Archive

Taxation vs. the Economy

Published
by
kevin
on August 29, 2008
in Government and Salinas
. 0 Comments

This week, both proponents and opponents anxiously awaited the results of Measure W, Salinas Valley Memorial Hospital’s $400 million bond effort. Much to the hospital’s dismay, the effort failed. The real news story here however, is not that the measure failed, it is that its’ failure was not unique. That same night, three hours east of Salinas in a small town named Oakdale, Oak Valley Hospital awaited the voters’ decision on their bond effort and received the same results.

District Hospitals all over the state are rushing to meet state seismic requirements by 2013 and in their quest to raise taxes in order to meet a legislative mandate, they are bumping up against what I like to call the Bond Ceiling. Looking across the state it appears as though somewhere in the last two years voters have lost their tolerance for self-taxation and managed to erect a ceiling that nary a public agency has yet to break through. Tough economic times are upon us all, our houses are worth less, our cars and groceries cost more and our jobs are not keeping up with the cost of living. The excesses of the late 90’s and early 2000’s have caught up with the energy industry, the banking industry, Wall Street and now the average American. Unlike its’ big corporate brothers, the average American, with less than $1000 in savings, is unable to pull out of the rut very quickly. Alas, the only thing the average person can control is the measure to which he or she will tax themselves.

So here is my question: is the post Prop 13 California, coupled with an economic downturn, a place where no bond can be passed for the foreseeable future? If so, what are special districts and municipalities to do? While I don’t think there is one right answer to this question, a possible answer might be: nothing. Well, maybe not nothing, but very little…let me explain.

Financial experts will tell you if you don’t have money, don’t spend money. As such, in lean economic times certain projects should be put off until a person has more disposable income. For example, in lean times when the kitchen sink breaks, you pay to fix the sink. When your house was worth 30% more and your sink broke, you may consider taking the opportunity to remodel the kitchen. The average person can appreciate the distinction between a necessary repair and a job that can wait.

It appears that local governments have entered into very lean times, along with the rest of the country. The voters are saying they won’t tolerate big projects and big spending by government because they themselves aren’t spending. Yes, this means deferring some projects that would be really nice to have done, like the building of better roads and new schools. But if government is of the people and for the people, shouldn’t it be like the people? Eventually, the economy will progress and people will begin to shout for better streets and bigger schools, and as such, maybe they will then be willing to pay for it.

Welcome to the NEW MCAR Blog & Forum!

Published
by
kevin
on August 18, 2008
in Uncategorized
. 0 Comments

Welcome to the new MCAR Blog & Forum! The goal of this new informational site will be to engage the real estate industry and public on the ongoing challenges and successes of this dynamic industry. We encourage you to take the time to register and comment on the various articles and editorials that will be posted throughout the week.

This site will remain a work in progress as we solicit your input and feedback as to it’s usability and functionality. A “Members Only” section is soon to follow, providing a vehicle for feedback on advocacy efforts, membership and real estate issues. As an MCAR member, you will have the opportunity to engage your collegues and MCAR staff on current market dynamics, challenges and successes in an enviornment exclusive only to MCAR members.

We look forward to hearing from you, enjoy!

Kevin

The Incentivised Approach

Published
by
kevin
on July 23, 2008
in City of Monterey, Government and Green
. 0 Comments

California is changing. Californian’s typically take the role nationally of being the facilitators of change. Whether its race, religion, sexual orientation, politics or the environment, California typically leads the way - for better or for worse. Unfortunately, as we continue to evolve, governments have begun adopting onerous policies or mandates in an effort to achieve desired results and achievements without fully vetting the long term cost or impacts of the adopted policies. The lack of thorough analysis and forethought of consequences has left many of us confounded. There appear to be workable solutions readily available and awaiting implementation without the need for additional bureaucracy.

So, what’s the solution? Cities are driving agendas that demand a change in the way business, real estate and development are done within their boundaries. It is imperative that we engage ourselves in this process and provide the essential data and analysis needed for proper decision making and if necessary, policy change. But unfortunately this isn’t always enough. How do we adequately address local government concerns while maintaining proper boundaries in regards to our interests?

Providing incentives as a primary tool to facilitate change seems like a straightforward concept. It’s simple in its implementation and does not restrict or impose detrimental policy changes. In most instances, it actually provides a more efficient vehicle for delivery of the proposed solution. By incorporating incentives, you provide for the opportunity of voluntary gifting of the desired service. At the very core of this approach lies the true key to its success. It’s simply human nature to work progressively towards a goal when there is a benefit in achieving it. On the other hand, mandates for performance are generic and when doled out they usually elicit the minimum output. The private business sector exceeds in the areas of creativity and service delivery. So why not let business do what it does best? Providing incentives is the way to achieve success. We all want projects that will benefit our communities and this certainly seems like a better use of resources than a set of mandates that only half helps everyone.

The city of Monterey recently adopted a new set of Green Building Regulations. All new construction and remodels, both commercial and residential will be subject to either the Leadership in Energy and Environmental Design (LEED for commercial) or the Build It Green (BIG for residential) standards with subsequent adherence to an adopted green point rating system. The new regulations will be phased in over a year with the first year being voluntary, incentivising adherence to the new policy with such things as: expedited permitting, flexibility in setbacks and receiving priority inspections. The incentives approach certainly makes the new level of reg’s somewhat more palatable, but what happens after the year long phase-in sunsets? All projects will require the new green standards and the incentives either disappear or lose their benefit altogether. The imagined panacea now has the potential to negatively impact the overall intent of those who originally conceived and subsequently adopted the policy. I’m sure you can imagine the desire of some to circumvent the new requirements only to pursue improvements void of the appropriate permitting process.

This is certainly not a judgment on either the LEED’s or Build it Green programs. Both have proven to be beneficial and have delivered levels of success in achieving energy efficiency and environmental benefit. This is however an opportunity to evaluate the level of success prior to the mandatory green building standards taking effect a year from now.

“Green” is the new “Black”

Published
by
kevin
on July 16, 2008
in Green
. 2 Comments

Recently, it seems like every product and company out there is jumping on the “green” bandwagon. With all of the feel-good promotional ads and new green products out there, it can be hard to differentiate between what may be “green plated” and what is truly a sustainable, environmentally - friendly product. Marketers are smart and understand that “green is the new black.” So buyers seeking true environmentally sound products must be smarter.

First off, the expectations of “going green” and the focus of one’s efforts on changing lifestyle behaviors and patterns to accommodate this choice need to be reigned in somewhat. There are very few 100% green products available on the market - contrary to what some may want you to believe. Many products are sustainable in some ways, and not so sustainable in others. Chances are, you’ll need to decide what green attributes are most important to you. Is it recycled? Is it durable? What is its’ carbon footprint all the way down to the production process? These are just some of the choices you have in front of you.

The topic of green building and residential energy efficiency has gone far beyond just the environmental community - becoming not only a relevant issue among mainstream building industry professionals, but an imperative discussion to be had in the real estate business. One of the most common concerns being: the true costs and benefits associated with “going green”.

Many California based builders have stated that the costs associated with green building have traditionally been prohibitive - resulting in expenses 10-20 percent more than that of traditional construction. However, many green advocates claim that the costs are negligible when compared to the value recaptured through water and energy savings, health benefits and environmental impacts.

Roundtable discussions are taking place across the state with Realtors® and industry professionals to strategize and conceptualize a reasonable approach to implementing an incentive based energy efficiency methodology in existing residential communities. While the task is certainly daunting, it is somewhat comforting to know that many energy efficient measures can be undertaken on a meager to modest budget with efficiency returns more than making up for the initial investment made.

One such group, “Step Up to Green”, is made up of local professionals throughout Monterey County. From municipal staff, sustainability professionals, water experts, local business owners and more, the brain trust behind the “Step Up to Green” program is certainly robust. The incentive based platform focuses on what homeowners can do to achieve energy efficiency. The common-sense approach is attainable, and with adequate public support, a viable program producing tangible results could be seen sometime early next year.

The environmental impacts of residency in Monterey County are being studied, evaluated, researched and tested by both industry advocates and environmental policy groups. As the global climate change debate continues - it will be imperative for our industry to be on the front lines of these discussions. A voluntary, pro-active approach on our behalf will undoubtedly serve as a long term benefit in this dynamic endeavor. While residential energy efficiency standards certainly aren’t the requirement today in most areas, it is understood by most that it will be in the near future. Our efforts to lead the way in research and best practices today will certainly help to achieve realistic, achievable, science derived solutions for the future.

Here at MCAR we are taking both the green movement and the interests of our membership seriously. We will continue to engage you all in the process and elicit response and feedback in our continuing “green endeavors’. I look forward to updating you all in the near future.

While the green benefits associated with any given product are certainly noted and appreciated, there are implicit environmental costs directly related to the production of these products and materials that should be taken into consideration when performing a true environmental analysis. I challenge you take a few minutes to do a little research before making up your mind one way or the other on a given green product or energy efficiency strategy.

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