Wednesday, January 10, 2007

Housing crash bubble market bottom time for change in Miami by gimleteye


Early voting whether or not to change to an executive mayor structure of government from the single member district county commission has started. Polls will be open, county-wide, in 12 days.

In this blog, we have offered repeated commentary why it is critical for voters to approve an executive mayor elected by voters of the entire county: 2.4 million residents in all.

The current system of county government is like its own solar system with thirteen planets revolving around a single bright star: the campaign fundraising power of production home builders.

The gravitational pull of campaign money enforces a rigid majority of county commissioners, agreeing to political money to control single districts in return for promises to support what they want OUTSIDE the single orbits—in other words, production home building in outlying areas of the county.

This is not just a recipe for disaster: it is why we are choking on impassible roadways and risks to health that include cancer-causing chemicals in aquifers where our drinking water comes from, to name a few.

The secret ingredient, and one which has not factored into the conversation about the structure of government, is the extent to which the housing bubble has been like financial crack cocaine to local legislatures in Miami Dade county.

Economists are concluding, now, what is self-evident: the housing boom benefited production home builders is not at all as advertised, in other words “what the market wants”.

While developers have hyped the county commission for zoning changes and building permits—even providing freebies to county commissioners like Joe Martinez that have gone unchallenged by the Ethics Commission or state attorney’s office—the reality of statistical evidence (including declining trends in public school enrollment!) have gone unquestioned, by the mainstream media and by local legislatures.

The housing bubble, now bursting, was the result of Federal Reserve interest rate policies that pushed a massive pulse of liquidity into the hands of borrowers, a majority of whom in recent years took down sub-prime mortgages to buy "affordable" homes in production home developments in green fields.

Having been lead down a blind alley by special interests, at enormous costs to our quality of life and massive infrastructure deficits totaling billions of dollars, why wouldn’t Miami Dade county voters choose accountability of an executive mayor structure of government?

We don't doubt that the production home builders will race to put their own man or woman in the executive mayor seat, once the structure of government changes. But they are nervous.

There is a growing backlash against the economic crack cocaine that has determined the laws of gravity pulling us around Miami Dade county.

We place our bets on an executive mayor accountable to all the voters of the county.

3 comments:

Anonymous said...

It said in the paper that production Home Builder, D.R. Horton, is posting huge losses. Maybe there will be a lull?

Anonymous said...

Eleven Steps To Marching On A New Path

Arva Moore Parks, one of South Florida’s most well respected historians reminds us that Miami’s history is the story of Boom and Bust. Her book Marching With The Drums describes the Boom of the 1920s and its eventual Bust. “The band with a big base drum marches on like crazy Boom, Boom, Boom and then someone blows the whistle and the marching stops. After a while—usually 20 years or so—the marching resumes and off we go again Boom, Boom, Boom.”

We marched in the mid 1970s and then that whistle was blown. We marched for the past five years and we heard that confounded whistle blowing again last year.

Perhaps it is time that we marched to a different tune, a different drummer or a different band leader.
Even with a real-estate boom for the past several years the city of Miami has maintained its dismal title as the “Third Poorest City In The U.S.A.” What may we expect now that the building boom has slowed down and we are left with a glut of thousands of new condo and residential homes that will take 2 to 3 years for the market to absorb?

If our city government can’t get the job done properly in prosperous good times then we are all in store for some real belt tightening now.

Here are some of the solutions that need to be implemented ASAP:

1. We must learn to live within our budget.
2. Reduce as many expenses as possible.
3. Reduce all elected officials salaries and pensions by 50% to 75% since it is an honor to serve our community. This is not, a job, a career move or a retirement plan.
4. Reduce all senior staff salaries and pension funds by at least 25%. There is no justification for our city attorney or city manager to make $300K with perks, expenses and an overly generous pension plan.
5. Work with the city service providers such as police department and fire department to provide them with a fair salary and retirement fund that does not put a strain on our economy.
6. Provide the same maximum 3% increase on all properties even if they are not protected by homestead exemption.
7. Raise the homestead exemption credit from $25K to $50K or better yet $75K.
8. Implement a moratorium on new building permits until we figure out how Miami 21 will benefit our city and how long it will take to absorb the glut of recently built housing units and the many that are still in the pipeline already permitted and being built.
9. Implement intelligent urban planning that will only change neighborhood zoning when the neighborhood agrees to do so. There must not continue to be patchwork zoning every time a powerful developer that hires Greenburg Trauig after buying a property and too easily convinces their city officials pals to permit them to up-zone, provide variances or special permits.
10. We must implement better ways to take care of our most needy, disenfranchised citizens.
11. We must implement better ways to prevent the continued economic hemorrhaging of our middle-class and their exodus from our community due to high property taxes, high property and auto insurance and the lowering of our quality of life.

Economic prosperity and real-estate booms are cyclical. So we must do a much better job of planning our city’s future then we have done in the recent past. Spending more and building more are not the only answers.

Budgeting smart and building smart are two of the best answers.

Isn’t it time that we marched to the beat of a different drummer?

Harry Emilio Gottlieb
Coconut Grove

Anonymous said...

http://www.nytimes.com/2007/01/16/realestate/16rentals.html?hp&ex=1169010000&en=2afc72067a1f2634&ei=5094&partner=homepage

The condo bust is official, the NYT says so..........