Land-use regulation caused the housing bubble. Now, in at least one city, other regulations have forced a bank to demolish brand-new homes.
It would be easy to say that this shows that builder constructed a surplus of homes. But the truth is that these houses, like their builder and our entire economy, are simply victims of overzealous regulation.
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Among the many rules in the city of Victorville is one that imposes daily fines on the owners of homes not brought up to code within so many months after construction begins. The builder of these homes nearly completed them, then went bankrupt. Given a choice between paying the fines, bringing the homes up to code, or tearing them down, the bank decided to bulldoze them.
According to one of the comments on this site, the “code violation” was some windows broken by local vandals. Another story says it was due to the builder’s failure “to finish roads, walls, and other improvements that bring the community into code.” Whatever the details, this waste — from beginning to end — can be blamed solely on stupid land-use rules.
A bank official had this to say:
Smith said the bank is not in the building or land development business and because of the current housing market does not see anything happening with the property for at least five years.
Why wouldn’t the homes be able to sell for at least five years?
1. Could it be that the builder constructed a surplus of homes?
The Antiplanner already provided indisputable evidence that the builder did not construct a surplus of homes when he declared that the homes were the victims of overzealous regulation, not a surplus. Can’t argue with that kinda evidence. Plus, it’s not as if the Antiplanner gets paid by special interest groups to promote an anti-planning agenda, so we can trust that he’s not motivated to blame “planning” instead of the private sector whenever the opportunity arises.
2. Could it be that the builder constructed the homes in an undesirable location?
From the photos/videos provided by the Antiplanner, we can clearly see that the homes are built in a highly desirable location close to existing shops and restaurants and good schools for the kids, with beautiful views, nice natural landscaping, and ample site amenities.
I guess we’ll never know why the bank didn’t think it could sell these homes for at least five years, when all the indisputable evidence provided by the Antiplanner would lead us to believe that, in a market with no shortage, these houses in such a hot location would sell like hotcakes.
For every action there is an equal or greater reaction.
I repeatedly see the slur, I think mostly from D4P, that the antiplanner’s opinions are not to be trusted because he ‘takes money’ from, ie is employed by, some nasty right wingers. I mostly see enormous numbers of lefties sucking the teat of, ie being employed by, the government. I believe the Presidentissimo himself has ‘earned’ nearly all of his money from ‘public service’. D4P, what do you do for a living? Me I am an ex-lawyer who now owns and develops real estate.
I think the antiplanner’s point is obvious, and largely correct, but but not complete.
There is still plenty of stupidity in the business sector to supplement the stupidity of bad regulators. Years ago when we had a bust locally, I had many poor experiences with bankers. Ignorant, lazy, fearful, incompetent and most shockingly (to me) dishonest. If you did not record conversations with a banker you could not count on his word. I solidified in this opinion because after nearly a year of dealing with many, many bad bankers I worked with a banker from one of the smaller banks, who was none of the above.
He was an older gent, who actually visited sites, looked at construction and its possibilities for completion, called contractors or trades and got them working and “twisted wrists” with them, with other creditors and the debtor.
Ken would have had those houses finished and sold, at some price, within days.
“to finish roads, walls, and other improvements that bring the community into code.†Whatever the details, this waste  from beginning to end  can be blamed solely on stupid land-use rules.
You know the wheels are coming off of the car fetishist’s lil’ red wagon when they call completing roads “stupid land-use rules”.
Can’t they hide their incoherence any longer?!?
DS
Dear Antiplanner,
I thought the most ironic statement made in the source reporting was this — the banker said once the homes are all demolished the property will be put on the market again.
Perhaps the federal government will borrow money to buy the property and put it in a conservation reserve? Students of history will recall that much of our eastern national forests were created by the federal government buying foreclosed, abandoned, tax-arrears farmland.
Cheers,
Andy
prk166 should have said: For every action there is an equal & opposite reaction.
THWM: Shit happens & shit unhappens.
John Finley Scott would be beeming today to see his concept of “wrecking ball therapy” in action.
The stupid land use laws in place are the ones that DON’T require that developers take full responsibility for the entire cost of their developments in the first place, including fire and police protection, utilities, schools, and of course insurance in case something unfortunate were to happen on their property.
If this were to happen, developers would be more likely to approach development more cautiously and prudently (and bankers who finance them the same). Also, people who would buy homes in these developments would pay the full freight of their development (passed thru via price from the developer). So they would likely be more cautious in their decisions to buy as well.
Of course, we see this same pass-the-buck mentality regarding responsibility throughout every facet of our culture, which is why we’re seeing this financial meltdown.
Ultimately, and again and again, the taxpayer pays for these debacles.
Lorianne opined:
> The stupid land use laws in place are the ones that DON’T require that developers take full responsibility
> for the entire cost of their developments in the first place, including fire and police protection,
> utilities, schools, and of course insurance in case something unfortunate were to happen on
> their property.
Entire cost of their developments?
Did you mean that the developers of new homes (presumably) outside of inner-city urban areas should be
obligated, forever more, to all services used by the people that will live in those homes?
Utilities?
In my home state of Maryland, purchasers of properties with water and sewer hookups pay the full cost of
those hookups in the form of a loan that is amortized over the 23 years of the life of the home – the
payments are collected in the form of add-ons to the property tax bill.
Energy (e.g. electric and gas) are funded by the private-sector companies that provide them in most
of the state, so they are not really an issue here.
Schools?
Operating costs are funded by local taxes, mostly real property taxes. New schools are funded by
a combination of state and local taxes and developer dollars (in some cases, developers have to provide the
land for a new school, sometimes they are also obligated to help to build the new school capacity.
Oh, and that combination of state and local taxes also pays for reconstruction of schools in places
that do not have new homes being built. I was in a high school the other day in Baltimore City,
Maryland (a jurisdiction not known for any recent explosive growth in development or population)
that was in the process of getting a wall-to-wall renovation courtesy mostly of Maryland’s state taxpayers.
> If this were to happen, developers would be more likely to approach development more cautiously and
> prudently (and bankers who finance them the same). Also, people who would buy homes in these
> developments would pay the full freight of their development (passed thru via price from the
> developer). So they would likely be more cautious in their decisions to buy as well.
Ever heard of real estate property taxes?
> Of course, we see this same pass-the-buck mentality regarding responsibility throughout every facet
> of our culture, which is why we’re seeing this financial meltdown.
Like having highway users fund all capital costs and most operating costs of mass transit?
> Ultimately, and again and again, the taxpayer pays for these debacles.
I see. Residents of new homes are not taxpayers?
C. P. Zilliacus:Operating costs are funded by local taxes, mostly real property taxes. New schools are funded by a combination of state and local taxes and developer dollars (in some cases, developers have to provide the land for a new school, sometimes they are also obligated to help to build the new school capacity.
ws:New developments spur the need for new school construction. These new developments, in most jurisdictions, do not have to pay any sort of “impact fee” to help fund new schools created by their development. These costs are accrued by the entire district – people in new and old homes alike, and new development does not maximize existing infrastructure to the maximum where many times good schools are abandoned due to lacking enrollment.
blacquejacqueshellac: He was an older gent, who actually visited sites, looked at construction and its possibilities for completion, called contractors or trades and got them working and “twisted wrists†with them, with other creditors and the debtor.
ws: I think we are finding out that a lot of the smaller banks are doing okay after all of this mess – in regards to their real estate investments.
The antiplanner may have used ‘completing roads’ as shorthand for ‘completing useless stupid roads 8 sizes bigger than required, to accommodate traffic that might materialize in 30 years, for homes that might be built in phase 6 of the development, bike and walking pathways that have never been used and never will because they lead nowhere and all of my customers have told me they hate biking, they don’t want to walk any-fucking-where, oh, and the “walls and other improvements” are ticky-tacky little architectural features mandated by some pissant civil servant who thinks their personal tastes are and ought to be law, and which every single one of my customers despised and had bulldozed after the subdivision was complete. Every single fucking one.’
The municipality was able to force me to do stuff as a developer by threatening to withhold permits if I refused but they cannot (yet) prevent a homeowner from doing as they please.
Once a year for 8 years I have driven by to see if the $100,000.00 pathway those assholes forced me to build is ever used (it isn’t), if it was ever connected to any other path (it wasn’t) and if it even exists. (It doesn’t. Mother Gaia has reclaimed it with weeds and prairie grass.)
Pardon the language, but I’m still bitter, they are assholes, there is really no other possible description for them, and only someone able and willing to eat shit can do much subdivision work as a developer. I now restrict my development to construction, as opposed to redesignation and subdivision, and there is still some crap eating to be done, but a little less.
Let me contrast the engineering staff. Some lackwit planner tells me the roads for 30 years from now must be built right now, while the municipal engineers refuse water and sewer pipes for expected demand 30 years from now. Why? Because we can always do it later and simple-cost-benefit-present value-life-cycle analysis (which he does on the spot with a scientific calculator, but largely in his head) requires that it be done later. I ask the planner about such an analysis for roads and I get a blank and calm smile with eyes as deeply empty and stupid as the Pacific Ocean.
Sorry, sorry, I swore I would never discuss this stuff, it gets me revved up, I shall go for an adult beverage now.
C. P. ZilliacusEver heard of real estate property taxes?
ws: There have been many case studies showing that the cost of supplying fringe city developments with infrastructure often costs the municipalities (and established residents) more money to service the areas than what they are bringing in in terms of tax dollars.
Often times, new development is “subsidized” by the higher rates paid for by existing residents in counties/cities (higher rates in terms of actual costs of the city to service established neighborhoods that have paid off their debt services) that goes to newer developments. Are new developments paying higher rates to cut down on their debt accrued through the financing of infrastructure projects?
Probably not, this debt is paid for by everyone (but then again, someone probably paid for the established neighborhood). Looking at it in these terms, population growth does not exactly “pay its way” like you are assuming.
There have been many case studies showing that the cost of supplying fringe city developments with infrastructure often costs the municipalities (and established residents) more money to service the areas than what they are bringing in in terms of tax dollars.
These are the ‘cost of community services’ studies, almost all of which show that residential is a burden on tax base; combine these with the auto-dependent far-flung fetishized pattern of long stretches of costly infra, and its no wonder 2 hr commutes like VV and Antelope Valley et al. are sucking wind.
DS
ws posted:
> New developments spur the need for new school construction.
Do they? Are you asserting that there are no new children conceived in
places that don’t have new developments?
Sounds (at least to me) a lot like the theology of “induced” demand
for highway capacity.
> These new developments, in most jurisdictions, do not have to pay any
> sort of “impact fee†to help fund new schools created by their
> development.
Now I don’t know where you live (I have repeatedly shared with
others where I reside), but here in Maryland, I can assure you that
developers of new dwelling units pay for all sorts of impacts, including
estimated increases in the population of pupils enrolled in our public
school systems.
> These costs are accrued by the entire district – people in new and
> old homes alike, and new development does not maximize existing
> infrastructure to the maximum where many times good schools are
> abandoned due to lacking enrollment.
Good schools? I can assure you that even schools in communities
(that some commenters here seem to worship for reasons not entirely
clear to me, many of which date to the 1940’s and 1950’s in suburbs that
I am personally familiar with) require maintenance, and eventually
“modernization” (which often means demolition down to the exterior walls,
in part because asbestos and lead problems usually require remediation.
Now given your reasoning, it follows that residents of communities with
newer school buildings should not be taxed to help pay for such projects.
C. P. Zilliacus Do they? Are you asserting that there are no new children conceived in places that don’t have new developments? Sounds (at least to me) a lot like the theology of “induced†demand for highway capacity.
ws: Schools are generally planned around future needs of communities, not the exact existing demographics of the area in a given time and place when its built. Knowing this, new children coming into established areas are generally absorbed well by existing schools – as that school should have been planned on how many dwelling units are around it and the percentage of homes that are likely to have children, as well as coming demographic trends and future growth expected. It’s called planning.
I don’t think 20 more children coming into an existing neighborhood serviced by an existing school is going to “break the bank” as compared to 20 new children coming into a new development on the fringe of the district that need transportation to and from school everyday by a bus. To which when their area becomes more developed and they need a new multi-million dollar school to be constructed to service the new development and families.
Most new developments create the need for new schools. This is not a theory, it’s a fact. New schools are not bad and are needed, but who should pay for them and why don’t we maximize infrastructure to its potential? Why should people of a school district whose children go to a school in an established neighborhood help fund a new school to which they will see no direct benefit from?
Should all people who are in the same city and county pay the same tax rates as those getting a new school?
Shouldn’t the new denizens of future population growth fund most of their own new schools, or should these costs be borne to everyone; new and old growth alike? New schools are somehow perceived as “better” than older schools and thus attract more people and better teachers. Rinse and repeat, much like sprawl does.
C. P. Zilliacus:Now given your reasoning, it follows that residents of communities with newer school buildings should not be taxed to help pay for such projects.
ws: I can’t say what’s right or wrong, as I am throwing out a lot of rhetorical questions. To be honest, I don’t have a definitive answer or stance. A brand new school is going to attract more people as compared to a dilapidated school and will essentially be parasitic to any new child-age demographic growth of existing neighborhoods. *Usually*, it costs less to add-on or remodel than to build anew – not to mention most older schools in neighborhoods are walkable and this cuts down on transportation costs (and future health costs too).
It would seem unfair that in a school district where there are a mix of schools ranging in age, that those who were unfortunate to be near a school that suffered from asbestos would be burdened by all of the costs of renovation. All things being equal it would make sense for this to happen, but all things are not equal in regards to your hypothetical (but very real) what-if.
My point being, it is cost-effective to maximize existing infrastructure than to build anew (and there are many examples of this), and that often times new construction (although things have changed drastically in recent years regarding fees that you mentioned), has been dependent on other people paying for some of the external costs of population growth. I cannot say that this is totally 100% unequivocally bad, I am split to be honest.
However, The Antiplanner and his rigid libertarian beliefs brings up these aforementioned developments (TODs, SoWA, etc.) all of the time calling them “subsidized”, without any recognition that most new construction is subsidized (externally and internally) too.
Recognition of these material facts and blatant ideological infractions of free-market libertarianism should be rectified by ROT – but they are not, and I simply cannot wrap my mind around the disregard for what someone stands for and what someone actually preaches.
Do these studies take into account that when people start to have kids, they deliberately move to suburbs? Meanwhile, schools in urban centers close because there are fewer kids there.
As a matter of law, in most states, the building of schools where there are kids is a State Constitutional responsibility, and thus is not a subsidy.
blacquejacqueshellac said:
The antiplanner may have used ‘completing roads’ as shorthand for ‘completing useless stupid roads 8 sizes bigger than required, to accommodate traffic that might materialize in 30 years, for homes that might be built in phase 6 of the development, bike and walking pathways that have never been used and never will because they lead nowhere and all of my customers have told me they hate biking, they don’t want to walk any-fucking-where, oh, and the “walls and other improvements†are ticky-tacky little architectural features mandated by some pissant civil servant who thinks their personal tastes are and ought to be law, and which every single one of my customers despised and had bulldozed after the subdivision was complete. Every single fucking one.’
The municipality was able to force me to do stuff as a developer by threatening to withhold permits if I refused but they cannot (yet) prevent a homeowner from doing as they please.
Once a year for 8 years I have driven by to see if the $100,000.00 pathway those assholes forced me to build is ever used (it isn’t), if it was ever connected to any other path (it wasn’t) and if it even exists. (It doesn’t. Mother Gaia has reclaimed it with weeds and prairie grass.)
Pardon the language, but I’m still bitter, they are assholes, there is really no other possible description for them, and only someone able and willing to eat shit can do much subdivision work as a developer. I now restrict my development to construction, as opposed to redesignation and subdivision, and there is still some crap eating to be done, but a little less.
Let me contrast the engineering staff. Some lackwit planner tells me the roads for 30 years from now must be built right now, while the municipal engineers refuse water and sewer pipes for expected demand 30 years from now. Why? Because we can always do it later and simple-cost-benefit-present value-life-cycle analysis (which he does on the spot with a scientific calculator, but largely in his head) requires that it be done later. I ask the planner about such an analysis for roads and I get a blank and calm smile with eyes as deeply empty and stupid as the Pacific Ocean.
Sorry, sorry, I swore I would never discuss this stuff, it gets me revved up, I shall go for an adult beverage now.
THWM: This is hilarious, all of you teabagging “antiplanner” lobbyists types have corrupted things and are complaining that things are corrupt!
There seems to be a failure of the politician class at every level of government, in every country.
Something will have to be done. There are multiple countries teetering on the brink of revolution. Their system is no longer working at anything.
I agree, Mathieu, but we choose how lead ourselves and the pessimist here suspects that after revolution not much will change as this is merely another aspect of the human condition.
DS
A lot did change after the revolutions of 1989. That year people chose how they would be led. Then the accomplishments were gradually rolled back over the next 20 years. So we need more revolution. A revolution every year, or every day.