Default Judgment in Property Case Tossed Over Jurisdiction

A trial judge did not have the authority to enter judgment against defendants for not showing up to an arbitration hearing because the defendants' counterclaims had already effectively removed the case from arbitration, the state Superior Court has ruled.

G.S.A. Has Federal Property to Sell, but It’s Not Easy

WASHINGTON — As government agencies are forced to do more with less, the General Services Administration has stepped up its efforts to dispose of surplus government buildings across the country in new and more profitable ways, instead of simply auctioning them off.

In an effort to streamline operations, the G.S.A., the federal government’s landlord, has sold hundreds of buildings since 2010. But in the last several months it has been working with private developers to negotiate land swaps that reduce the government’s real estate portfolio while consolidating offices and saving money for taxpayers. The goal, the agency’s acting administrator, Dan M. Tangherlini, wrote in a staff memorandum, is “to maximize the value of our real estate assets and reduce our federal footprint.”

The federal government owns about 14,000 excess buildings and other structures, and the G.S.A. is working to dispose of them. 

The strategy is evident here, where a proposed land swap involving the 40-year-old F.B.I. building last month yielded 35 formal expressions of interest, and in Miami and Los Angeles, where plans are under way to replace and dispose of two old federal courthouses. “What we’ve seen is more attention and focus put on this activity, in part because of fiscal constraints across the government,” Mr. Tangherlini said. “At G.S.A., we are asking ourselves if there are other ways to speed the process of disposal and get positive outcomes as a result.”

Dorothy Robyn, the Public Buildings Service commissioner for the G.S.A., said at a public meeting on the F.B.I. building in January that “functionally,” much of the government’s property, with an average age of 47 years, is “out of date.” But despite government efforts to sell obsolete or surplus properties quickly, the process has sometimes bogged down in political, technical and economic issues.

The federal courthouses in Miami and Los Angeles were long overdue for replacement, but how to do it cheaply and efficiently and what to do with the old structures have presented challenges.

Disposing of the David W. Dyer Federal Building and United States Courthouse in Miami has proved to be far more complicated than expected. Built in 1933 and added to the National Register of Historic Places in 1983, the 170,000-square-foot Mediterranean Revival structure was vacated in 2008 when a new court building was completed. The G.S.A.’s initial plan to renovate the older courthouse for continued use as a federal building was scrapped because of the $60 million cost. When the G.S.A. sought expressions of interest in the building last August, only two responses came in, neither acceptable to the agency.

One of the proposals came from Miami Dade College, which wanted to convert the old four-story courthouse, across the street from the college, into an educational and cultural center. But the courthouse is connected to another courthouse, and they share a courtyard. Separating the utilities and dividing secure areas from nonsecure ones in the buildings could cost nearly $15 million, which the G.S.A. said it would not pay.

“I don’t see we have any budget for that,” said Juan C. Mendieta, a spokesman for Miami Dade College. “We have a pretty challenging budgetary situation here in Florida.”

At a House subcommittee hearing in Miami in March, John E. B. Smith, the Public Buildings Services commissioner for the Southeast Sunbelt Region, testified that “the Dyer courthouse helps highlight the challenges of developing long-term asset strategies in changing fiscal times, and the unique characteristics of properties that can present hurdles to repositioning.”

The swapping strategy being applied to the F.B.I. building, where a developer will get the old headquarters in return for building replacement headquarters elsewhere in the region, is now also being tested in Los Angeles.

For years, federal judges, citing security concerns, have been pushing for a new building to replace the late 1930s courthouse on North Spring Street. In December, the G.S.A. awarded a $318 million contract to Clark Construction, of Bethesda, Md., to build a 550,000-square foot courthouse at another city location.

With a Mall Boom in Russia, Property Investors Go Shopping

While it sounds like the Mall of America, this mall is outside Moscow, not Minneapolis.

“I feel like I’m in Disneyland,” Vartyan E. Sarkisov, a shopper toting an Adidas bag, said recently while making the rounds of the Mega Belaya Dacha mall.

Instead of bread lines, Russia is known these days for malls. They are booming businesses, drawing investments from sovereign wealth funds and Wall Street banks, most recently Morgan Stanley, which paid $1.1 billion a year ago for a single mall in St. Petersburg.

One mall, called Vegas, rose out of a cucumber field on the edge of Moscow and became, its owners say, larger than the Mall of America if the American mall’s seven-acre amusement park is not counted in the calculation of floor space.

A few offramps away on the Moscow beltway, another mall scored a victory by another measure: the Mega Tyoply Stan shopping center attracted 57 million visitors at its peak in 2007, well ahead of the 40 million annual visits reported by the Mall of America.

As American malls dodder into old age, gaptoothed with vacancies, Russia’s shopping centers are just now blossoming into their boom years, nourished by oil exports that are lifting wages.

“It’s 1982 all over again in Russia,” said Lee Timmins, the country representative of Hines, a Texas-based real estate group that is opening three outlet malls in Russia, referring to the heyday of the American mall experience. Russians, he said, love malls.

The mall boom illustrates an extraordinarily important theme in Russian economics these days. The growing crowds at malls, and the keen interest in Russian malls on the part of Wall Street banks, are signs that the emerging middle class that made up the street protests against Vladimir V. Putin in Moscow last winter is becoming a force in business as well as politics.

Investors, who with money at stake are a bellwether of the new trends, are not waiting for the next round of protests; they are already placing bets on the rise of a broad affluent class in Russia.

“Over the past 10 years, Russia has turned into a middle-class country,” Charles Slater, a retail analyst at Cushman & Wakefield, a commercial real estate consulting firm, said in an interview. “What better to do than go to an enclosed, warm environment with many things on offer, whether that be bowling, cinema or food courts, things the customers have not been used to in the past?”

Moscow now has 82 malls, including two of the largest in Europe, according to the International Council of Shopping Centers, a New York-based trade association. Both are owned by Ikea Shopping Centers Russia, the branch of the Swedish assemble-it-yourself furniture franchise that manages 14 malls here. In Russia, malls are still novel; the first Western-style suburban mall opened in 2000. They are now changing hands as developers sell to institutional investors, like Morgan Stanley, shedding light for the first time on their eye-popping values.

At the core of the attraction for investors is the rising disposable incomes of Russians, nudged along by policies favoring the middle class, lest their challenge to President Putin’s rule intensify.

Russia has a flat 13 percent income tax rate. Most Russians own their homes, a legacy of post-Soviet privatizations, and so pay no mortgage or rent. Health care is socialized.

Not surprisingly, then, Russians have become fanatical shoppers. Russians spend 60 percent of their pretax income on retail purchases, a category that includes food, according to Jones Lang LaSalle, a real estate consulting firm. The country in second place in Europe is Sweden, where retailing accounts for 40 percent of total private spending. Germans, by comparison, spend 28 percent of their salaries shopping, according to Jones Lang LaSalle..

Malls, where the secrets of Western capitalism were finally peeled open and laid bare, with fast food, clothes, ice rinks, electronics and appliances wherever the eye falls, have mesmerized shoppers here — much as they did in their early years in the United States, from the 1960s to the 1980s.

Olga N. Zaitsova, 55, who was in the Mega Belaya Dacha mall with her granddaughter Anastasia, said she came every weekend, drawn by the warm play area for toddlers. “It’s just not comfortable to be outside when it’s so cold,” she said.

When she shops, she said, “now we buy things we want, not things we need.”

Greece Seeks Taxes From Investors in London Property

Real estate agents recall sifting the listings for some of the most prestigious, and expensive, properties in South Kensington, a favored area for London’s international set.

But the house hunter, Lavrentis Lavrentiadis, never made a purchase in the spring of 2011, agents say. Within months his failing institution, a small lender known as Proton Bank, was seized. The Greek government, suspecting that Mr. Lavrentiadis may have moved money out of the country, is now investigating his activities to determine whether he engaged in fraud and money laundering.

Greece, heavily in debt and desperate to track down money wherever it can, is leaving no stone unturned.

Mr. Lavrentiadis has denied the accusations, and his lawyer did not respond to questions about any interest his client might have had in London properties. But the Greek banker’s rumored flirtation with this city’s prime real estate market, and the frenzy it stirred among sales agents, is telling.

At the request of the Athens government, the British financial authorities recently handed over a detailed list of about 400 Greek individuals who have bought and sold London properties since 2009.

The list, closely guarded, has not been publicly disclosed. But Greek officials are examining it to determine whether the people named — who they say include prominent businessmen, bankers, shipping tycoons and professional athletes — have deceived the tax authorities by understating their wealth.

“These people have money and they are known — but it is not clear yet if they have violated any laws,” said Haris Theoharis, an official in the Greek Finance Ministry. Tax investigators have been examining the list to see whether there is any overlap between those who bought London properties and those already identified as being tax cheats.

The Greek government, under pressure from its international lenders to raise 13.5 billion euros ($17.4 billion) through tax increases and spending cuts, is intent on making the well-heeled share the burden. Studies have shown that the country may be forgoing as much as 30 billion euros a year in uncollected taxes, with a significant portion of that amount having been shipped out of the country as the affluent seek shelter from Greece’s financial storm.

This week, the government of Prime Minister Antonis Samaras opened an investigation into the bank accounts of more than 30 Greek politicians to determine whether they should be charged with tax evasion and the illegal accumulation of wealth.

The politicians on the list included the president of the Greek Parliament, Evangelos Meimarakis, creating an embarrassing distraction for Mr. Samaras’s coalition government. Mr. Meimarakis is a former defense minister who has also been implicated in accusations concerning a money-laundering network said to involve two other former ministers.

London, long a magnet for foreign real estate investors, has become a special focus for Greek officials trying to track down money taken from the country.

Bankers say that accounts in Singapore and even in the country of Georgia have become favorite destinations for fleeing funds, more so than the traditional haven of Switzerland, because the looser rules and regulations of those countries about accepting large sums of foreign money. But while Singapore and Switzerland have been reluctant to divulge information about its Greek clientele, the British government has been more cooperative in sharing its real estate records.

There is an air of desperation to this Athens fund-raising drive, which includes leasing out empty Greek islands and even putting up for sale the former residence of the Greek consul general in the tony London neighborhood of Holland Park. But with Greece’s membership in the euro at stake, every conceivable revenue-raising strategy is being pursued, even if it remains unclear how successful it will be.