Housing Recovery - A Plan

Maybe I am becoming more bleeding heart as I get older, or maybe it is just my sense of moral outrage is growing. Today's Cape Cod Times included a story, Foreclosures rising on Cape, that illustrates the problem with the current bank bailout plan.

GMAC Financial Services has received $16.3 billion in banking bailout financing. Essentially you and I paying them for their losses on loans. That funding has not trickled down in any fashion to the homeowners who have really suffered the losses. Losses in jobs and home value due to bank and speculator fraud. Bank fraud due to deceptive lending practices and predatory lending. Speculators, as they artificially drove up home values.

I cannot find any specific values related to GMAC's bad loans. One discussion suggests it is about 10% of its $189 billion in assets. If we took this $19 billion in bad assets and considered most of these, while losing value, still held some value (the foreclosure sale price), the government bailout money would seem capable of opening the door to mortgage re-writes and principal reductions. The end result is a program that supports the banks and the property owners. With the $16.3 billion government gift to GMAC being used to support the real estate market and not to reward business executives who managed to dump their bad business decisions onto all of our banks.

National Housing Policy - Redux

In my post below, I had stated that the bank bail-out would have provided a better service to the country if the funds had actually gone towards paying off a portion of the balance of mortgages that were in default. Such a program would have allowed people to stay in their homes, rather than being forced out - and either leaving empty bank-owned properties everywhere or dumping homes on the market at deep discounts. Today I saw the following New York Times Editorial (from January 4th) This Year’s Housing Crisis. Quite clearly the commentators I was responding to - those supporting booting people out of their homes - are not gaining mainstream support. Unfortunately, neither is a housing program based upon saving people and their homes.

National Housing Policy

The following article from the NY Times January 1, 2010, U.S. Loan Effort Is Seen as Adding to Housing Woes , is one of several recently critical of the federal homeowner "bailout" program. The program provides $75 billion to rewrite and restructure home loans in danger of foreclosure. This amount, while quite substantial, is small when compared to the $700 billion bailout provided to banks, Oversight of Bank Bailouts Criticized, to address esentially the same mess.


The banks, essentially, were provided funds to cover bad debt from the mortgage meltdown. The homeowners, (in perhaps a simplistic vision) many whose debts were probably part of the ones banks were bailed out of, were provided the opportunity to re-write their loans. Little, if any, of the actual debt has been forgiven.


Now, we are seeing comments from banking and real estate interests condemning efforts to help these homeowners. The suggestions are that the government should allow them to fail, arrange short sales or allow people to surrender their deeds to the banks. Basically, they are suggesting we get to the end-game quickly so that the building banking community can get back to work.


What's wrong with this picture????

• As many community governments and residents can attest, banks are very poor property managers. Allowing vacant properties to become eyesores and neighborhood problems. (see Foreclosures spur neighborhood ghost towns)


• Foreclosures and short sales will further pull down property values, once again affecting the next round of properties.


• Where exactly will the builders find customers for new homes if an additional glut of housing is dumped on the market?


• Will we need yet another round of bank bailouts to recover from this idea?

Let's take a look at a few numbers, and draw a few conclusions. American Factfinder reports that there are 127,762,925 housing units in the United States. Of these, 75,363,085 are owner occupied. Of the owner occupied housing units 51,487,282 units carried a mortgage in 2008. Finally, the median value of all owner occupied housing was $192,400.

A HUD report, cited in Foreclosures in Rural America? Who Knows!!, reported that 5.3 million homes, or 10.8% of those carrying mortgages had been "in some state of foreclosure" in either 2007 or 2008.

Working off of the median value of homes nationwide, the total value for all foreclosures would have been a bit over $1 trillion. I have not been able to find any solid numbers but, if the total value of properties in arrears is in the $1 trillion range, and foreclosure starts within a few months of the first missed payment, the actual value people are behind on mortgages is considerably below the full value of the properties.

So, with $775 billion to bailout the housing market, a program to actually pay off the arrears on default properties, and restructuring mortgage balances may have been a better and cheaper long term strategy. Of course, strings would need to be attached to such a program, such as restrictions on re-sale without some level of government repayment, restrictions on refinancing to cash-out equity, and other credit management strategies. However, the strategies would be designed to keep people in their homes, not evict them.

How Would We Zone For This Today?

I saw this article circulated by Planetizen, The High Cost of Ignoring Beauty, and wondered about some our more creative structures. Given the strictness of zoning, could uniqueness be foreclosed upon?

Hammond Castle, Gloucester Built 1920's

Searles Castle, Great Barrington, circa 1888

Usen Castle, Waltham, circa 1928

Blantyre Castle, Lenox, 1903

These are just a few of the Castles of Massachusetts.

This Land - Maybe I'm Old

Heard a child, probably 5 years old singing "This Land." However, it wasn't the version we are all used to. I looked up the version, and saw discussions saying the parody has been around for years and sung, by kids in the hallways, in many schools. I even saw one post where Arlo suggested Woody actually wrote the parody.


The ideals of the original and the parody provide stark contrast.


This Land is Your Land, This Land is My Land


Whether we agree or not, these lyrics make a statement that the land, America, belongs to all of us, and we all have a stake in the country. In contrast,


This land is my land, it isn't your land


Provides us with a statement that the land belongs to the haves, and others need not apply. It could be viewed as a broad statement on slamming the doors on immigration (with or without proper papers), we are here, now close the doors on all others. Woody's original lyrics are all enclusive, the parody sung by a five year old, clearly exclusionary.


From California to the New York Island

From the Redwood Forests to the Gulf Stream Waters

This Land Was Made for Your and Me


The land is the whole country, it belongs to all of us. We all have a stake in its future. While definitely Woody had a socialist bent to him, the song was an inspiring one about how we all share a common fate.


I got a shotgun, and you don' got one


If you don't get off, I'll blow your head off


This land is private property


Might makes right, threat of violence. Quite the statement on its own, shocking when it comes from a 5 year old. Instead of This Land being a song about all of us being in this together, we get an anthem for private property and violence.

Beyond the context of the words being issued by a 5 year old, to which myself and several other adults listening shook our heads, one can think about many societal issues. From a planner's perspective, the Private Property Rights interests versus the Henry George thoughts that all private property value comes from government investments.

We actually see it everyday. One property owner strips or regrades their property and those down hill have to deal with the water that runs off the property. Their "private property rights" interfere with another's private property rights. The parody words for This Land and the whole private property movement it reflects flies in the face of the old cowboy adage Don't Fence Me In as reflected in the Cole Porter song of the same name which states, in part:

Oh, give me land, lots of land
Under starry skies above,
Don't fence me in.
Let me ride through the wild open
Country that I love,
Don't fence me in.
Let me be by myself in the evening breeze-
Listen to the murmer of the cottonwood trees,
Send me off forever, but I ask you please,
Don't fence me in.
Just turn me loose,
Let me straddle my old saddle
Underneath the western sky.
On my cayuse,
Let me wander over yonder
Till I see the mountains rise.
I want to ride to the ridge
Where the west commences,
Gaze at the moon till I lose my senses,
Can't look at hobbles and I can't stand fences,
Don't fence me in.

Avulsion, Accretion, Re-Nourishment, Sea Level Rise, My Head Is Spinning

So I got curious about the law surrounding a news article this past week in the Cape Cod Times, Chatham land claim turns the tide. It seems that the breach of the Chatham Spit, and avulsion, has provided a windfall to nearby property owners through the accretion of sand on their properties.

So I got curious and Googled the question, about how the changes in land affects property rights and found that exactly that question has landed in the U.S. Supreme Court, Stop the Beach Renourishment, Inc., Petitioner v. Florida Department of Environmental Protection, et al. and here. It is a discussion that has people buzzing on both sides of the issue. On one side is the property rights people who want to protect the new beachfront property owners "rights" to beachfront property. On the other side are people who feel that restoring the lost beach area will provide future protection to the new beachfront property owners.

The case may have relevance MA should we ever codify the boundary defined as "Mean High Water." In Florida they have codified, post recent hurricanes that the present mean high water line as a property boundary defined as a new Erosion Control Line (ECL). Essentially the state has "taken" land that lies below the mean high water (essentially by the deeds land that now belongs to the public trust). The law allows the state to renourish beaches below the ECL. By establishing the formal property boundary as this new ECL and only providing easement rights to the water for adjacent property owners, property owners claim there has been a taking of their "land" as it has "taken" their waterfront rights after the state renourishes the beach.

The issue is also presently being played out in New Jersey Courts where there are several different issues progressing at once. First there is the City of Long Branch v. Liu case which involves a property owner whose land is being taken by eminent domain. He is seeking compensation not only for the upland area, but also for a beach area that was restored at public expense. The state courts, so far, have ruled that he has gained no personal value from the public expenditure. Separately there is a begining of another case known as Harvey Cedars and here. In this case, it appears that Harvey Cedars, NJ has issued an eminent domain easement taking in order to restore dunes. The dunes will be restored and the town will maintain control of the land for dune maintenance. As the MSNBC article illustrates, there are significant divisions between land owners. Without the maintenance some appear at risk of losing their homes to the ocean.

The Cape Cod Times article deals with accretion of sand. The accretion has resulted in "lands" that were formerly in the Public Trust being converted to private property. While generally, Public Trust lands cannot be taken by adverse possession, there are many deeds written in such a fashion that as the mean high water line changes, so do their property (and that of the Public Trust).

The Florida and New Jersey situations illustrate the problem, do we pursue beach renourishment as a mechanism to protect private property from the impacts of storm surges? If we do, what are the public rights to that property? With Sea Level Rise, will we be simply delaying the inevitable? One estimate I saw for the Harvey Cedars project was that the renourishment would cost $25 million plus the costs associated with the eminent domain takings - valued within the past week as $480,000 on just one property. Obviously losing these coastal properties to the ocean will have a significant impact on the town's overall property values, but could the overall costs be put to a better use such as preparing the community for the day when the ocean takes this area as it is trying to do?

I do believe it is necessary now, and going to be even more necessary in the future to protect our coastal properties, but do we do this in areas where the property owners cannot recognize the long term value to themselves of these public actions? This really gets to the heart of all of these issues, the public good is to protect private property from flood damage. Looking at the storm surge impacts of the recent major hurricanes, it is easy to see justification for these efforts.

In the Florida case, the questions asked by the Supreme Court Justices as to the added value to the adjacent properties due to the public expenditure to protect their properties, need to be considered. The costs in New Jersey to protect 82 homes from the ocean could be viewed as using public money for private benefit. Far more than a taking issue, this should be viewed as a situation where a public/private partnership is needed. The public, the town and the Army Corps have anted up their share, the property owners are simply being asked to allow the proper erosion controls to be placed on "their land." Land that from the looks of the MSNBC site will soon be in the Public Trust if the ocean is allowed to continue to have its way. Or, perhaps the homeowners in all these cases should be required to undertake the appropriate measures at their own costs?

This will all be interesting to watch. However, it clearly raises the question, should we do something to officially establish a boundary for the Public Trust lands now? We clearly have better surveying equipment today than was had in colonial times. Something to think about.

I'm Not Growing Older Just Wiser...

So, as some of you may know, I have spent much of my Planning Career following court cases and trying to figure out the direction we are heading in. Over the years the Tahoe Regional Planning Agency has been a leader in the Planning field, they have wound up before the U.S. Supreme Court twice over this leadership. In the 1980's the Regional Planning Agency was challenged over growth moratorias. It took years to roll its way through the courts and ultimately wound up being decided by the US Supreme Courtover the question as to whether a temporary moratoria amounted to a compensable taking. You can find a summary of this court case here: Tahoe-Sierra Preservation Council v. Tahoe Regional Planning Agency.

In the 1990's the Tahoe Regional Planning Agency again was taken to the Supreme Court. The second time was over development prohibitions to protect Lake Tahoe. The second case involved a parcel that was determined to have transferable development rights, but due to various factors could not be built upon itself. Again the agency was challenged on the taking principle, and again the agency prevailed, however, on a ripeness argument the second time around. This second decision Suitum v. Tahoe Regional Planning Agency became one of a set of court cases in the mid-1990's that helped to define takings and development exactions.

So, what is all this about? Well I just read the following article, Tahoe faces new development battle: green vs. green, and from the court history we have been exposed to, it seems odd that environmental groups are criticizing the Tahoe Regional Planning Agency as being too pro-development. From an outsider's perspective, the exact opposite would seem appropriate.

As you read the article it becomes clear that the Tahoe Regional Planning Agency really has not changed from its positions in the 80's and 90's. They are promoting smart growth, encouraging re-use of sites over stripping greenfields for new development, and ultimately hoping that smart redevelopment can undo the years of destruction that occurred to the Tahoe environment before their creation. The opposition appears to prefer that these greyfield areas be reverted to greenfields.

So, now 28 years after the creation of the original moritoria on growth the battle lines over the Tahoe Regional Planning Agency are still drawn, the agency's position does not appear to have changed much, but one's perspective on the agency may have changed. The Tahoe Regional Planning Agency has grown wiser.

A Case Of Selective Enforcement?

You may have seen the articles recently on the bikini clad coffee barristas in Bellevue Washington. This article, Bellevue bikini espresso stand told to close its drive-thru, provides some fairly serious issues - whether you support the businesses means of attracting customers or not.

A few of the more choice, anti-business quotes:

"Bellevue Deputy Mayor Claudia Balducci said during Monday's city council meeting that residents should shame Knotty Bodies customers by taking photos of the patrons and posting them on the Internet."

"Balducci also said residents should boycott the Chevron gas station where the espresso stand is located."

"The city council asked city staff to find ways of "aggressively" enforcing codes that pertain to Knotty Bodies. The council also asked staff to research further regulations that could restrict such businesses in the future."

First thing that comes to mind is that the city should always be aggressively enforcing its code. The comments suggest that they do not. If they do not, then a civil rights challenge may be hanging out there for the city.

But of even greater concern is that the city is encouraging people to boycott a business they do not like AND to try to embarrass people just for buying a cup of joe. It sounds like a city out of control.

Green Lawns and Water Quality

Recently I was charged with researching whether towns could regulate the use of fertilizer on lawns. It turns out that in Massachusetts has a law on the books, from way back, that prohibits anyone other than the state from regulating fertilizer and specifically the ingredients in fertilizer. Massachusetts is in the process of studying whether it makes sense to change how it regulates fertilizer.

The State of Maine is way ahead of us. Recognizing that its clean water ways are a vital part of its economy, especially its tourist economy, the state has taken steps the change how it restricts the use of fertilizer. They are now restricting the sale of phosphorous based fertilizers for lawn application.

This past summer many lakes on Cape Cod were impacted by high levels of algae. While direct links have not been identified, the blooms are considered to be tied to run-off related to the heavy storms this past spring. This run-off contained many sources of contamination, but lawn fertilizers were probably a significant player in the equation.

Maine's lead is definitely a direction Massachusetts should follow. For more information on Maine's program go here: Lawns Green Water Clean

Maine has also posted a partial list of phosphorous free fertilizers (available in Maine hopefully available in Massachusetts as well): P Free Fertilizers

Green Spaces

Saw this article, Parks, Green Spaces Protect Your Health, it provides a rather interesting perspective. We have been working for some time on promoting new village style developments (we meaning much of the planning community) as "Smart Growth." The article clearly points out the need to maintain a balance as we plan these areas. We cannot forget the need for parks in this planning. The analysis cited suggests a rather wide area, one-half mile, can serve this green space need. Other studies have supported the benefit of seeing trees from a persons window (thus the Million Tree effort in NYC). I think these green areas should be much closer to where we live and work. Such close proximity can provide significant calming benefits.

Basically, the article reminds us all of the importance of green areas and that we should not only be thinking of density as we think of smart growth. Those open areas are so important.