Bill to stop ‘fake farmers’ from getting large property tax discounts passes N.J. Senate panel

A Senate panel has approved a bill to make it tougher for property owners to qualify for large property tax discounts if they use their land for farming.

Under the bill (S589), sponsored by state Sen. Jennifer Beck (R-Monmouth) and Senate President Stephen Sweeney (D-Gloucester), those who claim a farmland tax exemption would have to sell at least $1,000 worth of products from five acres of land – up from $500.

The Senate Environment and Energy Committee approved the measure 4-0.
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New Jersey’s farmland tax exemption is intended to preserve open space and keep farmers in state. But it’s been controversial for decades. Environmentalists say real estate developers claim it for land they plan to develop later, and wealthy residents — including several high profile politicians — sometimes use it to pay lower taxes on their estates.

“There is nothing that really guides our tax assessors as to what is and isn’t a farm. So the result has been that we have a lot of fake farmers,” said Beck.

The state senator Beck defeated in 2007, Ellen Karcher (D-Monmouth), had some of her Marlboro property classified as a farm, saving her tens of thousands of dollars in property taxes because she sold about half a dozen Christmas trees.

Former Gov. Christie Whitman reduced taxes on her two estates by selling cords of firewood to relatives and friends. U.S. Reps. Scott Garrett (R-5th Dist.) and Jon Runyan (R-3rd Dist.) have also faced
criticism from political opponents for using the program.
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Sierra Club New Jersey Director Jeff Tittel opposed the bill because he did not think it went far enough.

“When land speculators and big corporations use farmland assessment to get around paying taxes, we have to make up the differences,” he said.

Added Tittel: “Raising it from $500 to $1,000 is 10 extra Christmas trees at someone’s house in Manalapan.”

NJ added 2,600 jobs in April

New Jersey added 2,600 jobs in April, a slight rebound from the March’s job losses, but unemployment remained high.

The state added 6,300 private sector jobs, and lost 3,700 government jobs, according to the monthly job reports by the New Jersey Department of Labor and Workforce Development.

The report also revised the March report to a loss of 3,700 – well below the previously reported loss of 8,600 jobs.

The unemployment rate increased from 9 percent to 9.1 percent, well above the national rate of 8.1 percent.

Charles Steindel, the Treasury’s chief economist, said the numbers are “consistent with continuing job growth.”

Although the jobless rate “edged up, it’s due to improvement in the labor market with New Jersey’s labor participation rate climbing to 66 percent,” Steindel said.

From the Star Ledger:

New Jersey jobs grow in April, so does unemployment

The job market in New Jersey inched forward in April, and dire numbers from March were revised upwards as the state continues its long, slow employment comeback.

Even as jobs were added, more people rejoined the workforce, lifting the unemployment rate by a tenth of a percent to 9.1 percent, a point above the national average of 8.1 percent.

“The number of New Jersey residents working is at a three-year high with over 71,000 private sector jobs added since February 2010,” said Charles Steindel, chief economist for the state Department of Treasury in a statement. “These numbers are consistent with continuing job growth…while the rate edged up, it’s due to improvement in the labor market with New Jersey’s labor participation rate climbing to 66 percent.

Around 6,300 private sector jobs were added, which offset 3,700 jobs lost in the public sector.

One piece of good news in the numbers: previous estimates for March that showed 8,600 jobs lost were revised to show a narrower monthly loss of 3,700 jobs.

N.J. foreclosure inventoryspikes; 2nd most in nation

New Jersey’s percentage of home mortgage loans in foreclosure continues to rise, even as rates nationally have fallen to the lowest level since 2008, a report released Wednesday showed.

New Jersey now has the second-highest percentage of mortgage loans in foreclosure — at 8.4 percent — behind only Florida, at 14.3 percent, according to the report by the Mortgage Bankers Association.

The results come even as other states that were hard-hit victims of the mortgage meltdown that began in 2008 have moved off excessive inventory.

In Michigan, for example, only 3 percent of all home loans are in foreclosure, and in California, that rate is down to 3.29 percent. Both states had been among the leaders during the housing bust.

Jeffrey Otteau, an appraiser and New Jersey real estate market analyst from East Brunswick, said the problem for the Garden State is only going to get worse.

A 2010 court-ordered moratorium on foreclosure filings — issued because banks and mortgage companies often did not have proper documentation — helped build New Jersey’s backlog, Otteau said in an interview.

Meanwhile, New Jersey has a lengthy court process that stretches out the foreclosure process for more than a year.

“The housing market had benefited from it. It lowered the tide, and reduced the number of short sales,” Otteau said. “But now is the time to deal with it, to clear this out at a point where the market can digest it and get to the other side.”

More foreclosures are on the way, Otteau said, but banks just haven’t bothered to file for them yet, even though the moratorium was lifted last August.

“The number is really larger,” Otteau said. “We’re just not clearing the backlog. All the results are putting New Jersey at or near the top.”

Tax-Cut Pledge May Trap Christie as N.J. Revenue Misses

Governor Chris Christie, a Republican who has spent the past four months promising New Jersey income- tax cuts, now confronts the challenge of selling his plan’s feasibility against a backdrop of continuing revenue shortfalls.

April receipts fell 5.3 percent short of budget forecasts, after March collections missed by 2.5 percent, according to statements from Treasurer Andrew Sidamon-Eristoff. So far for the fiscal year that ends in June, the state has brought in $230.3 million, or 1.2 percent, less than projected.

Christie, 49, didn’t remark on the latest figures during two public appearances in Atlantic City and Camden yesterday, when the April data was released. He will continue barnstorming the state with a public forum planned for today in East Hanover. He has regularly pitched the three-year, 10 percent tax cut at such meetings as a key to what he calls the “Jersey Comeback.”

“To back off now would smell of political weakness,” Brigid Harrison, who teaches law and politics at Montclair State University, said yesterday by telephone.

Christie’s $32.1 billion spending plan for fiscal 2013 counts on a 7.3 percent revenue gain, the most since before the recession that began in December 2007. Should revenue miss budgeted amounts for the current year, the state would start the next with less cash than estimated.
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New Jersey collected $3.26 billion last month, less than the $3.44 billion forecast. Income taxes trailed estimates by 2.8 percent and corporate levies fell 22 percent under budget, Sidamon-Eristoff said in a statement.

“This is one month’s worth of collections,” said Kevin Roberts, a spokesman for Christie. “We still have two months.”

So far in fiscal 2012, revenue is $500 million, or 2.7 percent, greater than for the first 10 months of the previous year, reflecting economic growth, Roberts said yesterday.
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“With revenue projections coming in much lower and the governor’s revenue estimates being ridiculously unreachable,

it would be irresponsible at this time to support any type of tax cut,” Senator Raymond Lesniak, an Elizabeth Democrat, said by telephone yesterday, before the April numbers were released. “I know that other members I’ve spoken to agree.”

Gordon MacInnes, president of New Jersey Public Policy Perspective, a Trenton nonprofit research group that focuses on social and political issues, said this is no time to cut taxes.

“New Jersey already has the third-lowest credit rating in the country, greatly increasing our borrowing costs,” MacInnes, a former Democratic state senator and assemblyman from Morristown, said in a statement. “Our leaders should concentrate first on putting the state’s fiscal house in order, not on politically appealing, but reckless, proposals to cut taxes. This is exactly how we got into this mess.”

N.J. Treasury delays release of April revenue figures without explanation

A joint news conference between Gov. Chris Christie and Senate President Stephen Sweeney wasn’t the only thing that didn’t go off as scheduled today in Trenton.

The state’s Treasury Department failed to release April revenue figures as expected. The department declined to explain the delay.

April is a critical month in the budget cycle where the state receives the bulk of its income tax collections.

A memo written earlier this month by the non-partisan Office of Legislative Services said business and income tax collections in April failed to meet expectations, but did not provide specifics. In March, OLS and the Christie administration were already $537 million apart on revenue projections through fiscal year 2013, with the OLS anticipating a slightly lower revenue rebound.

The slumping revenue figures cast doubt on Christie’s and Sweeney’s ability to deliver the tax cuts — and already have some Senate Democrats rethinking the wisdom of offering them while revenue is weakening.

Christie and Sweeney were poised today to announce a compromise on their competing tax cut proposals, but the surprise news conference was abruptly canceled. Sweeney cited “minor” health issues, but sources say he failed to notify key Democratic lawmakers of the compromise and was the target of some internal criticism that prompted him to delay the announcement.

North Jersey foreclosures haunt neighbors

Maywood homeowner Joe Leichtnam spent some time recently trimming the shrubs, mowing the lawn and fixing the siding.

Not at his house; at the empty house next door. It’s a small effort to contain the chaos at the property, which is in foreclosure and has been vacant for several years. The house has a blue tarp covering a hole in the roof and overgrown bushes that threaten to engulf the deck.

The house on Edel Avenue is just one of thousands of vacant homes left by the housing bust all across North Jersey. Neighbors say they’re discouraged and disheartened by the sight of these neglected homes, which can remain empty for years while the foreclosure process grinds slowly forward.

If a neighboring house is empty and in disrepair because of a foreclosure, homeowners can complain to their town’s code enforcement officer. The town then has the power to contact the foreclosing lender, which by law is supposed to correct violations of the property tax code. If that doesn’t work, the town can send in workers to clean up the property and then place a lien on it to pay for the work. That way, the town is repaid either when the lien is purchased by an investor or when the house is sold at sheriff’s auction.

“It just detracts from the whole neighborhood,” said Leichtnam, a retired telecommunications professional. “It definitely has an impact on the value of the homes in the area.”

These homes are orphans of the real estate storm. The homeowners are gone. Foreclosing lenders don’t own the property, and generally do the minimum — mow the lawn or board up windows. Towns can step in, but their workforces are already stretched, and they don’t know when they’ll be reimbursed for the work. Without the level of care that homeowners typically give, the properties can fall into neglect and disrepair. So neighbors like Leichtnam, who see the value and appeal of their own homes threatened, take matters into their own hands.

The blight has not hit just lower- and middle-income areas. On McCain Court in Closter, for example, an empty McMansion sits in a cul-de-sac of half a dozen similar houses. The owner paid $929,000 for the home in 2000, but lender Keystone Nazareth Bank and Trust filed to foreclose in July 2008, according to public records.

Today, the house sits with expensive but overgrown landscaping, a knocked-over mailbox and signs of damage in a high corner where the side wall meets the roof. There’s a notice on the door from United Water, dating to December, warning that the water’s about to be turned off because of an unpaid bill of $1,367.
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Mortgage companies will often turn off the water in a house to prevent burst pipes. But they don’t always act in time. Theresa Rolaf says an empty house on her street, Terrace Street in Bergenfield, was flooded when an upstairs pipe broke.

“I called the police and they came to shut the water off,” said Rolaf. “I’m sure there is a lot of damage inside.” The house is now owned by JPMorgan Chase, according to property records. A note on the door from the bank’s lawyers indicates that the homeowners gave the bank the deed, to head off a foreclosure.
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The homes can stay vacant for years. It now takes, on average, more than 2½ years for lenders to go through the legal process to evict New Jersey homeowners who can’t pay their mortgages. The New Jersey foreclosure pipeline came to a near-halt in 2011 over sloppy paperwork by lenders — called “robo-signing” because lender representatives allegedly signed documents without checking them, in the rush to evict homeowners. The foreclosure machine has shown recent signs of starting up again in New Jersey, but with the backlog of properties in the system, distressed properties are likely to linger for years.

Because vacant homes can be a “calamity” in a neighborhood, Affuso, of the bankers’ group, said the state should try to streamline the foreclosure process on empty properties, since the homeowners obviously aren’t contesting the foreclosure. A recent bill proposed in the Legislature to turn foreclosed homes into affordable housing would help, because it sets out a way to identify vacant homes and allow banks to repossess them more quickly, he said.

Memo to Would-Be Members of the 1%: Move to the Northeast or Mid-Atlantic

Reaching for the American dream? Your best chances are probably in New York, New Jersey or Maryland.

Those states are best at helping Americans move up the income ladder, both in absolute terms and relative to their peers, according to a groundbreaking new study from the Economic Mobility Project at the Pew Center on the States.

Generally speaking, states in New England and the mid-Atlantic had the most upwardly mobile residents, whereas states in the South had the least mobile populations.

The study, which appears to be the first to try to measure economic mobility at the state level, looked at the incomes of Americans in each state over a 10-year period using data from the Census Bureau and the Social Security Administration. Researchers tracked a group of nationally representative Americans who were age 35 to 39 at any point from 1978 to 1997.

They then examined how each individual’s earnings had changed exactly one decade after the initial income number was collected.

Across the country, the income of the typical American rose by about 17 percent in inflation-adjusted terms during that time. There was great variation among the states, though.
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To measure this “relative upward mobility,” the authors focused on people in the bottom half of the income distribution and tracked whether those individuals were able to move up at least 10 percentiles.

For example, a person who started out in the 20th percentile would have to climb to at least the 30th percentile after a decade in order to be considered “upwardly mobile” in this study.
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Using all three metrics together — absolute income gains, relative upward mobility and relative downward mobility — the researchers determined that New York, New Jersey and Maryland performed best in the country. They were, in fact, the only three states that outperformed the country as a whole on all three measures.

Home prices rise in half of U.S. cities, fall in NJ

Prices for single-family homes climbed in half of U.S. cities in the first quarter as real estate markets stabilized. But in the region that includes Monmouth and Ocean counties, they fell 3.6 percent.

The median sales price increased from a year earlier in 74 of 146 metropolitan areas measured, the National Association of Realtors said in a report Wednesday. In the fourth quarter, only 29 areas had gains.

The U.S. housing market is showing signs of bottoming as improving employment and record-low mortgage rates boost demand while inventories of available properties tighten. At the end of March, 2.37 million previously owned homes were available for sale, 22 percent fewer than a year earlier, the Realtors said.

“The housing market is still depressed but it had a good quarter,” Patrick Newport, an economist at IHS Global Insight in Lexington, Mass., said in a telephone interview Wednesday. “We’re on the mend but it’s still something that will take two or three years before we’re back to normal.”

The national median existing single-family home price was $158,100 in the first quarter, down 0.4 percent from the first three months of 2011, according to the Realtors group.

In the Edison market, which includes Monmouth, Ocean, Middlesex and Somerset counties, the median was $292,400, down from $303,200 in the same period a year ago.

Similar tales were found in other New Jersey markets. Parts of northern New Jersey sell 3.2 percent to $363,800, and the newark-Union area fell 9.6 percent to $326,000. The Camden region fell 2.8 percent to $193,500 and the Trenton region fell 6 percent to $205,500. The Atlantic City region saw the only increase in the state, rising 3.7 percent to $220,600.

NJ Home Sales Up 25% YTD (Click for graph)

Home sales continued to surge in March as combined purchase-contracts for resales and new homes rose by 20% in March. YTD sales are now running 25% ahead of 2011 through Q1 2012 due to the combined effects of higher consumer confidence, low home prices and low mortgage rates. Another key driver for the increase is that home purchase affordability in New Jersey rose from 131% in Q4 2011 to 136% in Q1 2012, resulting in record high purchasing power for home buyers.

Through the first 3 months of 2012, home buyers have signed contracts to purchase 17,683 homes compared to 14,104 during the same period in 2011. Still more positive news comes from Unsold Inventory in New Jersey which stands 17% lower than one year ago. At the end of the 1st quarter there were 60,965 homes being offered for sale compared to 73,263 one year ago. This reflects a reduction of 12,298 homes including both resales of existing homes and new construction. The combined effects of a 25% increase in purchase demand with a 17% decline in Unsold Inventory are expected to stabilize home prices in 2012 and lead to modest price increases in 2013. One cautionary note is that sales pace has slowed in April due to rising asking prices.

Home buyers remain highly resistant to price increases at this stage of economic recovery which appears to be reducing the sales pace this month. Also affecting the April sales pace is that both Easter and Passover occurred during the month which had the effect of deferring some purchase demand into May.

Realtors’ group poll: Property taxes irk N.J. residents

If you want to rile a New Jersey resident, two words will do it: property taxes.

Most state residents — 89 percent of the 800 registered voters surveyed in early April by the state’s Realtors, according to the poll’s results — maintain that property taxes are too high, but they are less united about proposals to lower them.

“Property taxes continue to be a major concern, even ahead of the economy and jobs,” said Joe Goode, senior vice president of American Strategies, who has been conducting the poll for the New Jersey Association of Realtors for the last five years.

What changed this year is the mood of the voters polled, Goode said.

Forty-seven percent said the state was headed in the right direction, while 42 percent disagreed, he said. In 2009, just 19 percent said the state was on the correct path; in 2010, 31 percent said it was.

Gov. Christie’s proposal to cut the state’s income tax by 10 percent was supported by 63 percent of the voters the Realtors’ group polled this year.
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When asked why housing cost so much in their areas — 49 percent had complained about it — the largest percentage, 28 percent, blamed home sellers and builders trying to make too much profit.

Nearly half those polled said foreclosures remained a huge problem in the state. There was virtually unanimous support, Goode said, for a program that would renovate foreclosed properties into affordable housing.

Fifty-two percent of those polled said they want the state to abolish its real estate transfer tax, and they strongly opposed proposals to allow municipalities to levy their own transfer taxes and impose a sales levy on vacation rentals.

A small majority favored managed-growth policies as a way to combat sprawl, the poll results showed.

Loss of 8,600 NJ jobs clouds economic picture

Optimism that New Jersey’s economy is on the rebound took a beating Thursday with the release of figures showing the state lost 8,600 jobs in March, the first decline since August.

The state lost 11,600 private sector jobs, the most since the recession ended in June 2009, while adding 3,000 government jobs, according to the monthly jobs report by the state Department of Labor and Workforce Development.

Unemployment stayed at 9 percent, well above the national rate of 8.2 percent.

The sudden darkening of the state’s economic picture caught economists off guard, and raised questions about Governor Christie’s claim that the state is on a “comeback” fueled by strong private sector growth that will help balance the state budget by boosting tax revenue.

“This was a kind of a shocker,” said James Hughes, a Rutgers University economist. “This is really a break in trend. Hopefully, it’s a one month blip on the long term trend.”

Further bad news came in revised figures for February that showed the state added 7,000 jobs, not 8,700.

“Today’s job report for New Jersey was just plain ugly,” Rutgers economist Joseph Seneca said. “Almost all the private sector employment gains of the first two months were wiped out, leaving the state with a net gain of only 3,500 jobs for the year.”

The figures followed a prediction Wednesday by another Rutgers economist, Nancy Mantell, that the state’s economic recovery is lagging the nation’s, and that New Jersey would not recover all the jobs lost in the recession until mid-2016.

N.J. needs property-tax relief, not income

The one thing that seems to get otherwise rational New Jersey residents to foam at the mouth is the state’s punishing property-tax system.

Property owners spend an average of $7,759 a year to support schools and municipal services. Sometimes they get tax rebates to offset the pain. Sometimes they don’t.

Now there is a dispute between state Senate and Assembly leaders, who want to give residents a property-tax credit on their state income taxes, and Gov. Christie, who wants to cut the income tax by 10 percent.

The governor’s plan would mean a $7,000 tax cut for millionaires, but only an $80 reduction for families earning $50,000. If that sounds wrongly skewed, it’s because it is. That paltry sum won’t help poor and middle-class New Jerseyans struggling with higher prices for food, gasoline, and health care.

The Christie plan also rests on a very shaky projection that state revenues will increase 7.3 percent next year, a figure that only the governor’s office seems to think is realistic in this fragile economy. His plan should be dismissed out of hand, so legislators can concentrate on meaningful property-tax cuts.

The Assembly’s proposal would give property owners earning less than $250,000 annually a 20 percent credit on their income taxes for property taxes paid up to $10,000. That would be paid for, in part, by raising the income taxes of millionaires.

The Senate plan would grant a 10 percent credit for those earning $250,000 or less, but relies on the governor’s revenue figures to cover costs. That’s too big a gamble.

The Assembly plan makes more sense. Only about 16,000 of New Jersey’s 2.6 million income-tax filers would see their tax rate increase from 8.97 percent to 10.75 percent. They can well afford to sacrifice a bit more than others who have shouldered the most in this down economy, with its job losses, wage cuts, and higher gas prices.

Both legislative plans would fold the property-tax credits into the state’s tax code. That means governors would no longer be able to dangle property-tax rebates in election years and pull them back when revenues fall.
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The legislative leaders are not that far apart. It’s time for them to work out their differences and speak in one voice. Divided, they will be conquered. New Jersey property owners deserve to win this argument.

Rents in New Jersey the third-highest in the nation

A new survey has found that state residents continue to pay some of the highest rents in America, making it difficult to afford an apartment on average wages.

The survey, by the National Low Income Housing Coalition, found New Jersey overall to be the third-most expensive place to rent in the nation, behind Hawaii and California, with a $52,081 yearly household income needed in order to afford a two-bedroom unit. The figures assume 30 percent of income is used for housing.

The most expensive housing in the state was generally concentrated closer to New York, however, with local housing costs less expensive.

The housing crisis of recent years has had a particularly profound effect in certain parts of the country, said the report “Out of Reach 2012: America’s Forgotten Housing Crisis.”

In rural areas and other places with higher unemployment, the report said, flattened incomes have made it more difficult to afford housing. At the same time, wealthier regions have seen more families thrown into the rental market, driving up prices in places that have historically seen less rental housing. The report said 33 percent of state households were renters from 2006 to 2010.
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This should not surprise anyone, said Russell Graves, executive director of Consumer Credit and Budget Counseling of Marmora, a nonprofit consumer financial counseling agency that works with clients in Cape May, Cumberland and Atlantic counties.

“This is the most expensive state to live in,” Graves said. “We have the highest taxes, and those taxes have to be filtered down to the renters.”

While the rents may be lowest in these three southernmost counties, Graves said the poverty and unemployment rates were also among the highest.
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“This report is just another example of how expensive New Jersey is,” said Conor G. Fennessy, vice president of government affairs for the New Jersey Apartment Association, which represents apartment owners. “It’s not just an expensive place to live in,” Fennessy said. “It’s an expensive place to do business in.”

Beige Book – April 11, 2012

Second District–New York

Growth in the Second District’s economy has picked up somewhat since the last report. Labor market conditions have been stable to slightly stronger in recent weeks, and a sizable number of contacts say they plan to add workers in the months ahead. While consumer prices generally remain steady, business contacts in a number of industries indicate rising cost pressures. Manufacturers report steady improvement in business conditions. Most retailers and auto dealers describe sales as steady but strong in February and the first few weeks of March. Tourism activity has been mixed but generally strong since the last report, with bookings for the months ahead described as robust. Home sales activity has continued to strengthen since the last report, though prices have been steady to somewhat lower; rental markets have continued to improve, and there has been a pickup in rental multi-family construction. Commercial real estate markets remained steady in the first quarter of 2012. Finally, bankers report increased loan demand, no change in credit standards, and the most widespread declines in delinquency rates in a number of years.
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Construction and Real Estate

Housing markets across much of the District appear to have picked up since the last report, while rental markets continue to firm. Home sales are reported to be on the upswing in northern New Jersey, though prices are steady to declining, largely due to more distressed properties coming to market. One industry expert notes surprising strength in new multi-family construction in New Jersey–almost entirely rental units–thus far in 2012; this segment now accounts for well over 50 percent of all new homebuilding, which is said to be unprecedented. Apartment rental markets in both New York City and northern New Jersey continue to firm, with inventories tight and rents rising steadily. A major New York City appraisal firm notes that Manhattan’s co-op and condo market has firmed since mid-February: while prices remain flat, sales have picked up–especially for studio and 1-bedroom co-ops–and new contract activity is estimated to be running 7 percent ahead of a year earlier. Conditions in the outer boroughs have been somewhat softer. Real estate contacts in western New York State report continued gradual improvement in home sales activity but note some downward pressure on prices.

Jersey Rejuvenation Story

About six years ago, Newark, N.J., seemed to be winning its long struggle to emerge from decades of urban decay, and one of the symbols of that was the opening of Eleven80, a market-rate rental property in a converted Art Deco office building.

The developer, Cogswell Realty, spent about $110 million to develop the 317-unit apartment tower with luxury finishes and a bowling alley in the building that originally opened in 1929. Most significantly, Cogswell was charging market rates of more than $2,000 a month for some units, prices unheard of in downtown Newark.
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But now the project has also taken on new symbolism as its defaulted mortgage has been sold. While sales of distressed real-estate debt are commonplace these days, this deal was significant because the seller was the Federal Reserve Bank of New York.

The Fed wound up owning the debt on Eleven80, along with about $6.4 billion in commercial real-estate loans, when it made a $28.8 billion loan to bail out Bear Stearns Cos. in 2008.

Since then, the Fed has been slowly and quietly reducing that stockpile, partly through loan sales. As of Dec. 31, the value of the commercial real-estate loan portfolio had been whittled down to $2.9 billion, according to public documents.

What is less clear is how well taxpayers have made out from the Fed’s efforts to sell off commercial real-estate loans. A spokeswoman for the Fed declined to comment on the disposal of toxic real-estate loans by Maiden Lane LLC, the Fed-controlled company that was established in 2008 to handle all of the Bear Stearns assets taken over by the Fed.

In the case of Eleven80, taxpayers didn’t make out well. Bear Stearns originally made a $54 million loan on the project, which Maiden Lane inherited. In the recent deal, Maiden Lane sold the debt for $35 million to KBS Strategic Opportunity REIT, a nontraded real-estate investment trust managed by KBS Capital Advisors LLC, of Newport Beach, Calif.

The Fed also moved slowly. A trustee began foreclosure proceedings in 2009, but three years later Cogswell still owns the asset. The foreclosure has been complicated in part by litigation related to a construction company seeking payments.

The Fed’s loss could have been worse. Investors’ demand for distressed commercial real-estate loans is rising, and buyers are now paying an average of 50 cents on the dollar, topping the 25 cents on the dollar that soured commercial real-estate debt was selling for when real-estate values hit their troughs, according to Harris Trifon, global head of commercial real-estate research at Deutsche Bank Securities Inc.