Daily Archives: June 5, 2009

Hot times at the Polo Grounds tonight!

T

Chukk you, Peter

Chukk you, Peter

The divorce between Stephenie Seymour and Peter Brant’s getting ugly.

Stephenie battered by Polo security guard

Ms. Seymour, seen here posing in her soon to be ex-husband’s trophy room, is apparently staying up at White Birch Farm while awaiting her divorce. That doesn’t sound like much fun and I wonder why the aging model is doing it, except to annoy and harass her hubby? Whatever, the couples’ spats make for interesting filler for any gaps in the Madoff/Noel/Dent/Bourke sagas. You go, girl!

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Hey, BJ, don’t blame me – I didn’t say this, these guys did – sue them!

My oh my, New Canaan attorney Brendan J. O’Rourke, Terror of the New Canaan Bar, has certainly done himself a world of good in the publicity department. Just a few days ago, Googling his name came up with an important sounding New York lawyer but nothing at all about BJ of New Canaan or his modest practice. Not the case now – he’s all over the web! This one’s from Pope Hat:

When the Hooked on Houses blog featured it — not to make fun of it, but as a quirky and interesting house — some of the resulting comments were jibes at the decor. The same happened when Blogger Christopher Fountain talked about the house. He drew comments like this:

And what’s wrong with clown-themed decor? Appeals to both sellers and any possible buyers

Such is life on the internet, as anyone who has spent more than five minutes on the internet knows. The internet is where people, freed by distance and anonymity, write what a substantial percentage of people who have ever visited the house on Lake Avenue have been thinking: “holy shit, this decoration looks like something out of a crazy person’s tequila nightmare.”

So no harm, no foul, right? Someone posted pictures of their house on the internet to sell it, other people made fun of the pictures. That’s life on the internet. That’s life in a society with free expression.

Oops, send in the lawyers. Attorney Brendan J. O’Rourke of O’Rourke & Associates sent a threatening letter to blogger Fountain objecting to the comments made about the house on Lake Avenue. In case the letter gets taken down, I’ve hosted it here. Here’s the heart of it:

We are in the process of evaluating various causes of action that our clients have by reason of the contents of your website and the statements you have made therein concerning the premises. We are also evaluating your conduct in the context of your status of an attorney and real estate broker, both of which professional positions create duties and obligations concerning how you conduct yourself and communicate with the public.

My clients are attempting to sell their property at what is known to be a difficult time and your website and related comments constitute an attempt to interfere with the sale of the property. As such we request that you withdraw from your website all material pertaining to the above premises. Failing to do that, we will take all appropriate action.

Let’s cut to the chase — this is a loathsome, petty, thuggish threat, but also a rather transparent one. Consider:

1. Brendan J. O’Rourke carefully avoids specifying exactly what statement on Fountain’s site is objectionable, and exactly how, which any competent attorney would do in any genuine cease-and-desist letter — as opposed to a thuggish bluff.

2. Brendan J. O’Rourke carefully avoids specifying exactly what rule of conduct for lawyers or real estate brokers Fountain has allegedly broken, as any competent attorney would in any genuine cease-and-desist letter directed at conduct that violated some rule or law the attorney could articulate.

3. Brendan J. O’Rourke speaks of “evaluating various causes of action.” A genuine cease-and-desist letter by a competent attorney will specify particular causes of action. Failing to specify one almost always means if I specify one I will look like an ass because it will be transparently bogus, so I will bluff.

4. Brendan J. O’Rourke’s central premise is spectacularly fatuous. I’d like him to explain this to me: what class of potential house-buyer would refrain from buying the house based on comments on a web site making fun of the decor, but would still have bought it if they had seen the decor in person? Perhaps Mr. O’Rourke is familiar with a class of homebuyers who make choices based on comments they read on obscure blogs like Mr. Fountain’s or mine.

This is most likely a bluff. We have no basis to believe that Mr. O’Rourke would actually sue Mr. Fountain based on the blog comments — such a suit would be profoundly frivolous. Regrettably Connecticut does not have an anti-SLAPP statute, so it might be difficult to recover fees if Mr. O’Rourke did, but I seriously doubt Mr. O’Rourke would be that foolhardy. Aside from the First Amendment and Section 230, he’d face a wide array of proof problems.

Rather, it appears likely that Mr. O’Rourke — like so many lawyers who send vaguely threatening letters to web sites — figured that he could intimidate Mr. Fountain. That attempt appears to have been unsuccessful. More importantly, it was remarkably foolhardy. Anyone with ever a passing familiarity with the internet and blog culture would have realized that the probable impact of this vaguely threatening letter would be to more widely publicize the criticisms of his clients’ home. That’s exactly what has happened. O’Rourke’s threatening letter was posted and commented on — as many such letters are — and then big-time blogger Walter Olson of Overlawyered picked it up, which is where I saw it. Such letters are widely regarded by people who have seen them as thuggish at worst and hilarious at best, and sending one often results in the content it complains of getting more attention — often by orders of magnitude — than it otherwise would have. If the content of Mr. Fountain’s blog is actually harmful to his clients’ chances of selling the home on Lake Avenue, Mr. O’Rourke has guaranteed that harm will be far more widespread than it otherwise would have been.

What goes through the mind of a lawyer who sends such a letter? Perhaps Mr. O’Rourke is not sufficiently familiar with internet culture to recognize this probable result. Perhaps he gambled — foolishly — that his letter would intimidate Fountain into silence. Perhaps he will let us know. Perhaps he regrets it already.

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Oh, the irony!

My brother Gideon showed 3 Roger Drive (off of Baldwin farms – I had a picture but lost it in the computer) today and reports that it’s in excellent shape. That’s nice to hear – this was an early, 2000 Mariani redo and there’s always time for things to go awry – not so in this case. But when I pulled up the history for this house I saw that it sold for $4.595 million in 2002, again in 2005 for $5 million and now, four years later, it’s back on the market for $4.595. I wonder if brother Gid showed this house before or after writing about Greenwich sellers who never drop their prices?

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Time to fire your broker in Saddle Ridge

Check out this ad in today’s WSJ. That’s expensive placement, so here’s what Sotheby’s did with its money:

Ah, the brown lawns of winter - so appealing in June!

Ah, the brown lawns of winter - so appealing in June!

Bedroom by Diamond and Barata

Bedroom by Diamond and Barata

 

Dungeon bar by Diamond & Barata for BJ O'Rourke's

Dungeon bar by Diamond & Barata for BJ O'Rourke's

Okay, so a collection of horrible photographs – for New Jersey, maybe that’s what passes for high class. But how about this bit of copy?

THIS EUROPEAN CHATEAU HAS INCREDIBLE CURB APPEAL! A GATED CIRCULAR DRIVEWAY LEADS TO THE ESTATE WHICH OVERLOOKS A GORGEOUS INGROUND POOL/WATERFALL AND PRIVATE POND W/DOCK.THIS PRESTIGIOUS HIGH RIDGE HOME HAS 10 FT CEILS,COFFERED CEILS,IMPORTED TILES AND TRIM.AN ELEVATOR WHICH ACCESSES ALL 3 LEVELS.THE CHARM OF THIS ONE OF A KIND SHOWPLACE WITH ELABORATE MBR SUITE/PRIV ELEVATOR AND OVERSIZED BATH/JAC/SS.3 BRS,3BTHS. 2-ST EF LEADS TO LIBRARY,GREATRM/FPL,AND GOURMET KITCHEN OVERLOOKING POOL AND POND. MAIN LEVEL ALSO HAS GUEST BR AND BATH.FULL FINISHED LOWER LEVEL WITH PUB RM/FPL,GYM,BR,BTH.6 CAR GARAGE.HOME NEEDS LOVING TOUCH.
That’s one hell of a big indoor pool, even for new jersey. And I love the “home needs loving touch” touch which of course means, “the place is a hopeless dump.”
No doubt the owner of this place is away for 5-10 and without internet privileges for that period, so he won’t care. But why would a real estate broker expose its own weaknesses so publicly and in such a prominent publication? Or is this just the best that Sotheby’s New Jersey has to offer? I mean, for all I know, maybe this is, as the ad says, “as good as it gets”.

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Even Chrysler knew what we all knew: Fiat’s a dog

WSJ: Emails show government forced Chrysler to agree to Fiat takeover. Scared yet?

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Dan Quayle vindicated

Dan Quayle who once ran for Vice President, was ridiculed when he suggested that America get smart and join the rest of the world by requiring the losing side in a law suit to pay the other side’s attorney’s fees. The American bar Association, which represents clients as effectively as the National Board of Realtors represents home owners and buyers, claimed that the rights of poor indigents would be destroyed, the world would end and lawyers couldn’t file nuisance suits if such a rule were adopted, and so it wasn’t.

Now comes word that a judge has ruled against a plaintiff who sued on behalf of all defrauded consumers of Captin Crunch’s Crunchberries which, the poor woman discovered only after haplessly dining on them for four years, aren’t real berries after all.

I’m glad that the cereal company won its motion for summary judgement, but  loweringthebar.net also mentions this:

Case dismissed.

Judge England also noted another federal court had “previously rejected substantially similar claims directed against the packaging of Fruit Loops [sic] cereal, and brought by these same Plaintiff attorneys.”  He found that their attack on “Crunchberries” should fare no better than their prior claims that “Froot Loops” did not contain real froot.

So these slime ball lawyers sue over “Fruit Loops”, lose, and then, no doubt using identical papers with “crunchBerriees” substituted for “Froot”, file the same lawsuit again. They should be disbarred, forced to eat nothing but Captain Crunch for two years or until their teeth fall out and doused in milk. At the very least, they should be forced to pay the winner’s lawyers fees, as should the plaintiff who agreed to go along with this charade. Under Quayle’s law, they would. Under our law, as protected by the ABA, they don’t. Too bad.

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Two papers in one

Headline from the Greenwich Citizen’s Real estate columnist today: “Existing home sales rebounding”. Headline on AP story below the fold: “[Connecticut] April home sales drop to lowest level since 1987.

That page needs an editor’s attention. The paper’s advertisers will demand it.

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Phony accounting rules, phony bank profits

The Government can’t admit its TARP plan’s a failure, so is encouraging banks to report false profits. The banks are obliging.

So we’ve got the government running the auto companies, deciding what cars will be built, and where (no more Chinese, please), which dealerships will remain open (depends on whether you were smart enough to donate to your elected representative) and even, as Barney Frank demonstrated today, whether GM warehouses in Congressmen’s districts can be closed. Consumers will be taxed to supply subsidies to Government Motors so that the latter can sell the former “cheap” American made cars no one otherwise wants, but it’s all good.

And bank profits are good, now that Obama is appointing a Salary Czar to make sure that no one there is paid “too much”, as defined by Congress. If there are no profits, we’ll let you pretend there are and then that, too will be all good.

Next month, Government health care. Need I assure you that that will be even better than government banking and manufacture?

UPDATE: to readers who have commented that TARP stabilized the financial system, here’s the Bloomberg artticle I link to above:

June 5 (Bloomberg) — Big banks in the U.S. say they’re on the mend. The five largest were profitable in the first quarter, rebounding from record losses for the industry in the fourth quarter. Share prices have jumped, with the KBW Bank Index doubling since March 6.

Treasury Secretary Timothy Geithner, after “stress testing” 19 banks on their ability to withstand a worsening economy, declared in early May that Americans can be confident in the banks’ stability and resilience. Wells Fargo & Co. and Morgan Stanley were among banks raising $43 billion in new capital since then through share sales.

“With our capital and assets, stressed as they have been, we can go back to focusing all our attention on managing our business and restoring value,” Citigroup Inc. Chief Executive Officer Vikram Pandit said after Geithner’s examinations were completed.

The revival may be short-lived. Analysts who have examined the quarterly profits and government tests say that accounting rule changes and rosy assumptions are making the institutions look healthier than they are.

The government probably wants to win time for the banks, keeping them alive as they struggle to earn their way out of the mess, says economist Joseph Stiglitz of Columbia University in New York. The danger is that weak banks will remain reluctant to lend, hobbling President Barack Obama’s efforts to pull the economy out of recession.

‘Bogus’ Profit

Citigroup’s $1.6 billion in first-quarter profit would vanish if accounting were more stringent, says Martin Weiss of Weiss Research Inc. in Jupiter, Florida. “The big banks’ profits were totally bogus,” says Weiss, whose 38-year-old firm rates financial companies. “The new accounting rules, the stress tests: They’re all part of a major effort to put lipstick on a pig.”

Further deterioration of loans will eventually force banks to recognize losses that their bookkeeping lets them ignore for now, says David Sherman, an accounting professor at Northeastern University in Boston. Janet Tavakoli, president of Tavakoli Structured Finance Inc. in Chicago, says the government stress scenarios underestimate how bad the economy may get.

The accounting rule changes that matter most for the banks came on April 2, when the Financial Accounting Standards Board gave companies greater latitude in how they establish the fair value of assets. Lawmakers, including Representative Paul Kanjorski, a member of the House Financial Services Committee, had complained that existing mark-to-market standards worsened the financial crisis.

Debt Valuation

Along with that change, FASB also let companies recognize losses on the value of some debt securities on their balance sheets without counting the writedowns against earnings. If banks plan to hold the debt until maturity, they can avoid hurting the bottom line.

At Citigroup, the recipient of $346 billion in fresh capital and asset guarantees from the government, about 25 percent of the quarterly net income came thanks to the debt securities rule change, the bank said.

Another $2.7 billion before taxes came from an accounting rule that lets a company record income when the value of its own debt falls. That reflects the possibility a company could buy back bonds at a discount, generating a profit. In reality, when a bank can’t fund such a transaction, the gain is an accounting quirk, Weiss says.

Citigroup also increased its loan loss reserves more slowly in the first quarter, adding $10 billion compared with $12 billion in the fourth quarter, even as more loans were going bad. Provisions for loan losses cut profits, so adding more to this reserve could have wiped out the quarterly earnings.

Wells Fargo

Without those accounting benefits, Citigroup would probably have posted a net loss of $2.5 billion in the quarter, Weiss estimates. In the five previous quarters, Citigroup lost more than $37 billion.

Wells Fargo also took advantage of the change in the mark- to-market rules. The new standards let Wells Fargo boost its capital $2.8 billion by reassessing the value of some $40 billion of bonds, the bank said in May. And the bank augmented net income by $334 million because of the effect of the rule on the value of debts held to maturity.

Wells Fargo spokeswoman Julia Tunis Bernard declined to comment, as did Citigroup’s Jon Diat.

The higher valuations Wells Fargo put on its securities probably won’t last, as defaults increase on home mortgages, credit cards and other consumer and corporate lending, Northeastern’s Sherman says.

Fed’s Optimism

“These changes will help the banks hide their losses or push them off to the future,” says Sherman, a former Securities and Exchange Commission researcher.

The Federal Reserve, which designed the stress tests, used a 21 percent to 28 percent loss rate for subprime mortgages as a worst-case assumption. Already, almost 40 percent of such loans are 30 days or more overdue, according to Tavakoli, who is the author of three primers on structured debt. Defaults might reach 55 percent, she predicts.

At the same time, the assumptions on how much banks can earn to offset their losses are inflated, partly because of the same accounting gimmicks employed in first-quarter profit reports, Weiss says.

“There’s a chance that it might work,” Columbia’s Stiglitz says of the government’s attempt to boost confidence. “If it does, then they’ll look like the brilliant general. But all these efforts also bank on the economy recovering and housing prices not falling too much further. Those are not safe assumptions.”

Indeed, while the government and accounting rule makers try to help the banks look their best, they may make the U.S. economy worse. As long as lenders are stuck with bad loans, they can’t provide new money to consumers or corporations to fuel a potential recovery. The banks may look pretty, but they’ll be zombies until they clean up their books.

(Published in the July issue of Bloomberg Markets magazine.)

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I assume they’ll be head hunting on Wall Street for experienced workers

"Brace yourself, Bridget."
“Brace yourself, Bridget.”

Nevada brothels hiring male hookers.

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It would be nice to hit even a false bottom here in Greenwich

In San Diego, some pundits are warning buyers to beware the false bottom: prices there appear to have stabilized, but a new wave of bank owned properties is about to hit. In Greenwich, we’re still falling and the bank stuff is just beginning to appear. I’m aware of at least 30 spec houses, representing over $130 million in mortgages, whose builders are in default and by the terms of their loans, no longer own the projects. The banks themselves may not want to unleash so much inventory on the market at fifty cents on the dollar but when the banks are replaced by the FDIC and those bad loans are auctioned off, the cuts will come. Oh, wait, I  forgot: that can’t happen here, we’re Greenwich. My bad.

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How you going to keep him on the farm after he’s seen Pierre?

Pierre, S.D. : 32 -year-old rancher wins $232 million powerball.

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There’s no shortage of great real estate news, just ask a broker!

From a New Canaan reader comes this bit of encouraging news. They have some pretty hard-hitting reporters up in our sister town – maybe we can get one to come down here to report on how things really are.

 

Real estate: Uptick in sales less than $1 million

Updated: 06/05/2009 02:14:54 PM EDT

The New Canaan real estate market is picking up the pace in the $1 million and lower price range as buyers are getting the confidence to make offers and close deals.

“People are visiting open houses and are out on weekends,” Brotherhood & Higley real estate broker Larry Sullivan said. “They have lots to choose from.”

In the past couple of weeks, some activity has even moved into the $2 million range, Barbara Cleary Realty Guild President Barbara Cleary said.

“It just seems logical if the lower range sells, then those sellers can turn around and make purchases,” Cleary said. “It starts the ball rolling, I see confidence returning. But it’s going to be a gradual return. As we call it an L [shaped curve]. We’ve stopped dropping and the issue is the large inventory.”

People that have the funds to purchase new homes were looking around for the last eight months, but lacked the confidence until now to make close, Cleary said. As the stock market stabilizes and lower interest rates make themselves available, families are ready to sign on the dotted line.

Thirty-one units were sold in the New Canaan first five months of 2009, compared to 60 units in the same time period in 2008, New Canaan


  

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340 Valley Road condominiums

Unit Number One of this complex has just lowered its price to $1.8 million which must come as a sad disappointment to the two buyers brave enough to buy other units last year for $2.3 and $2.360, respectively (the higher sales price was February ’08. the lower, July). I’m not quite sure how many units are here, but at least 8 and perhaps as many as 12. I’d be feeling forlorn right now if I owned one and was watching my equity slip down hill. Pioneers get the best land but sometimes they find arrows instead.

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Post- crash life in the Hamptons: nasty, brutish, and short

Vanity Fair’s got a story on life in the Hamptons and BusinessInsider has a summary. Best part for Noel fans is the bit about trying to rent his own house out there for $350,000 in July and $375,000 in August. Walter is about to discover what so many of his (former) Greenwich friends have learned: just because you need a specific sum of money, it doesn’t mean you can get it. Not since Bernie retired, anyway. Poor guy. Poor fill(ie)ys!

UPDATE:  Full Vanity Fair article here.

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Price decline on Stillman Lane

16 Stillman Lane, new construction on the old Rockefeller land in Glenville, was listed a year ago for $5.850 million and today has been knocked down a total of a million, to $4.850 million. Interesting price history on this street, in that No. 6 sold for $5.1 in ’03, No. 17 sold for $5.450 in ’04, No. 15 for $5.5 in ’06 and No. 10 for $5.8 in ’07. So starting 16 at $5.8 in ’08 wasn’t crazy but obviously, 2008 was not going to be another 2007. In fact, we seem to have dropped below 2001 prices over there in Glenville. Life marches on.

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New Riverside Waterfront Listing

22 Pilot Rock , down at the end of Indian Head and right on the water, is listed today for $12 million and change. That’s actually not a terrible price, considering that the last land sale down there (and this property, although it has a nice enough house on it, is definitely a land sale) went to contract last December for $10 million and this has a much better view.  In fact, this is where I would have priced it too. It may not sell for that much – these days, who can tell anything with certainty? – but it’s a good place to start.

Speaking of big sales, what’s happened to the $25 million spec at 253 Round Hill Road? It was supposed to have closed by now – in fact, I’ve heard rumors that today is a drop – dead date but so far at least, no news. If it does sell we’ll finally know what it sold for. I predicted last month that it would end up between $12 and $15 million. I’ve been wrong before, so I can take the shame and humiliation. If I’m right, of course, some sellers of lots on Round Hill currently asking $5 million and above might want to reconsider the value of their land. Or not – there’s probably a very warm feeling one gets from owning land and that’s worth holding on to, for some of us.

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More fun with numbers

While we’re all waiting for the sky to fall on spec builders, nothing much is moving out there but we do have one sale and one price cut that show why buyers should be cautious when interpreting statistics issued by the Greenwich Association of Realtors. 4 Ridge Road, in Cos Cob, is reported as under contract for and the listing shows a first and only asking price of $1.325 million. Assuming it sells, its “sales to ask ratio” will be calculated from that number, and not the $1.395 it was originally listed at in 2008. Why? The old listing was deleted so that it culd get a clean start. Similarly, 10 Sparrow Drive shows a price cut today down to $3.8 million from $4 something, not $5.250, where it was priced in February, 2008.

The listing service is maintained by brokers as a means to sell their clients’ houses and you certainly can’t expect them to to a disservice to their owners by letting a house appear stale. But as a buyer, be aware that the ridiculous assertion that Greenwich real estate sells for just 4% of its asking price is just that: ridiculous. We have a long standing tradition of wildly overpricing houses in this town and we hide that fact by using the ask price that finally attracts a buyer, usually years after and millions of dollars lower than when the house was first offered for sale.

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Solution for unsold Greenwich mansions found!

Turn them into homeless shelters like this Brooklyn developer. The builder,  faced with a collection of useless, unwanted luxury condominiums, has rented them to New York City for use by the homeless. Those people love it, of course, what with marble bath rooms, huge master staterooms and the like, but we can do them one better and today First Selectman John Tesei announced a program to do just that.

“Greenwich is perfect for this idea,” Tesei said. “In Brooklyn,”the homeless are encountering envy from their lessers, citizens who work for a living and can’t afford Corian countertops,let alone granite. But everyone in Greenwich already lives in luxury, so why would they care if their neighbor has the same thing? We can show the world that Greenwich has a heart and help our builder friends at the same time. It’s a win-win situation and I’m proud that the Republican party thought of it.?”

Reached for comment, Greenwich P&Z secretary  and traditional Democrat sacrificial lamb Frank Farricker was delighted. “This is exactly the sort of innovative idea we’ve been looking for,” he said, “although John may not realize that he’s bringing in a Trojan horse. Democrats have always been out-numbered in this town. John’s plan is going to triple our numbers while he’s busy showing what a nice bunch of folks the Republicans are. What a chump. But his heart’s in the right place, so God bless him, and I’m sure we all wish him well in his new career, whatever that turns out to be. He’ll be toast by November,  ’cause the first thing we’ll do with this program is set up a voter registration booth in the biggest home out there – I’ll bet Hillary will show up for the ribbon cutting!”

Official Town Curmudgeon and attic snooper Franklin Bloomer, had one reservation: “As long as they ride bicycles to get to town,”I’m on board,” he said. “But they’ll have to leave their state-supplied SUVs at the station. We don’t need any more traffic in the Back Country” . But all in all, it’s just like that movie I saw once, where that Russian doctor fellow came back to Moscow and found his place occupied by 12 families where once just his family had lived. ‘This is better,’ he said, ‘more fair’. And so it is.”

The Department of Social Services has established a waiting list for developers who wish to participate in the program and will answer questions from the public and builders during its usual working hour, Wednesdays, 10:15 to 11:05 a.m.

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