This article reveals how the title to a small tract of real property once owned by the people of Bakersfield has become vested in a bank owned by a global corporation that didn't pay a cent to acquire it.
On May 15, 1992, the city of Bakersfield privatized one-half acre of land located in Beach Park by selling the land and a building containing racquetball courts to an individual in exchange for $300,000 in lawful money of the United States, provided by 10 racquetball players who wanted to make sure that they and other Bakersfield racquetball players had a social environment in which to enjoy the sport. The deed provided that "The uses of this property shall be in compliance with those uses generally permitted by applicable zoning regulations or those uses specifically permitted by Conditional Use Permit No. 5306." Beach Park is zoned recreational.
On May 20, 1992, the individual transferred title to a California corporation incorporated by the buyers. On June 25, 2002, the corporation sold the property in exchange for credit valued at $570,500, provided by a bank, to a buyer who continued to operate it as a racquetball facility until Dec. 15, 2006. At that time, he sold the property in exchange for credit valued at $700,000, provided to the purchasers by UPS Capital Business Credit, a bank owned by shipping giant United Parcel Service. The borrowers also continued doing business as a racquetball facility, until the economic downturn forced them into bankruptcy.
The bank foreclosed on the borrowers' mortgage, and, on Jan. 31, 2012, the property was sold at public auction. The bank was the highest bidder and the trustee's deed upon sale states that the bank "became the purchaser of said property for the amount bid being $555,000 in lawful money of the United States, or by credit bid." The bank chose to pay with credit.
What is the difference between lawful money and credit? Lawful money consists of the Federal Reserve notes that the bank promised to loan to the borrowers in return for the borrowers' promissory note that obligated them to repay the bank with lawful money. I contend that, like banks everywhere, the UPS bank did not keep its promise; it never loaned the promised lawful money to the borrowers. Instead, without the borrowers' agreement, it turned the promissory note into a deposit owned by the bank, used the deposit as backing for a line of credit generated by the bank out of thin air, loaned this credit to the borrowers, and charged them interest for its use.
When the financial system deliberately crashed the economy and made it impossible for the borrowers to repay with lawful money, the bank used the same line of credit to purchase the property that the borrowers had pledged as collateral for the repayment of the lawful money they thought they had borrowed.
Since UPS is part of the financial system responsible for the lucrative but potentially destructive practice of substituting credit for lawful money, it should suffer the consequences of its deceptive actions. Therefore, I suggest that the city return ownership of the property to the people by offering to reimburse the bank for the amount of any lawful money the bank can prove it loaned to the borrowers, or negotiate a settlement.
Then, the city should do what it did in 1976, that is, offer a long-term ground lease upon terms that reflect the state of the economy, conditional upon the leaseholder repairing the building's roof, estimated to cost $125,000, and operating the facility as mandated in the deed dated May 15, 1992, thereby creating a source of income for the city.
In other words, the buyer of the lease will do it for the same reason the 10 individuals bought the property in 1992, namely, to provide a social environment for racquetball players and health enthusiasts that has to be enjoyed to be appreciated. By doing so, the people will recover what should never have been sold, and the people's representatives will go to bed at night knowing they have done the right thing by reversing a decision that should never have been made.
John Turnbull of Bakersfield is a retired attorney and former candidate for the Kern High School District board of trustees.