Peak of the Week

A look back to the past and a peek forward is a fore warning of things to come...........

Amendment V to the Constitution of the United States of America
in part........................ “nor shall private property be taken for public use without just compensation.”

Kelo v. City of New London
From Wikipedia, the free encyclopedia

Kelo v. City of New London, 545 U.S. 469 (2005)[1] was a case decided by the Supreme Court of the United States involving the use of eminent domain:

to transfer land from one private owner to another to further economic development.

The case arose from the condemnation by New London, Connecticut, of privately owned real property so that it could be used as part of a comprehensive redevelopment plan which promised 3,169 new jobs and $1.2 million a year in tax revenues. The Court held in a 5–4 decision that the general benefits a community enjoyed from economic growth qualified such redevelopment plans as a permissible "public use" under the Takings Clause of the Fifth Amendment.

My comments:
In a previous post, I outlined the need for local governments to compete for jobs by enticing companies to expand or start-up businesses in their community. Their intent is to generate jobs, increase tax revenues and have their community survive.

Their bag of carrots will include tax incentives and possibly “free” land!

You will see more and more local governments exercise eminent domain taking private land for private development. This approach will be used more and more to control development patterns and limit infrastructure improvements.

It is all in the LAND.

ASCE Annual Civil Engineering Conference

This year, the conference will be held in Memphis and the topic is:

“Sustainable Infrastructure – Civil Engineering Solutions”

As a brief background, I have given speeches at past ASCE annual Conventions. I have been a member of ASCE for a very long time and I was elected as a Fellow several years ago. You do not have to be a civil engineer to think that the trade organization has gotten “inside the beltway” mentality.

I thought you might want to know some of the titles of the special sessions:

“Climate Change Impacts on Critical Transportation Infrastructure”

“Communities Create a Sustainable Civil Engineering Profession”
MY NOTE: this session should be re-titled – The Civil Engineering Profession creates Sustainable Communities”

“The New Trend in Engineering: Sustainable Social Media”

“Planning Transit Connections: Defining the Pathways to Sustainability”

“Ethical Engineering Situations in Sustainability”

“Sustainable Restoration in Urban Environments”

“Achieve Sustainability Goals by Understanding and Implementing a Charette Platform”
MY NOTE: This session should be cancelled. This promotes the general public influence on how land is developed. If you live in a community which has a charette component in the rezoning process, move away!

It is interesting to watch “inside the beltway” government and quasi-government entities feed off each other. ASCE is the primary trade organization for the civil engineering profession. Combined with academia, the civil engineering organization embraces a movement (sustainability) without considering its validity in developing residential and non-residential projects.

The word “sustainability” is now overused.

A Look Into the Luxury Real Estate Market

Guest Blog Post By Phyllis Brookshire

Luxury home sellers and buyers want many of the same things as their counterparts at all price points. A recent Harris Group research project shows that these buyers want a highly respected company that shows results, a professional, experienced real estate agent and strong marketing efforts with an Internet presence.

Conducted on behalf of Luxury Portfolio, “How Today’s Highly Affluent U.S. Consumer Selects Luxury Real Estate Associates and Brokerages,” was done to gauge priorities, likes and dislikes related to the selection of an agent to buy or sell a $1 million plus home.

Some key findings:

Reputation remains paramount.

People like to do business with companies that not only have a solid business performance but also a strong standing in the community. And when it comes to their agent, 97% say the professional attributes of an agent are extremely/very important. 91% say it’s extremely/very important to have a reputation for performance in the market.

Website performance is important.

Luxury consumers like elegant websites, but in the end it all comes down to performance with 77% of those surveyed indicating that a strong internet presence is important to them.

An agent who has market knowledge and experience (no surprise) as well as global reach is a top priority.

Consumers want to know that their agent has local expertise as well as a broader view of the marketplace as a whole.

The paper also notes that because of the recession, consumers have become more fiscally responsible. For luxury real estate, this means consumers are seeking fair-priced homes that still provide superb quality of amenities and features that fit the needs and lifestyle for a family setting.

GDP REPORT

2nd quarter 2009                                - 0.7%

3rd quarter 2009                                   2.2%

4th quarter 2009                                   5.6%

1st quarter 2010                                   2.7%

2nd quarter 2010                                  1.7%

3rd quarter 2010                                   2.6%

4th quarter 2010                                   3.1%

1st quarter 2011                                   0.4%

2nd QT

Advance Estimate July 29                    1.3%

Second Estimate Aug 26                      1.0%  This is not at all a good number and the trend is decline. It would not be unreasonable to think that the 2nd qt. 2011 GDP could be negative. This would represent the first leg of an officially defined recession.

Third Estimate Sept 29


Release dates in 2011 Gross Domestic Product

3rd QT
Advance Estimate Oct 27
Second Estimate Nov 22     Hurricane Irene's economic impact could show up in the GDP
Third Estimate Dec 22

As housing goes …. So goes the economy!

Peak of the Week - Real Estate Development Terms

For the peak of the week, I look back and peek forward to consider how two real estate development terms are used.

Two terms which over time have crept into our real estate development vocabulary -- entitlement and stakeholder. Both of these terms are now commonly used during the real estate development process.

Entitlement – We used to define entitlements as rezonings, permits and/or approvals.

Stakeholder – We used to define stakeholders as neighbors or community groups.

ENTITLEMENT
From Wikipedia, the free encyclopedia

An entitlement is a guarantee of access to benefits based on established rights or by legislation. A "right" is itself an entitlement associated with a moral or social principle, such that an "entitlement" is a provision made in accordance with legal framework of a society.

Typically, entitlements are laws based on concepts of principle ("rights") which are themselves based in concepts of social equality or enfranchisement.

Zoning decisions must be based on the best interests of the entire community, and not just the interests of a particular property owner or neighboring property owners

From CBS ATLANTA - Celebrity cook Paula Deen might have to part with her beloved chickens if a Georgia county follows through on a zoning crackdown in the Savannah area.


STAKEHOLDER
From BusinessDictionary.com

A person, group, or organization that has direct or indirect stake in an organization because it can affect or be affected by the organization's actions, objectives, and policies.

In real estate development back in the ‘80’s, a meeting with adjacent neighbors to present a project was rare. Neighbors let alone community groups were made aware of a project through public notices and public meetings as part of the regulatory process.

In the ‘90’s, it was in the best interest of the developer to hold neighborhood meetings to present the project. Neighbors would voice their opinions and as a developer, decisions were made to either make plan changes based on their input or ignore their suggestions. Developers did not have to agree with the neighbors.

Sometime after 2000, all of the neighbors and community groups turned into stakeholders. Now, developers would not only be required to hold neighborhood meetings, they will also have to meet and consider their input even from “indirect” stakeholders, i.e. environmental groups.

And now local government .............

Charrette
From Wikipedia, the free encyclopedia

Charrettes take place in many disciplines, including land use planning, or urban planning. In planning, the charrette has become a technique for consulting with all stakeholders. This type of charrette (sometimes called an enquiry by design) typically involves intense and possibly multi-day meetings, involving municipal officials, developers, and residents.

A successful charrette promotes joint ownership of solutions and attempts to defuse typical confrontational attitudes between residents and developers.

Charrettes tend to involve small groups, however the residents participating may not represent all the residents nor have the moral authority to represent them.

Residents who do participate get early input into the planning process.

For developers and municipal officials charrettes achieve community involvement, may satisfy consultation criteria, with the objective of avoiding costly legal battles

Entitlements, stakeholders and now charrettes have changed our real estate development industry through local government action.

Today, local government and the general public have the opinion that developers are guilty and must prove their innocence. Meaning their projects should be designed by a community committee or stakeholders and then they are entitled to build it. Costs, price points and markets are secondary to consensus building and government regulation.  

Once we come out of this real estate depression, how far did the local regulatory pendulum swing while we are striving to survive?
Remember, once a regulation or process has been imposed at the local level, government restrictions on land are rarely reversed or overturned.

Housing Prices from 2006 - 2011 By State

Every market is different and some markets may never return to pre-2006 price levels. The majority of the states experienced less than a 13% price decline. The big 4- states of California, Nevada, Arizona and Florida elevates the average. In some markets and sub-markets, we are starting to experience price increases! Not a trend but a recognition that every market is different and you must assess each market on its own merits.

Housing Experts

Case Shiller is the leading housing analyst tracking housing prices and projecting prices going forward. It is a good thing that they are very much like all experts that are trying to anticipate what the economy will do in the months ahead. With the 1st Qt GDP revised to 0.4% and the first 2nd quarter estimate at 1.3%, it is trending toward a second recession.

Most Presidential election years energize career politicians to concentrate on the economy and jobs – otherwise they are out of a job. This time, it will be no different except the economy is trending south and President Obama will not have time for the economy to recover and substantiated by published data.

In the following graphs, the key statistic is the anticipated return to August 2011 prices is estimated by Case Shiller to be April 2013. This is brought forward from the previous projections. I am not sure if I understand this? Oh well, the next couple of years will remain difficult.

Case Shiller Housing Price Projections
Price Period                           Projected Bottom                      Anticipated Return to Current Prices

May 2010                               May 2011                                          November 2013

August 2011                         February 2012                                        April 2013

"As Housing Goes................So Goes the Economy"

Blog Posts will Start Again Next Monday

Limited Blog Posts over Next 2-wks

Trends

We all know that the economy has not improved and has been a bumpy road since 2007. We all know that Congress, the Administration, and the financial industry have and will continue to mire in their own egos while we all are left to watch and be impacted by their actions. I have and will continue to be a proponent that

AS HOUSING GOES……..SO GOES THE ECONOMY

I wanted to show you several trends. In a previous blog, I illustrated the relationship price of oil has to housing starts. As you may know, our economy does not turn around on a dime. There is a significant lag in what is really going on and the official numbers. In other words, the economic trends in the second half of 2010 will show up in the first half of 2011 official data. The trend is already cast for the balance of this year.

In an election year and the inability of Congress do to anything will leave us hanging through mid-2013 --- at the earliest. Thus, Expect the Worst and Pray for the Best.

                                   GDP                         Gas Prices                                Housing Starts

2nd quarter 2010        1.7%                        2.86 per gal                               142,000

3rd quarter 2010         2.6%                       2.93                                           119,000

4th quarter 2010          3.1%                       3.32                                            96,000

1st quarter 2011          0.4%                       3.95                                            89,000

2nd Qt. Adv. Est.         1.3%                      3.89                                              ??

I am not an economist nor am I an expert in anything. Research on your own and reach your own conclusions.

Have strong Beliefs

Be an Optimist
Relentless Preparation
Invest in Others
Live in a State of Gratitude
Act rather than react
Reinvent

Do You Know How Much Members of Congress Earn?

I guess there would be a debate on if they earn their salary but they do get paid!

In 1991, their annual salary was              $101,900

In 2011, their annual salary is                 $174,000

In today’s Congress nearly 50% of all senators and representatives are MILLIONAIRES.
No wonder they are out of touch with US.

At a salary of $174,000 per year, they would be paid $14,500 per month.
In reviewing the congressional calendar for August – December, 2011, they will be in session 44 days.

$14,500 x 5 months = $72,500
$72,500 / 44 days = $1,647 per day
$1,647 / 8 hours = $205 per hour --- this is salary only and does not include benefits.

Some members in Congress are worth their salary and some are not. At least we have a chance to decide on who should stay and who should go by voting! Regardless, we should demand term limits.

Would you be an unemployed worker if you worked ONLY 44 days over the next 5-months?

Although congress has recesses for members to visit their constituents back home, that is campaigning more than working on our behalf. I always thought that unemployment, lack of jobs, economic downturn, deficit spending, wars, debt, GDP, middle east unrest, scandals, inflation, housing disaster, class warfare, etc. etc. etc. would be enough to have anyone stay in Washington DC and help find solutions.

The House Calendar August 1, 2011 - December 31, 2011

 
 
  

Local Sustainability Activists

Agenda 21, through ICLEI is intended for changes at the local level. I have been in the real estate development industry for over 35 years and environmental group efforts at the local level have increasingly become more active. Their reach started with flood plains, wetlands and endangered species. Now, it seems that ICLEI will extend its reach and change the environmental focus to global issues governed at the local level. Their approach seems to working.

The following process outlines a defined methodology in researching your local government actions toward passing local ordinances controlling how we use our land. Excerpts provided by Stacy Lynne.

1. Conduct open records access requests. This is a legal process designed to protect our rights to access public information. It is very inexpensive and effective at holding local governments accountable. Focus on the facts through factual research.
a. For excellent help with this, please visit the website of Student Press Law Center. There is an automatic letter generator on that site which can help with the process.
b. In your first open records request, ask for “any and all documents and communications related to or concerning the organization called ICLEI – Local Governments for Sustainability.”
c. The information you receive as a result of your first open records request will be the starting point for researching actions taken by local government in implementing ICLEI goals and objectives.
2. Attend council meetings and commission meetings. Read the agendas.
3. Listen for sustainability buzzwords at public meetings.
4. Research local environmental groups. These are the powerful and effective “stakeholders” who are pressuring your local officials into adopting stronger environmental ordinances at the local level based on ICLEI’s goals and objectives.
5. Read your local climate action plan/local environmental action plan/city plan, etc. Research who prepared the report, who paid for the report, and learn how the report plans, will impact people.
6. Read your local budget; watch for triple bottom line budgeting process. Follow the money and total the amount being spent on sustainability or green programs. Include salaries of the employee who implement those programs in the total budget amounts.
7. Research which private companies are in partnership with local government (public/private partnerships). Those private companies are profiting from taxpayer money.
8. Ask your local government for the definition of “sustainable development” and “sustainability”.
9. Photographs are powerful communication tools.
10. Research the websites of: Michael Shaw, Dr. Stan Montieth, and Tom DeWeese. These are excellent resources for information about sustainability, Agenda 21, and ICLEI.

In my post last week, go to the list of cities which are members of ICLEI. Is your city on the list and will you become an activist to protect our use of our land? It is all in the land!



Please research your local ordinances that have been passed during 2010 or 2011 further controlling land. Please send me the ordinance.

August 1, 2011

The debate on the debt ceiling has shown the true colors of the elected branches. Throughout the debate, the economy is structurally flawed without attention. The GDP revised in the first quarter is reflective of a recession – not by definition but by reality. The debate with shift to jobs because that will be one of the most important election issues. The President, Senate, and the House are one dimensional and can’t focus on major issues simultaneous because it is not in their best interest.

Don’t expect the economy to turn around anytime soon. How can the economy improve soon when the GDP is trending south and the housing industry is still in a spiral down cycle?

Plan for the worst and pray for the best.

If you haven’t revisited your spending and revenue streams, you should! But don’t use the US Government as an example of how to run a business!

Source: Bipartisan Policy Center

August 3 – 31 Estimated Revenue                   $172.4 billion

Estimated Expenses                                        $306.7 billion

About 1/3 of the expenses are in Medicare, Medicaid, and Social Security.

Would you vote for the brokered deal currently on the table in DC?