Wednesday, February 27, 2013

The problem identified: Homestead, in a nutshell ... by gimleteye

The economic crisis arising out of the housing boom -- involving mainly the conversion of "cheap" farmland into suburban tract housing -- infected the entire United States. The model of destruction was clearly visible in south Florida, where so much stupidity followed the massive rezoning of open space and private property defining the once magnificent Everglades; building massive wealth and powerful political constituencies to replicate the pattern and proliferate sprawl as fast as banks would finance it.

There is an interesting article in today's Miami Herald where the formula is put right into the open by John Alger, in "Homestead, farmer look to settle lawsuit with Air Force." The issue, as described, is "balancing" the rights of property ownership of farmland located very close to the US Air Force Base at Homestead.

The array of economic and political interests to convert that air base into a massive, private (and no-bid) commercial airport consumed years of my life, beginning in the mid-1990's. At its heart, the fight, joined by civic activists and conservationists from around the nation, revolved around the focus of the Herald article: the use of thousands of acres of environmentally sensitive land, owned by large land owners, as fodder to spread sprawl against the chance to restore Biscayne Bay and the Everglades.

Mr. Alger gets straight to the point in the Herald article, "We have no immediate desire for development," said Alger, a third-generation farmer. "But the development rights allow us to preserve a hypothetical value that can be used for collateral."

"Is" used for collateral is the key point. The reason Homestead became the foreclosure capital of the nation after the recent housing bust is that banks conspired to lend farmers/developers money at values and rates that offered no chance for any outcome other than pricing to transform farm acres to zero lot line housing. Homestead continues to be the most egregious example, except perhaps for towns like Stockton in California's Central Valley.

Banks and land owners across the nation have conspired to use the developable value of real estate to finance everything from lifestyles to crops, turning once rock-solid, conservative businesses adverse to risk into gambling operations no different from casinos.

There is nothing illegal in Mr. Alger's premise, but there should be. The hypothetic value, moreover, of developable real estate is not only the foundation of banking and lending practices; it is virtually enshrined by the political order. A sane society would create financial barriers protecting communities by denying banks the opportunity to lend and to conspire on "developable values" where sprawl is the highest value. But ours is not a sane society. Even after the worst economic crisis since the Great Depression, there has been no public outcry or demand for change in banking regulations. In fact, as our blog has observed: the reverse is occurring. Every economic interest in South Florida, like the founders and speculators of US Century Bank, are hoarding cash and waiting for the miracle to come: the reversion to development and land use models that catalyzed growth leading up to the crash.

Our connections to democracy -- lamented on the Herald pages by FIU president emeritus Mitch Madique as "apathy" -- have been turned to dust by encouragement of land speculation.

To see how this happens, you don't have to be a farmer or property rights champion or environmentalist: you simply have to go to the county commission and watch how decisions are made on a single zoning application at the fringe of the Urban Development Boundary. To see how speculation took root and infected Florida, you just have to watch one legislative session in Tallahassee where the Great Destroyers devise one more way to socialize risk and privatize profit; it is all about encouraging the speculators.

One can empathize with farmers who don't want to be farmers: under the best of circumstances, farming is a difficult, challenging way to make a living. (And under conditions of climate change, it could get much worse, faster than anyone is talking about ...) But economic policies that reward farmers for being land speculators -- using, for example, farmland as collateral based on its developable value as suburban sprawl -- has made some people rich and powerful while destroying public discourse.

What is also unfortunate and regrettable is that this view is never given an inch of space on the Herald OPED page. That fact alone demonstrates the influence of downtown land use law firms, like Greenberg Traurig and Holland and Knight. Miami has never known another way to accumulate wealth than formulas based on speculation. It is why casinos are held in such esteem and so many land use decisions made by local government, detached from reality.

6 comments:

Anonymous said...

All true, BUT this suit against Alger and the City arose when the City Council "created" land rights that, if they ever existed, were extinguished during annexation several years ago. The city attorneys and the federal government took this position and the brain trust on Council, against their own legal advice, voted in favor of the owner. So, here is the real problem in addition to speculative value issues: elected officials who do not have the guts to say no to friends and political benefactors. One can only imagine how much money has been spent by the Homestead taxpayers to defend the suit over something that the city fathers should have never approved.

Anonymous said...

My blood runneth over whenever I see the names Alger, Losner, Warren, Shiver, Bell & Williams (the last most seem to forget)!

This is so true and should be criminal. Annexations in to Homestead were the norm in the past decade because even some on the Commission would blush at approving these insane re zoning's.

I could go on, but you did it for me.

Great writing and so, so true!

Anonymous said...

The second comment is sorta off topic. True, perhaps, but off target. This particular annexation took place long before the boom; possibly as far back as the late 1980's. Note to commentor: if not for the annexation, the County CDMP had the Waterstone land at 30 units per acre, slated for apartment development. Can you imagine the slum Homestead would be today if the acreage north of Campbell Drive had been under county jurisdiction and developed in this manner ? Not saying it is not a slum now, it just would have been much worse, much earlier.

Mr. Rational said...

There is no simple fix for this problem, but there is one thing we can do to help preserve farms and small businesses: assess property taxes at the carrying value (the value based on the property's actual revenue) rather than on its highest and best use value.

The State, local governments and school districts prefer highest and best use because it produces the greatest yield in tax revenue.

However, assessing at highest and best use - even with an agricultural exemption - inflates land values. For small businesses that own land, highest and best use can cause crippling tax bills that force restaurants, shops and others to sell when the market heats up.

Anonymous said...

The 2nd anon named the players in the great housing bust in Homestead.....The breaching of the UDB was included in some of those annexed parcel. Thankfully Florida City was stopped with massive mess by Lennar called I think Florida City Commons (I know this blog addressed it).

Add to all of this what has been addressed by Gimlete & Genius with the Penelas gang, the LBA & the US Century 'Gang of Thieves' (because to me, they stole from the taxpayers until they pay the money back!)

Just think Parkland is probably still somewhere pending in County Hall and a whole bunch of people left over from Penelas & Alvarez are still hanging on the 29th floor with Gimenez! This won't stop until someone puts the brakes on it from the outside because I have a lower opinion of (and/or faith in) Miami Dade County Hall then I do of Congress - both parties too!

Anonymous said...

I was one of the suckers who bought a pre-construction home in Homestead. Looked great, was affordable, I liked the plan for the community. I am not one to tend towards planned development units (have since lived in Miami Springs and now in North Miami) but I liked the location (close to the Keys).

I was able to negotiate with the mortgage holder and get out of the home without much damage. Still surprised that such a home would sell for $130k but hey, the buyer got a great deal I guess.

At the time of purchase I was not a 305 resident. Had I been aware of the lunacy that was occurring I would have never purchased where I did. Just a year ago, I was contacted by a friend who was considering a several year contract job at Turkey Point. I told him, in no uncertain terms, don't live in Homestead. Like me, the proximity to the Keys was appealing. I told him to look at Broward and commute. He took my advice.

I don't understand why with so much inventory out there that developers are even considering new ground breaks.