Which public? What purpose?

The New York Times ran an article the other day about access to public lands: It’s Public Land. But the Public Can’t Reach It. Hunters out west in Wyoming are using an app called OnX to locate public lands. The controversy arises when access to the prime hunting acreages is blocked as the parcel is surrounded by private ranches.

This leads to the question of whether something is public if it is beyond their reach. But first, what does it mean to be public land. According to the NYT:

Especially around the fact that public land — by definition owned by all Americans — is not always publicly accessible.

Is it realistic that every park and open space is considered a public amenity to every person on US soil? It doesn’t seem like nearly a precise enough description of what is truly at work.

There are 30 million acres of public land in Montana

The sheer geographic distance can keep a US citizen from enjoying Half Dome in Yosemite or the Reflecting Pool on the Mall in DC, but there are other impediments to obtaining full use of a federal, state or city property. If a gang of pill pushers are dealing at the base of some statue or drunks are sprawled out across every park bench, then the function of the park is transformed. And a more general public is discouraged from entering.

Neighbors can also use local authorities and rules to keep people out as the private ranchers do in the NYT story. The hunters are threatened with a civil lawsuit for having stair-stepped their way onto Elk Mountain. There will be pressure for the use of the land and thus difficult to deter the public from venturing out. As the rancher finds out:

However, he couldn’t keep the public out, for interspersed within his property lay 27 parcels — 11,000 acres in total, an area the size of several airports — owned by the federal Bureau of Land Management and the State of Wyoming.

Live and Let Live?

Restrictions on how and what is built where is an ongoing conversation in any city planning department. Too many rules limit the number of available dwellings, pushing prices to new heights. Too few rules might infringe on the use and enjoyment neighbors are promised when they acquire their homes.

In Japan, teeny tiny apartments are being built to allow more people access to the hot areas of town. These micro apartments are smaller than a ten-by-ten-foot room which is considered a small bedroom in our neck of the woods.

With its high property prices and the world’s most populous metropolitan area, Tokyo has long been known for small accommodations. But these new apartments — known as three-tatami rooms, based on how many standard Japanese floor mats would cover the living space — are pushing the boundaries of normal living.

NTY

The article mentions that these units are not at the bottom of the market. They are stylish and new. They are attracting a younger set of renters who see themselves in a higher-end neighborhood and have yet to experience a larger apartment, and thus (perhaps) don’t feel the loss of space. It’s the match of neighborhood amenties, quality of interior finishes and price that make these small spaces work.

And they are situated near trendy locations in central Tokyo like Harajuku, Nakameguro and Shibuya, which are generally quite expensive, with luxury boutiques, cafes and restaurants. Most of the buildings are close to subway stations — the top priority for many young people.

Over two-thirds of the buildings’ residents are people in their 20s, who in Japan earn on average about $17,000 to $20,000 a year, according to government data. (Wages in Tokyo are on the higher end.) 

On the other extreme of the housing restriction stories, is the conclusion of a longtime feud between a Marin County (CA) man and local regulators. He’s being evicted, in part, for operating a creative sustainable toilet that has been in use for the past fifty years.

…, he’s built a sanctuary to showcase his ideas about environmental sustainability: the Shower Tower, the Worm Palace (crucial to his composting toilet), the Tea Cave (where he has stored more than 50,000 pounds of rare, aged tea), the Tea Pagoda (where he’s hosted tea ceremonies for friends and dignitaries for more than 40 years) and so many more.

He calls it The Last Resort and he never had permission to build any of it. “I’ve been a scofflaw all my life,” said Mr. Hoffman, 78. “I have to recognize that.”

NYT

The battle between this outsider artist and the government has been going on for more than a couple of decades. Ten years ago the NYT ran a similar piece. He has a contingent of supporters and recently had a shot at maintaining the property through a historical designation. But now his eviction seems imminent. Meanwhile, new construction in the San Fransisco Bay area is being stymied by regulation-induced high prices.

This brings up the point that in some areas of the country the use of an outhouse is completely acceptable. On large acreage properties in the wide open plains, there’s no harm done in digging a hole and erectly a one-stall shack with a bench and a door with a half moon. The value or harm of regulations that allow super-small apartments or unstructured sewage disposal is entirely dependent on the group structures and commitments of nearby neighbors.

MN Election Update

With four weeks to go until election day, the campaign ads are becoming increasingly frequent. What is different this year is that every level of office, down to the Secretary of State (an administrative position), is coming up with the funds to run TV ads. And then there are counter ads. And the news media jumping in to evaluate whether the ad and counter ads are accurate.

A television ad produced by an independent expenditure group takes aim at Republican Kim Crockett in her bid to defeat Democratic Secretary of State Steve Simon.

The ad makes some truthful claims about Crockett’s stand on a couple of key election issues but also significantly misleads viewers by claiming she “proudly calls herself your ‘election denier-in-chief.’”

The ad starts with a narrator promoting Simon, saying “Secretary of State Steve Simon makes it his job to defend democracy.” That’s followed up with audio from Simon himself saying, “I have pledged to do everything to always protect the freedom to vote.”

The ad then quickly pivots to attacking Crockett, including a grainy black-and-white video of her speaking at a forum in June.

“Kim Crockett proudly calls herself your ‘election denier-in-chief,’” the ad says, with the last part of the quote making it appear Crockett is calling herself that nickname.

……

Because this ad includes a mix of misleading and out-of-context material along with truthful claims, it gets a “C” on the 5 EYEWITNESS NEWS “Truth Test.”

KSTP

The state auditor’s race is also getting more play on the local public affairs program, Almanac, as several DFL candidates have refused to participate in long-held debates. This position is in place to enable an outside audit of various forms of government. Ryan Wilson is the GOP challenger and Julie Blaha is the DFL incumbent. There is some question as to whether she should have stepped in and audited the disbursal of $250 million in federal funds in the Feeding our Future fraud scandal.

But by far the biggest race in terms of ad expenditures is the competition for the seat held by congresswoman Angie Craig (DFL) in Minnesota District 2. This is the second challenge by Tyler Kistner who narrowly lost the race two years ago. During the Vikings game or the news, there are sometimes three ad installments per commercial break. Angie is back-roading in a Jeep looking down to earth and Tyler shows off his beautiful young family. The race is often cited among the top ten most competitive races in the country.

Perhaps energy generated from this political tete-a-tete is stirring up the rest- but whatever the reason Minnesotans are getting an earful about each contest from the Minnesota Governor to the Minnesota Attorney General, the Secretary of State, the State Auditor, and even on down to the County Attorneys. Tradition has it that a last-minute bombshell always explodes in the weeks leading up to November 8th. I can only imagine what that will be.

On the Mall in DC

Have you lost that feeling?

It’s hard to extrapolate feelings out of numbers. Novelists have the luxury (and the skill) to fine-tune phrasing in a way that demonstrates how the same scene can in fact be different. Take this passage for example:

Yes, that was it-the change was there. Before the war at a luncheon party like this people would have said precisely the same things but they would have sounded different, because in those days they were accompanied by a sort of humming noise, not articulate, but musical, exciting, which changed the value of the words themselves. Could one set that humming noise to words?

Virginia Wolf- A Room of One’s Own

But when you see numbers, tabulated-out in sales figures of Rolex sales, income disparities between adjacent countries, or tallies of police arrests- you don’t feel anything. Of all the inputs that go into economic analysis- resources, labor, utilities, transport, and so on, there is no mention of an emotional quantifier.

Yet isn’t at least a portion of why people buy a Rolex due to a feeling? A luxury good makes one stand up a little straighter and beam a little brighter. A luxury good encourages others to treat you with a little more attention. A luxury good may be the ticket to gain entry into a new network of associates. There’s a swarming effect to luxury goods where people are drawn to the aura of the wealthy establishment. At least Kim Kardashian has a billion reasons to think so.

And then there is the opposite effect. The feeling of neglect and secondary status is always in the mix when economic results are released and compared to a strong neighbor. The numbers may divvy out the details of who stands where with what, but the gnawing feeling of being two steps back and half a year behind comes to the surface in casual conversation. “Oh- they are just so brash down there!” Implying, of course, a certain nobility in lower production, further justifying complacency.

Analysis of the cost of policing goes into rows and columns as easily as any set of numbers. But the emotion of seeing your middle school buddy handcuffed and walked out of school doesn’t show up in any way in the numerical representation. How many officers are needed in a community that has memories of one type of public safety is going to be different from another. The expense to leverage community participation in crime-solving is also going to vary. Like groups need to be compared to like groups.

And similarly, when solutions are presented and discussed, time and time again by people outside a community, especially those with elitist inklings, eye-rolling follows disjointed analogies.

The mayor of Minneapolis is Jacob Frey. Keith Ellison is MN’s Attorney General. Also pictured is St. Paul Mayor Melvin Carter.

Econ or Poli-Sci?

I recently saw this quote on Twitter: Economics is the study of human behavior under constraints. This makes sense to me if the individual and the clusters of individuals operate under maximum freedom. But the reality is that virtually all people have some sort of, or many layers of, political structures also setting constraints. Where econ stops, and where poli-sci begins is deviding line to consider.

For instance, if you were trying to figure out the choice parameters for automobiles in the Amish community you may come to the conclusion that they don’t have a preference as you cannot come up with any data. Yet the political constraint of only being allowed to drive a horse and buggy is the political constraint which explains the lack of opinion. Complete exclusions from some choices are entirely political and hence do not provide economic insights through the actor’s behaviors.

Gorgeous blooms are still to be seen at the Lyndale Rose Garden in Minneapolis

Yglesias Tip Toes across Platters

In the old days, or in the movies, the good and bad guys are contrasting characters in nefarious plots. Activists love the straightforward dichotomy of the winners and the losers as it facilitates their theory of choice. If you want to benefit the world, you’re with us; if you want to harm the world you’re with them. You are either on the inside or you are excludable. You are blessed or descending into the bowels of the earth.

In the most recent free newsletter from Slow and Boring, Let Joe Manchin have his pipeline, Matt Yglesias lays out economic arguments for allowing the completion of the Mountain Valley Pipeline despite the negative externalities it will generate. He tiptoes through a dizzying array of players and their platters, in the operating systems of cooperative endeavors. He concludes that there should be less focus on chum (I like that word) and more focus on the stuff that matters.

The stuff that matters appears to be the more socially favorable outcome once the pros and cons of the action are tallied up. Instead of hype, Matt wants an accounting.

Here are all the groups mentioned in roughly the order they appear: Mountain Valley Pipeline (MVP), Biden Administration, West Virginia, Virginia, Joe Manchin, green activists, Senators, democrats, Keystone XL pipeline, left writers, center-left writers, Barack Obama, Labor Unions, Rail Lines, activist organizers, protestors, Putin, Russian Oil Producers, LNP gas export facilities, the United States

There are a bunch of ways to sort these players. Elementary school math with Venn diagrams comes to mind. All the oil producers which operate on a for-profit basis, MVP and Keystone XL, and LPN export facilities form a group. Then you have the political people who are meant to act on behalf of their constituents like the two Presidents, the Senators, and Joe Manchin in particular. Clearly, there is different weighting on the impact of these decisions based on who they represent. This brings us to the states themselves, specifically West Virginia, Virginia, and a bunch of unnamed states affected by Keystone. And there are the people who advertize for the various positions, the writers (both left and center-left), and protestors. I would put the activist organizers in the same bin as the labor unions because their function isn’t to care about the issue as much as to energize those who will resist. Putin and Russian oil producers are in a group to themselves as they are not nested in any way with the others.

It is impressive to touch on so many levels of tradeoffs and draw the reader to the intended conclusion: Joe Manchin’s pipeline project will cause less environmental harm than economic good. The social externalities are less than internalized social benefits.

Not everyone can successfully call out those who oversell the need– in this case for climate caution. It is something only someone of his stature could accomplish. Since there is no numerical system of coordination, supply is determined by trusting the voices of those close to the action to describe the need. Food shelf providers give feedback on the demand for food. School counselors give feedback on the need for social services. Hospitals give feedback on the number of uninsured patients.

I’m all for calling out the beefed-up hype and manufactured objections to socially valuable industry. Hold the Chum! And give Yglesias the proper accounting he demands!

Meet Roxanne

Roxanne and her helper replace the work of five able bodied men. You go girl.

I’ve been one to poo poo the whole AI is going to conquer the world of workers thing. When they come up with a way for robots to do all my housework, I’ll be a beleiver. Until then, AI is just an upgraded piece of machinery.

But then I met Roxanne. She a deminuitive type, but does she pack a punch. Come ball season she can paint the lines on the fields in perfect geometric patterns, all with the aid of GPS and the guy holding the tablet. They say if you compare satellite pictures from manually painted fields to AI painted the differences are striking.

She’s a bit pricy. And she’s high maintenance. But the parks department is so bummed when she is out of commission they’ve stored up the parts for the most common repairs. Not only does she do the work of five men, she’s a lot of fun.

Political Scorekeeping

It seems like we are in for more of the same tactics in the runup to the elections in November. So far we have:

  1. Demand to release tax returns- to which the response was that no one cares
  2. Demand to debate- to which the response was end of Oct, too late for many voters
  3. Fear of loosing right to choose- apparently not within the capacity of the position
  4. Fear of extremism– an open-ended fear in search of a monster

It will be interesting to see how it all works out.

A National Lottery?

Recent payouts by the federal government whether during the COVID pandemic or more recently via student loan forgiveness, feel a little bit like a lottery system. In a wild spree of funding the feds have been savvy to include a wide net of beneficiaries. As long as everyone is getting a taste, there are fewer objections to the outlays of cash.

I remember reading how one single mom was genuinely grateful as she was planning on spending her COVID money on passports for herself and her children. She explained that the $130 per person fee was otherwise a luxury she couldn’t justify. But with the windfall, she would find a way to take her kids on a trip abroad. As a steadfast supporter of travel, I admire her decision. Her kids will learn more through travel than through many other educational venues.

People also spent their dollars on home improvements. Appliances are still on backorder, depending on what country they originate from. Another couple I know excavated their aging sewer line. These are all great purchases. When you improve your home you are partly just transferring money from a savings account to an equity-in-my-home account. The other portion, not retained in your home’s value, you will appreciate every day when the whisper of your new Bosch dishwasher does not interfere with your favorite NetFlix series

The lottery system creates mad money- you won’t starve without passports or silent dishwashers, but they sure are nice to have.

But this leads us to question whether the American people are really that bad off in the first place. That’s what we are being told. Many voice excessive rents, struggles, and need. But if the need was that great, wouldn’t there be a desire to get desperate funds to desperate people? Wouldn’t the power players try to direct the most funds away from those who can and towards those who have none?

I’m not here to minimize the fact that in America we have people who are destitute. We do. And we should help them. I just think we are being oversold on the level of need. And the proof is in the papering of ‘relief’ funding across all age groups and income levels. People who earn 100K are not needy. If you want to run policy like a lottery- just call it what it is.

Norms of today; Norms of yesteryear

Minneapolis is lucky to have a long-standing history of parks and trail system support. Early in its history, the city set up a connected park system throughout its neighborhoods. The green space ropes together a string of lakes which often have a walking path encircling their parameter. But despite being glorified for prescient action in the development of a great city- city leaders of yesteryear have failed the environmentalists of today.

Now wild rice is something to be preserved! Enshrined! Even though it is cultivated for commercial sale around the state, and grown wild under a protected status near and on Indian reservations. It’s a little hard to believe that even with this new status, the city consumer of parks and trails would be better off with a slothy body of water in lieu of what Lake Nokomis is today.

I’m not sure how far the revisionists would like to go with their return to nature. Perhaps there will be a push to revert all yards to prairie grasses. Or dig up all the asphalt roads and return them to cart trails. Nor am I sure how this shaming of the present and glorification of the past is helpful.

Unclear duties

Another type of duty shifting happens when regulations, or rules, are made official across a group. We all want to be able to go to the Minnesota State Fair and eat from as many of the food booths as our gastronomical ambitions allow. It would be unfortunate to find out after the fact that the mini donut vendor did not change out their frying oil promptly. Even the most non-regulatory types would agree that purchasing food without the risk of food poisoning is a good thing.

If food prep regulations were weighed out, it is clear that having the rules in place allows for more people to be freer to sample the Fresh French Fries and Sweet Martha’s Cookies and Turkey on a Stick. Having the rules in place gives people confidence in interacting not only with people they know personally, or they’ve heard of from friends, but with any food truck or pop-up vendor operating with a license. The rules push the duties of edible foods on the small vittles providers because this allows for greater freedom, not less, overall.

The Minnesota State Fair is the best in the Midwest.

This feature works really well when populations are nested one inside the other. Although there may be small differences between counties, the rules reflect what is expected at the state level. And it is fairly reliable to maintain the same consumer expectations as one crosses state lines as everyone is nested in a federal suite of rules. And although there is sometimes pushback, like when the health department wants to show up at a church basement waffle breakfast for their parishioners, the system, in general, reflects efficient coordination.

Who gets to assign the duties becomes a bit more opaque when bundles of economic activity operate separately from one another. For instance, do European consumers of garments manufactured in Bangladesh owe the workers an EU evaluation of their working conditions?

Within one’s own trading system one relies on the press and complainants to expose wrongful work practices. Then consumers can make choices with consideration of brand reputation. When markets operate at a distance, it is unclear which market has a duty to established norms.

Fresh Sweet Corn

When sweet corn is in season we stop by our favorite farm and pick up a dozen or two. Pull into the semi-circular drive that swings past the farm buildings to the garage and an elderly farmer in overalls appears to serve you. He often had an assortment of vegetables as well. Three medium tomatoes might run you $1.50- the corn is pegged at $5/dozen.

I realize that eating corn off the cob is not done everywhere, so here’s how it goes. You shuck the coarse leaves encasing the cob, pull back and remove all the silky threads spinning through the shiny kernels and plop the cob into boiling water for eight minutes. Remove from the pot carefully, place the prongs into the tender ends, and butter up the golden and white nubby corn. This guy grows the best ‘peaches and cream’ variety. A little salt and you are in for a delight.

It used to be that every farm in the Midwest had a setup as our corn guy (pictured here). A great big red barn anchored by a massive blue silo. Now simple rectangular sheds have won over the landscape due to their lack of maintenance. Economics! The adversary to nostalgia. Although the dollar amount of subsidies that go to farmers indicates that there is in fact a price for hanging onto the past.

In the 80s and 90s immigration of the younger outstate population in the urban areas lead to a fear of the loss of the family farm. Dilapidated farm sites were pulled down and plowed under to lay in more valuable crops. A sense of abandonment rippled through the local communities. Then corporate buyers appeared to be buying up the open landscape. An era of homesteading and a farmsite on every 80 acres and gathering at the local churches and corn feeds every fall seemed to be all but gone.

As a result, a suite of subsidies has evolved over the years to help the farmers. And there have been many that have been in line with other types of backstops in the system to avoid failures and their subsequent negative impacts. I asked a farmer in one of the really good years how he felt about the subsidies. He responded that it was a little ridiculous to be on the receiving end of government aid given how well the year had gone, but, “if we let them go we’re not sure they’ll be there in the bad years.” People are fearful that the mechanics of support are not nimble enough to be able to respond in a price and practice sensitive motion.

Corporate America was not successful in becoming the majority owner of the great American breadbasket. “There is a popular myth out there that today’s modern food production system is being run by corporations or industrialized agriculture. But, the truth is that much of our food is grown and raised on farms by families. Iowa has roughly 88,000 farms and 129,000 farm operators. According to the U.S. Department of Agriculture’s 2012 Census of Agriculture, more than 97 percent of Iowa farms are owned by families.” This data may be a little old but still is true. Families still own farms, they just look a little different.

All this is to say that nostalgia does have a price. And the mythic corporate boogie man is always the fall guy for the uncertainty of change. And lastly- we’d all be better off and trust the system if a coordination of services were dependent on an enumeration of the cascading costs and benefits in the system instead of a bureaucracy.

Rules, power and getting things done

Most people agree that some rules are necessary. People cannot coexist with a reliance on internal moral compasses and common sense. Conflict is bound to arise and rules shape how to proceed once this happens. Even in the case of simple standards, rules can facilitate living in close quarters. It may seem like trivial overreach to implement a maximum grass height. But in fact, it’s the benchmark that tells the neighbors when they can say enough! Hire someone to mow that hay field.

 

A certain number of ordinances enables standard responses, which ease the ability of society to get along. But as the rule setting continues, a weird thing happens. People who like power (and often who understand power) mandate regulations to feel powerful. They talk a good game about the issues at hand, but you’ll notice the conversation always revolves back to some coalition beating out another coalition. There’s an ever-present fascination with some sneaky move that one group played on another.

People who like power are needed on occasion. But often these people have left the issue and the objectives at hand. The resolution is just a bobble to fight for. They are not useful in the daily duties of getting the job done. And this appears to be taking a toll on the workforce.

The New York Times looked into Why City Workers in New York Are Quitting in Droves. Read it. It’s all about power plays. The jobs have not changed, nor the compensation, nor the fact that the private sector has always been more lucrative. So what’s left? The social position of jobs has diminished and it is no surprise that the “(R)esignations and retirements from the Police Department are the highest they have been in nearly two decades.”

Other jobs that have become undesirable are the enforcers of the rules. “A critical New York City inspection team, which responds to violations and complaints about lead paint, mold, heat and hot water, has been hampered by a severe staffing shortage, with 140 positions waiting to be filled.” Call it pandemic enforcement fatigue. There is no status in it anymore.

And as tired as everyone is with discharging mandates, workers want a little freedom too.

Many also cited Mayor Eric Adams’s campaign to compel city workers to return to the office full time, a stance that was reinforced in late May. “While hybrid schedules have become more common in the private sector, the mayor firmly believes that the city needs its workers to report to work every day in person,”

All I’m saying is that rule makers have fallen out of fashion, let’s hurry up and take advantage of the loss of status. Repeal the dumb rules and regulations. There are plenty out there.

Roundabouts

Roundabouts are becoming popular in the Twin Cities. The city of Minneapolis has a list of seventeen mini ones on the docket. But it is not only in the center cities- they are popping up everywhere. The Ridgedale Mall area in suburban Minnetonka has feathered in two full-fledged traffic circles on the south side of the shopping area.

I remember the first time one slowed me down in Woodbury, located on the eastern edge of the metro. We had spent the afternoon at a large athletic playfield complex and were trying to get home for dinner and rest. The sun was low in the sky to add to the irritation that the car in front had come to a complete stop. Unprepared for this new fangled road feature, the late middle-aged driver had to assess her choices. In proper Minnesota fashion, we sat in passive aggressive limbo while she sorted out her confusion.

As people have become familiar with the concept it is less likely to stop entirely. Although drivers are hesitant, the setup works as intended with a continuous flow of traffic. In the area shown above, the quieting will most probably discourage hot-rodding and get-away cars. Thus there is safety to be gained from several areas of social activity.

It’s silly to rob Peter to pay Paul

Kenneth Ahrens recently wrote a paper, Robbing Peter to Pay Paul, The Redistribution of Wealth Caused by Rent Control. He was kind enough to join the Minneapolis Area Association of Realtors in a zoom call to present the material. It’s of particular interest in our market as he uses the effects of a recent ballot measure in the city of St. Paul. The paper is written in clear plain language and starts with a nice historical review of rent control in the US. It’s well worth the read. Here is the abstract.

Abstract

We use the price effects caused by the passage of rent control in St. Paul, Minnesota in 2021, to study the transfer of wealth across income groups. First, we find that rent control caused property values to fall by 6-7%, for an aggregate loss of $1.6 billion. Both owner-occupied and rental properties lost value, but the losses were larger for rental properties, and in neighborhoods with a higher concentration of rentals. Second, leveraging administrative parcel-level data, we find that the tenants who gained the most from rent control had higher incomes and were more likely to be white, while the owners who lost the most had lower incomes and were more likely to be minorities. For properties with high-income owners and low-income tenants, the transfer of wealth was close to zero. Thus, to the extent that rent control is intended to transfer wealth from high-income to low-income households, the realized impact of the law was the opposite of its intention.

Ahrens mentioned that his peers were wondering why he was working on demonstrating the problems with a policy that has been shown to have greater negative impacts than positive ones. Experiments with rent control in the 50s and the 70s are long forgotten. A new generation of problem solvers and activists are reviving old ideas despite their flaws. The focus seems to be on preserving a renter’s ability to stay in their apartment by capping rent increases. This in turn transfers wealth from the landlord to the tenant.

Although the intent might be to have a one-for-one transfer from the pocket of the property owner to the renter, Ahrens points out that it is not that straightforward. “Basic economic theory predicts that rent control causes both transfers of wealth and deadweight losses (DWL) for property owners. These losses can be divided into a direct capitalization loss and an indirect negative externality loss.” A deadweight loss might derive from postponement of maintenance and repairs due to lack of income. “The sum of these effects is observable as a decline in the market value of real estate, as the property can no longer generate a market rate flow of income and fewer repairs to the property mean a lesser quality building.”

Furthermore, the transfers benefit the wealthy and hurt the less wealthy. In their findings, the lower income owners realize the greatest decline in home values- 8.52%- than any other transfer.

Excerpt from Table VII

There have already been meetings in St. Paul to adjust the stringent rent control measures passed last November. But there is no talk of reversal. Constituents seem to feel that renters in some way are not getting a fair shake.

Maybe I can take a run at the reasoning. Renters play a role in the community as do property owners. They are not as vested as they are more mobile, yet they too can be good citizens. Perhaps they go to city hall to petition for a road safety concern, a new playground, or more observance of a problem property. Perhaps they are the bus stop mom or the football coach. Perhaps they help maintain a safe light rail system or advocate for better bike lanes. For all that personal time spent on city infrastructure, they enjoy an improved environment. Yet the homeowners enjoy greater home values. And renters face the possibility of being priced out.

Of course, homeowners do not always enjoy greater home values. I remember a period of three years following the great recession where most sellers brought a check to closing to buy out their remaining mortgage balance. Sellers also feel a pinch in their bottom line when cosmetic updates have not been done, or repairs deferred. Renters find it far less costly simply to move to a newer updated unit. Such are the differences between ownership and rentals.

Maybe there is a new framework to consider. One that takes into consideration the economic issues of civic participation yet still tallies the risks of ownership. What’s clear to me is that if economists do not come up with analytical tools that better express the motivations and incentives constituents are expressing in their political decisions, then we will continue to suffer through cascading unintended consequences of bad policy.

Altruism- San Fransisco Style

Should fulfilling social goals tend more toward the push system or the pull system? Half a century ago less advantaged people were often ashamed of their poverty and were reluctant to ask for help. In a small town community, there was a shuffling of donations so that they would appear discretely at the home of those in need. This momentum of first demonstrating a need and then delivering some supplies to the designated beneficiary was done on the pull system.

Complete definition[edit]

There are several definitions on the distinction between push and pull strategies. Liberopoulos (2013)[5] identifies three such definitions:

1. A pull system initiates production as a reaction to present demand, while a push system initiates production in anticipation of future demand.

2. In a pull system, production is triggered by actual demands for finished products, while in a push system, production is initiated independently of demands.

3. A pull system is one that explicitly limits the amount of WIP that can be in the system, while a push system has no explicit limit on the amount of WIP that can be in the system

Wiki

In today’s world, it is common to hear those who work with the poor deny the necessity for those who come to a food shelf, say, to demonstrate a need. It is thought to be disrespectful. The intermediary agencies, whether the county, the food shelf, or the Department of Ed (school lunch) are responsible for determining demand. This is a bureaucratic push system.

There are advantages and disadvantages to both. The pull system is more efficient, but some families may refuse to come forward and others feel shame. The push system is bound to attract theft. If a push system becomes elaborate over a long periode of time, then it may become its own little economy (we could call it a platter).

Nellie Bowles has an article in the Atlantic, How San Fransisco Became a Failed City, which illustrates such an economy in her hometown of San Fransisco.

On a cold, sunny day not too long ago, I went to see the city’s new Tenderloin Center for drug addicts on Market Street. It’s downtown, an open-air chain-link enclosure in what used to be a public plaza. On the sidewalks all around it, people are lying on the ground, twitching. There’s a free mobile shower, laundry, and bathroom station emblazoned with the words dignity on wheels. A young man is lying next to it, stoned, his shirt riding up, his face puffy and sunburned. Inside the enclosure, services are doled out: food, medical care, clean syringes, referrals for housing. It’s basically a safe space to shoot up. 

Not only are material services provided in abundance to any addict who shows up in this iconic American city- but advice is also spun out free of charge.

She recognized him (a homeless man) as someone who regularly slept outside in the neighborhood, and called 911. Paramedics and police arrived and began treating him, but members of a homeless advocacy group noticed and intervened. They told the man that he didn’t have to get into the ambulance, that he had the right to refuse treatment. So that’s what he did. The paramedics left; the activists left. The man sat on the sidewalk alone, still bleeding. A few months later, he died about a block away.

A whole bouquet of social service agencies has sprung into action. In some sort of warp incentive system, the services attract addicts, which in turn attract services.

Here is a list of some of the organizations that work with the city to fight overdoses and to generally make life more pleasant for the people on the street: Street Crisis Response Team,  EMS-6, Street Overdose Response Team, San Francisco Homeless Outreach Team, Street Medicine and Shelter Health, DPH Mobile Crisis Team, Street Wellness Response Team, and Compassionate Alternative Response Team. The city also funds thousands of shelter beds and many walk-in clinics.

In the 90s there were stories of social workers in Chicago giving the needy bus tickets to Minneapolis as they knew there were services available upon arrival. If there is migration of those in need to an area simply due to the known availability of welfare, then the push is pushing too hard.

Lawn games vs. the Government

It’s the Memorial Day long weekend here in the US, a time when people get together with family and friends to visit and recreate. French Park, a regional park on the north side of Medicine Lake was full of folks today. Most were gathered in clusters around a set of picnic tables, grills cooking, and people chatting. The beach had some activity, as did the volleyball pit. Forty years ago, you may have seen people throwing lawn darts- metal darts with a pointed tip and aerodynamic fins. But they’ve long been banned in the US (Still legal in Europe).

Bag toss is a very popular activity at picknicks in the lakes area.

In April 1987, seven-year-old Michelle Snow was killed by a lawn dart thrown by one of her brothers’ playmates in the backyard of their home in Riverside, California, when the dart penetrated her skull and caused massive brain trauma.[9] The darts had been purchased as part of a set of several different lawn games and were stored in the garage, never having been played before the incident occurred.[9] Snow’s father David began to advocate for a ban on lawn darts, claiming that there was no way to keep children from accessing lawn darts short of a full ban,[9][10] and, partly as a result of Snow’s lobbying, on December 19, 1988, the U.S. Consumer Product Safety Commission introduced an outright ban on lawn darts in the U.S.[11] In the previous eight years, 6,100 Americans had visited hospital emergency rooms as the result of lawn-dart accidents. Of that total, 81% were 15 or younger, and half were 10 or younger. During the week when the commission voted to ban the product, an 11-year-old girl in Tennessee was hit by a lawn dart and fell into a coma.[9]

Wiki

Not to diminish the tragedy of a child’s death but forever labeling an artifact a weapon following one incidence of loss of life is surely government overreach. And then to add this numerical representation of 6100 hospital visits over 8 years without any reference points is so weak. According to the CDC, there were 130 million emergency room visits in 2018. So– 6100 divided by 8 taken as a fraction of 130,000,000— or basically an extremely trivial amount.

The lack of bracketing of relative impact on health and safety issues is mind-boggling. It takes one tragedy and a loud voice to create a law which forever bans an object. Meanwhile, knives kill people, hammers go bang upon the head, and if Hart to Hart is to be trusted as a reliable source, a marble paperweight or carved bookend can do just fine as well.

Sometimes it feels like people need answers- Why did the parents not give proper instruction to the children? How could the friends have been so careless? Why do innocent children sometimes die expectantly? People want to take action so as to make these questions go away. They demand something be done.

Common sense says that sometimes these are not questions for government and legislators. These are questions to be discuss within the religious community of your choice.

Claims about Trees

To be sure, I’m a big supporter of trees. Still- I wonder about these claims:

According to research conducted by MPRB, each city taxpayer saves around $100 a year from trees being on public property. Trees process about 200 million gallons of water each year, saving up to $6 million in stormwater management costs.

https://bringmethenews.com/minnesota-lifestyle/minneapolis-wants-to-use-1m-in-federal-cash-to-plant-200000-more-trees

The population of Minneapolis is around 420,000. Of course, some of these are children who rely on their parents to pay taxes. Let’s say persons under 18 are around 20% of the city’s population, that leaves 336,000 taxpayers. At $100 savings per taxpayer, that comes to 33.6 million– not 6 million. Or if you go the other way and divide the 6 million by 336,000 taxpayers, the savings are $18 per person.

No link to the research to see the numbers.

Getting More Properties to Market

As the new listings plunge to pandemic-year levels, an obvious question is how do we get more properties to market. Where are they, and why isn’t the regular turn over in ownership providing opportunities for new buyers to acquire property?

I’d be curious to see a study about the effects of the capital gains tax on people who own less than four properties. Say an individual held onto a condo or townhome after they got married. It was fairly easy to rent, and the years roll by as one gets busy with family and life. Before you know it there is a couple hundred thousand dollars of equity tied up in the rental. Now if the owner were to sell, they would have to recapture depreciation and pay capital gains. And this is substantial.

If this tax is holding back sellers from releasing their property to market which in turn disallows wealth growth by a younger generation- perhaps it is more of a societal detriment than a source of income.

Tax Day USA

Today is the day you must file your taxes in the US. Expats are also required to file no matter where they live abroad. We pay federal taxes, as well as state taxes, which are established independently. Here’s an economist’s estimate on taxes ranked by the amount paid:

If I had an opportunity to influence tax policy, I would pursue two objectives. Create a process that a high school graduate can accomplish independently of any professional services. Create a process where taxpayers experience, in some way, the cause and effect of payment and services.

Minneapolis Fed Series

 

The Minneapolis Federal Reserve has started a regular zoom offering. Today’s event was part one in a rent stabilization series. Libby Starling from the Fed was the moderator. Edward Goetz, of the UMN and author of Clearing the Way, is known for favoring rent control. The two other panelists, Sophie House (NYU) and Jenny Schuetz (Brookings) offered new perspectives on the issue.

One objection stems from an efficiency issue. Creating an across-the-board rent control rule means that those who do not need a subsidy receive it anyway. Instead of targeted benefits to people in need of assistance, all renters benefit from an increased restriction. In fact, it is noted that all the rent-controlled apartments remaining in Manhattan are occupied by wealthy New Yorkers.

I like the image that a community has only so many dollars to devote to the financial support for people who can’t afford their housing. Worrying about the efficient allocation of this bundle of cash will keep the system tight and free(er) from fraud. Blanket rules mess with the market for rental housing. Targeting benefits while maintaining the natural flows in the shelter business will distribute resources based on priorities in an entire system.

Conjuring up a bag of cash marketed as subsidy housing money is one new framing. Another is to group types of consumers. The story of rental restrictions is always told as the battle between the poor and the horrible greedy landlord. These conversations seem more about taking money away from the investors (determining a *fair* appreciation) than trying to get people into the best housing situation. Mainstream buyers are not thinking about their seller’s finances when the make an offer on their home; they are thinking about the great kitchen and the short commute and the great schools for the kids.

When we’re trying to house the least advantaged, public dollars should be leveraged to put people in close proximity to the public services they need most. If they have kids, offer a subsidy to keep them in the same school district for the remainder of their children’s K-12 education. If they are a lower wage worker, see if the companies will participate in a subsidy which keeps the workers close-by. If the recipient of the subsidy is in need of regular medical care, have their stipend be tied to buildings close to significant medical facilities. Match the group of people the lowest rung of income to the neighborhoods which are best suited to notching them up and out of this social stratosphere.

There are some rotten landlords out there. And they need to be pursued for a higher level of service for any of the tenants who live in their buildings. But don’t tie up the bag of subsidy cash with buildings. This wastes social dollars and doesn’t get the intended recipients into the best match of housing supply.

The story of the snow on sidewalks

When it comes to neighborliness it’s hard to get concrete numbers. There is a general sense that pitching in and helping out is a good thing. But does it count as economic activity? Here’s a story about snow falling on sidewalks that helps demonstrate the cold hard cash of being a good neighbor.

Sidewalks are common features of residential areas allowing the public to walk along the road. People stroll for exercise; they walk their dogs; they catch a bus at the bus stop. Residents are sometimes surprised when the concrete needs to be replaced that they are responsible for (the relatively costly) expense. The long-established norm is that the owner of the building behind the walk is the caretaker of the public walk. In a winter climate, the household also must clear the sidewalk of snow. Failure to do so can be hazardous as melt and refreeze makes for icy walkways.

The city of Minneapolis has been suffering from a lack of interest by residents to tackle to forty feet runs. A March 23rd editorial opinion in the Start Tribune calls a spade a spade, “let’s acknowledge that Minneapolis has an unacceptably large population of residents who feel no particular obligation to keep their walks clear.” It was written in response to a proposal that is making its way through city hall for the city to embrace the chore. The instigating motivation is people’s safety– “An unshoveled walk gets in the way not only of walking, but also of sightless navigating, of wheelchair maneuvering and other modes of travel that most of us need not master. When walks are covered in snow, a blind woman using a white cane cannot tell the difference between a residential street and an open field. A man in a wheelchair cannot negotiate the snow and ice, and might choose to risk traveling in the street instead.”

Please be aware that there are already serious repercussions in place for the n’er-do-wells who find it difficult to put their hands on a shovel. Here’s a violation letter:

I spoke with the crew who was clearing snow one morning. The gal said they can co up to thirty front walks in a day. Let’s see, 30 x $229= $6870. Paying six employees for eight hours of work only comes to $1680. It seems like a good money maker! But maybe they have to wait until someone complains to justify going out and shoveling.

This isn’t the first time shoveling has been a news feature. In 2018 the president of the Minneapolis City Council, Lisa Bender, was sited. Two of her constituents got creative and made an instructional video.

Another factor in shovel-gate might be the proportion of renters to owners in the city which runs about 53-47%. Owners receive the violation letter, but renters are in many cases responsible for snow removal in single-family homes, duplexes, and tri-plexes. Perhaps the process would be more effective if the $229 fee was directed at the residents of a dwelling.

Some argue that folks are disabled and for that reason cannot clear their walks. The US Census reports that 8.8% of city residents fall in that category. One would think that there is a capacity amongst city residents to lend a hand and help the few who can’t fend for themselves. But instead of pursuing a culture change, the city is looking into publicizing (my word, nationalizing at the city level). As one can imagine transferring a job to a bureaucracy is a little pricey. They are anticipating $20 million in this case.

Just to review the dynamics here. Most cities count on the goodwill of neighbors to clear walkways for the public. This is unpaid labor. For cultural reasons the residents of Minneapolis resist this norm. Instead of working on converting the mindset and showing people that it can be rewarding to lend a hand to someone in need, the city is pricing out the service. This process of making public something that was handled privately is called publicizing (the opposite of privatizing). The process will not only be more expensive, but it will also forgo the capacity of citizens to participate in their community. Publicizing is a change of structure not just a form of payment. It eliminates the possibility of citizens to see how simple gestures go a long way in communal endeavors.

And the price of neighborliness- for all you economists- is $20 million.

Parade of Homes

From March 12th- April 10th builders showcase their model homes by having them open to the public. It is a convenient way for buyers to get out and look at what is being built around the metro. Some people go to see the latest trends in home design and decor. Some are interested in the latest technology. But many are considering a move and would like to build new.

The key appeal to the building is the personalization of choosing some of the finishes. There are very few truly custom builders, these work at the top of the price range, but even national builders allow the choice between several packages of finishes. Some buyers feel so strongly about having a hand in the creation of the home as well as being the first owner that building is their only option.

This explains how they justify the price they pay for that privilege. New builds are beautiful, crisp, modern- but they are not cheap.

Buyer making plans with a builder rep via Skype

Out of the 343 new properties on the tour, only a couple are priced below the Twin Cities metro median sales price of $340K. Most of the least expensive options are townhomes, but one is a split entry with the upper level finished. Most are also located on the outer peripheral of the urban area. Or in other words, half of the metro home buyers can purchase homes at lower prices and in closer proximity to infrastructure like jobs, education, medical facilities, shopping, and so on.

If a chief accountant of the community had to select a type of property to offer to members who needed help paying the rent, it is clear that she could stretch her public purse further by going with existing homes instead of new. The math is pretty clear.

When responsibility tips

Communal arrangements are mostly nested. The family unit secures the primal position. Then surrounding neighbors (I like to think of this as the size of an elementary school district) create a group, then the city/suburb, county, state and so on. Overlayed in various positions of priority are people’s associations with religious affiliations, work associations, general interest groups and passions.

For instance, at the federal level there is the US Department of Education with a primary function to “establish policy for, administer and coordinate most federal assistance to education, collect data on US schools, and to enforce federal educational laws regarding privacy and civil rights.” Then each state has their Department of Education which gives direction, collects data and funnels money to the School Districts. Despite all these layers of oversight many decisions are left to the most basic unit. The administration of Covid rules, for example, was determined at the building level of a district.

The situation in Ukraine highlights the difficulty in determining when a nested structure requires an outside intervention. In the case of war there is an impulse to violate political delineations, drawn into the foray due to an associational compact of humanitarian compassion. But rupturing the divides between units of responsibility is always controversial. It is not clear when to breach the boundaries of a marriage in the case of suspected domestic assault. It is not clear when to intervene in the administration of a failing school. It is not clear how to restructure a department of human resources which repeatedly fails to administer benefits resulting in human tragedy.

The foundational reason not to intervene is that the unit will come out of a challenge stronger for the experience. A neighborhood which comes together to reduce crime through block parties, cooperative interactions with police and the courts will develop methods for working together. Once they realize the rewards of safer streets, the recompense for their work will further encourage the efforts.

But at some point, the outer group has to call it, and step in. Unfortunately, this often does not happen. The cost/benefit logic says that if the subgroup school is performing at such a low level over a generation or more, then the outer group is taking a hit. The need to interfere is justified in order to maintain a pre-determined threshold.

In Minnesota there is a political debate at the moment regarding the timing of the National Guard’s intervention during the riots following George Floyd’s death in 2020. The mayor of Minneapolis claims he requested help early on. The Governor claims he wasn’t given authority to intervene in the city. This last argument seems to fall flat when three miles of a city in his state is set alight. At some point it is clear that the greater group is obliged to step in.

I believe there is a relative calculus for these tipping points. We just have to find them in the numbers.

Markets in Competing Interests

Today this appeared on Twitter.

The Lt Governor has been a strong advocate for trans youth since she ran four years ago. The posting indicates a continued dedication of her time and interest and political capital to this sub-group of Minnesota’s youth.

A new candidate for Hennepin Couty Sherrif (the largest county in the state, maybe 20% of total population) Jai Hanson, challenges her, and asks why the other kids don’t deserve to be nurtured to their true and full selves.

A third observer makes the claim that these are not competing issues. Herein lies the practical problem. People who feel versus people who count.

Some folks seem to think that the caring and demanding more is all it takes. I care about our schools so I’m going to ask for more resources for the kids. I care about the loss of life due to drunk driving, so I’m going to push for driver safety programs and prosecution of drunk drivers. There’s no thought given to length of the agenda, or whether their issues take all of the air out of the room. There’s a flat-out denial that resources are finite. If you care, you can make anything happen.

In reality, if you are gearing everyone up for one group of kids, then you are not gearing them up for another group of kids. The efforts of activism, or the labor to promote and voice social issues, has a set capacity. It’s not about caring enough.

No Asymmetry- just- what is public and what in private

All urban neighborhoods have rules. The garbage cans, for instance, in our neighborhood must be kept inside a garage or behind an enclosure of a certain dimension. The can might always sit on the private lot, even while down by the curb on collection day. Yet the city residence at some point gathered up in the city council chambers and voted that garbage bins are unsightly and hence violate the public enjoyment of our streets.

Although property rights secure ownership of the home and plantings and outbuildings, the neighborhood considers the outer appearance of the street as a shared good. And hence feels it reasonable to set some guidelines for those who don’t pick up on the nuances of social norms. To be sure these vary from place to place throughout a metro area. Some cities are fine with RV’s in the drive, while others do not permit extra cars in the drive and require garage doors closed while not in use.

Changing times present changing issues. The advent of Air B&B led to concerns around properties being used for entertaining instead of everyday life. Although the use of the short-term rental property is just for the structure, the noise and traffic that come along with vacationers is a negative externality to the neighbors. They are interfering with the public space shared amongst the group. And that is how it ends up on the city council persons’ agenda.

So how about the other way around? If a neighbor uses private resources to do a project which has positive externalities, is it reasonable for them to knock on the door across the street and ask for some equity payback, for having increased the value of the neighborhood? Can they say, “See the lovely $70K custom landscape job, with perennials bordering a gorgeous paver driveway and the welcoming front patio? I just increased your home value, so get your checkbook out and give me a little of that extra equity you’ve got tucked away in your house value.”

The error in the thinking here is in categorizing the goods as public or private. The activity which was done (hiring a designer, picking out the plan, hiring a landscape firm) was achieved for private purposes. The activity did not touch the neighbors’ private goods, like damaging a basement through flooding or perhaps taking down a tree that was right on the lot line. These landscaping transactions are in the moment and fungible.

Improving the facade of your home and thus elevating the ambiance on the road also directly impacts the neighbors (in the same way that a burnt out, boarded up house has a negative impact). This is a public impact. With public goods, you don’t see the cash until you exit the group. The stock of all the public goods tied to the neighborhood may go up and down through the ownership time period- but it is only upon leaving the group that a dollar figure is recorded on these non-fungible values.

Noticing the different mechanisms is a keyway to identify whether a good is public or private.

The reasons why a homeowner would over improve their property knowing that they pay the tab and others will benefit through externalities are important to understand, especially in policy recommendations. The net result of one improvement is generally a cascading effect of others. When people enjoying what they see across the way, they tweak their own property as it pleases them. Sometimes a little seed money from a city can be a catalyst to get the ball rolling.

These are the borderlands where publics and privates get negotiated. In city council meetings and across back fences. There is no one recipe. A reactive, amicable and consistent system of governance seems key.

Story of the TikTok poster and a rent-controlled apartment

A young woman from New York City created a media stir last year, when she posted shots of her scrumptious apartment on the upper west side of Manhattan (where all the famous people live). She gave an on-line audience a peek into the dreamy lifestyle of making fresh again an old-world charm unit in one of the most expensive real estate markets in the world. It’s no surprise that a school of media swimmers followed her. This story line has already proven successful in the sitcom Friends which aired for ten seasons.

Just like Monica (Courtney Cox) on Friends, the special ed teacher inherited her rent-controlled apartment. It is her childhood home, and the rules allow for a transference of benefit from parent to child. Unlike on TV there are monthly fees associated with the utilities and maintenance of the unit. Given the age of the building, I can guarantee you that $1300/mo rent does not cover the normal combination of heat, electric, water/sewer, common area updates, exterior maintenance which is usually collected through condo fees. For comparison, here’s a listing for a condo built in 1981 and the condo fees run $1424/mo.

Whereas this story has captured the imagination of many who would love to swap living situations with the young New Yorker, others may wonder how this came to be. I can’t supply the context for the imposition of rent control a number of decades ago, but I think today’s housing advocates might see the inefficiency of one individual receiving such a significant benefit. Nor do I think voters today (knowingly) would divert money from the flow of funds through the housing market in a way which would allow this scenario to develop downstream.

Therein lies the danger of using laws to replace economics. Laws are static whereas economic systems are dynamic.

Say a group of people, whether a rural town. or a suburb or a big city have a certain capacity to provide resources for the housing of some community members. We do this naturally of course, when we house our children or perhaps an elderly relative. An example of a dynamic change is how the norms have varied on when children are launched into the real world. Whereas boomers mostly left home at eighteen, millennials stayed on avoiding homeownership and household formation. (Joint Studies for Housing Study- Harvard)

But over and above family ties, the community pays part (or all) of the rent for those who cannot care or themselves. Funds can be funneled through non-profits like Caring and Sharing hands which operates entirely on private donations. At a city level there is an authority to use tax increment financing (TIF), usually in conjunction with monies from the state level. At the federal level the section 8 voucher plan is the largest component of HUD’s budget. These bureaucratic mechanisms are slow and unresponsive to demand.

The disjointedness of subsidy providers is even less able to match individuals and families with the community infrastructures which not only support them but also allow them to participate in a productive manner. Ideally it is through increased involvement in mainstream activities which allow move people back into self-sufficiency, and eventually homeownership.

It’s important to note in the TikTok story that the parents never became homeowners. They never increased their wealth through property ownership. Most probably because there were too many incentives in place to retain their apartment. And the same is true for their daughter. Not only is the TikTok’er afforded a place to live, but she is also monetizing her lifestyle through social media. From what I hear, YouTubers can earn quite a bit when their videos are viewed in the 100’s of thousands. And why shouldn’t she make such extractions? She is simply complying with the incentives set up by the rent-control agreements of years gone by.

Keeping track of the deal

Solving for climate change solutions is a tough go as the time spans over hundreds of years and the inputs offer imprecise measures. Luckily issues around real estate are typically on shorter horizons and tangible resources. Consider the story of the novice developer from Texas, Nathaniel Barret, in the tweet at the end of the post.

By the time you’ve read through the entire description of his experience as a developer you’ll get a feel for the grit and grime of the process. He has even provided visual aids through extensive photos. You can also sense the apprehension he must have felt when he had to go back to friends and family mid-project and ask for a sizeable amount of additional funding. Keep in mind that at this stage the building is ripped apart and there is no going back. It’s like saying, gee thanks for the $50K, if I don’t find another $150K, I won’t be able to repay you.

Note #1- developers are all in on their own money as well as money provided by their network.

Then consider the time over which this transpires. It isn’t a couple of months, or a year, but several years of no income, free labor and no certain outcome. Several years of owing people, who hold you in high esteem, to sit tight until the whole thing comes together. The post has his adventure starting in 2016. It may not have taken five years to wrap it all up, but it took that long to write about it.

Note #2- there is a backlog of expenses in investment return and in personal favors and in unpaid sweat equity.

Some people may come away from this story wondering how anyone would want to pursue such a project. Some people will never understand the satisfaction in turning a derelict building back into a going concern. Some people do not have the impulse to go toe to toe with a failing neighborhood and throw one’s ambitions at it full force. But fortunately, some investors do. These people are long term thinking, maybe twenty-year scope people.

Luckily a fully renovated property should be good to go for twenty years without major expenses. This allows for the return from the upfront investment of resources and sweat equity to be recouped over a dozen to fifteen years. And there is still the uncertainty as to whether the direction of the neighborhood will turn and inflate, rather than erode the equity in the property.

Now let’s leave behind this story from Texas specifically, and more generally entertain a speculative scenario. Say about five years following a rental property renovation, there is an influx of new residents to the neighborhood. They have relocated from another state. These folks have no memory of the seedy buildings from the past. However, they do bring their recollections of what things were like from whence they came, about relationships with landlords and laws in their previous hometown.

The area attracts an influx of residents due to these restorations. That combined with an overall uptick in the economy causes rents to rise. Tenants who sign one-year leases see increases in their monthly obligations. They cry foul and become politically active due to what they see as greedy landlords. Their short-term framing is not in sync with the longer-term investor framing, hence the perception of corruption. Since tenants make up over fifty percent of the city’s population there is success through four-year term city council people to restrict landlords from earning what was originally projected.

If we are trying to model a neighborhood, a city, or a rural community, where real estate structures are built to last over many decades, then it seems the disjointedness of short-term politics versus long-term investments is counterproductive. Maybe even destructive.



Originally tweeted by Nathaniel Barrett (@ncoxbarrett) on January 27, 2022.

The 2016 story of my very first real estate project: How I bought a scruffy old strip center, almost died of stress, and started Barrett Urban Development.

After reading too many articles about problems with our urban development patterns (thanks @StrongTowns) and walking on our broken down sidewalks too many times, I thought there was no better person to address this than yours truly.

After reading RE books and looking at projects that would have surely failed (thanks @montewanderson & @IncDevAlliance for saving me), I found a pair of adjacent commercial buildings totaling just under 8,000 square feet both for sale. They were in…sub-optimal condition.

I raised money from family members and put a fair amount in myself and found a great GC and architect to work with. The scope: replace/repair everything except the wastewater lines, the foundation and maybe 60% of the structure.

During our walk-through, the GC ballparked it at $250,000 to white-box it. I was way too green to know of a better way to estimate costs or recognize the many red flags during due diligence.

Thanks to a pair of motivated sellers, the ACBM, and an REC during the ESA (don’t do auto-repair in the back yard), we negotiated pretty hard and got what I thought was a good deal: something like $400K for the pair of them.

The plan was divide the 2 buildings into 5 spaces since we figured we’d get higher rent that way. The building is awfully deep, but work with what you got.

The problems started almost immediately. Remember those wastewater lines I wanted to keep? Just past the bend we couldn’t get the camera past, the clay pipes had collapsed.

The plumbing bid to replace comes in: $80,000. I’m already 20% over my construction budget and we’re just getting started. This is not good but there’s no way to go but forward.

Since we’re replacing the plumbing anyway now, we move the bathrooms to the back of the building to shorten the run and reduce the number of bathrooms in the larger suites by 1 (foolishly I plumbed the wastewater lines for them anyway in case I wanted to add bathrooms later???)

Meanwhile, new problems come up: During due diligence, my GC commented that a lintel was sagging. Being naive, I didn’t probe further. Turns out you could put your arm through several of the beams over the openings. Now I need $20,000 of masonry work, steel, and welding.

At this point, I know I need another $150,000-200,000 to finish the project, money I don’t have. I have jaw pain as I start grinding my teeth at night while I sleep which isn’t much, because of the anxiety. A nightguard and sleeping pills solves the symptoms but not the problem

I look for money but I don’t know how: I apply for city grants, liquidate my stock holdings, and borrow against my 401k. I still don’t have enough and I find myself weeping outside City Hall after failing to get a grant as I wonder what I’m gotten into.

I finally have to tell my investors (should have told waaaay sooner). Most of them are circumspect but one is very upset and is making noises about taking over the project. I eat crow and fall on my sword.

I finally have a revelation: I can borrow money from places other than banks. Turns out if you pay a high enough interest rate, people are happy to lend you money*!

I raise another $150K and the project is on track: the walls are flying back up, the trusses going into place, the windows being installed.

It’s finally looking like a building again and I can start to think about actually leasing the place! One of my mentors comes by to check out the project and says I “Decided to skip the master’s degree and go straight for a PhD and now i’m studying 24/7 to get a C-“

I catch a break and a local publication does a favorable story on my project and I pick up several tenant commitments.

https://lakewood.advocatemag.com/rebuilding-not-replacing-old-east-dallas-nathaniel-barrett/

In not too long, the building is finally done. I get some really good long-term leases in place and the rents come in higher than expected, which is good because I owed a lot of people a lot of money.

I don’t recommend the above method for starting in real estate. I mostly succeeded due to luck and the good fortune of a large network of supportive people in my life. I can’t believe I actually made it through.

Originally tweeted by Nathaniel Barrett (@ncoxbarrett) on January 27, 2022.

How we talk about the Homeless and the Housed

It was refreshing to see this post from Matt Yglesias regarding the homeless population in Europe. One of the most tiring things I found when I came back to Minnesota to go to college was the erroneous (and all too frequent) comparisons fellow students made between Europe and the US. One exchange program to Sweden and the fountain of suggestions on how we’d all be better off doing it the Scandinavian way was ever flowing.

Another pet peeve of mine is how homelessness is written about in the media. It shows up in articles around the cost of housing, right in there with scandalously high-priced luxury homes and the persistently rising average median price of homes. I question why people do not realize that the chronically homeless do not participate in open market real estate transactions, and hence in no way influence the cost of housing. When costs are escalating some people in financially precarious situations lose their housing, often temporarily. But these aren’t the homeless living in tents alongside the main roadways of our nation’s capital.

Which brings me back to the substack article at SlowBoring. Yglesias takes the time to point out that what market rate mainstream residents care about most is how the homeless are affecting their neighborhood public goods. (And I’m not saying they shouldn’t). Locals want to be able to use their parks without repercussions for their safety and access public transit and use the libraries for that matter. The objections to the lifestyle of the homeless has more to do with their neighborliness than their housing.

But I’m not here to give advice on how to remedy this group of societies issues. I’m here to point out that any shelter for these folks will have to be provided for them. They are not part of the market, and many don’t plan to be, as described by Jeanette Walls in The Glass Castle. Assistance to put the fraction who tumbled into their predicament during rapidly escalating prices back into the stream of self-provision, is common sensical. But there will always be a segment of the population who will need to be subsidized.

It just seems like issues of the homeless need their own articles. Mixing the topic of homelessness in with a hopping real estate market is like bringing up the number of entrepreneurs who fail every time there’s a breakout unicorn to write about. As we all seem to have short memories, I’ll take a moment to remind everyone that during a recession, when real estate prices are in a downwards spiral, folks also find themselves without shelter. Again- the homeless are neither borrowers nor sellers nor renters in real estate. And thus, to feature them in a discussion about pricing seems to be more of a trigger than anything else.

A cure for car jackings?

The last two years have seen a terrific rise in carjackings in the Twin Cities. Loose numbers for the trend in the city of Minneapolis come in at 84 for 2019, 388 and 610 in 2020 and 2021 respectively. Whereas the crime was mainly centered in the city, now offenders are venturing out into the suburbs. Whereas the perpetrators were mostly unarmed, now they are mostly armed and often inflicting bodily injury.

Out of the 610 incidents there are certainly a portion inflicted by career criminals. But at our holiday potluck last week the conversation focused on the number of juveniles involved in the activity. One story concerned a recent incident in a wealthy third tier suburb carried out in broad daylight. When the car was apprehended later in the day, all the occupants were under fifteen years of age. Here are a few other reports which follow the same lines.

The day after Frey’s press conference (12/16), two teens pleaded guilty to multiple carjackings across the Twin Cities; in a separate incident, a pair of juvenile suspects were arrested in association with violent attempted carjackings outside two Lunds & Byerlys locations. One suspect is still at large. 

Bring Me the News

As it has progressed to a larger geography, residents have organized to express their concern. Just over a week ago a community crime prevention meeting drew three hundred participants in a suburb abutting the city of Minneapolis. The mayors of five western suburbs compiled a statement and action list to address the issue. The role of the county attorney was questioned.

“We think the message being sent to criminals is you can commit this (kind of) crime this afternoon and be out by this evening,” he said. “From what I understand from the police officers, that is not far from the truth. I think we want the county attorney’s office to relook at that.”

https://www.eplocalnews.org/2021/12/18/suburban-mayors-meet-to-develop-response-to-
increasing-crime/

We’ve come full circle. The county attorneys had loosened penalties for low level crime in response to demands for social justice. Kids from disadvantaged neighborhoods get in the system, the reasoning went, and then they are hindered from progressing up through the regular channels of entry level jobs and on up the chain to self-sufficiency. Take formal charges off the table, and the balance will be set right. Unfortunately, releasing the penalty for low level offences has increased the number of kids getting into the carjacking business 6-fold, not decreased it.

Perhaps Minneapolitans would tolerate this increase in crime and see it as a penalty paid in order meet their social justice ambitions. But it is already clear that there is little appetite for such things further afield. More importantly, the loss of life amongst these budding ne’er do wells has been tragic.

Two teens are dead and three others in the hospital Thursday morning after Robbinsdale police say a reportedly stolen SUV crashed in Minneapolis.

The incident first began around 6 p.m. Wednesday (12/8) night, when a Mercedes SUV was stolen in an armed carjacking near the area of 12th Avenue North and Fremont Avenue in Minneapolis. ….

Police said five people were inside the fleeing SUV, all of them teens. One occupant was declared dead at the scene of the crash, and the other four were taken to nearby hospitals, where Robbinsdale police confirm that a second person died. Robbinsdale police captain John Kaczmarek told KARE 11 that the other three suffered significant injuries but are “up and talking” in the hospital.

MSN

As people puzzle over this escalating situation many of the same solutions are bantered about. But I say look to those suffering the greatest loss. To raise up a child to fifteen or sixteen years of age and then see them, on a whim, end up in a car which veers off the road and takes their life, must be a serious blow. These are the folks with the most to lose. A group of parents who have recently lost a child to this nonsense must have ideas on how different circumstances could have pulled their loved one in a different direction.

Slack in the System

There’s a portion of interstate in downtown Minneapolis that funnels through a tunnel. When the interstate was built in the sixties, the congestion at this SW corner of the city warranted the expense and logistics involved in sinking in the subterranean passage. That was 1969, and in 1971 the neighbors threw a party in the below ground venue celebrating its completion.

Fast forward to the here and now and the congestion has returned. In 2018, according to one estimate, 185,000 cars passed through the tunnel every day. And not always successfully as the video clip shows. The end result is that there is often a back up from the feeders that bring traffic through the tunnel.

As a motorist approaches the city from the west during peak hours, and the downtown skyline takes shape above the dash, there’s inevitably lineup to exit on a right hand ramp to the tunnel and destinations beyond. Vehicles can start queuing up a couple of miles before the turn. Well before the green overhead placards announces the interchange.

As you sit behind the wheel, see-sawing down the right hand lane, there are always those drivers. You know the ones. They bypass the two mile wait, dart in, merge in, or arrogantly come to a full stop on the interstate, blinker pulsing, and wait until someone lets them in. (Do they realize they are at a full stop on a freeway?) I used to get irritated at such line jumpers. I used to pull up so tight to the bumper in front of me so as to deny them any chance of sliding in.

But time has altered my view.

Most skippers pull into spot ahead of trucks. There’s a slight incline on the bypass and the trucks can’t gear up fast enough to keep the line tight. There is often the space for several vehicles ahead of a semi. Then you have the putterers, so conservative in their driving that they leave ample room between them and the car in front. The darters grab those opportunities and fill those spaces. It dawned on me one day, maybe as the late afternoon sun reflected back on me off of one of those glass paneled high rises, that the line jumpers actually make the process more efficient, not less.

Of course it doesn’t work so well if no one conforms to the norms of courtesy. But the thing is that in group activities, you don’t need everyone to follow the rules at all times. In the case of freeway sharing, this example indicates a little bending of intentions makes the system flow a little freer. We just need most of the people pointing the same direction. Not every last one.

Which is one way of saying we shouldn’t get all bent out of shape by the few objectionable sheep in the flock. Spend time an energy on the majority, and keep moving forward.

Yes to the incumbent Mayor, No to power to the Council

Minneapolis voters on Tuesday soundly rejected a proposal to replace the Minneapolis Police Department, crushing the hopes of supporters that outrage over the killing of George Floyd would translate into one of the nation’s most far reaching experiments in transforming public safety.

https://www.startribune.com/minneapolis-voters-reject-plan-to-replace-police-department/600112156/

Moving money & the unrealistic unrealized capital gains tax

Years ago a friend pointed out that it is easier to capture money when it is moving. As workers earn a wage, it is easier to capture a tax as funds transfer from the employer to the employee. At the time an asset is sold, it is easy to capture a tax from the dollars passing from one owner to the next. When purchases are made at a cash register it is easier to add on a sales tax. You get the picture.

And for this simple practicality, the asset tax or Biden’s wealth tax, was doomed from the get go.

There are other practical reasons that gum up the whole idea. Assets fluctuate in value over periods of time. So the years that the asset increases in value you pay a tax, but the years the asset decreases in value the government pays you back? Sounds like an accounting nightmare. Sounds like a scenario made for grift.

Maybe it’s more than just the practicality of money on the move. The severing of ownership leads to a settling of accounts, which includes an obligation to the greater group in the form of a tax. Use of assets for philanthropy, start-ups (basically business charity), endowments and so forth is a different type of supporting the greater group than the stream of funds channeled through taxes to pay for services.

The problem it seems is in the mechanism to draw the substantial assets to turn them over to political process. And maybe that a good thing.

To hire a Mayor

In about a week elections will be held here in the US. The presidential spot won’t be on a ballot for another three years, but there are still some important races in the works. Like the Mayor of Minneapolis.

With the largest commercial center in the state also home to many government service centers, public institutions like the University of Mn (home to 60,000 students) and sports and entertainment centers, it’s sometimes hard to get your head around the fact that only the residents of Minneapolis vote on core services like who is in charge of public safety. (The city proper has about 420K residents whereas the entire metropolitan area has a population of 3.65 million people.)

The city of Minneapolis has been engaged in a very vocal discussion around this issue and in the following video clip you can get a feel for how the political positions have shaken out. The incumbent mayor has risen in his position since the death of George Floyd had him numb and silent. He is more confident and more assured about the path ahead and his contribution to the journey.

There are three other candidates in the conversation. One represents the left/Marxist progressive angle, then there is a the center progressive/climate action candidate, and lastly a very articulate representative of the immigrant community. All in all the clip is worth watching as it pulls apart some common themes seen across the democratic party more generally.

Minneapolis also uses rank choice voting, and the moderator raises the question of whether collaborative efforts on the part of two of the candidates fulfills the intentions of this form of democratic determination.

Jump to minute 17 to get right to the debate section of the hour long public affairs show.

From great grandma’s photo album

I love this old photo of my great great grandfather Anfinson at a political rally. He’s the one holding the flag. What a motley crew of citizens out and about supporting their favorite politicians. And lest you think there are no women involved in the political process, take a closer gander behind the mule to the left. A covey of proper women folk are gathered.

If they can handle the maintenance and advancement of American democracy, then I’m sure we can too.

From my cousin: It’s definitely Cambridge, where he lived:

This pic is Main Street in Cambridge Iowa. The buildings match up.

Cambridge, Iowa, Main Street

I think they’re either campaigning for, or celebrating the victory of 

Frank Jackson, Governor of Iowa 1893

http://uipress.lib.uiowa.edu/bdi/DetailsPage.aspx?id=194

This would make Anfin about 55 y.o.

Making Rules

One thing that bugs me is the lack of understand that making rules is more than making rules. A problem needs a fix. The answer is to make a rule for that! But requesting an audience to do something is foisting a power over them; it implies an authority and a compliance. It assumes that the work, or inconvenience, of following the rule has been judged to have a balancing positive effect.

More often than not, however, the rule making authority doesn’t follow through with compliance.

Recently, an acquaintance lamented that her town house association board was going through the complex, unit by unit, looking (most literally standing on the sidewalk out front in a little cluster) for unauthorized exterior embellishments. There was a rule on the books that owners were not allowed to litter the grass with such things as quaint stone benches, large urns overflowing with geraniums or petunias, or an artfully decorated signs bellowing WELCOME.

After a bunch of years of non-compliance, the residents of this twenty unit community were now going to be served notice to remove their horticultural self-expression. My friend didn’t want to give up her planters now that she had grown to enjoy them. Phooey on the rules!

How many municipalities set up ordinances which they cannot enforce and code compliances which go uninspected? Having the authority to do so, yet not following through creates complacency. Before you know it people are used to disregarding what is so carefully written down as community guidance. And worse yet, residents get angry and feel a suffered loss once enforcement action gets underway. If no rule had been written to start, wouldn’t the group be better off?

Writing rules, as a rule, needs to be taken seriously.

City councils and Core services

In the last few weeks, I’ve been listening to a lot of city council people make their pitch for the upcoming election. What has struck me is the number of individuals stressing that city councils are non-partisan in nature and the goal of the (mainly) part-time citizen council is to oversee basic city services. Basic as in getting the streets plowed and the garbage picked up. There is a definite less frills more nuts and bolts type of vibe.

Which is as refreshing as a jump in the lake after twenty minutes in a sauna.

One vibrant gal from a suburb which was built in the 50’s, you know the ones with the oversized, heavily treed lots partially covered by one level homes, won me over immediately when she expressed interest in hearing from all sides of an issue. Her family moved to the area when she was one and she, in turn, had raised her kids blocks from a park with maples and oaks. In her view her role is to preserve what is good about the city so others would settle in, as her family had done.

One issue she mentioned relating to housing was the desire to catch homes that need repair before they deteriorate to the point of being irredeemable. The typical municipal reaction to this is to enforce a truth-in-housing review of homes at time of sale, along with a possible repair obligations. A policy that’s a nice, if not evanescent, thought with absolutely zero effect.

Only a small sliver of the housing in a city is sold in a year. Distress in a building is a process which happens over decades. A roof, for instance has a 22-25 year lifespan. Damage from a leaky roof would result following many years of deferred maintenance. Putting the spotlight on the properties going to market continues to leave those which need help in the shadows.

The concern is real even if the solution is opaque.

Similar homes can have a range of pricing depending on how well they have been kept. Ones with new mechanicals command higher prices. Most properties have some sort of mix; a new hot water heater, old furnace, and ten year old windows. These settle in the middle of the range. And at the lower end the buyers realize they will need to jump right in and start making updates. But in all three scenarios the home is habitable. It is a viable shelter for the new owner. And the price is substantially greater than the price of a lot in the same neighborhood.

When the deferred maintenance meets a threshold where the market no longer feels it is viable- the extra kicker maybe settling cracks in the garage foundation wall, then the price drops noticeably. It hovers only slightly about the lot cost– positioning it for a possible tear down. This is the point where a lot of equity goes wasted. If some of the core mechanicals had been better kept, or the kicker ‘last straw’ flaw been averted, one could dodge the price dip.

Here’s where the city could forestall the shift from habitable to the mainstream, to demolish and rebuild.

The city could first play a roll by abolishing any type of truth-in-sale which is a complete waste of time, and second by directing services towards homes that are on the tail end of a slide. Owners in these situations are likely to be better off living in another type of property. Perhaps they need help decluttering, or with estate sale services, or a variety of non-profits which help with such things. Perhaps health issues are keeping them from making the switch.

Offering information and connecting people to service providers could help them to move before the property becomes unacceptable to main stream buyers. This will not only keep the properties in better shape it will facilitate a difficult move for a resident to a residence better suited to their needs.

Architect/Builder in Kenya says:

Here are some comments from an architect/builder, Sacrinos. (@dnahinga), in Kenya regarding the obstacles to building housing for the average Kenyan. Interesting throughout, especially the land use comments:

The pricing model in Kenya's Construction Sector/Real Estate is Colonial and Punitive.

It is akin to trophy pricing. All clients become as pricey as elephant tusks.

Let us reason together.

Short Thread 1/n.

After the Colonists grabbed Land and the Means, they quickly put up roadblocks to Home Ownership.

One being approvals for Self Expression

A house is the most express image of the Builder. Thus his native language

It was no longer possible to just build

2. Now if you have lost acres of communal and individual land, it is virtually impossible to Express your wealth as a fraction of the same Assets you lost.

You do not have the wherewithal.

So, it is a scorched earth where everyone must rebuild their wealth from scratch.

3. As the First Gatekeepers would have it, it's professional #misconduct to charge unprescribed fees.

A board has all powers to make laws, "for the scale of fees to be charged by architects and quantity surveyors for advice, services, and work done."
AQS Cap 525 (f)

Walk with me.

This is the formal housing cost structure in Kenyas #RealEstate.

So, the Colonists became the Levites in the sector. Basically taking a tithe from everyone that wishes to Build or be Adviced to Build.

What is the market effect? Facebook and Quacks* step in.

These powers need to be returned to the Free Market Mechanism.

This does not in any way encourage anti-competition but allows for competence, supply and demand to calibrate the lowest and highest prices people are willing to pay.

Intellectual Assets do not need Price Fixing.

Price Fixing of Intellectual Assets makes the Consultants unable to offer their services to the people below a Certain Wealth Threshold.

It also ensures and guarantees a thriving Black Market for Unprofessional Services.

It stifles growth in the Sector. We need to ReThink it

The current Top Down Board Sanctioned Pricing Model assumes all people who want to build have all the money.

All the Consultant has to do is to check a schedule and prescribe a % Fee.

It treats housing as a Noun and not a Verb.

Unfortunately, the next generation of Home Owners are:

1. Struggling with Savings.
2. Have practically little to no Assets to extract a %.
3. Can successfully build incrementally.
4. All the insider knowledge is NOT with the Gatekeepers. How will you stop people from building?

Reality Check.

Colonial Natives are now Digital Natives.

We innovate or die.

It is time to let the market mechanism allow for creation of an efficient, profitable way to serve the less affluent so we can stop looking forward to building towers only.

Set Architecture Free!

Dear Architect, Engineer, QS et al.,

Q. Have you lost clients because you tried to charge prescribed fees?

Dear Client. Have you lost a Professional because the prescribed fees was Impossible?

Let us see.🙏🏿🏡🏘🔨

If the 1933 Pricing Model was followed, Real Estate consultants would be controlling between 5% to 10% of all value created from their Consultancy Work.

Hypothetically, every 11nth Client would make the Consultant wealthier than any of the previous 10.

Project Value being K.

Originally tweeted by Sacrinos. (@dnahinga) on August 19, 2021.

Choosing is part of the deal

When we travel, I’m usually the one who figures out all the logistics. A direct flight to a not so distant destination is easy to plan. After weighing the various departure times and prices, and taking into account the shuttle service to the hotel or condo, the choice is relatively apparent. The type of trip can add considerations, like a ski trip includes extra luggage and a drive up to the ski hill.

Juggling a more complicated journey with multiple flights and modes of transport, requires further evaluation. This is especially true if you are toting along your kids whose complaints from discomfort can grate on you like finger nails on a chalkboard. So the analysis then insures extras like timely food availability and total travel time.

I’ve been having quite a time finding viable air travel to Kauai for our trip over the Thanksgiving holidays. I’m not sure how far west you have to go before Hawaii becomes a popular sunny destination. But Minnesotans generally go south to places like Cabo or Cancun, the Dominican or Costa Rica. It is even much easier to fly to Europe than to Hawaii. As a result the connections to the Aloha State are either quite irregular or considerably more expensive.

At every thought of my offsprings’ (and spouse’s) objections to waiting out layovers in the likes of Phoenix or Las Vegas, the dollars I was willing to spend for one versus two connections kept mounting. Then it occurred to me that they really needed to be in on the choosing. Since all the choices are middling to poor, we would have a more favorable experience if everyone decided on the deal.

It’s so easy to take something on and make the decisions. But to deny others the overview of choices is to deny them the ability to process two layovers and fourteen hours of travel. If the choice is made for them, and all the choices are subpar, then they will be dissatisfied no matter what.

It is similarly easy for elites, or politicians, or heads of non-profits to make choices for the vulnerable people they serve. Many times these choices are from a selection of far from ideal circumstances. But when the recipients are denied the ability to make a choice, they are denied the practicality of seeing how the result is still incrementally better than another option.

Was Rome’s expansion due to an understanding of platters?

My most underrated source of interesting books come from estate sales. You never know what you might come across, which is part of the fun of it. But you can be sure to see books that are not on the front tables at the bookstores. And you can actually stand there as long as you want sifting through them creating two piles: ‘maybe’ and ‘definitely.’

It’s a treat to come across a collection of philosophy books. Partly because people’s shelves often hold various genres of novels, but fewer homes house books on thoughts. I brought home a bundle a few weekends ago which included a Cornell University Press soft cover on the expansion of Rome. Chester G. Starr Jr notes:

If we are to understand the significance of Roman history and the reasons for the expansion of Rome, it is worth stop ping a moment to investigate this Roman character, as revealed in traditions and in religious beliefs. The traditions, which were preserved mainly in the family and so passed from father to son for generations, were often tied intimately with landmarks about the city; points such as the Tarpeian Rock, the Lake of Curtius, the Sister’s Beam, and others each had its tale pointing some patriotic virtue. Together, these traditions reveal a patriotic people who were above all else obedient to established, legal authority–the family, the state, and the gods.

The Emergence of Rome, As Ruler of the Western World by Chester G Start, Jr

When writers use the word tradition in this setting I really think they are referring to the work of the family, which ends up being in large part the work of women. The guys are off leading, soldiering or earning money. The women are maintaining the traditions. But note how clearly the groupings by mutual objectives are stated: family, state and gods.

Did the Romans understand better than anyone in their day that each of these obligations created an economic ecosystem or platter? That the mission of Rome could be an overarching ambition which left the families and their local cities free to pursue their priorities?

It appears that the Romans expanded across territories with a clear deal on the wind. Give us a few of your good men and you will be protected under the umbrella of the Empire. Other than that, we won’t tax you and you are free to go about your business.

As they advanced, the Romans opened up roads along strategic routes and established colonies of Roman and Latin families as permanent garrisons at key points. Land hunger certainly must not be discounted as a reason for the expansion of Rome; it has been estimated that conquered states on the average lost one-third of their land for the benefit of Roman settlers. Otherwise the defeated were not unduly penalized. They yielded control of their foreign affairs, they entered a permanent alliance with Rome by which they agreed to furnish a set number of men to the Roman army, but they paid no taxes and retained autonomy in their local affairs.

Furthermore the Roman infrastructure of roads, bridges and aquafers benefited the general public. The Romans understood how to give in public goods so that could gain what their warring faction desired, an army of the most physically able. A balance of exchange was struck between the multiple groupings of the public and the private.

Circus Maximus, Rome

The complexity of being affordable

Cracked crumbling asphalt is an unusual site in the more affluent suburbs of the Twin Cities. In fact the number of areas that would be considered distressed across the metro is pretty slim in relation to its size. So it’s a bit of a puzzle why the Four Seasons Mall in Plymouth, a relatively wealthy third tier suburb, has been left unused for the past twelve years.

First Wal-Mart purchased the site, but the neighbors said ‘no.’ It would draw too much traffic off the well traveled State Highway 169 which connects the Minnesota River Valley with the far northern points of the state, where the outfitter town of Ely serves as a portal to the boundary waters. That whole thing took a handful of years.

Then the city spent some time on getting a mixed use project approved on the sixteen acre site which included upwards of several hundred affordable units. Not bad for a fairly wealthy area of town. Here’s a news clip Plymouth Approves Four Seasons Mall Redevelopment – CCX Media explaining the project, and here is a commercial real estate synopsis on the site.

Just recently the whole project came apart because the tax credits were allocated to another project by the Fed’s scoring system. Two years after the community said ‘yes’ to welcoming a housing product that is often rebuked, a chart put together by bureaucrats says ‘no.’ Although I’ve been unable so far to find out where the subsidies were put to use, the feeling seems to be that the funding went to an area with greater need. Which I assume means an area with a higher density of people living in poverty.

Sure enough, according to a study on Low Income Housing Tax Credit, by the Urban Institute:

The program structure can promote the concentration of units in poorer places. Although the program only requires that 40 percent or more of the total units in the property be set aside as affordable, most properties are developed with affordability restrictions on all units to maximize the equity investment because only the affordable units qualify for tax credits. The allocation structure also provides an incentive to build in low-income communities designated as Qualified Census Tracts or Difficult Development Areas.

On the one hand political units like the Metropolitan Council maintain pressure on the greater metro to come up with their fair share of affordable housing unit, on the other hand the means of financing such rehabilitation and new construction can by politically allocated to neighborhoods already carrying more than their share of disadvantaged citizens.

If I were to house people who needed a little extra help in life, I would make the argument that it is sensible to do so in a community with a little extra time and expertise on their hands to help out. But I can’t choose where to house folks as I am not able to purchase tax credits along with friends and neighbors of similar minds.

The process simply isn’t that simple. Here’s a visual that is helpful.

Needless to say the multiple layers of bureaucracy add cost to the process.

LIHTC is an economically inefficient method for producing affordable rental housing. The process
of allocating and awarding tax credits is time consuming and complex. A study produced by the State of Washington found that it frequently takes twice as long to put together a LIHTC-financed project than one that is market rate, in turn contributing to higher legal and other transaction costs (Keightley 2017; Mitchell et al. 2009). Costs are also driven by the complexity of some LIHTC deals. A GAO (1997) study found that the process of syndication (pooling resources from multiple investors) can claim between 10 and 27 percent of project equity. LIHTC projects also have few incentives to keep costs low because reducing development costs would result in not using the full tax credit issued for the project (Mitchell et al. 2009).

From what I gather, low income tax credits are sold to any corporation who wants to invest in them. There is no mission, there is no sense of service. It is a pointy penciled transaction sketched out by a corporate CPA. Does it make more sense that a scoring system by the Federal government with a tongue twisting list of acronyms (CDBG,HOME,AMI, and 60% of this and 30% of that) be the mechanism for matching supply with demand rather than a neighborhood saying yes to affordable housing?

Honestly– the serpentine system seems to be more about keeping people out of the conversation than in it.

Nesting, Public Goods and Price signals

Public goods often exist in a nested structure. The household, the neighborhood, the ward, the city, the state. The classroom, the elementary school, the district, the states’ Department of Education. At what point is it clear that a rung on the ladder needs help in its delivery of the good?

Earlier in the month it was reported that a charter school, Cedar Riverside Community School, would be closing. It serves a neighborhood of high rise subsidized housing nestled between downtown and the University of Minnesota. Lauded as culturally sensitive in its delivery of education to a mostly Somali immigrant community, it has been plagued with threats of closure due to poor performance for more than a decade.

There are many good intentions, hopes and aspirations at the ground level for these types of grass roots public goods to be successful. But when are the price signals strong enough to cause the rung up the ladder to engage, and supplement the production of the good. When is the loss great enough to tip the efforts away from the local level and demand services from a superior level?

With the bright flood lights of the world stage focused on our metro and its racial disparities, it’s hard not to imagine that the closure comes in the wake of last year’s events. It seems pretty costly and inefficient to wait for a crisis to fess up to the fact that these kids were not being served by their neighborhood school.

Maybe the better question is what are the powers in play which dampen or misalign the the signals of lost public good delivery? What stops the natural interactions of feedback and improvement that occur through the system elsewhere?

I can only speculate from afar, but it seems to boil down to two components: structure of (for pay) jobs and positions of power. An enterprise, whether a company or a school is composed of an interlocking group of paid employees. These are entities composed of W2 workers whose livelihoods depend on keeping the boat afloat. A company will sink if it fails to attracts consumers. As long as a school has a pool of students within its attendance boundaries, it will receive funding.

In a typical neighborhood, people with school age children will leave the neighborhood if they feel the schools are inadequate, while others would-be-buyers into the neighborhood will look to settle elsewhere. The dynamics is a little different in a neighborhood like Cedar Riverside as many of the residents are tied to their housing through subsidies. The lack of mobility creates a type of monopoly on the residents both for their support of the school as well as the political structure.

The end result is that the price signals–the signs that the pupils are failing to receive the public services which inevitably are an expense to them and their communities later in life–are muted. They are not able to exit. Their presence in the group is taken for granted by those in paying jobs and those with political power.

Mn political news

The first surprise this morning was that Minnesota did not loose a congressional seat as feared. It appears we kept our seat whereas New York lost one. Our population keeps on growing despite the cold winters temperatures!

The second bit of surprise news is the large field of right leaning candidates in the Minneapolis city council race. All thirteen councilpersons are up for reelection this fall. The council president has chosen not to seek office.

Framing

Framing offers multiple perspectives.

Wouldn’t it be great if you could put a frame around a conversation so when voice(s) try get a hold of the markers and run straight off the canvas on some doodle, they’d hit the edge of it and come ricocheting back to finish the project at hand?

The ability to reframe an image quickly has taken a lot of uncertainty out of successful modern photography. Whereas one once spent time manually capturing the image through the lens, now one worries mostly about high resolution. Unhappy with tipping or cropping? A few clicks and it’s done! Take one photo and clip it four ways to tell four stories.

Framing topics of discussion is not so simple. There can be lack of guidance as to what information is admissible, as to the boundaries of the topic. And that’s just the subject matter, data, facts. Then there is the obscurity of the wealth, or limitations, of your interlocutor’s personal experiences.

Roya Hakakian, an Iranian-American poet, has a new book out: A Beginner’s Guide to America for the Immigrant & the Curious. In an interview today she explained that her writing is a way of showing the American people what is like to be an immigrant in a foreign land. And through this process help people to reframe issues.

But what if the audience in question has very few points of reference?

For instance, when I returned to the US in the early 80’s to attend a small liberal arts college, I befriended woman who had never been allowed to venture to downtown Minneapolis. The 8 mile trek from her affluent first tier suburb was considered to risky. To entertain a meaningful discussion about safety when the granular degrees of life’s experience are so excessively narrow in one instance, and so comprehensively broad (so as to include a childhood immersed in revolution and an eventual flight from one’s homeland) seems improbable.

And what is challenging in public conversation, is that more times than not, you do not know your interlocutor’s framing. Are they looking at the river in the upper left photo, concerned primarily about water quality? Are they focusing at what is going on beneath Hennepin Avenue Bridge? Do they just have the bridge in focus as a source of river crossing and transport? Or are they in those tall condos valuing the view of the river and the Minneapolis skyline beyond?

When two people fail to find common ground for the basis of a discussion, the outcome is frustration and a few slurs on Twitter. Irritating yes, but there are worse things. Here is a case where lack of framing leads to detrimental rule making.

Say a city was weathering a period of fast rising rents. Maybe this inflation was even due to a catch-up period as real estate prices had been atypically low in preceding years. But the acceleration scares people. Especially young people with short time horizons. So they rally and want action. They point to the recent data to convince the public that markets must be constrained. If not the 4%, 5% increases will continue to 6%,7%,8%!

The data over a long term, however, shows a modest increase in annual rents of, let’s say, 2%. The city council members prefer to keep their framing on the short term as this is most effective. It seems there maybe a role here for the Federal Government. If rescue funds were made available (like Covid funds are now) to the truly needy after a sharp increase in rent, then the gut reaction to impose rules would be muted. The demand for action satisfied.

Having a rescuer of last resort whose view isn’t immediate, whose view expands to a longer timeline framing, who steps in to ease the burden of those disproportionately effected, this could deter four year politicians from rewriting rules with over a century of good standing.

Whereas less rules keep us nimble in our special combination of an open economy and liberal democracy, erroneous rules take time to undo, reek havoc and prevent progress. Every tier of government can use its framing to ease demand for bad policy.

Truth-in-Regulation

A few days ago I suggested that home buyers and sellers, at least while in the process of a transaction, do not place monetary value on a city’s truth-in-housing process (TISH). Whether the city mandated point-of-sale ordinance contributes to the transfer of property is not a new discussion. It’s not even controversial in the sense that the handful of cities which require the inspections are steadfast in the process and very few new cities have ventured down the road of its implementation. You can read the Minneapolis Realtor Association position statement on the matter here.

Let’s consider the expense of the regulation in a modest suburb of 23,000 households which experiences a ten percent turnover in any one year. The city collects a fee of $250 x 2300 or $575K to cover the costs of TISH. By design this fee pays inspectors on staff and the administrative burden of processing the certificates. Financially it is a wash through the city coffers.

What exactly do the residents get for the $575K? The idea, of course, is that the condition of the housing stock is elevated to some degree. As you can read in the position statement this reasoning is flawed, at least in a relative sense. The properties that come to market have been prepped and prettied up. Buyers often require sellers to do repairs before closing based on their own private inspections. Furthermore new owners, in their excitement, invest further in mechanical and cosmetic improvements. Just ask Home Depot.

The truth-in-housing process does double duty to the private process of a more comprehensive inspection. The city is perhaps better prepared to catch failures to pull or complete permits, but that is also covered in the disclosure process required my Minnesota law.

Regulations are needed. They are desired. Let’s just be as efficient with them as possible. If the objective is to elevate housing stock, I would argue that constituents may choose something other than TISH. They may choose for the $500K to be shoveled back into clearing up permits for the least advantaged households in their community. They may choose for the city to carry out TISH on properties that have not pulled a permit in the last fifteen years.

Many mechanicals have an average 15 year lifespan: appliances, hot water heaters, even furnaces. In a fifteen year window roofs might be replaced, window and doors. There’s a good chance that these households are not pulling permits because they either suffer from lack of money or the ability to tackle large projects. Wouldn’t this be a good use of half a million? To aid those who are not able to help themselves with their housing maintenance?

I don’t claim to know how a city’s population would respond. But I know the present system doesn’t even allow the conversation to happen. (And those with the most expertise in the process are quite deliberately left out on the permis they are only capable of self-interest.) Establishing a periodic rethink of regulations refreshes the figures, and the costs, the possible alternatives, and the goals.

Wouldn’t it be great if truth-in-regulations were right there, printed on glossy paper, with all the other summary reports of a city’s performance?

Market Value of City Inspection : $0

The housing market is marching to pomp and circumstance as apartment dwellers and condo owners are graduating to detach single family living. As this Star and Tribune weekend article announces, “In risky move, buyers waive inspections in red hot Twin Cities home market.”

Everyone benefits from an inspection. Buyers learn what it is they are buying, and sellers are far less likely to hear about conditions issues after the fact. The average home owner has somewhat limited knowledge of all the mechanicals in a house, and first time buyers are truly limited in their understanding of not only how it all works, but more importantly which items are costly.

It is risky for the average buyer to accept a home without an inspector’s professional opinion. The fear is that hidden behind some panel is a terrible crack in the foundation or behind an electrical panel cover is a box about to be set alight by over-fused breakers. So wouldn’t you think there would be some value placed on a city’s truth-in-housing process? This is a process where the city requires the soon to be seller to have a city inspector come to the property and do a less thorough review, yet still a systematic evaluation of the structural features of the home.

The city collects a permit fee somewhere in the $200-250 range, produces a report, and sometimes request repairs. Yet never once in over twenty-five years have I heard a buyer say, “I don’t need to get this home inspected because I know xyz city has done one already.” Even in these fiercely competitive times when buyers are bidding on three, four, five houses before securing a purchase, they hang onto the inspection contingency.

If the actors in the market do not value the city inspections, who is receiving a benefit from the $250 being spent on the housing market? The seller is simply complying with the rules. The buyers, even the ones who only want assurance that the home won’t collapse around them on the day of move-in, don’t value it. Anyone not involved in the transfer of property, pay no attention to it.

City officials when considering a truth-in-housing ordinance say things like, ‘preserve the housing stock,’ and, ‘get in there and look around,’ and, ‘make sure they are keeping things up.’ I doubt the money is a profit to the city, maybe a breakeven. It seems that the $250 times thousands of transactions per year is the expense to feel like something is being done.

It wouldn’t be that hard to investigate the subject, especially in this market. There is an advantage for a buyer to waive the inspection as the seller will consider the offer more favorably over another; the sellers will not have to wait a handful of days to know the transaction is finalized. Simply tracking transactions between two cities, one with a truth-in-housing and one without would determine if there is any consideration given to the report.

In the reports that city’s send out to constituents pie charting out how they spend their tax dollars, it might be beneficial if city’s also had to justify the benefits of their permitting expenses. Instead of a truth-in-housing, a truth-in-regulation.

Talk of Short Sales- How can that be?

After a steady stream of buyers came through my new listing today, it’s hard to believe some people are out preparing for what is being presented as an inevitable wave of short sales.

When I sold this mid-century modern home to my clients in 2010 the listing sheet bragged that it was not a short sale, that the folks on title as owners did not have to beg permission from a lender to sell their home. A little over a decade ago buyers in the marketplace had become weary of dealing with corporate interests who had to forego of some profits in order to allow a sale to proceed. What we call a traditional seller was a valued party to the transaction.

With demand for single family homes peaking as inventory shrinks, the days of bank owned properties are part of a foggy past. But maybe it makes sense that the reason for the inventory shortage is in part due to the protections in place for all those distressed sellers who would have had to jump in the game and let their homes go to market. Once a past due seller realizes they can live rent and payment free, why not coast it out.

If the incentives are there, that is exactly what should be anticipated.

One fellow realtor went to a class recently offered on the topic, and said the presenter had some pretty astounding numbers. They are predicting a tsunami of distressed property once Covid protections are lifted. Time will tell how demand absorbs it all.

Can it be more than just about coin?

Biden’s 1.9 trillion relief plan is a little too enormous for me to get my head around. The magnitude of federal numbers just makes my eyes blur over the page. There is no anchoring the size of these things to my everyday life.

But if I can’t talk about magnitude, I can talk about structure. The goal of the bill is to engage the US economy as well as shore up people’s unexpected and uncontrolled loss of income; to keep their lives right side instead of upside down (which subsequently causes an economic drag on their greater groups). And then to get them back to employment where income can be feathered back in to the economic apparatus.

I’m all in favor of transfers for the first part. They work efficiently.

But I think there is a missed opportunity in the second part. Engaging idle labor from folks who are not destitute nor in need of transfers is low hanging fruit. As explained in this post about The Crafter The Contributor and The Covid Tracker, there are high skilled individuals available to donate labor if they are enticed by the objective at hand.

There are successful national service programs like AmeriCorps and the National Guard. Would it be so hard to have a property repair civil service? Ask any builder about the shortage of construction workers. What about a write-off for plumbers and sheet-rockers and electricians who’d be willing to have an apprentice tag along to fix a faucet at the local homeless shelter, sheetrock in a storage room at the food shelf, or replace all the gym lights with LED fixtures at the community gym?

A money transfer won’t teach a trade, nor will it make a connection between a potential employer and up-coming employee.

Inciting Violence?

MINNEAPOLIS (AP) — Some Minneapolis City Council members are preparing a new plan that seeks to replace the city’s police department in the wake of George Floyd’s death.

Phillipe Cunningham, Steve Fletcher and Jeremy Schroeder are working on a proposal to create a new public safety department that removes the police department as a standalone department from the city charter.

The three are still working on their plan and expect to release it by the end of January, the Star Tribune reported. It would require voter approval.

Cunningham told the newspaper that the proposal might place oversight of the new department on par with many other city departments, giving the council legislative authority while the mayor would retain executive authority.

Minneapolis council to try again with plan to replace police (apnews.com)

Radon Be Gone

The EPA has designated January as National Radon Awareness Month. “Test. Fix. Save a life.” is their tag line.

Those of us in the business of helping folks buy and sell homes, have been hearing about the health concerns emanating from radon seeping into homes for the past twenty years. In the first part of the 2000’s, health department officials encouraged buyers to test for radon at time of purchase. Radon was listed alongside a variety of other environmental concerns on the state of Minnesota mandatory seller’s disclosure.

Consumer response to radon did not match the government’s concern, and in 2014 the MN Radon Awareness Act went into effect. The variation in apprehension is best represented by the amount of space now dedicated to the topic in the seller’s disclosure. Lines 279-309 (2020 version) of the body of the disclosure speaks to radon alone–more lines than wells, septics, or any other topic. And two pages of information regarding the detection and harm of radon gas were tacked onto the end. Out of a twelve page disclosure virtually three pages, or one quarter of the document, is now devoted to radon (as opposed to foundations, or water penetration, or roofs).

The new disclosure established an industry standard which dictates the seller is obligated to mitigate a home which tests above the 4 cPi/L established by the EPA. It’s unclear if buyers request the install due to fear for their health, or because they don’t want to be the sucker-who-got-stuck-with-the-bill at a later date, when they go to sell.

Over the course of implementing tests and installations there have been some inconsistencies which have resulted in the need for a final arbitrator. For instance, a few years ago an inspector turned off the air exchange system that a seller had installed in his 1920’s home to enhance the heating and cooling functions. The EPA guidelines state that HVAC systems should be running as normal during the test. However, since this air exchanger was located in the attic (not in the basement) the inspector felt it was an extraneous appliance and turned it off.

The reading came in slightly over the benchmark of 4 cPi/L. As it had already been a contentious negotiation the seller refused any additional compensation. The buyer choose to use $1200 (compensation negotiated for a cracked clay chimney flu) on a radon mitigation system that would not be necessary had the exchanger been left running. They chose between fire safety and radon safety.

By early 2019 licensing of inspectors who perform radon testing was implemented to handle the inevitable variations in the use of the testing apparatus, including decisions regarding air exchangers. Since the MN Radon Awareness Act went into effect, a whole industry of inspectors (tests range from $180-$240) and mitigation installers (system installation ranging from $1000-$1800) as well as a bureaucracy to monitor and deal with complaints, has been established.

Background

The story the Minnesota Health Department has been stressing is that cancer is the leading cause of death in the state. But the leader is all cancers. Mortality rates for cancer vary within demographic groups, but generally, lung cancer makes up around 25% of cancer fatalities. Radon is called out as the second leading cause of lung cancer after cigarette smoking. What they don’t say is that radon is lumped in with second hand smoke and accounts for just 12% of the cases of lung cancer.

MN Leading Causes of Death, 2017DeathsRate***State Rank*U.S. Rate**
1. Cancer9,896146.836th152.5
2. Heart Disease8,230119.150th165.0
3. Accidents2,78844.638th49.4
4.  Alzheimer’s disease2,47434.923rd31.0
5. Chronic Lower Respiratory Disease2,46436.339th40.9
6. Stroke2,25032.640th37.6
7. Diabetes1,31219.336th (tie)21.5
8. Suicide78313.838th14.0
9. Flu/Pneumonia6979.948th14.3
10. Parkinson’s Disease67510.23rd8.4
Taken from the CDC’s website

Feel free to chime in if I’m doing my math wrong, but a quarter of all cancer cases is around 2500 (lung). Then twelve percent of that number is 2500 x .12 = 300. In other words, death due to radon isn’t even on this top ten chart. It accounts 38% of the souls that commit suicide.

From the keys on my calculator, I have death from radon registering in at no more than 5 per 100,000. Below this grouping of accidental deaths which make up 6% of all deaths (from MN Department of Health):

  • Falls (2.7%): 21.1 per 100,000 population
  • Accidental poisoning: (1.6%) 12.8 per 100,000 population
  • Motor vehicle (1.0%): 8.1 per 100,000 population

The average Minnesotan is four times more likely to die from a fall, twice as likely to be accidentally poisoned and slightly more likely to die in a car crash. The claim that more than 40% of homes in Minnesota are contaminating people’s lungs with radon gas and killing them is not jiving with consumers’ personal experiences.

Nationwide Agenda from the EPA

One has to assume that the MN Health Department is following a directive for radon procedures from the EPA’s national agenda. However the EPA offers not one article newer than 2003 on its website to validate research tying lung cancer to levels of radon in homes.

A paper from Korea, which looks at the topic using measures of radon in homes, was published in March of 2016 and is the most recent academic paper I could find. It too references almost exclusively research papers written prior to 2000. Ji Young Yoon et all (Department of Humanities and Social Medicine, Ajou University School of Medicine, Suwon, Korea) wrote “Indoor radon exposure and lung cancer: a review of ecological studies” which was published in The Annals of Occupation and Environmental Medicine. There had been no studies to date in their country. They found:

For Korea, we observed tremendous differences in indoor radon concentrations according to region and year of study, even within the same region. In correlation analysis, lung cancer incidence was not found to be higher in areas with high indoor radon concentrations in Korea.

Scanning the bio’s of the faculty at the College of Design at the UMN, not one cites an interest or expertise in radon. There seems to be a lack of interest in funding or pursuing this topic.

How can we be following guidance that doesn’t appear to have been updated or even reviewed in the last ten years?

That was then this is now

Furthermore there has been a dramatic decrease in lung cancer’s claim on lives.

The death rate from cancer in the US declined by 29% from 1991 to 2017, including a 2.2% drop from 2016 to 2017, the largest single-year drop ever recorded, according to annual statistics reporting from the American Cancer Society. The decline in deaths from lung cancer drove the record drop. Deaths fell from about 3% per year from 2008 – 2013 to 5% from 2013 – 2017 in men and from 2% to almost 4% in women. However, lung cancer is still the leading cause of cancer death.

American Cancer Society

The American Cancer Society estimates deaths from all lung cancer in MN in 2021 will come in at 1950. Twelve percent of this is 234.

Time has changed the circumstances but there has been no release, or at least, re-evaluation, of the protocol. It’s like everyone moved-on and no one told the bureaucrats. So they keep RADON at the top of their checklist of ‘to-do’s. Meanwhile a whole industry of inspectors, installers and licensing and compliance people are settling into a new market.

It’s that mindset that if, ‘We can save one life!’ Then it is all justified. Yet–if 2020 has taught any lessons it is, that even in lives, there are trade-offs.

Costs

In 2019 closed home sales in the 16 county greater metro area (Minneapolis Area Association of Realtors) came to just shy of 60,000 transactions. Take out new construction (10%) and townhomes (25%), and take out a few for opting out of radon testing assuming 36,000 test were performed. A radon test performed by a now licensed inspector averages $200. The (conservative) amount spent on radon testing in 2019 totals $7,200,000.

The MN Department of Health estimates that 40% of homes in MN will test over the benchmark set by the EPA as hazardous to one’s health, or 4 pCi/L. That would lead us to expect that 40% of the homes tested high and negotiated the installation of a radon mitigation system into their purchase. At an approximate average cost of $1200, that comes to a total expenditure for the state of MN to (36000 sales x .4 x $1200) $17,280,000.

Based on these numbers, Minnesotans spent nearly $24,480,000 on mitigating radon in 2019. The tag line from the ‘EPA Test. Fix. Save a life’ promotes an image of each install resulting in fewer deaths to cancer. But is that true?

The amount of money our metro community spent on radon is a flash in the pan compared to a state budget or even a (metro) county budget. But $24,480,000 for community associational groups, who are on the ground interfacing with those struggling with mental health and substance abuse, it is a pot of gold. And that’s where the money should be going. When a 70+ year old passes, it folds into the course of life. The impact of a father OD’ing, leaving young children behind, or the death if a youth, high on the latest street drug, will galvanize community effects that reverberate, even to the point of burning down a mile stretch of buildings.

Wouldn’t our communities be better off by spending that $24,480,000 on mental health to deter suicide? Wouldn’t this, for instance, help with community policing? I say yes.

Motivations and Spheres

The difficulty, of course, is that we can’t transfer the $24 mil from the radon pocket to the mental health pocket. Government used their ability to pressure a commercial endeavor to set up the radon industry. In fact, with the death rate for lung cancer dropping, it almost feels like the health officials are spurred onto be more aggressive. “We’re doing so well making widgets, lets make more!”

Unfortunately this is a business mindset, for work in the private sphere, one that seeks to expand and grow. The public good mindset is quite the opposite. Since the work in the public sphere is often performed to prevent something from happening–as in this case, to prevent lung cancer. Once that is accomplished, activities should cease, and resources reallocated to other demands of the public that now climb up to a higher priority.

In the meantime, the industry standard for radon testing, at time of a house purchase, has created paying jobs for inspectors and bureaucrats. Quite naturally, their motivation will be to support this new structure from a private point of view. It is not part of their employment to evaluate whether this the best use of societal funds. The inspectors and installers and continuing ed teachers and state licensures and public health workers will support the process because it pays the bills that support their families.

What happened to the feedback loop? Where in the system should there be a check to see if programs are on the right track? Feedback has been stifled because to criticize the noble cause of saving life has not tolerated.

What I am and what I’m not saying

I am not saying I have the expertise to validate or deny the tie of radon in homes to lung cancer.

I am pointing out that public health officials have struggled to get this issue to take traction in the public mind. I am saying that no research in the last fifteen years has validated our present path to safety (and one study has countered it). I am saying that an industry, in the private sphere, has sprung from these government actions, draining over $24,480,000/year from community funds for this issue. I am saying death rates from lung cancer have plummeted in the last ten years. I am saying there is no feedback loop to public officials to demand a review. I am saying it is no longer good enough to make one agenda and then push it through for a decade without any consideration that time alters all things.

For a generation there has been the activist approach in government. Select a cause; implement it nationwide; get the talking points out to all the communication outlets so it is heard in stereo; then never relent. I am saying that this is no longer good enough.

The Iron Lady- movie review

I’ve been a big fan of Meryl Streep ever since Sophie’s Choice (1982), but for some reason hadn’t gotten around to watching her portrayal of Prime Minister Margaret Thatcher in The Iron Lady (2012, directed by Phyllida Lloyd, a British film director and producer). It seemed like the perfect match-up for a Saturday night: the story of the first women to rise to the highest political office in the UK brought to life by a favorite actress.

Yet-I found this movie perplexing. The film opens with a batty old lady stumbling around a shop, buying a pint of milk. I could barely make out Meryl and was confused how this could be Thatcher, who putters anonymously along the streets of London. Getting wise to the technique of starting a story at the end of a life, and then filling in the important stuff in a retrospective, I sit back and wait.

And wait. Nearly half the film is about an elderly lady hallucinating about her kind and beloved husband. It’s a touching story, but not exactly what the most powerful woman of the western world in the twentieth century is known for. The message seemed to be that this woman had a supportive father as well as a devoted husband- lucky girl! That’s how she managed to enter the halls of power.

Even when the film gets around to her accomplishments, they leave out interesting details, like that she was a chemistry major. No information or encounters in her subsequent academic pursuits, or early years. We do discover her husband was a businessman and also a family man, but isn’t the story about her?

More often than not the portrayal of her career lands on the tragic- such as the scene where she is writing letters to the families of the servicemen who died in the Falklands War. No mention that the conflict was provoked by an Argentinian invasion on April 2nd, 1982, and was wrapped up with a decisive victory by June 17th. What does a girl have to do to get a little recognition?

An overt concentration on the loosing side of her political career continues through the whole film, from the riots following her proposal of a “community charge,” to the waning of political judgement after so many years in office, to the tears that spring to her eyes when she resigns. Yet the voice of her husband pipes in, “Chin up old girl.” There’s Denis with his unfaltering support.

This representation of Prime Minister Maggie Thatcher, the longest serving prime minister of her generation, blessed as a dementia patient so she doesn’t have to relive a faltering political career, is more than a little odd. Any female who started in a grocery store and rose to lead men, not listen to them, must have been– spellbinding.

It’s not even difficult to find her admirers. Check out the level of reverence in William F Buckley Jr’s voice as he introduces her in this clip from Firing Line. Meanwhile, she sits in her chair composed and alert, neither aloof nor nervous. Just present. This was 1977. Two years into being the leader of her party, and two years away from being elected to the top job.

It would have been far more interesting to tell the tale of how she discovered and cultivated her ability to captivate her male (and female) counterparts. Instead of showing how two men coach her into a new hair do and enhance her elocution skills (ho hum), how about the moments she went from awkward to confident, from nervous to calm, from hesitant to determined? How did she come to realize her je-ne-sais-quoi?

Meryl Streep took home the best actress Oscar for her performance. I just don’t think she was playing Maggie Thatcher.

Photo of the day: Minneapolis City Hall

Home to the Minneapolis City Council

The building, located at 350 South Fifth Street, is an example of Richardsonian Romanesque architecture. The design is based upon Henry Hobson Richardson‘s Allegheny County Courthouse in Pittsburgh, Pennsylvania. Washington School, the first schoolhouse in Minneapolis west of the Mississippi River, was demolished to make way for the new building. Groundbreaking took place in 1889, and the cornerstone was laid (a story off the ground) in 1891. Construction did not officially end until 1906, although the structural exterior was essentially complete by the end of 1895. The county began moving in to its side (4th Ave.) in November 1895, while the city (3rd Ave.) side was not occupied until December 1902. Cost was about $3,554,000, which works out to 28¢ per cubic foot ($10/m³).

Minneapolis City Hall – Wikipedia

Graffiti and Barricade Building

In a recent paper, Balancing Purse and Peace:Tax Collection, Public Goods and Protests, Benjamin Krause from UC Berkley evaluates state capacity in Haiti. From the abstract:

Strengthening state capacity in low income countries requires raising tax revenue
while maintaining political stability. The risk of inciting political unrest when attempting to increase taxes may trap governments in a low-tax equilibrium, but public goods
provision may improve both tax compliance and political stability.

The author predictions are very intuitive: 1. decreasing pubic goods (in this case garbage collection) and fines decreases tax collection. 2. increasing public goods increases tax collection. What is interesting to me are the variables he chooses as benchmarks. The research measures the public willingness to pay taxes while tracking their voice as expressed in graffiti and the amount of time some members may spend on barricade building.

… I introduce two novel metrics for independently measuring political
unrest. First, to measure political speech, I conduct a census of and geo-tag the graffiti
across the city. I then use the presence, prevalence, and tone of political graffiti specifically
as outcomes of interest. Second, to measure the most violent or destructive political unrest,
I track the construction of barricades in neighborhoods which are built, and often lit on fire,
as a form of protest in this setting. Tracking both where these are constructed and which
areas are affected provide additional outcomes of interest. As a result, I am able to provide
novel experimental evidence of the effects of both tax collection and public goods on political
unrest – and on violent or destructive unrest in particular.

In my model I propose that in the public sphere, goods are provided when the voice of the group expresses a need and people are willing to do work on behalf of the objective.

In this paper the author measures voice by tracking graffiti. Lack of graffiti speaks to an endorsement of the state or a sign of favorable response to provision of garbage collection. And he measures work as the number of hours spent building barricades to protest against the state. Where lack of work is an endorsement of the state.

Exciting to see something similar appearing in an academic paper.

TOPA – Links

TOPA (Tenant Opportunity to Purchase Act), a proposal to offer renters the first right of refusal when their landlord wants to sell the property, is back on the front burner at Minneapolis City Hall. Some politicians see giving tenants part of a landlord’s property rights as a way to mitigate the expense of housing. The only perspective where this is at all rational, is from the view that property owners are simply sitting on a sack of gold coins which they refuse to share.

A story which is meant to support the tenant’s first right of refusal as a valid policy is told here: Tenants of Five Minneapolis Buildings Now Own Their Homes. Yet this suite of buildings was owned by a truly poor landlord. And because the guy was a fraud, the tenants acquired the buildings without TOPA. It will be interesting to watch the unfolding of this tale as more than likely these properties are run down and will have expensive repairs in the coming years. I’m expecting buyer’s remorse.

To understand the process and in turn the length of time a property could be tied up before sale, here are TOPA process charts from Washington DC. The financial power behind owning an asset is the ability to sell it and obtain your investment. When that ability is in question, markets do not respond well, hence value is affected. The TOPA process is considerably uncertain.

I attended this TOPA forum at the UMN presented by CURA. The presenters were Dominic T. Moulden is a longtime resource organizer at Organizing Neighborhood Equity and Michael Diamond, Professor of Law at the Georgetown University Law Center, teaches corporations, contracts, and a seminar in affordable housing. The non-profit housing community in attendance seemed skeptical.

NBC news covered how TOPA rules tie up the sale while parties arbitraged the TOPA rights to the highest bidder. (video) Although in effect since the 1980’s, it was more or less forgotten until Andrew McGuire Esq started a business ‘getting renters maximum dollar’ for their TOPA rights. He estimates it’s a 100 million a year market.

In San Francisco they call it COPA. And it is not the tenants who make the purchase but a pre-selected non-profit. Also from 2019:

If approved, the COPA would give the first right to purchase (this includes a first right to offer to purchase and a first right of refusal to match an existing offer) vacant lots or residential rental buildings with three or more units to nonprofit housing organizations.  This means that when an owner of a multi-unit building puts it up for sale or has received an offer to purchase, nonprofit housing organizations that are pre-selected by the City would have a chance to bid on the building first or to match an existing offer.

Oakland is considering something similar- January 2020.

It’s not A Field of Dreams

According to NorthStar MLS, of the 699 duplexes or triplexes sold in the last year in Minneapolis only 14 of them were built after 1970. For fifty years this simple multi-family form of housing has more or less been ignored. They are few and far between in suburbs, undoubtedly for the same reason.

The numbers work in favor of affordability. Here is a developer’s breakdown:

So significant were the feelings against this type of housing that, despite having lifted single family zoning in Minneapolis earlier in the year, additional obstacles are preventing their creation. Restrictions such as building heights and parking throw enough of a question mark into the approval process, that developers are bailing on the idea before even approaching the planning commission.

Over the years I’ve heard of individuals using duplexes as their first steps to becoming real estate investors; then there was a story of elderly sisters going in together on a building so they could live out the remainder of their lives as neighbors. Small multi-family buildings fit right in with single family homes unobtrusively. It would be nice to see more of them.

Money & Safety

On Friday the Minneapolis City council voted 7-6 to fund hiring outside police from the Hennepin County Sheriff’s department to assist with the crippling crime increases within the city. This pecuniary decision to support the MPD is the first since the defund announcement in June. The discussion between the council members and Chief Medaria Arradondo was tense. You can find a recording of the full meeting here.

Fortunately, reporter Mark Vancleave with the Star Tribune, reduce the two hour meeting down to a 9min video clip of highlights:

The council members come at the discussion for approving the funds from a variety of viewpoints. The strongest defund voices place all the work of street safety at the policeman’s door. Money is raised through taxes, salaries are paid to cops, crime statistics measures their performance. The deterioration in safety is all on the police so there is no economic reason to purchase more of a failing service.

The mid-road view is best expressed by Lisa Goodman. She provides several examples of her constituents being assaulted and carjacked and being afraid to leave their homes. She mentions some of the extenuating circumstances following George Floyd’s death including the riots and the retirement of a large segment of the force. In her view, they are purchasing more police power for better response times and general police work.

The wholistic view of policing is voiced by Andrea Jenkins (8min). She maintains that the community must engage with the police force. That the community is also involved in the work to maintain order and safe streets. She is probably the only one who could have voiced this view when put at odds with the defunders.

This view isn’t new. Back in the 1960’s Jane Jacob’s spoke to eyes on the street. Although it is accepted informally that community participation makes a difference, there is no accounting for this type of work. National night out, block watch groups and such are one of those ‘oh isn’t that neighborly’ things that people do. Not a hard cash-in-your-hand transaction.

If public safety was accounted for not only by city budgets to pay officers, precincts, detectives and administrators, as well as by public participation, prevalence of criminal elements, then we would have a universal accounting of the forces that contribute to safety. We would not only want to considered the time people put into surveillance but also the losses people incur when they go back on their group and turn in a criminal.

Instead, some council members are accused of being disingenuous for trying to deny this very real system. They deny it in order to advance another objective which lays beyond their power. But whilst they hijack one economic process in order to engender a social outcome elsewhere, Minneapolitans are getting shot.

This would never happen in MN

I’m not tuned-in to how new construction is done in China, but I can say why this would never happen in Minnesota. Clients are on a time-line. They would not proceed with a purchase agreement until a somewhat (within 30 days or less) firm closing and occupancy date was clearly possible. The project would have to be far enough through the city approval process to be assured of no delays. With the hint of a builder’s lack of ability to retain tradespeople, buyers will shift to a builder that has deep enough pockets to hang onto good workers.

In a very hot market, buyers will put down money to hold lots or condo units pre-construction. This dollar amount is a small fraction of the total cost of the unit. If the developer went bust, those funds could be at risk. Only in the relatively small number of custom built single-family homes do clients risk a construction loan, where the builder receives disbursements from the bank over the six month period it takes to build a home. But the timing would never put the buyer on the hook for the full amount of the mortgage.

In other election news

The presidential race gets the lion’s share of election attention, but communities all over the US are taking care of business. Barber Township sits down on the Iowa border and needed to establish who was responsible for the ditches on the town roads.

Straight north to the Canadian border, International Falls said yeah to chicken coops out back.

Drop down past Black Duck and Leech Lake Reservation to Rogers Township where they pulled a draw on whether or not to appoint a treasurer. Four votes, split 50-50.

All ballot questions are here, at Minnpost

Neo Liberal–Twitter

A thread by Ben Winegard

“Neoliberalism is a complete failure”

I mean unless you care about poverty, literacy, life expectancy, and freedom. Oh, but neoliberalism really is a catastrophe to social conservatism, you say. Think again!

Nonelites can now read. That’s kind of cool!

Another cool thing: Children are not dying anymore.

If you are into political freedom, we even have something for you!

Pop quote!

To add to the fun, there will be a prize for identifying the location of this photo as well. C’mon, it is easy! Post in comments.

“The notion that there are many values, and that they are incompatible; the whole notion of plurality, of inexhaustibility, of the imperfection of all human answers and arrangements; the notion that no single answer which claims to be perfect and true, whether in art or in life, can in principle be perfect or true – all this we owe to the romantics.”

Is it so simple?

Nathaniel Rachman writes in Persuasion about how the simpleton manifestos originated in the 60’s and 70’s.

In their 1970 classic The Politics of Unreason, the sociologists Seymour Lipset and Earl Raab coined a word for this black-and-white thinking: “simplism.” They defined it as “the unambiguous ascription of single causes and remedies for multifactored phenomena.” 

He notes that these one line policy responses were clung to by the political extremes. Whereas now it is fashionable to reduce all policy to a slogan. In the same way that it is now fashionable to be an activist.

If I retell the last four years as a simple story, it would go something like this. America’s Heartland felt sold out and left behind so they hired Trump to shake things up to make fun of the sharply educated, networked and shined-up coastal internationalists. They demanded that the nation refocuse on the nation itself. As a counter-response the 60’s political types went into a high-gear-radical-simpleton response, unleashing their swarm of buzzing bees on all the social media electronic waves.

For months following the election an acquaintance on Facebook spewed like a fire breathing dragon, reposting every negative commentary topped off with an acidic remark. But her sphere was at odds recently when a well funded Melton-Meaux challenged incumbent Ilhan Omar in the primaries and lost. Suddenly her tone changed to high school counselor sorting out a cat fight in the hallway. This was as refreshing as a spritz of Evian water poolside at a Four Seasons Hotel (we can only dream about such things these days) and gave me hope that we’ve reached an exhaustion point on activism.

Have we finally stripped down the old ways so we can rebuild? Because there is evidence all around us that things are not so simple, that the system is complex. It relies on a vast network of interlinked groups freely interacting to produce value. For instance, the simple response to the virus is to lock everyone down, to deny them access to all the networks they rely on in the social structure of their lives. So high school kids are out carjacking cars and dying in high speed police chases, and suicides are on the rise, and who even knows what amount of domestic battery is going unreported.

As Nathan goes onto say in his piece:

Perhaps the greatest danger is that simplism feasts on its failures. Its ineffective policies will not solve America’s problems, so calls for radical action will intensify. In this mood of crisis, norms are obstacles rather than boundaries. Politics becomes two unshakeable poles, which paralyzes Congress and halts the passage of policy fixes. As long as simplism reigns, America’s problems will worsen—and so the process will repeat itself.

Understanding a more complex system, no relying on a more complex system is our path to a free society. The problem is that the old guard is not letting go. The very natural tendency to hold onto the prestige and power they’ve gained over the last fifty years, by fighting off opponents, has us stuck in a Ground Hog’s Day movie. Their implicit power makes it necessary for them to gracefully exit stage right. In the meantime we wait.

Changing Priorities in the Neighborhood

Crime has been on the rise since May of 2020. In Minneapolis more than 400 people have been shot and 64 killed so far this year. It’s common to hear residents say they know more people that have been carjacked in broad daylight than have contracted Covid-19.

One neighborhood is organizing to do something about it. When a building in their neighborhood was slated to become a Salvation Army run women’s shelter, the moms went into high gear. Their priorities had changed and the folks in Near North weren’t going to have bureaucrats telling them what they needed.

Residents were vigorously opposed. A Mother’s Love went door-knocking in a multi-block radius of the Gordon Center and found no one knew about the proposal. The Northside Residents Redevelopment Council—the official neighborhood association—filed an injunction to halt the process.

Council member Ellison showed up. Elected in 2017 on the promise “to imagine a future for the North Side authored by North Siders,” he apologized for poor public engagement and encouraged constituents to lay out their concerns. “I don’t at all take skepticism of this project as, like, an attack on homeless women,” he assured them.

Frustrated residents pulled no punches. There were already three homeless shelters within a mile of the Gordon Center, yet the North Side had been without a sanctuary for at-risk youth since the 1980s, they said. Many community-led proposals for the Gordon Center had been rejected over the years.

The residents, who were organizing on their own time, objected to the shelter not because they weren’t sympathetic to the cause. It’s just that in the ever changing landscape of neighborhood needs, the effect of increased crime was more damaging to the youth than the needs of the women.

“I’ve lived here for 43 years,” said Willard Hay resident Esther Adams. “I’ve seen kids shot on this corner, I’ve seen kids killed on this corner. We’re just trying to help the kids here.”

In addition to the granular differentiation of need, the resources necessary for a youth center is thought to be considerably less than the homeless shelter.

The Gordon Center (homeless shelter) will cost more than $4 million to convert into a shelter, but peace activists like Clemons’ group, A Mother’s Love, believe it would cost considerably less for a youth center because of the way the building is designed. For one, it already has a playground.

In this case the system worked. The neighborhood did the work to voice a preference between services for their group. It was close though. The building permit had already been approved for the homeless shelter. If the moms had been too busy to put in the time, or their council member too distance from his constituents or the county’s ambition too strong, there could have been four shelters and no youth center.

It just seems like there should be some general tracking of these things by neighborhood. A hospital wouldn’t go into an area with three other hospitals. Even a McDonald’s wouldn’t have four franchisees within a mile of each other. Some sort of indexing of the mix of services provided to not only serve residents, but also to be sure that various age groups and household formations are being supported.

The Ratcheting up of Regulation

The enforcement of norms is an everyday event. Whether through disapproving looks across a bin of oranges at the grocery store in response to a parent’s disciplining techniques, or the scoff of disbelief at your friend’s new beau’s use of culturally insensitive language, or showing up to work with a card and flowers for a co-worker who recently lost a spouse. The behavior of shaping, criticizing or supporting of each other is judged and metered out with eye movements, gestures, and offers to help.

Once an infraction is deemed serious, it is made a law- you shall be prosecuted if you leave your toddler in a hot car while you shop. There is a lot of ground covered, a lot of degrees of severity and risk in parental actions, between scolding a toddler over a pyramid of piled up produce and locking someone up for child endangerment. But everyone can agree that we are all better off by formally acknowledging a certain threshold of acceptable behavior and enforcing persecution against those who cross over.

We are all better off knowing we can drink tap water from the faucet and that our houses won’t crumble overhead, and we can feed our kids hotdogs from the concessions stands at the Little League games. Accepting these standards and counting on a system, comprised of a series of reportings and enforcements, will maintain the freedom to move in and between communities safely. This is a social advantage we often take for granted.

It can also be shown that at some point there are diminishing return to regulations as their burdens cause detriments that are costly. Most of these arguments set up a discord revolving around health and safety (often tied in with the environment) versus the ability to supply families with income from a job. But this source of monetary capital also affects a person’s ability to lead a healthy safe life. You end up with this big teeter-totter where on one side all the variables set to maximize production of industry are weighted, and on the other, all the variables set to maximize social concerns piled up. What we want to find is at what point where the board finds balance.

Since this topic will be the question of this century, let’s start with a wide angle view in considering the use of regulation to keep the teeter-totter level.

Regulations for commercial enterprises seem to ratchet-up more freely than to release and reevaluate. There are many indications that the systems in place which regulate commerce, (often bureaucracies like Departments of Commerce and Federal Administrations, but cities as well) are not getting the feedback necessary to properly account for all the downsides to their actions. Things at the city and county level work fairly well. Yet, I propose that in the case of big business the intended beneficiaries of the regulation are removed from the system. They do not receive an accurate evaluation of the issues nor a proper accounting. And except to become activists at times of tragedy, they fail to regularly communicate with the regulating agencies.

For purposes of contrast, first consider water quality which is administered at the city level. Complaints about the water filter up through the city council and can be voiced at open city council meetings. Elected officials respond to constituents, especially those who show up. Even city staff feel the pressure when the seats are all taken in the normally hushed city council chambers. Other than the very notable example of Flint MI (and undoubtedly a few under-reported incidents) potable water is successfully provided to 331 million people in the US.

Take hot dogs at a concession stand. The county public health people have the power to decide the cleanliness of the two-windowed, wood clad concession stand with its pretzel warmer and popcorn popper and slushy machine. It is in their power to have it to meet the same standards as a science lab, of they so choose. But the regulator, who is more than likely a part of the community, knows that if the rules checklist becomes too long, making the workload too great for the already tapped, completely volunteer workforce to handle, it will shut down. No concessions, no extra money. No extra money, no new uniforms or dugouts, or pitcher mounds. Do ballfield concession stands or Rotary pancake breakfasts really need to be run at restaurant level standards of cleanliness to keep people safe? Or is there some other level that is ‘good enough’ that won’t squelch to whole endeavor?

Regulation of businesses, however, are missing the community tie-in. Commercial enterprises are regulated by bureaucracies, where people develop careers and other monetary incentives to successfully develop and implement regulations. It’s their job. The purpose of the position is to protect the consumer, where more protection always seems better.

This system removes the citizens that show up at the council meeting both in favor and against city action from the system. The bureaucrats judge and evaluate. They search for evidence to justify their position, not from the public, but from other detached experts. The consumer who can best express the complete picture of tradeoffs for their particular lot in life, has no routine forum. The next closest party to the transaction is the business person who hears and tries to comply with the requests of the consumers. Yet he/she is considered tainted by a money motive, and hence regarded with suspicion or often disregarded.

With the absence of a consumer evaluator, there is no system wide continual assessment of the costs and benefits of the regulation. There is no dynamic information being provided to determine when the regulation has gone too far and is causing too great of a burden.

So what to do? One solution is to consider how people live, by considering their revealed preferences. Testing, if you will, where the new standards are in relation to what the population expresses as their acceptable risk level. For instance, say you have a city that imposes a rental property review based on a scoring system comprised of a four page list of items. Missing smoke detector 5 points, missing receptacle plate 2 points, no furnace tune-up in the last year 5 point, ripped window screen 1 point, etc.. When the property scores 20 or more the renters must vacate the property as it is deemed inhabitual.

Now let’s say the assessment is used on the other 23 homes on the block. If 75 percent of them failed then it seems that the review checklist is too stringent. The regulator are basically saying to its own constituents that their standard of house maintenance are inadequate and they must move. (How do you think that would go over?)

Think of how this came about. The property regulators were trying to do right by the tenants, trying to get rid of the slumlords. They developed a tool that would allow them to put a handful of bad actors out of business. They get little community objection. Even very acceptable landlords are going to stay quiet when heavy handed regulation is in the mix as they are fearful of retaliation. But by setting a standard well above the average accepted living conditions, the regulators have raised the cost of providing housing. Since cost is reflected in rents, this causes undo pressure on affordable rentals.

Indexing off a general-population-standard may not be the end-all-be-all, but it would provide a starting point for the group. If analysis showed reasons for regulators to require more out of a subgroup (rental property), than at least this could be publicly discussed and agreed upon. But forcing the landlords to provide housing units at a higher standard than the average, and hence places undue costs on the provision of housing, avoids a proper accounting. This leads to endless circular discussions about the lack of affordable housing and whose to blame and whose to pay.

Furthermore when regulations don’t match the populations expectations, people resort to go-arounds until the formal rules are disregarded entirely. The highway speed limit debate that started in the early seventies left the public conversation once States set their driving limit to how fast motorists tended drive.

As a part of the system, development, implementation and enforcement of regulations need to be influenced by all actors. When a bureaucracy takes on an agency of their own, which allows them a power position which in effect rebuffs feedback from the general population. Using an indexing method for the group would at least reveal an average standard. It would provide an initial means of analysis. Ideally, even in situations of complex issues there could be a greater transparency with all the costs at hand. And in this way the average citizen could participate in a continual feedback loop while they assess their costs. Without this participation we are simply creating a power void ready to be filled by bureaucratic czars.

We’ve lost track of regulation by allowing it to jump out of the mechanics of the entire system. Lack of transparency and convoluted agency keep any meaningful accounting of the tradeoffs. In the same way that the business community’s opinion of the issues at hand are tainted by the money motive, so are the bureaucrats. They are incented to build their agencies, find new safety concerns, beat back business with zeal. So why are we surprised when they do so?

Meet the Met

The Metropolitan Council was conceived a little over fifty years ago with the foresight that the Twin City Metropolitan Area of Minneapolis and St. Paul would benefit from a multi-county planning entity. Large infrastructure projects like transit and water/sewer in particular would be best coordinated regionally in lieu of by an aggregation of cities. The 17 member council serves at the pleasure of the sitting governor. Here is a nice fact sheet providing an overview of the council’s latest accomplishments.

The council wields a tremendous amount of power for an unelected body. Over the years objections to this structure have been voiced by champions of both the left and the right. But for the time being, it is a structure which continues to influence the growth of residential settlement through patterns of transportation provided by bus and light rail, and through the provision of city and water.

In a presentation last week, Charlie Zelle, the chair of the council stressed that his agency is responsible for planning. In light of this spirit, I would like to propose a new way to frame up some of the research.

There are two new infrastructure projects which will offer circulation options for residents. First off, a new interchange off interstate I94 will provide direct access to the city of Dayton, a third tier suburb. Dayton, with a population of 6,302, was bypassed for development and become donut hole to suburban expansion while the populations of neighboring communities grew: Maple Grove to 71k, Champlin to 25k and Rogers to the NW to 13K. The mayor of Dayton touts the economic potential that will be unlocked by the anticipated increase in vehicle traffic from the off ramp.

The second infrastructure project is the Southwest Light Rail which recently received its Full Funding Grant Agreement from the Federal Transit Administration. This transit option links the four SW suburbs of St. Louis Park, Hopkins, Minnetonka, and Eden Prairie to the City of Minneapolis.

Excitement around Southwest LRT in not just confined to transportation advocates, already the alignment has seen hundreds of millions of dollars of private investments along the line. From affordable housing to commercial centers, Southwest LRT is making an impact on the state’s economy a trend which will continue far into the future.

Both of these projects will allow a new pattern of circulation for residents. One will experience growth and transformation from rural low density to suburban. The other will allow a built community to circulate more readily to and from the downtown core.

Whereas commuters and businesses are often the focus of the benefits to transit, I would be interested in seeing how all pubic goods in these communities fare following the completion of these two projects. Are there effects to public safety? Are the public schools over-loaded or better-funded? Are people healthier due to better access to medical care?

Maybe part of the concern regarding representation within the Metropolitan Council is for this reason; for the need to voice both the positive and negative impacts of transit and water/sewer infrastructure (restrictions) on the suite of public goods underwritten by a city. Elected officials, especially mayors, manage a boutique of goods for their residents, and they are not seeing the Council take all of them into consideration

The Trick with Triplexes

A little over a year ago Minneapolis was getting a lot of attention for ending single family zoning which secured one family home for one lot in 70 percent of the city. Politco ran a headline with dramatic vivid language of strangleholds, and further reported on how activists were taking victory laps following the City Council’s 12-1 vote to reverse single family zoning across the city. The Atlantic ran an article. And the New York Times gave Minneapolis‘s story first consideration in their article.

Yet in this first part of 2020 their have only been, drum roll please, 3 permit requests to take advantage of this up-zoning. The reason being, according to the Government Affairs Director with the Minneapolis Realtor Association, Eric Meyers, “even though new zoning laws permit triplexes, the underlying code was still written with single-family homes in mind. Height restrictions are the same, as are setback requirements.” A seemingly simple request to increase the height of a garage peak by one foot drew an extensive and heated debate. 

Since demand for housing continues to be strong in Minneapolis –the median sale price has risen 5.5% over the last twelve months– and hence the need for more housing units is unwavering, one would think that the spirit of releasing the stranglehold of the single family home would make the process more forgiving.

Emily Hamilton at Bloomberg explains it best: Want More Housing? Ending Single-Family Zoning Won’t Do It. Regulations that have been built over years won’t be undone with that quickly. Think of this at step one. Now investors are reconvening to put together documentation on the obstacles that stand in the way of the envisioned housing option. They will spend time and resources to go back through the city process and seek approval for building conversions and new builds.

Some investors will call it quits and sit out this process as they fear it is too expensive. But it is in this back and forth between the private and the public that incremental changes are made in order to achieve the goal of more housing units. And in doing so lower the cost of homes.

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