The public purse is always under attack from some cleverly designed tactic, and this is no exception.
Dan Walters: Appraisals could be minefield
By Dan Walters - dwalters@sacbee.com
Published 12:00 am PST Monday, November 12, 2007
A major factor in the collapse of the residential real estate market in California and elsewhere has been the willingness of lenders to accept very questionable, even bogus, property appraisals to justify subprime mortgage loans.
Anecdotally, appraisers have described the pressure brought to bear on them by sellers, buyers and hyperactive loan officers to inflate property values; implicitly, appraisers who didn't play the game simply didn't get hired.
Ironically, the Legislature's budget analyst has found that the state has played a similar game in its purchases of property, especially large tracts that are being acquired for environmental protection purposes.
This column described what it called "the land game" earlier this year. Someone – an individual or a corporation – owns some land that, as a practical matter, cannot be developed but has some theoretical environmental value. The landowner wants to peddle the otherwise low-value property to the government and, directly or indirectly, enlists environmental groups as allies – sometimes by issuing paper development plans.
The enviros put the heat on politicians to acquire the supposedly "threatened" property, an appraiser sets a value that reflects the bogus development potential and the taxpayers overpay the landowner for the parcel. The property owner pockets the money, the environmental groups celebrate their victory, and the politicians pat themselves on their backs for doing something positive.
The column cited three big examples of the syndrome in recent years:
• The 405,000 acres of California desert that the Catellus Corp. traded and sold to the federal government as an environmental preserve.
• The state's acquisition of 16,000-plus acres of salt flats in San Francisco Bay from Cargill Corp.
• The state-federal purchase of old-growth redwoods on the North Coast, dubbed Headwaters Forest, from Pacific Lumber Co.
