From the St. Pete Times, here's a lovely interview contrasting the points of view on the development mess and the Florida legislature, featuring the former CEO of St. Joe, Pete Rummell, and Lesley Blackner, a Palm Beach attorney and co-founder of Florida Hometown Democracy. This is a dialogue, by the way, that has had zero coverage in The Miami Herald.
St. Pete Times, Sunday, April 12, 2009
Kindness
Peter Rummell rode Florida's real estate boom for 11 years as chief executive of St. Joe Co., the state's biggest landholder. Rummell, who left in May, made his mark by transforming St. Joe from a papermaker into a "placemaker" of upscale vacation homes in the Panhandle. He's now president of Nicklaus Companies, building golf courses worldwide.
Lesley Blackner, a lawyer in Palm Beach, tapped into the average Floridian's anxiety about runaway development by promoting the Hometown Democracy initiative. The proposed amendment, which Blackner hopes will be on the ballot in 2010, would allow residents to vote on land-use changes, rather than leaving approval in the hands of elected officials. The call to give citizens a voice in local development triggered massive opposition from a coalition of business forces, which is pushing a counterproposal for "smarter growth."
Diametrically opposed on most issues, Rummell and Blackner found one slice of common ground during recent separate interviews on Florida's economic crisis. The two longtime Floridians see a state where real estate prices are in free fall, 300,000 homes stand vacant and reservoirs are running dry. But in Tallahassee, they see legislators trying to dramatically loosen restrictions on development in an effort to restart the economy. Neither Blackner nor Rummell thinks that makes much sense.
"Doing the same thing over and over again and expecting different results is the definition of insanity," Blackner said.
Said Rummell, "The alternative is not just to keep doing what we always did." Here is what they had to say on a variety of questions related to development.
When did you sense Florida's real estate market was headed for a fall?
Rummell: In February 2008 I said Florida's real estate market was the worst I'd seen in 37 years. I was right. I just didn't expect it to keep going down.
Blackner: I remember reading a story in 2004 about a commercial window washer buying a half-million-dollar home in Palm Beach County and I thought, "The system has gone insane." Florida just went nuts.
What responsibility do developers have for this downturn?
Rummell: There's no question developers played a role. But unlike some of the other times when developers were clearly guilty of overbuilding, we had real partners in this one, primarily the lenders. There was the availability of credit and stupid mortgages. So it's not fair to say that if the state had had tougher (development) regulations, everything would have been fine.
I would acknowledge that in the euphoria of everything that was happening, we were all guilty. Projects got built that shouldn't have. Loans were made that should not have. Now we have to pay the price. The big question is, how do we methodically dig ourselves out of the hole and learn from it so we don't do it again?
Blackner: There seems to be widespread agreement that the real estate bubble started this financial crisis. For the last 20 or 30 years, the U.S. hasn't really produced much except for sprawl and financial products. Those have been the leading engines of our economy. People who said all that was unsustainable were called party-poopers. Well, the financialization of our economy and sprawl saw their climax in Florida.
What do you see as the biggest danger at this point?
Rummell: Total overreaction. You have Obama throwing everything at the problem. There's the fear that regulators will screw everything down so nothing can move. And that every agency at the state level will make sure not so much as an acre is getting developed. How do you acknowledge what went wrong and fix it without being stupid about it? That's hard to legislate, particularly in the environment we find ourselves in now.
Blackner: One of the principle positions of Hometown Democracy is that, due to developer control of local politics, we really haven't had much growth management in Florida. We have comprehensive plans that are supposed to control growth so there are adequate services, a semblance of a middle-class lifestyle and so local governments don't bankrupt themselves. But those growth management plans don't mean anything if they're constantly being changed, as they have been.
What do you think of the effort by Florida's lawmakers to loosen state oversight of development?
Rummell: Some of that could easily be part of an overreaction in the other direction. I've always said that if you're a good, responsible developer, a difficult but reasonable regulatory environment is your friend. For somebody who does it right, they're not afraid of reasonable wetland rules or (environmental) mitigation rules. I'm the last guy to say we need to take the barriers down. That's a recipe for disaster. You've got to have a responsible regulatory environment.
Blackner: What you see are the sprawl cheerleaders in the Legislature who are desperate to do something to crank up the big development machine even though it's been our undoing. For the past five years, we gave them everything they wanted and they crashed the economy. They don't have another plan for Florida. Building is all they know, all they care about.
What's your reaction to proposals to eliminate the state's Department of Community Affairs, which oversees changes to communities' comprehensive development plans?
Rummell: I don't want to see us dismantle DCA because you think you need to clear the runway for everyone. That leads to bad planning, bad products and bad inventory.
There has to be something beyond the county and city level that acknowledges a lot of growth issues are regional. It's hard to figure out how to deal with that without somehow bringing in the state at some level.
To wipe out DCA feels like an overreaction. On the other hand, you always want to figure out a way to streamline or coordinate efforts. The problem's when you've got redundancy and duplication.
Blackner: During Jeb Bush's administration, DCA was a paper tiger. Under (Tom) Pelham, he's trying to restore some teeth to the DCA, but it's a difficult job. Now the Legislature is trying to gut their funding. If DCA is quiet and rubber-stamps everything, it's fine. When DCA stands up, developers don't like it. We need a strong DCA, and we also need Hometown Democracy because local governments can't be counted upon to protect the public interest. Changes to communities' growth management plans should go to the voters and such changes should be few and far between.
What's our future now that population growth has stalled?
Rummell: The low-hanging fruit, in terms of development, may be gone. The alternative is not no growth. If you want to understand what no growth does, go to Michigan. Florida's got to figure out how to grow more responsibly. It's got to figure out how to make more Scripps (Research Institutes) happen — selective, rifle-shot efforts that worked. It's got to start thinking about being more proactive versus being an automatic receiver (of new residents). The alternative is not just to keep doing what we always did.
The classic second-home business is stalled. So at St. Joe we targeted economic development with a viable new airport (Panama City/Bay County airport under construction) with the ability to be smart about the entitling around there. That will be attractive to somebody. It's a good example of a future which is pre-planned. You're not just assuming you're going to get 1,000 retirees moving down here every day.
Blackner: I'm sure the legislators want to jump-start population growth again, but they ought to focus on the people here instead of having our economy depend on the next 100,000 people to move in. That's why Florida is a Ponzi scheme: The state's economic model depends on destroying the state with endless growth. We don't have the water for it, and we can't provide decent services. It's not a sustainable model.
And "smart growth" is whatever a developer says it is. What St. Joe got with that boondoggle airport was a gift from the taxpayers to pay for sprawl in the middle of wetlands. People who live in that area cannot afford what St. Joe wants to build and nobody was using the existing airport. It's an act of economic hubris by St. Joe and the state of Florida.
Aren't legislative efforts to remove obstacles to development just a return to business as usual?
Rummell: I'm not as close to the inside baseball in Tallahassee as I once was, so I'm hesitant to say. But philosophically it has me worried.
Blackner: The Legislature is controlled by the development industry. Scratch a politician and there's a developer underneath. They're in deep denial about reality but you can't pound nails to prosperity. It's just more of the stupidity that got us into this mess.
Kris Hundley can be reached at hundley@sptimes.com or (727) 892-2996.
2 comments:
Great piece, though St. Joe's model doesn't make any sense in the long term either. I don't expect to hear them saying that any time soon.
This article is very timely and relevant. As I quote Cameron Muir, an economist, "Home sales are unlikely to fall much further..That being said we expect home sales not to decline much further."
But it's never too late, with the right business plan set up, it will lead to valuable outcome. This is what most counselors would give as an advise.
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