International Municipal Lawyers Association - Local Government Blog
The Cause of the Housing Bubble, the Burst and the Recession Finally Revealed: It’s Growth Management
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Posted By: Dwight Merriam, Partner, Robinson & Cole, LLP
Those of us whose professional lives are inextricably linked to the real estate development economy in one way or another have had plenty of time in the last year to twiddle our thumbs and attempt to figure out what the heck happened. This much we know — there was a housing bubble some places, it burst, and the economy collapsed. Have you ever slipped and fell – one those unexpected spectacular aerial feats where your feet fly out from underneath you, you look down your legs and see your toes at eye level pointing to the sky, and you say to yourself “this is really going to hurt when I land”? That’s what this year has been like for many, some of whom are still waiting to hit hard because they had projects in the pipeline and they are grinding their way through “inventory” of unfinished work. Plus, we started from a high plateau. Wall Street types call the unexpected but apparent life in the market during the first part of a recession “dead cat bounce” which Forbes defines as “a temporary recovery from a prolonged decline or bear market, after which the market continues to fall.” Even a dead cat dropped from a very high place will bounce a little when it hits the ground…
I have been reading all I can on what happened (to see me so engaged makes my law partners think I have work), though it’s uncomfortable at times as it feels a little like getting to know someone really well by reading their obituary. The experts tell us that the housing bubble was caused by several factors.
1. Too much home ownership. Think of your local affordable housing programs. Most produce housing for ownership. Homeownership has increased from 64% in 1994 to 69.2% in 2004, an all time high. It’s a chicken-and-egg thing. Maybe the high level of ownership is driven by the easy credit, but it could be the other way around. Compare our ownership with other countries. In Switzerland 34.6% own, Germany 43%, France 55%, Austria 56%. For the first time in a half century, home ownership in Great Britain declined in 2007. Too many people with too little money own too many homes. It’s cheaper to rent and some people who own homes should not have been enticed to buy them.
2. Buying for speculation rather than shelter. A study by the National Association of Realtors a few years ago found that 23% of homebuyers specifically identified their purchases as investments. Another 13% said they bought vacation properties, real estate which inherently has a speculative component. Think of all the house flippers you have had to listen to at parties, bending your ear about how they bought with a low interest adjustable rate mortgage so their carrying costs would be low, tidied up the place, and sold it for some big profit? California (of course, it’s always California) has a licensed real estate agent for every 52 people. Compare that with say, veterinarians. California has the 8th highest per capita ratio of veterinarians, yet they have just one for every 5617 people – in short you’re more than a hundred times more likely to encounter a real estate broker than veterinarian in California.
3. Low interest rates. The plain fact is that money has been and is cheap. Cheap money was brought to us in the first instance by the dot.com crash in 2000 and the Federal Reserve cutting its short-term rates to the lowest ever, down to 1% from 6.5%, to overcome the 2000-2001 recession.
4. Residential real estate as a safe harbor. So, after NASDAQ dropped some 70% when the dot.com bubble burst, people took what money they had left and put it in residential real estate, figuring that had to be safe. That drove up the price of housing, as did the easy credit, over-emphasis on ownership, and herding instinct encouraged by the media touting investment in residential real estate.
5. Bad lending practices. This we have all heard enough about that to accept it as a principal cause for the bubble and its bursting. Now, however, many foreclosures are of good loans, ones with relatively low loan-to-value ratios, and fully-amortizing at fixed rates. The problem has become that the bursting bubble has wiped out jobs which has eliminated income which has led to defaults – all in a cascading effect.
So, that’s my take on what happened, but along comes Randal O’Toole, a Senior Fellow of the Cato Institute, which might be fairly described (not by themselves) as a libertarian think tank in Washington, DC. O’Toole is a burr under the saddle of planning. In 1996 he wrote The Vanishing Automobile and Other Urban Myths which lambasted New Urbanism and Smart Growth. In 2007 he published The Best-Laid Plans: How Government Planning Harms Your Quality of Life, Your Pocketbook, and Your Future which the advertising says “reveals how government attempts to do long-range, comprehensive planning inevitably do more harm than good by choking American cities with congestion, making housing markets more unaffordable, and sending the cost of government infrastructure skyrocketing.”
Here he is pitcured on one of the sites with his biography. You can get information here also.
Planning magazine, published by the American Planning Association, is quoted on the Cato website as saying “O’Toole today looks a lot like Jane Jacobs did in 1961. They’re both outsiders with a detailed grass-roots view of how planners—with the best of intentions—are following a fashion into disaster.”
You got the picture. I don’t agree with him for the most part, but he’s a good writer, a good speaker, and he is thought provoking. Planning needs to be challenged if nothing more than to ferret out the mistakes, the weaknesses, the false assumptions, and thus make it better. His latest burr, an especially prickly one, is an October 1, 2009 report for Cato entitled “How Urban Planners Caused the Housing Bubble.”
He asks why California and Florida are ground zero for burst bubbles and Georgia and Texas escape largely undamaged. The answer, he says, is simple – the former two states have growth management, the latter two don’t, and growth management constrains supply, driving up prices. When the bubble gets big, it bursts.
The solution? He says “…states and urban areas with growth management laws and plans should repeal those laws and dismantle the programs that made housing expensive in the first place.” No bubble, no burst, no recession.
Ask yourself what metropolitan area has the absolutely toughest growth management system? You will likely answer: Portland, Oregon. I went to the latest Case Shiller index for year-over-year prices and see that Portland with a highly constrained market is down 14.4%. Atlanta, essentially a free-fire zone when it comes to development, is down 15.3%. And Detroit, it’s a complete tragedy, is down 23.6%, barely beaten by Miami at 29.5%. Google “Detroit growth management” and the first hit is the Detroit Economic Growth Management Corporation. Its job is to promote growth.
We must remember that the big bubble, big loss markets are for the most part ones that had enormous increases in value, so the bursting brings them back to the ground (no Balloon Boy hoax here). Detroit is quite different as it never enjoyed the up swing and its devastation is almost entirely to be attributed to the loss of jobs. It really is about employment now. Augusta, Maine, with steady employment from the state capital, has had no bubble and no burst.
Growth management may be part of the problem in some markets, but the true cause of the housing bubble is far more complex than that.
Big Wind In Kansas Begets Another Battle
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Posted By: Dwight Merriam, Partner, Robinson & Cole, LLP
My favorite movie is The Wizard of Oz, so I couldn’t help but notice the decision of the Kansas Supreme Court yesterday on a wind energy issue in Wabaunsee County. Zimmerman v Wabaunsee County.
Wabaunsee County is in the eastern part of the state 30 miles west of Topeka. In 2008 it had 6,922 people in an area of 791 square miles. The county lies within the Flint Hills, a six million acre grassland ecoregion of hills largely of limestone and shale. Here is the Flint Hills area in Kansas. “WB” is Wabaunsee County.
The Flint Hills extend into Oklahoma where they are known as the Osage Hills.
The soil is no good for growing crops, so ranching has predominated. Today, the largely native Flint Hills Tallgrass Prairie, most of it unplowed, is one of the last intact preserves of the ecosystem which once was characteristic of the Midwest just east of the Great Plains. There’s a Tallgrass Prairies National Preserve in the Flint Hills.
The Flint Hills not only has plenty of steady wind, but it also has a good infrastructure of transmission lines – thus, the interest in commercial wind power.
J.W. Prairie Windpower, the Lawrence subsidiary of a German company, proposed a wind farm. What followed were 54 public hearings with the majority of the people attending opposing the project because it would adversely affect the views. The County adopted these changes to its ordinance:
207. Wind Energy Conversion System (WECS). The combination of mechanical and structural elements used to produce electricity by converting the kinetic energy of wind to electrical energy. Wind Energy Conversion systems consist of the turbine apparatus and any buildings, roads, interconnect facilities, measurement devices, transmission lines, support structures and other related improvements necessary for the generation of electric power from wind.
208. Commercial Wind Energy Conversion System: A Wind Energy Conversion System exceeding 100 kilowatt or exceeding 120 feet in height above grade, or more than one Wind Energy Conversion System of any size proposed and/or constructed by the same person or group of persons on the same or adjoining parcels or as a unified or single generating system. (Commercial Wind Energy Conversion Systems are specifically prohibited as a use in Wabaunsee County.)
210. Small Wind Energy Conversion System. A wind energy conversion system consisting of wind turbine, a tower, and associated control or conversion electronics, which has a rated capacity of not more than 100 kilowatt, which is less than 120 feet in height and which is intended solely to reduce on-site consumption of purchased utility power.
30. Commercial Wind Energy Conversion Systems are not a use that may be approved or permitted as a Conditional Use in Wabaunsee County and are specifically prohibited.
The resolution in support of the amendments explained the rationale for the changes prohibiting commercial wind power anywhere in the county:
The basis of the amendments to the Zoning Regulation is that Commercial Wind Energy Conversion Systems would not be in the best interests of the general welfare of the County as a whole. They do not conform to the intent and purpose of the Zoning Regulations. In light of the historical, existing and anticipated land uses in the County, they would adversely affect the County as a whole. They would be incompatible with the rural, agricultural, and scenic character of the County. They would not conform to the Wabaunsee County Comprehensive Plan, including the goals and objectives that were identified by the citizens of the County and incorporated as part of the Plan. They would be detrimental to property values and opportunities for agricultural and nature based tourism. Each reason stands on its own. This motion is based upon what has been presented at public hearings, public meetings, letters and documents that have been produced, as well as experience and personal knowledge of the issues involved.
The Kansas Supreme Court, in a unanimous decision which may be the first in the country to allow a local government to completely ban commercial wind power, upheld the ordinance prohibiting the wind farm construction on aesthetic grounds, finding it reasonable based on related objectives of protecting ecology, flora and fauna of the Flint Hills.
Here is the Kansas Judicial Branch report of October 30 on the decision.
Justice Lawton R. Nuss, writing for the court, noted that the Wabaunsee County Commission had identified these adverse effects of commercial wind farms:
The Flint Hills of Kansas, of which Wabaunsee County is a part, contain the vast majority of the remaining Tallgrass Prairie, which once covered much of the central United States and which is considered one of the most endangered ecosystems in North America.
Wind farms could have a detrimental effect on the ecology of the area, affecting prairie chicken habitat, breeding grounds, nesting areas, feeding areas and flight patterns.
Wind farms would not be in the best interest of the general welfare of the county as a whole based on aesthetics, size and scope of the complexes needed for them and their placement on the ridge lines of the county, which make them “objectionable and unsightly.”
Wind farms would be detrimental to property values and opportunities for agricultural and nature based tourism. The Flint Hills are unique in their ecology, heritage, and beauty.
The court found the ordinance reasonable when it assessed the totality of these permissible governmental objectives, the will of the people, and the wind farms’ lack of conformity with the county’s Comprehensive Plan.
The court left open the question of whether the prohibition might be a taking. The County Board has argued the “whole parcel” rule – the Board thinks the owners of the wind rights should not be able to segment the wind rights from all of the other rights when they determine the impact on value. If you are not familiar with the law of the relevant parcel, you may wish to read this article I wrote a few years ago: Rules for the Relevant Parce (double page version).
There is also a Commerce Clause claim still outstanding because the ordinance only allows wind power systems “to reduce on-site consumption of purchased utility power,” essentially limiting them to personal use rather than production and sale of power to others. Briefs are due on both issues December 11 and oral argument will be on January 27.
Don’t Bogart that Joint My Friend
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Posted By: Dwight Merriam, Partner, Robinson & Cole, LLP
Lyrics: Lawrence Wagner
Music: Elliot Ingber
(on the soundtrack of “Easy Rider”)
Chorus
Don’t bogart that joint my friend
Pass it over to me
Don’t bogart that joint my friend
Pass it over to me
Roll another one
Just like the other one
You’ve been holding on to it
And I sure will like a hit
[chorus]
Roll another one
Just like the other one
That one’s burned to the end
Come on and be a real friend
[chorus]
Marijuana is prescribed for certain medical conditions, such as pain relief, control of nausea and vomiting, and appetite stimulation. Since 1996, at least 13 states have legalized the sale of medical marijuana.
Now, check your zoning regulations and see what districts allow this land use: “Retail Sales – Medical Marijuana.” Couldn’t find it, right?
I first saw mention of this issue in Longmont, Colorado. It’s legal there and buyers now don’t have to drive into Boulder to get their meds. Here’s a local proprietor with product to be prepared for sale. One of his newest patients has had 14 knee surgeries and needs the pain relief.
Larry Hill — owner of the The Apothecary, 1314 Coffman St. — displays a medical marijuana plant Thursday that he has grown and harvested. Hill said he opened his medical marijuana dispensary in February and has “over 50 patients.” Lewis Geyer/Times-Call
When I started searching for other communities facing the issue of local zoning for medical marijuana sales, it was obvious there is a widespread debate. Interestingly, Colorado and California, two of the 13 states allowing the sale, have most of the news stories. Do you suppose their residents in those two states have special needs for pain relief, control of nausea and vomiting, and appetite stimulation?
Aspen, Colorado allows sale anywhere an office is permitted, says the city’s planning director.
It’s being debated in Brush, Colorado, where there has been discussion (click here and here) about distancing requirements which would put the dispensaries on the same footing as liquor stores and sexually oriented business, hardly the medical treatment model.
San Diego, California, has created a task force on the subject, but police are reportedly raiding dispensaries, guns drawn, bursting in using battering rams.
Charles Ziegenfelder, owner of PB 420 Cheech & Chong Headquarters, poses for a portrait just minutes before being informed that raids are being conducted at dispensaries in the area. Photo: Sam Hodgson. Courtesy www.voiceofsandiego.org
And, yes, there is even case law on the subject, from California, of course, where the Court of Appeal, Second Appellate District held that Claremont did not have to zone for the use and that the city could declare the dispensing to be a nuisance, at least where it appears the use is not permitted. Go here for the actual decision.
For a good model zoning ordinance on “Medical Marijuana Dispensaries”, where else better to go than Berkeley, California?
Local Governments, Cell Phones, and Health
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Posted By: Joseph Van Eaton, Matthew Schettenhelm and James Hobson
Do cell phones cause brain tumors or other health risks? At a September 14, 2009 hearing before a subcommittee of the U.S. Senate Committee on Appropriations, leading researchers testified that more research is needed before we definitively have an answer. This renewed attention to the health risks associated with cell phones and towers may mean that local governments, which regulate cell tower siting, may face an increasing number of questions from concerned citizens about the risks of radiofrequency emissions. Local government attorneys should be aware of both the limits upon their authority and the opportunities for local action in this area.
The Health Issues
The evidence of a link between cell phones and adverse health effects has been described as contradictory. Unlike x-rays or other forms of radiation that have been shown to cause harm, cell phones operate in frequencies that produce non-ionizing radiation, which does not independently mutate cells. As a result, many have argued that cell phones do not pose a health risk, and that the current evidence of a link between cellphones and cancer is weak or nonexistent. CTIA, the cell phone trade association, maintains that the “scientific evidence to date does not demonstrate any adverse health effects associated with the use of wireless phones.” This is consistent with the current views of the American Cancer Society, the FCC, and the FDA.
Others cite contrary findings, however, which do suggest reason for concern. For example, researchers have found that people who use cell phones for more than 10 years are more likely to get tumors on the side of the head on which they usually hold their phone; that exposure to such frequencies causes the blood brain barrier to be breached; and that DNA in rats is damaged by exposure to very low levels of cellular radiation. Some also contend that, just as early data failed to show a link between cancer and other harmful radiation, it may be too early to see a definitive link between cell phones and health risks. While these findings and views are now subject to vigorous debate, most do agree that additional research is needed with respect to long-term exposure and the effects on children, who appear to be more susceptible to potential harms. Thus, the placement of wireless antennas at or near schools, and the increasing use by young people of cell phones or other sources of non-ionizing radiation, has come under particular scrutiny by citizens and their elected officials. Several local government actions are noted below.
FCC Regulation
Acting through the National Environmental Policy Act (“NEPA”), the FCC currently regulates non-ionizing radiation from broadcast, cellphone, and other wireless transmitters, including cell phone towers, pursuant to 47 C.F.R. § 1.1310 and 47 C.F.R. § 1.1310. The FCC also regulates the Specific Absorption Rate (“SAR”) for individual cell phones. The SAR is a measure of the rate at which energy is absorbed by the body when exposed to a radio frequency electromagnetic field pursuant to 47 C.F.R. § 2.1093.
The FCC’s current rules for cell phones date from 1996, and are founded on scientific knowledge of the 1980s and 1990s. The rules are based on avoiding “thermal” harm – that is, overheating of the human body by direct exposure to radiation from antennas or from a wireless receiver itself, such as a cell phone. Under the current standard, before any cell phone is released on the market, it is tested to confirm that its maximum SAR level does not exceed 1.6 W/kg.
In 2003, the EMR Network urged the FCC to reconsider its antenna radiation and SAR standards, arguing that it is dated and fails to consider the potential health risks of non-thermal effects or long-term exposure. The FCC refused to revisit the issue. The FCC maintained that in adopting its regulation, the agency has relied on both standards produced by IEEE and ANSI, and on agencies such as the EPA and the FDA that have primary expertise and responsibility for ensuring health and safety. The FCC said it would reconsider its regulation in the event such agencies or other expert sources found reason for concern.
Local Government Role
With respect to cell tower siting, local governments can only consider the potential health effects of radiofrequency emissions within the limits of the Communications Act. Section 332(c)(7)(B)(iv) of the Communications Act provides that no local government may regulate siting based on the effects of radiofrequency emissions if the facility complies with the FCC’s regulations on the issue. Accordingly, local governments that deny a siting request based on health concerns beyond the FCC ’s regulations may find their decisions overturned by the courts.
However, while local government’s role in regulating radiofrequency emissions is limited, local entities can bring pressure to bear on Congress and on the FCC to address the health concerns. Some local entities – including Los Angeles County, California; the Los Angeles City School District; Glendale, California; Sebastopol, California; and Pima County, Arizona – have responded to local concerns by calling on Congress to revise Section 332(c)(7)(B)(iv) to allow local jurisdictions to more broadly consider the health effects of cell tower placement in their community. In May 2009, the City of Portland adopted a resolution calling for the FCC to work with the FDA and other relevant federal agencies to revisit and update studies on potential health concerns arising from RF wireless emissions.
Local governments can also educate citizens in this area. Those concerned about the potential adverse effects of cell phones often cite the precautionary principle. They maintain that even if we lack scientific proof of a link between cell phones and adverse health effects, we should take low-cost measures in order to avoid even the possibility of very costly future outcomes. Local governments officials can encourage such low-cost measures. They can urge cell phone users to take very basic steps, such as using a head-set or speaker, that will greatly reduce any potential risk. Local governments can also encourage users to check the SAR level of their cell phone at a site provided by the Environmental Working Group, or by inserting their cellphone’s FCC ID # at the FCC’s webpage.
Conclusions
Local counsel for communities should recognize:
- This is a hot issue, and it may become hotter.
- Citizens may want to raise the issue in hearings on particular applications to site cell phone towers. But beyond ensuring compliance with FCC rules, local governments should not allow radio frequency and health issues to become, or even to appear to become, the driving force behind zoning decisions. There are often legitimate reasons for denying a request for permission to construct a cell tower, and decision-makers must focus on those grounds, or risk having a decision overturned.
- A local government can respond to community concerns without putting its zoning decisions at risk. Local governments can both urge Congress to grant it further authority in this area, and call upon the FCC and other agencies to revisit regulations with respect to cell phones radiation.
The Eleventh Commandment: “Thou Shalt Not Violate the Establishment Clause”
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Posted By: Dwight Merriam, Partner, Robinson & Cole, LLP
So sayeth the Tenth Circuit in Green v. Haskell County Board of Commissioners on June 8, 2009, followed on July 30th by the court en banc voting 6 to 6 to deny a rehearing. Close only counts in horseshoes and hand grenades.
In reading the dissent to the en banc decision, you will see the frustration and angst among both local officials and the jurists as to where to draw the line.
The board of commissioners of Haskell County, Oklahoma, authorized a Ten Commandments monument, eight feet tall, in front of the county’s courthouse in Stigler. Here it is up close:
Courtesy www.huddlestonlawoffices.com
And here it is in context:
Courtesy www.spiritual-politics.org
Here is the layout of the front lawn (Appendix C, page 51 of the decision):
As you may recall, the U.S. Supreme Court decided two Decalogue cases in 2005, allowing the monument in one, Van Orden v. Perry, and finding an Establishment Clause violation in the other, McCreary County v. ACLU of Kentucky. The difference appears to be that the former had been up for many years and did not have any apparent history of being placed in support of religion.
The Haskell County monument, emplaced on November 5, 2004, was up just a year before it was challenged and the there was ample evidence that many supporters wanted it there for religious purposes. It was sponsored by Michael Bush, a construction worker and part-time minister who helped raise the money for it from local churches. Two of the three county commissioners, and several ministers, attended the unveiling of the monument (along with 200 people and representatives of 17 churches) and participated in a rally afterwards.
In speaking of the monument sometime in November 2004, one county commissioner reportedly said:
“That’s what we’re trying to live by, that right there…The good Lord died for me. I can stand for him, and I’m going to…I’m a Christian and believe in this. I think it’s a benefit to the community.”
Another county commissioner said:
“God died for me and you, and I’m going to stand up for him.”
At a rally two weeks later attended by 300-400 people, one commissioner said:
“I’ll stand up in front of that monument and if you bring a bulldozer up here you’ll have to push me down with it.”
At least one photograph in the press showed all three commissioners standing next to the monument.
The commissioners failed to distinguish their personal religious beliefs from that of the Board and consequently “left the impression that a principal or primary reason for the erection and maintenance of the display was religious.”
The Alliance Defense Fund plans to petition for certiorari in the U.S. Supreme Court.
“Americans shouldn’t be forced to abandon their religious heritage simply to appease someone’s political agenda,” said ADF Senior Counsel Kevin Theriot. “As some of the dissenting judges pointed out, the three-judge panel’s decision is in conflict with both the U.S. Supreme Court and other federal appellate courts. There is no difference between this Ten Commandments display and the one at the Texas state capitol that was upheld by the U.S. Supreme Court nearly five years ago.”
Here is a checklist I have prepared, based on my review of the several cases, for local government lawyers to use in managing the placement of religious monuments on public property:
1. Put up several monuments at once, including totally secular ones, like the Star Wars Pledge of Allegiance:
Star Wars Pledge of Allegiance
By Miba Reywes
I pledge allegiance to George Lucas,
the master of all that is Star Wars,
and to the movies he has created,
one galaxy, in war,
OT and PT, with Jedi
and blasters for all.
http://www.starwarsdotcom.com/fans/fanfiction/miba003.html.
In Haskell County, the minister who sponsored the display added the Mayflower Compact on the back apparently to somehow neutralize the religious content of the display. Really, he did that. The Board didn’t know about it.
2. Have the commissioners who vote to approve the monument say things like: “So what are the Ten Commandments – I never heard of ‘em.” And “Ten? I thought there were two – drink beer and party.”
3. After the vote to authorize the monument, have a couple of commissioners say something showing that they didn’t really know what they were voting on, like: “Decalogue? I thought we were building a ‘deck of logs’ in the park.” In that way you totally insulate the commissioners from any religious intent.
4. Have Larry Flynt sponsor the monument. He’s got a kind of religion, yes, but not usually associated with this type of display.
5. Have all the ministers and other religious types stay away from the unveiling.
6. On further thought, don’t have an unveiling – have it erected on some moonless night behind the densest bush you have and a few weeks later approve a new landscape plan that eliminates the bush.
7. Glue moss to the side in the shadows and prominently engrave on the bottom of any display: “Erected anonymously and without public support on November 14, 1957”.
Tags: aclu, amendment, clause, commandments, commissioners, county, Dwight, establishment, first, green, haskell, mccreary county, Merriam, monument, perry, ten, van orden
