April 17, 2019

AFFORDABLE HOUSING…Not Gonna Happen

by Steve Dana

In pursuit of answers regarding Affordable Housing, our investigation should consider all aspects of the problem.  I will include a few I know about.

The term “Affordable Housing” isn’t well defined so it can be considered in the context of properties for sale and properties for rent. Rental properties can be privately-owned, government owned like the Snohomish County Housing Authority or NGO owned (non-government organizations typically non-profits) like Cocoon House or Housing Hope subsidized by government.  These properties are for rent to people with varying income levels.

If you believe that public private partnerships might be a way to create affordable housing, they are working in some areas.  We approve property tax relief for some projects if there is an aspect of affordability incorporated into the credit agreement.  It’s not clear what qualifies for affordability in this scenario.

Section 8 has been a way to incent private landlords to rent to low income tenants, but the pool of money and the applicable regulations haven’t kept pace with demand.  There are anecdotal accounts of huge fraud within the Section 8 program that might warrant investigation.  It was reported recently that there is an eight year wait for Section 8 housing with the current inventory of properties.

Private sector property owners cannot be expected to cut rents out of the goodness of their hearts so if the government wants access to the property, they need to kick in enough to cover the differential between appropriate rent for low income tenants and market rent for the landlord.  There might be other incentives for landlords that would also make participating worthwhile.

If affordable housing is only for rental properties our focus could be on them, but home ownership is still the American dream.  How can we keep buying a home within the range of young families?

Let’s take a look at why buying a home is so expensive.

There are a few components to housing cost consistent with all segments; land cost itself, driven by local and state/federal regulations, building regulation driven by local permits and fees and construction cost of the building.

From the standpoint of housing cost at a structure level, the cost in our market is comparable to other places in the country.  Framing materials, plywood, roofing, drywall, carpet and fixtures are generally the same price across multiple markets.  A home built in Boise, Idaho should have approximately the same component cost as a home built in Snohomish, Washington.

So, for the most part, factors effecting housing cost for consumers is driven by something other than the structure.  It appears that government regulations are the driving force.

Right out of the gate, the government controls the zoning of the land that might meet affordability requirements better if more was set aside for multi-family development rather than single family detached housing.  Encouraging condominium construction might address a deficiency for housing where ownership is a priority.  Condo construction comes with its own set of obstacles also created by the government we cannot begin to address here.

When the state passed the Growth Management Act, it created a tool to limit the amount of land available to developers which we knew would artificially drive up the cost of developable land.  Areas outside Urban Growth Areas would be down-zoned to rural density in the One Dwelling Unit per Five acres range while land within UGA’s would immediately escalate in value because of the finite supply.  Supply and demand is still a market force that reflects shortages or surpluses in product or in this case, land.

When the government creates shortages through regulation, the cost goes up faster than in an unregulated market. Urban Growth Boundaries arbitrarily pick winners and losers.  The politics of urban growth designations add a layer of cost that compounds as the process evolves.

The process of dividing land required by local and state laws make $40,000 lots into $140,000 lots.

The other factor in the cost of housing is the skyrocketing increases in direct government regulatory cost through permitting, hook-up fees, mitigation fees and associated regulations from state regulatory agencies.  The Growth Management Act empowered cities and counties to collect mitigation fees supposedly to offset the cost of future development rather than to address existing deficiencies.  Without inventorying the deficiencies at the time, cities and counties went about collecting fees and spending money to build schools, roads and parks.  The burden of growth is supposedly borne by the new development.  Do we need to collect park impact fees if we have enough parks already?  How many parks do you need?  Can you use mitigation fees for anything other than purchase of the land?

School districts must develop a capital improvement plan to predict where and when new facilities should be built.  They analyze where schools are today and compare that with where students are coming from to know where deficiencies exist to be mitigated by new facilities.  In our district, there haven’t been school impact fees for a while since we built or remodeled schools through a huge bond issue.  That should establish a legitimate baseline for future growth to be paid for with mitigation fees.

Hook-up fees have become commonplace in the last twenty-five years as utilities discovered that they could sell the privilege of connecting rather than granting it for free as a property owner in the service area.  Hook up fees supposedly allow collection of funds that can be used to expand the physical delivery system in advance of growth.  I don’t think it’s happening that way in practice.  New pipes in the ground are now paid for by developers.  Under certain circumstances, they can recover a portion of the capital cost of the installation through late comer fees.

On top of that add Storm Water Collection and conditioning fees authorized/mandated by the state.

The science of sanitary sewer service is driven by federal and state laws which translate into higher sewer rates.  In recent years, clean water standards have driven up the cost of increasingly smaller incremental improvements in quality of the effluent released into the river.

The Shoreline Management act limits how property owners can use their land if it is within 200 feet of a significant waterway in the state.

Critical Area regulations also play a huge part in limiting the supply of land and how much of that land can be used for a designated purpose.

Currently we are developing local code language to address a mandate from the state to regulate archaeological aspects of privately-owned property that could substantially increase the cost of housing if there is a suggestion that artifacts are on the property.  Not proof that there are artifacts, but suggestion.

The bottom line for those clamoring for the government to do something, the government is doing something, they are driving up the cost of housing.  If the private sector is to be the solution to the problem, the government needs to cut the permit fees, mitigation fees and other fees while offering credits and incentives to the developer if the end use is committed to subsidized housing for low income or senior tenants.

Affordable Housing will not happen with government playing such a significant part in regulating housing in general.

The housing market is a hugely complex dynamic creation that cannot be explained in a couple hundred words.  The takeaway should be that every level of government regulation compounds and adds to the cost of housing for consumers.  Relief will only come from peeling away those regulatory requirements away.

March 26, 2019

Barrel of Bad Apples

by Steve Dana

So if Robert Mueller found no evidence of an improper relationship between Donald Trump’s campaign and agents of any foreign country that rose to a level worthy of indictments for anyone, was there evidence of an improper relationship at any level?  Trump was a businessman with an international reputation so it’s not unreasonable for him to have previous relationships with foreign governments.  Having said that, were any of those relationships such that his patriotism was ever called into question?

This two-year nightmare we just completed should provide some closure for the critics of Donald Trump but it probably won’t.  The question of him possibly conspiring with Russia or any other government should have been determined definitively.  Mueller said there was none.  His job was to find out if Trump conspired with Russia in any way.  He found nothing.  How many ways can you say there was no there there?

The apparent need to exhaustively investigate Trump only calls into questions the motives of the ones calling for the investigation.  If they have knowledge of or evidence of criminal activity by Trump, wouldn’t you think they would have shared it with Mueller?

What the incessant demand for Trump’s hide does for me is to reset the bar for investigation of every candidate.  We need to codify the scope of this investigation so we will never elect a candidate who’s ever accomplished a thing in his/her life.

Imagine what would have happened if anyone in the press demanded to know as much about Barrack Obama as they want to know about Trump.  Fact is, Obama’s list of accomplishments prior to being elected president was non-existent so he wouldn’t have had to worry about much. We still don’t know a lot about him because the press didn’t bother to investigate him for fear of what they might find.

During the Obama years, there was no shortage of topics to investigate if the press was inclined, but they weren’t.  I know I had questions about Fast & Furious that warranted investigation, but we heard nothing by the Department of Justice or the press.  Lois Lerner took the Fifth rather than answer questions about the IRS treatment of conservative organizations. That could have been a good story if the press had bothered to investigate even a little.  Where were the high standards of journalism during those years?  Where was the DOJ investigation of crimes then?

Since we all suffered through two years investigating Trump, I’m okay if we spend a couple more finishing the job. We spent time and money looking into Donald Trump when there wasn’t any evidence that he had committed a crime.  Federal prosecutors told us time and again that before you begin an investigation you need evidence of a crime.  You can’t just start investigating because you don’t like someone; and yet, they did.

In the case of Hillary Clinton, we had lots of evidence of crimes; many of which would send you to prison for many years.  And yet, the DOJ chose not to investigate.  Why?  What we learned with Paul Manefort is it’s never too late unless the statue of limitations has expired.  The clock is ticking.

As we all suffered through the Trump investigation, some because we wanted to find evidence of a crime and others because we needed to certify that there wasn’t a crime, it became clear that we all need closure.  Now it’s time for the other shoe to fall.  Those of us who wanted justice served by investigating Clinton need closure too.

The fact that in the face of a mountain of evidence there was no investigation of Clinton suggested that there were other rotten apples in the barrel.  The things we’ve learned in the course of investigating Trump exposed the corruption in the Obama government more than in the Clinton candidacy.  To what degree her campaign conspired with the Obama administration we don’t know yet.  But because of the efforts to sink Trump we’ve found an unbelievable conspiracy involving members of the Obama administration at the highest levels.  It could be that Hillary Clinton going to jail won’t be the big news when everything is said and done.  The scope of criminal activity seems so vast its mind boggling to contemplate.

What we’ve learned from the Trump investigation is that we start with evidence of a crime and follow the evidence wherever it takes us.  If it had taken down Trump, a lot of folks would have been cheering.  If pursuing the evidence ends up exposing people in high places of crimes, so be it.  I only hope the press is as enthusiastic in pursuit of justice as they were in pursuit of injustice.

March 23, 2019

Mueller Report Next Steps

by Steve Dana

Now that the Mueller report has been submitted, what is the next step?  I guess it depends upon what Mueller was actually investigating.

I think we have reasonable agreement that foreign governments or their surrogates have used technology to influence American elections to some degree for several years.  The Mueller investigation was predicated on there being a relationship between Donald Trump and Russian efforts to interfere.

Keep in mind that our government has known about Russian efforts and those of several other countries to interfere in one way or another for years.  President Obama knew about them and yet he still minimized the actual impact on any election we could point to. He never instructed his Attorney General to investigate Russian meddling; probably because he knew Hillary Clinton was actually in bed with the Russians. That should be incorporated into the discussion.  Foreign interference in our elections was never identified as a significant threat to our country before Donald Trump came on the scene.

What we learned in the course of the nearly two-year investigation was that people associated with Donald Trump misled investigators.  Some like Mike Flynn and Paul Manafort might spend years in prison for their lack of candor.  The important conclusion we should arrive at is Trump and his team didn’t interact with Russia inappropriately.

My personal view is that Mike Flynn was targeted because he was a strong advocate for American security evidenced by his dismissal from the Obama Administration for his criticism of the administration’s incompetence. Flynn was a target of the Obama holdovers in the DOJ and FBI from the time he signed on with Trump.  At that time, there was discussion about how Flynn knew where the bodies were buried in the Obama Administration because of his very high position.  His relationship with Trump represented a threat to exposure of evidence that Obama Administration officials were involved in criminal activities, even up to treason.  It was absolutely a priority to discredit Mike Flynn and hopefully silence him.  Surprise, Surprise, Mike Flynn was snuffed.

The good news now is that we might get to see the evidence they tried mightily to keep in the dark.  After two years of this torture there are indications that the new Attorney General might be shifting the attention of the DOJ over to investigating the real crimes committed going back as far as 2014.

We learned that in the pursuit of Paul Manafort that timeliness of the crime is not important.  He is going to jail for crimes he committed years before Trump ever heard of him.  Members of Congress and TV pundits were clear that allegations of criminal acts warrant investigation and if there is actual evidence, prosecution should follow.  Prosecutors squeezed Manafort mightily and they came up with old crimes that would ruin his life moving forward, but they didn’t get a thing implicating Trump in anything dirty.

The lesson is that allegations of crimes by government officials regardless of their timeline or intent are worthy of investigation and if there is evidence of crimes then prosecution is required.  Paul Manafort will most likely spend the remainder of his life in prison for minor crimes so I don’t think it’s improper to demand that every one of the folks at the Department of Justice and FBI who conspired to take down a President (regardless of their suspicions about Trump) are pursued and prosecuted to the fullest extent of the law.

We cannot sweep this under a rug and hope it goes away.  Crimes against our country demand investigation.  Covering up crimes against our country demand investigation.  Conspiring to undermine an election demand investigation.  Destroying evidence of Espionage and National Security crimes demand investigation.  Obstructing justice by anyone in the government or by anyone in a political campaign to prevent exposure of criminal acts by others demands investigation.

The model for the Department of Justice moving forward needs to reflect the aggression and zeal of the Trump-Russia Special Counsel investigation.  We are entitled to justice but more importantly, we need justice to restore the integrity of our institutions.

Attorney General Barr needs to get on with the process.  The time clock is running.  A Presidential election could squelch an ongoing investigation in 2020.  Start with the evidence we all are aware of and work your way up.  Shake the tree.  If you can squeeze lower level rats to sing, we can work our way to the divas at the top of the pyramid.  Let the evidence lead us to the criminals.

March 9, 2019

Climate Change Guilt Trip

by Steve Dana

It’s hard to comment about things related to climate change these days because some people de-compensate at the mention.  Having said that, I am willing to spin a few minds into a tizzy.

Let me say from the beginning that I am not a climatologist or a meteorologist, but I did stay at a Holiday Inn Express the other night.

Here’s what I think I know.  The weather is changing all the time.  Climate is a reflection of weather changes over time.  Climate is changing all the time.

We are growing grapes in the state of Washington where we couldn’t fifty years ago.  Climate changes in California are affecting the crops they can grow today that were staples fifty years ago.  Over that time, farmers have adapted their practices to take into consideration the changes.

For me and most other people, I don’t understand what all the fuss is about.  Al Gore is like Chicken Little warning us that the sky will fall.  Our own Jay Inslee characterized his Presidential campaign as a “War against Climate Change”.  As far as I can tell, the people he intends to wage war against are you and me.

From a scientific perspective the climatologists study the evolving climate, but they don’t ever suggest we can manage it.  The current craze is to reduce Green House gases and the movement is to identify those man-made sources of Green House gases and slash them.

The thing I don’t hear from reputable scientists is that efforts in the US will have a measurable impact on the problem.

The countries producing the most pollution contributing to the problem have no intention to slash production of Green House gases if the cost of doing so trashes their economy.  China and India are by far the largest populations on the planet and they produce the most pollution.  Unless we can twist their arm to get them to play ball, we accomplish nothing by trashing our own economy.

I’m not suggesting that we don’t undertake an effort to reduce environmental impacts that contribute to climate change, but we must keep in mind that everything comes with a cost.  For the Al Gores and the Jay Inslees of the world, they don’t mind that you bear the burden of a Climate Change War even knowing up front there will be no victory.

The thing that pushes their zealotry is guilt for America’s past abuses.  American excesses over the past sixty years coming from a very successful economy create an appearance to the rest of the world that Americans are selfish squanderers of the world’s resources.  Creating a Climate Change movement focusing on American behavior only, contributes nothing to measurable change in the climate but a catastrophic impact to the American economy.

When Obama talked about fundamental change to America, this is the tool that will make it happen.  Inslee’s war will be a war of ideas to convince us that we are bad people who should be ashamed of our success and as a result we should beat our selves to death for penance.

If the environment on the planet changes, our best strategy is to be adaptive.  If we have huge population centers located on low elevation seacoast areas subject to flooding if the oceans rise, then maybe we should be talking about moving to higher ground. Just look at New Orleans if you think you can hold back the sea.  That city is sinking and the government is spending a fortune to prevent the relentless flood.  Move away from the low land, quit building homes in flood prone areas, quit putting people’s lives in danger by allowing residences in “future flood” designated areas.

We’ve learned that mankind is fairly insignificant to mother nature.  It is only in our feeble minds that we think we can alter the weather.

I know I always advise my clients to buy property at least fifty feet above sea level.  Who knows, at some time that property might be on the beach.

Adopting modest changes to our behavior at modest prices is probably a good thing, but taxes to change your behavior has nothing to do with the environment and everything to do with power over you.  Think about that.