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« Mother of All Investigations - Another Bush Quip | Main | Inheritance Tax-Responsible Wealth »

January 02, 2006

Comments

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Tim Morrissey

Paul, this post is absolutely brilliant. It should be required reading for every city council member, every city official, and anyone who cares about the city and its future. You have a phenomemal vision....and your skill at analyzing things like IZ to put it into a meaningful perspective is uncanny.

Best for '06.

/tjm

Pete Lansing

Wow, Paul, I guess I better get the heck out of here before, as you said, this happens:

"housing cost will rise as shortages worsen" while somehow "the value of real estate in Madison will either decline or languish."

I found it interesting that, in your account, everything started to go to hell right around the time a certain mayor left office. Hmm. Curious. Is this that certain mayor who needs to bash and distance himself from his liberal town to achieve higher office?...

All in all, I'd say: weak. Especially since the only two things you teamed with IZ to achieve this disasterous effect are 1) a smoking ban that is more and more the worldwide standard and 2) a minimum wage law that was quickly preempted by the state and came to no effect here.

Paul

If you look at cities like Milwaukee in the period from 1970-1990 you will see several things happening at once, depending upon the neighborhood.

Overall Milwaukee property values declined significantly relative to the rest of the state. There were areas of Milwaukee, comparable to the city of Madison where homes cost $20,000-30,000 in the 1960's. By 1990 those properties in Madison were in the $100,000 range, in Milwaukee they were in the $15,000-30,000 range.

Commercial property in Milwaukee was not as bad off but it was similar as companies fled to the suburbs.

Meantime, there were areas of Milwaukee, mostly white and upper-income that appreciated because of the shortage of good housing.

In 1970 the total value of all property in Milwaukee was more than three times the value of all property in Madison. By the mid-1990's the total value of all property in Milwaukee was less than twice the value of all property in Madison (And none of this includes the state owned property in Madison).

Pete, I am sorry you miss the point. It is not just the specifics of IZ, or smoking bans, or minimum wages ordinances. It is the cumulative effect of isolating Madison economically from the rest of Dane County. Repeal is not the issue.

Rather than getting personal with me, why not address the issue: the long term effect of this is to create disinvestment in Madison. This does not happen overnight. It will take awhile, but unless there is some change, it will happen-fewer people paying bigger bills for less service.

Pete Lansing

I don't know, Paul. Maybe I am missing your point. Because I don't see how an affordable housing law that guides residential development has a lot of bearing on whether major employers want their plants and offices here. If anything, if the law were effective, it seems as if it would be a draw for "investment."

And I don't see how Madison's left is going to effect the same change on their city that the decline in U.S. manufacturing had in Milwaukee. Are they really that powerful? To me, it seems like the city's leadership is more moderate than it's been in quite a long time.

From my point of view, the real lesson in IZ is for the city to toughen up and keep its end of the bargain. That is: give developers who are trying to comply with the law some real incentives in terms of density and height allowances. That's where the city seems to be failing -- they aren't willing to build affordable housing if it draws any objections from neighborhood associations.

By the way, to get personal again on you Paul, I really like your blog. This last post just seemed off and nasty. And it continued your habit of sounding like someone who just got his hands on an Econ 101 textbook, with all your talk of understanding what an "externality" is. What's next? "The left just doesn't understand the concept of a Sunk Cost!"

Ben Brothers

Is Madison in fact economically isolated from the rest of Dane County? I'd like to see some statistics to support the claim. The surrounding towns and cities don't seem to be engaging in a race to the bottom, at least in terms of tax rates. Maybe things are negotiated differently with large companies and developers on an individual level, in order to attract them to small towns, but the situation seems better in Dane County than almost anywhere else.

The 2004 property tax rates for Dane County show Madison to be firmly in the middle of the pack ($22.25), and substanially lower than near neighbors like Fitchburg ($30.12) and Verona ($23.73). [*]

It also seems to me that a business which already has a smoke-free building, and provides sick-leave and health care to its employees, will gain a competitive advantage over its competition when and if those competitors are forced to offer those benefits as well. I don't see them complaining per your paraphrased anecdote. The case is different with respect to local non-Madison competition, and certainly rules and regulations need to be made prudently and with some forethought, but the particular danger from such laws as the smoking ban is overstated.

I think your Doomsday scenario, while obviously something for local government to be aware of and look out for, is not justified by the facts on the ground today.

[*] - http://www.madison.com/features/bob/pdf/bob031.pdf

Madison voter

THIS is why I didn't vote for you in 2003, and will never, ever vote for you again. You are every young progressive's worst nightmare: That we'll grow up into an old, cranky Republican with a bad moustache and worse logic.

anonymous

You may be wrong on this one, but don't let them give you shit about that fantastic cookie duster!!!!!(!!!!)

Stu Levitan

Paul
Are you available to discuss this on citychannel 12's Access:City Hall on January 25 at 7-8pm? You and Brenda would make a fine hour of public affairs broadcasting. Lemme know. Stu

Rudy McCormick

I just don't understand how so many people can miss the entire point of your article. Great insight.

It would seem to me that business, large business, are using the system to get what they want, and the city government doesn't have the ability to say "NO".

If the business that grows a city ( through the creation of the middle class within) does not have the desire, ability, and INTENT of helping the community grow properly. They should leave our area and go screw up someone else's town.

Scott Norton

Paul, I could not argree with you more, however Madison has a long way to go before doomsday arrives, but they have set into motion a set of circumstances where the laws of unintended consequences could create a bad situation in the future. Paul, I now live in Fitchburg and I am on City Council. I see Fitchburg making some of the same poor decisions on planning and policy making that Madison has made. I plan to come to hear you speak in Fitchburg, but I wonder if you would have time to get together with me and give me some of your thoughts on the challenges Fitchburg is facing?

Carl Wogsland

Paul,
Many good points even though I don't see the so called 'Doomsday senario' taking place. My view comes from someone who is in the lower economic strata and has looked at the ordinance from a possible property purchasers side. The rules, restrictions and limits on equity return make this law helpful to only the most financially challenged buyers who would have no hope of ever qualifying to purchase anything new or in good condition. I cannot justify investing my money for the gain of the city, when I would still have substantial restrictions to deal with in trying to live and improve that property. The 'equity timetable' may be the most frightening part of the ordinance. I am in disbelief that a single alder voted for a rule that has the city telling someone when they should move from the IZ property or else the equity the receive back from that property will be reduced? How can any potential homeowner know the situation that they will be in five, ten or more years in the future? What if that homeowner decides to try to sell at the 11 equity return peak, but they happen to be in a neighborhood that is undergoing construction due to city projects? Since I live in the Union Corners neighborhood now I know that the next several years will be difficult to deal with the variety of construction and traffic problems here.
One facet of the IZ issue I do not know about is what about developers who wish to undertake projects of modest sized and priced housing which would entirely be within the purchasing ability of those who qualify to be an IZ property purchaser. Will 15% of those units still only be available to sold through the IZ program? Will the developers then have to overprice the remaining 85% of the units to ensure their return, or build a false interest in the units that listed as being in the IZ program?
The city council would do better to spend their time making sure the condition of current homes, buildings and neighborhoods as a whole are kept well maintained. Instead, we have projects going that leave a neighborhood like my Union Corners area without a grocery store for 3 years at this point, it will be 7 to 8 years by the time the McGrath project is finished and businesses, like a planned grocery store, are reintroduced to the area. Those of us living in that area without vehicles can only hope that a company will be willing to pay the price the developers will require to get back their investment in the project costs. Not to mention getting something in place a little quicker than the several additional years that the west side waited for some cmpany to commit to serve their neighborhood at the former Ken Kopps site. Now the same Union Corners neighborhhod that will have almost 15 acres of buildings razed will be undergoing a major street renovation at the same time with the E Wash project in the summer of '07.
For all the problems that my neighborhood may endure in the near future, I am hopeful about the final results of the Union Corners project. I will be interested to see how the additional hoops that the McGrath staff will be required to jump through will effect their offerings among the estimated 500 units being put up in this project. I have also looked into the Capital-West project and found nothing in the IZ units that I could live with (if I did decide to use my IZ income qualifying status) and nothing that I could come close to affording that is not an IZ unit.

BTW Paul, congrats to your Sox!
Hurry Spring, this could be the Cubs year!
Stop laughing...

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