Real Estate Week in Review for April 1, 2023

No, April Fool’s is a day, not a week, as surprising as that seemed during over the past few days.

Former President Donald Trump, who before his stint as Commander in Chief was once a prolific real estate developer, was indicted by a Manhattan grand jury. The indictment was filed under seal, but it’s reported that he will be charged with more than 30 counts related to business fraud.

While not confirmed, it’s widely speculated at least one charge stems from allegedly falsifying business records to cover up a $130,000 payment to porn actress Stormy Daniels in exchange for her silence about an affair she claims took place in 2006.

Trump’s indictment pretty much trumped everything else in the newscycle as the week drew to a close, particularly in the political realm. But earlier in the week, Florida Gov. (and would-be Trump challenger for the 2024 GOP presidential nomination) Ron DeSantis signed a $711 million affordable housing legislation to bolster housing programs and incentivize developers with major tax breaks.

The legislation, known as the Live Local Act, will supersede local zoning, density and height regulations for affordable housing in areas zoned for commercial and mixed-use development. It also prevents localities from implementing rent control measures, the passage of which were already severely restricted to housing emergencies.

The state legislature passed the measure, and DeSantis signed it into law, after South Florida became one of the least affordable housing markets in the country last year fueled in no small part by the migration of people from out of state.

DeSantis may have wished someone were pranking him upon hearing that Disney had, at least for now, outflanked him when the board that oversees the company’s tax district in Florida quietly agreed that Disney would keep control over its state theme parks and other properties for at least 30 years, CNN reported. (Other outlets noted the agreement is in effect for 21 years after the last descendent of King Charles III dies.) The agreement also gives Disney veto power over public projects in the district.

DeSantis has been famously feuding with the House of Mouse over cultural issues, most notably over the controversial so-called “Don’t Say Gay” law that the governor backed in 2022.

When Disney balked at the law, DeSantis moved to have Disney’s special tax district eliminated, only to realize that move presented too many headaches to follow through on. So the state legislature, backed by DeSantis, passed a law giving DeSantis the ability to appoint all five members of the board of the special tax district, which oversees the development of Disney’s Florida theme parks, as well as maintenance of the theme park’s infrastructure, including roads.

Disney’s maneuver — which was done prior to the legislature’s special session — effectively neutralized DeSantis’ authority over the board, at least for now. The newly constituted board is reportedly exploring legal options to nullify the agreement between the outgoing board and Disney.

Back in the Big Apple, there was another story that could have been mistaken as a prank. The Flatiron Building, the iconic New York City structure that has recently fallen on hard times was at the center of a baffling series of events following its auction.

Unknown Jacob Garlick came out of nowhere to successfully outmuscle Jeffrey Gural for the building at auction with an eye watering $190 million bid. But Garlick didn’t have the bread and failed to cough up the $19 million (10 percent) down payment, leaving the property’s status in limbo and likely headed back to auction.

Garlick’s temporary, though extremely high-profile ascendance in the newscycle wouldn’t have been possible had bidders been required to put down a deposit before the auction, court filings say.

“It’s highly unorthodox to do an auction without requiring a deposit,” said Greg Corbin, a bankruptcy specialist at brokerage Rosewood Realty Group. “Over the past 15 years of conducting distressed asset auctions, only once have we allowed people to bid without providing funds up front.”

Perhaps after the last week, we can focus on other rites of spring, such as the Final Four (particularly if all your brackets aren’t busted) and the start of the Major League Baseball season.