Housing crash collapses stent in developers' heart, by gimleteye

In Miami, the battle to protect the Urban Development Boundary of Florida's largest county encapsulates the shipwreck of unsustainable development in America's fastest growing regions. The broader issue will manifest in the 2008 election for president.

What will manifest is not a partisan fight so much as the eclipse of a political formula nearly 20 years in the making: the incremental loss of federal and state regulatory authority in favor of local control in order to service the "free market".

It is interesting, of course, that Congress is now considering ways to rescue the "free market" for housing, construction and development. What is being discussed is the biggest bail-out of banks and homeowners in US history. And that is not even part of the Federal Reserve program to lower key interest rates further, despite evidence of rampant inflation.

It is possible--even probable--candidates for president will first fight over the bones of failing models of growth before explaining to American voters how the disaster occurred in the first place. To hasten the moment, it is necessary to pull the threads, to the beginning as it were, and reveal angels for all their sins.

The fiasco is on full view in Florida--whose natural resources and sustainability have been gnawed away at all ends, and in Miami-Dade county in particular by economic interests that invested in candidates who supported "devolution" of regulatory authority in order to extract maximum value from land purchased at exorbitant prices, just a few years ago.

Political candidates and the mainstream media are loathe for these connections to be made visible. Far easier to focus--as The Miami Herald did just yesterday--on ever more grandiose plans for development like 1000 foot towers proposed by developers without even noting, not in a phrase or a paragraph, the very same developers are mired in financial and legal difficulties involving existing projects begging for tenants and owners.

Just like a shoreline revealed by a retreating tide in advance of a tidal wave, declining housing markets are showing the distortion of government and its purposes in service of unsustainable economic development.

In theory, the political philosophy that has driven Florida for the past decade--buffed to a shine by two-term governor Jeb Bush--spurns state mandates in favor of local decision-making. But "devolution" of authority was not a mantra that Bush begat.

President Bill Clinton embraced the concept to co-opt Republican and independent votes; at least enough to win the White House in 1992 and especially in 1996 after the dramatic shift in Congress through the 1994 election cycle.

When the political and economic history of the past decade is written (and it will be written, in terms comparative to events leading to the Great Depression), what should be scrutinized first and foremost is how the dismantling of the regulatory atmosphere governing development--from the issuance of mortgages, to rules governing banks and insurance, to the filling of wetlands-- dove-tailed with fiscal and monetary policies like low interest rates of the Federal Reserve to ignite a bubble in construction and development that did what the Union did to the South: it drove Old Dixie down.

In South Florida, the components of this formula combined in a such a powerful way that resistance--from environmental and civic groups--was ground to dust.

The Homestead Air Force Base battle in south Miami Dade is often held up as a victory, to the contrary. What the air base controversy demonstrated (from its origins in the wreckage of Hurricane Andrew in 1992), in fact, was the integrity of the US military which finally refused to allow the motives of private citizens to push it around, no matter how well organized they were politically. In South Florida, the Homestead Air Force Base "victory" did not result in any coalescing of environmental forces or further energy to counter the effects of what was to come.

In a blazingly short period of time, thousands of acres of farmland in South Dade turned into platted subdivisions, as if by financial pixie dust. It was no different in West Palm Beach, or Orange County, or Tampa Bay. Let 10,000 suburbs bloom, was the cry from state legislatures around the nation during the rise of the biggest asset bubble in US financial history.

While Florida environmental groups struggled and competed for contributions to bolster their own small staffs, Wall Street bankers minted money, bonuses and fees through easy credit, securitization of debt, and lax lending practices--all part of a parcel with the weakened capacity of land use regulations and local politicians encouraged, by all means including Bahamian poker chips, to take their foot off the regulatory brakes.

Never in the history of the US democracy has so much damage been inflicted on the economy in so short a period of time as the decade beginning in 1998, marked in Florida with the election of Jeb Bush.

In 2004 and 2005, developers and their lobbyists ran around Miami-Dade county, like their hair was on fire with the enthusiasms of growth. They showed a powerpoint presentation to every business audience in town, with sharp graphics and tables depicting how county planners were wrong in their hesitation, how there was an absolute need to increase the spatial extent of land available through zoning for more platted subdivisions.

During these years, moving the Urban Development Boundary galvanized the building lobby and the lawyering class and enlisted the sympathetic ear of the mainstream media whose revenues and profits increasingly relied on big advertisements for real estate.

Finally, in 2006, the State of Florida forced the local county commissioners in Miami-Dade to recognize that there was not enough water in the region to sustain all the growth and development applications proposed outside the urban service area. The county, with the lowest water utility rates-- and lowest water re-use capacity in the state-- began to plan for billions of dollars of infrastructure upgrades.

The purpose of these upgrades was not to alleviate quality of life deficits for existing taxpayers and residents (if it were, then the investment would have been made in a "Marshall Plan" to fix the massive traffic nightmares afflicting the entire region) so much as to pave the way for state approvals for new developments outside the Urban Development Boundary.

In 2008, once again, developers have flooded local government offices with new initiatives to change zoning and to move development past the urban service area in Miami Dade. Some are repeat applications, made palatable by land owners' offers of land to build schools or highway improvements and interchanges, or, the prospective use of railways to alleviate traffic for future residents.

Today another Florida Republican governor, Charlie Crist, appears to be aware how threadbare and bankrupt yesterday's sales pitches sound. In April, local county commissioners in Miami will be taking up the matter of the recent state objections to developers' applications outside the urban service area: they are hoping to gain through rezoning property value that is essentially worthless until the underlying zoning is changed.

No doubt there will be clamor and justification (Jobs!) for whatever assistance government can bring to the table for the development industries and their lobbyists.

Will it take another Depression for sanity to return to the application of regulations in the economic life of our nation, battered by the unrestrained impulses of greed and fraud masked as good? I hope not.