Many say lotteries are a disguised tax on the poor… why are these wealthy guys buying lottery tickets? When poor winners become rich overnight, surely the win qualifies them as rich and the win is unfair too? And what is the value of a dream, even if the chances of it becoming true are super-slight?

The bigger message I see is that wealth concentration happens everywhere. In lottery wins, in capitalist societies, in socialist societies, in communist societies, in dictatorships. The decider in all is either luck, skill or influence…..often it is corruption. Surely capitalism comes out of this cleaner as it does not pretend to be anything other than a winner-takes-all mentality (of course in its purest form, capitalism does not allow cheating, stealing, lying, undue influence, etc)?

So the big question arises again about wealth distribution: Would the lottery be as successful if there had been say 1,000 winners? Would as many people have bought the tickets knowing they could only win a maximum of $ 108,000.00? It would be an interesting test to see if a lottery that offered this payout was successful or not… may help us all answer the questions we ask daily about whether wealth concentrated amongst a very, very small group benefits or hurts the big picture.


Monday, May 30th, 2011

Posted by Leonard Steinberg on May 30th, 2011

Bloomberg reports that homes priced at $10 million and above are accumulating on the market in Greenwich, Connecticut, a town about 30 miles (48 kilometers) north of Manhattan that’s known as the U.S. hedge fund capital. They’re moving so slowly that it would take more than four years to sell them all, the biggest backlog since at least 2004, according to Mark Pruner, an agent with Prudential Connecticut Realty. Wall Street’s greater emphasis on deferred compensation, in which a portion of an annual bonus will be paid in the future, has stifled demand, he said. I think that’s only part of the problem.

“Our market moves very closely with the financial markets,” Pruner, based in Greenwich, said in an interview. “Deferred compensation has totally hammered the over-$10 million market because people just aren’t getting large amounts of cash, and that market has traditionally been a cash market.”

Fifty-two houses in that price range were listed for sale as of May 19, according to Pruner. Four have sold this year and two are in contract. At that pace, it would take 52 months to sell the inventory, he said. If that backlog remains through the end of the year, it would be the biggest in his data going back to 2004.

I think another component thats driving this market trend is the large number of wealthy homeowners in Greenwich moving back to Manhattan: Now there is definitely a shortage of large apartments in Manhattan, with many developers scrambling to cater to this need. Many who moved out to Greenwich to escape New York are learning that a good volume of business still remains focused in Manhattan, requiring lengthy, time-consuming commutes. Owners of super-large homes (lets face it, if you want to look rich in Greenwich, you need a 10,000sf+ home!) are finding many rooms un-used, and the cost and aggravation of maintaining them more than they had bargained for. Couple that with the fact that most of these homeowners usually own a second or third home. We constantly hear Greenwich homeowners looking in Manhattan griping about:

1) SUBURBAN BOREDOM….they miss the stimulation and variety of options for entertainment and socializing in the City.

2) LENGTHY COMMUTES/CAR CULTURE…..there is something infinitely appealing to take an elevator ride down to the street to buy  pint of Ice Cream, walk 2 blocks to your favorite restaurant, or take a 5 minute cab ride to see a movie or a play. All these activities require at least a 20-30 minute drive.

3) SUBURBAN CULTURE….Social living in Greenwich is different: not better or worse, but certainly more insular. The peace and tranquility of suburban life can be achieved at a weekend home in the Hampton’s or Upstate, combined with the stimulation of big city living during the week.

4) EMPTY NESTERS…..a huge garden and lots of rooms is wonderful with kids and their friends using them. Not so wonderful when they move on to college.

5) ENVIRONMENTAL RESPONSIBILITY….we all have to share in our efforts to conserve energy and cut back on needless energy consumption. A large house in Greenwich leaves an enormous carbon footprint in its wake. City living is significantly less damaging to this planet, even in very large apartments or townhouses.

6) CONVENIENCE: Owning a large home presents large maintenance issues. Living in a condo in the City requires a call to the Super to get those pesky lightbulbs changed: That $ 100 tip is a bargain next to the cost and aggravation of full time maintenance staffing.

7) SIMPLIFICATION: There is a large trend right now towards efficiencies. More compacted, efficient and engineered spaces are just easier to live with. A well designed 4,000sf apartment can deliver most of the needs of a 10,000sf house.

8) COST: The suburbs really aren’t that much cheaper. Yes, you get lots more house for your money, and it looks more impressive when your peers drive by. Now throw in the cost of 2 or more cars, yard, pool and house maintenance/staffing, additional energy costs, infrastructure re-building (eg roof, facade, windows, etc). Yes, all these items are required for a swell City existence, but many of these costs are shared. One roof shared by 50 owners….

Financial-Industry Buyers

“Previously, if you got a $10 million bonus, buying a $5 million house wasn’t that big a deal” said Pruner, who estimates that about half of all homebuyers in Greenwich work in the financial industry.

“If you get $20 million — $3 million in cash and 17 in deferred compensation — are you going to borrow another $2 million in cash to buy a house? I don’t think so,” he said.

Cash bonuses on Wall Street declined 8 percent last year as financial firms raised base salaries and deferred some earnings, New York State Comptroller Thomas DiNapoli said on Feb. 23. Companies disbursed $20.8 billion in 2010, down from $22.5 billion a year earlier.

The average Wall Street employee took home a cash bonus of $128,530 in 2010, a drop of 9 percent that was greater than the total decline because the pool was shared among more workers, DiNapoli’s office calculated in a report based on personal income-tax collections.

Less Liquidity

The smaller payouts reflect changes adopted by the industry after the credit crisis, in response to criticism that soaring incentives pushed traders to disregard risk. About 56 percent of financial firms incorporated risk management into performance measures for top executives by the end of 2010, and 37 percent have also done so for lower-level staff, according to a February study by Deloitte Touche Tohmatsu Ltd.

“Pay for performance and incorporating risk measures is making its way through more and more of the ranks of Wall Street, and that is going to have an impact because people have less liquidity at bonus time than they used to,” said Constance Melrose, managing director ofeFinancialCareers North America, a network of websites for finance industry professionals.

A smaller cash component of bonuses may translate to fewer high-dollar property sales in Greenwich, where the median household income was about $122,000 in 2009, more than twice the national average, according to the U.S. Census Bureau. The town is home to about 90hedge funds, data compiled by Bloomberg show.



Friday, April 1st, 2011

Posted by Leonard Steinberg on April 1, 2011

No, this is not an April Fool’s joke: All of us in New York have either heard of or experienced first hand the outrageous behavior of a co-op board, and yes, even a CONDO board.

This morning the New York Times reports that a bill now before the Connecticut legislature would establish an ombudsman within the Department of Consumer Protection, in the Attorney General’s office to oversee the actions of Boards and address disputes between boards and owners of condomiums. The agency would be financed through an annual $4 fee on all condominiums. Connecticut has between 240,000 and 250,000 condo units. Manhattan has many more, and of course even more co-ops

The bill would require condominium associations to set up internal procedures to resolve disputes. Condo owners would be required to go through that process before filing a complaint with the ombudsman, for which they would pay a $35 fee. The ombudsman’s office would investigate and resolve complaints, and could impose a penalty of up to $200 for knowing violations of state statutes.

I think this would be a great idea for Manhattan. Right now, the only recourse an owner has against a runaway Board is to sue. That is absurd. It is time to make the actions of Boards much more transparent….board members have a fiduciary responsibility to the owners who elected them.