Monday, December 5, 2011
I came across a link to this Bloomberg report in reading for my previous post on the Leinberger-Kotkin debate. The article is a few months old, but I still think it's highly relevant: U.S. Moves Toward Home 'Rentership Society,' Morgan Stanley Says, discussing a report on housing.
The U.S. homeownership rate has fallen below 60 percent when delinquent borrowers are excluded, a sign of the country’s move toward a “rentership society,”Morgan Stanley said in a report today. . . .
The homeownership rate reached an all-time high of 69.2 percent in 2004 as relaxed lending standards fueled home sales and President George W. Bush promoted an “ownership society.” Mortgage delinquencies, foreclosures and tighter credit for housing loans are reducing property buying, [Morgan Stanley analysi Oliver] Chang said.
“Taken together they are forcibly moving the country away from being an ownership society,” Chang, based in San Francisco, said in an e-mail. “This change is only beginning, and is moving the country towards becoming a rentership society.”
A real estate professional demurs, but look at the reason why:
Most Americans still aspire to own their houses and don’t want to be renters forever, said Rick Davidson, president and chief executive officer of Century 21 Real Estate LLC in Parsippany, New Jersey.
“It isn’t about the financial aspects, but about building a family and having a part of the American dream,” Davidson, whose company is a unit of Realogy Corp., said today during an interview at Bloomberg’s offices in New York. “What really drives purchases at the end of the day is emotional and has to do with lifestyle.”
We're still conditioned to think of homeownership as the sine qua non of the American Dream--but it's not necessarily in our financial or economic interest; it's emotional and about lifestyle. But is there an adequate range of opportunities presented for Americans to choose (emotionally?) between different forms of lifestyle? I believe that at their base, issues of housing, community, and urban form are primarily cultural.
Perhaps no theology more grips the nation’s mainstream media — and the planning community — more than the notion of inevitable suburban decline. The Obama administration’s housing secretary, Shaun Donavan, recently claimed, “We’ve reached the limits of suburban development: People are beginning to vote with their feet and come back to the central cities.”
Yet repeating a mantra incessantly does not make it true. Indeed, any analysis of the 2010 U.S. Census would make perfectly clear that rather than heading for density, Americans are voting with their feet in the opposite direction: toward the outer sections of the metropolis and to smaller, less dense cities. During the 2000s, the Census shows, just 8.6% of the population growth in metropolitan areas with more than 1 million people took place in the core cities; the rest took place in the suburbs. That 8.6% represents a decline from the 1990s, when the figure was 15.4%.
Nor are Americans abandoning their basic attraction for single-family dwellings or automobile commuting. Over the past decade, single-family houses grew far more than either multifamily or attached homes, accounting for nearly 80% of all the new households in the 51 largest cities. And — contrary to the image of suburban desolation — detached housing retains a significantly lower vacancy rate than the multi-unit sector, which has also suffered a higher growth in vacancies even the crash. . . .
It turns out that while urban land owners, planners and pundits love density, people for the most part continue to prefer space, if they can afford it. No amount of spinmeistering can change that basic fact, at least according to trends of past decade.
But what about the future? Some more reasoned new urbanists, like Leinberger, hope that the market will change the dynamic and spur the long-awaited shift into dense, more urban cores.
Kotkin provides further statistics derived from his Census analysis. This debate is central to the future of housing policy and urban planning in America.
Friday, December 2, 2011
The New York Times today has an excellent investigative piece on oil and gas leases and how they do - and don't - protect landowners. From the article:
Americans have signed millions of leases allowing companies to drill for oil and natural gas on their land in recent years. But some of these landowners — often in rural areas, and eager for quick payouts — are finding out too late what is, and what is not, in the fine print.
Energy company officials say that standard leases include language that protects landowners. But a review of more than 111,000 leases, addenda and related documents by The New York Times suggests otherwise:
¶ Fewer than half the leases require companies to compensate landowners for water contamination after drilling begins. And only about half the documents have language that lawyers suggest should be included to require payment for damages to livestock or crops.
¶ Most leases grant gas companies broad rights to decide where they can cut down trees, store chemicals, build roads and drill. Companies are also permitted to operate generators and spotlights through the night near homes during drilling.
¶ In the leases, drilling companies rarely describe to landowners the potential environmental and other risks that federal laws require them to disclose in filings to investors.
¶ Most leases are for three or five years, but at least two-thirds of those reviewed by The Times allow extensions without additional approval from landowners. If landowners have second thoughts about drilling on their land or want to negotiate for more money, they may be out of luck.
The leases — obtained through open records requests — are mostly from gas-rich areas in Texas, but also in Maryland, New York, Ohio, Pennsylvania and West Virginia.
I found this personally interesting, as our family holds mineral right on some land in Montana, but with all the natural gas exploration happening in the Eastern U.S. this is a timely story for many.
Jamie Baker Roskie
Thursday, December 1, 2011
Thanks to Atlanta lawyer Robert Jackson for the heads' up on this amazing decision from a Carroll County judge regarding the potentially wrongful failure to modify a mortgage for homeowner Otis Wayne Phillips. My favorite part of the opinion:
This court cannot imagine why U. S. Bank will not make known to Mr. Phillips, a taxpayer, how his numbers put him outside the federal guidelines to receive a loan modification. Taking $20 Billion of taxpayer money was no problem for U. S. Bank. A cynical judge might believe that this entire motion to dismiss is a desperate attempt to avoid the discovery period, where U. S. Bank would have to tell Mr. Phillips how his financial situation did not qualify him for a modification. Or, perhaps he was qualified, yet didn't receive the modification, in violation of U. S. Bank's Service Participation Agreement (SPA). A cynical judge might think that, if the guidelines clearly prevented Mr. Phillips from getting his modification, then U. S. Bank would have trotted out that fact in mathematic equations, pie charts, and bar graphs, all on 8 by 10 glossy photo paper, with circles and arrows and paragraphs on the back explaining each winning number. [Here the judge puts a footnote begging indulgence from Arlo Gutherie for the Alice's Restaurant reference.] U. S. Bank's silence on this issue might heighten the suspicions of such a cynical jurist. I, on the other hand, am sure that nothing of the sort could be true. Maybe U. S. Bank no longer has any of the $20 billion dollars left, and so their lack of written explanation might be attributed to some kind of ink reduction program to save money. I'm sure there is a perfectly reasonable explanation for why the U. S. Bank will not print out the ONE page of figures that show Mr. Phillip's financials compared to the RAMP guidelines to clear all this up.
Jamie Baker Roskie
For all of our takings geeks out there (you know who you are), and courtesy of the ABA State and Local Government E-News briefs comes a potentially important decision on the reach of the Supreme Court's exactions jurisprudence (aka Nollan/Dolan). The case is St. Johns River Water Mgmt. Dist. v. Koontz, No. SC09-713 (Fl. Nov. 3, 2011) (and it is attached). It holds, in short, that the Nollan/Dolan line applies only to exactions requiring the dedication of real property for public use.
Some brief background on Nollan and Dolan for those who are not takings geeks: Taken together, the U.S. Supreme Court's decisions in Nollan v. California Coastal Comm'n., 483 U.S. 825 (1987) and Dolan v. City of Tigard, 512 U.S. 374 (1994), hold that when a regulatory entity demands a condition in exchange for authorizing a use of land that would otherwise be prohibited (known as an "exaction") the condition imposed must have an "essential nexus" with (Nollan) and "rough proportionality" to (Dolan) some anticipated impact of the proposed use of land. Both Nollan and Dolan involved situations where the regulatory authority demanded the landowner physically dedicate some portion of his or her land for public use, and the Court in both cases emphasized that the condition demanded by the regulatory authority required the landowner to forfeit the sacrosanct "right to exclude." As a result, many commentators believed that Nollan and Dolan were limited to circumstances where the "exaction" was a requirement that real property be dedicated for public use, and did not extend, for example, to requirements that landowners pay an "impact fee" or other type of monetary payment in exchange for development permission.
That interpretation, however, was rejected by one of the most significant lower court decisions to date dealing with Nollan and Dolan, the California Supreme Court's ruling in Ehrlich v. City of Culver City, 911 P.2d 429 (Cal. 1996). There, the court held that Nollan and Dolan did apply to certain types of impact fees, specifically fees imposed on a discretionary, individualized basis. The court emphasized what it saw as the underlying policy rationale of the Nollan/Dolan doctrine, to prevent regulatory authorities from using their monopoly power over the land use permitting process to extort concessions from politically powerless developers. This policy concern, the court noted, would apply equally regardless of whether the exaction was a physical dedication or an impact fee.
Now, in St Johns, the Florida Supreme Court holds to the contrary: Nolllan/Dolan apply only to physical dedications. The court reasons:
1) Nollan and Dolan themselves both involved physical dedications. And in dicta in two recent decisions, Monterey v. Del Monte Dunes, 526 U.S. 687 (1999) and Lingle v. Chevron, 544 U.S. 528 (2005), the United States Supreme Court has described Nollan and Dolan as applying to exactions requiring dedications of real property to public use.
2) Expanding the exactions jurisprudence beyond physical dedications would unduly hamstring regulatory entities in negotiating with developers and would likely result in more outright denials of development approval (which would not be subject to Nollan/Dolan at all).
Color me unpersuaded, particularly when comparing St Johns with the much more nuanced opinion in Ehrlich. Ehrlich makes a principled argument for treating physical dedications and impact fees similarly under Nollan and Dolan, although one may not necessarily agree with its principle (Developers are politically powerless? I don't think so). St Johns never articulates why physical dedications should be treated differently from impact fees under Nollan and Dolan, other than mechanically applying some pretty meager dicta in Lingle and San Remo while confining Nollan and Dolan to their facts. The St Johns court could have said something about the fundamentality of the right to exclude, as I mentioned above, but did not do so. Instead, it made a public policy argument that is less a reason to limit Nollan/Dolan to physical dedications than a reason to scrap the doctrine entirely. After all, any limitation on exactions is going to limit regulators' bargaining power and incline them toward more denials. Will a limitation on exactions involving physical dedications hamstring regulators less, or incline them to issue outright denials less frequently, than a limitation on impact fees? Or is the court more concerned about landowners' rights in the former case than the latter? The court does not say.
[Update: After taking another look at St. Johns, some brief clarification is in order. The facts in St Johns are a little convoluted. The district initially proposed an exaction that would require dedication of some real property, but the developer refused and the permit was denied. The court held that Nollan and Dolan did not apply because 1) the permit was never issued and 2) there was no dedication of real property. It is possible to read this as a single holding: Nollan and Dolan do not apply where there is no dedication of property because a permit is never issued. However, as I read the opinion, these are two separate holdings: Nollan/Dolan do not apply where a permit is not isssued; and Nollan/Dolan do not apply in the absence of an exaction requiring a dedication of real property.
Where matters get really confusing is in the court's public policy reasoning. As I mentioned in the initial post, the court says that Nollan/Dolan needs to be so limited so as to avoid unduly confining regulatory discretion and to avoid incentivizing regulators to issue more denials rather than negotiating with developers. This reasoning is apparently intended to apply to both of the holdings, although as the initial post points out, it doesn't really make sense as a basis of distinguishing impact fees from dedications. It makes more sense in explaining why Nolan/Dolan should not apply to outright denials where no negotiating is ever involved. But my underlying point remains: the court has given little reason why Nollan and Dolan should apply only to dedications. Sorry for the initial confusion.]
I had an interesting conversation this morning with Meg Mirshak, a reporter from The Augusta Chronicle. She contacted me for background on a series of stories she's doing on a proposed overlay zone that would allowed mixed-use development in a historic African-American neighborhood called Laney-Walker. The overlay as proposed is very general, but requires specific permission for uses like pawn shops and liquor stores. The community feels underinformed and is very concerned about the potential impact on their neighborhood. Also, this concept of an overlay zone is confusing to many, and the commission has delayed its vote on the overlay until January due to the confusion and to notice problems.
Mirshak asked me if I could provide examples of where overlay zoning has proved succesful, and honestly, this stumped me. We've proposed particular types of overlay zoning in some of our client communities - to require more pedestrian friendly redevelopment on aging strip corridors, for example - but the time horizon on implementing these changes is so long that I can't honestly say I know of a "successful" use of overlay zoning. Also, as I pointed out to her in a follow up e-mail, overlay zoning is really just a form, so it's kind of like asking if any type of form - buildings, novels, movies - are inherently successful. Yes, those forms can be successful or they can be a disaster, depending on how you construct them and what you're trying to accomplish. With any zoning tool the trick is to make sure they reflect the community's goals and market realities, and that they deliver what's best for the long term vibrancy of the city. And that often involves a lot of process, more process than they seem to have allowed for in Augusta.
Coincidentally, I stumbled across a blog post on Planetizen, written by an urban planner who lead a group of students to plant trees at a New Orleans school, only to be thwarted in their task by a schoolyard shooting. The post, titled "Can't Buy Me Love - or Plan for It," points out the importance of human connection in urban planning.
In my first year and a half as a working urban planner, I've consistently come back to the lessons I learned in New Orleans in 2009: For all of the innovative design that you can bring to a city, and for all of the smart planning principles that they teach you in school, there's no match for literally and figuratively digging your heels into a neighborhood, getting residents invested in the work that you're doing, and—together—building a partnership that leads to the kind of community building that can't be taught.
I can't say better than that. Here's hoping the planners in Augusta can do what it takes to get the residents invested in what they're trying to accomplish.
Jamie Baker Roskie