Nick's Council Connection (18Aug2014)

Council Meeting Date: August 18, 2014SupplyAndDemand.png

Council Meeting Location: City Hall, 220 Clay St, Cedar Falls, IA 50613

In this post, I review a request to modify an old agreement, old rules and new moratoriums.

- Committee of the Whole (6:05pm, Mayor's Conference Room, ELECTRONIC AGENDA)-

There are three agenda items for Committee (the meeting before the cameras): (1) 12th Street Extension cost share request; (2) Council Procedure; and (3) Bills and Payroll
12th St. Extension - In 2005, Dennis and Trudy Weichers made a voluntary annexation request for land area west of Union Wildhorse.JPGRoad. As a condition of annexation (and resulting development), the owners are responsible for infrastructure extensions such as water, sewer and roads, including the hard surfacing of 12th Street to the annexation boundary. Recently, the city notified two successor entities (portions of the property were sold) that 12th Street construction is being planned and the associated costs will be allocated to the undeveloped properties. The successor entities are requesting that the city share the expense of 12th street 50/50 to make future lots more affordable. This will be a true test of contract. Frankly speaking, I am concerned about setting a precedent by revisiting the contract. Surely the development agreement must have been disclosed to successor entities as part of their due diligence process. As such, any future obligations for infrastructure development should have been factored into their original purchase negotiations. The request for the city to contribute an extra $250,000 against a standing agreement would need to be extremely compelling.
Council Procedures - this is mostly an administrative update to 13 pages of council meeting rules originally established in 1927 and amended from time to time. For example, Rule 28 states that previous to speaking, every council member must "address the mayor, and say, Mr./Mrs Madam Mayor". Beyond updates for the recent restructuring, the changes appear benign.
 -Regular Council Meeting (7:00pm, Council Chamber, ELECTRONIC AGENDA)-

New BusinessCFRecyclingCenter.jpg

G.1.a) This item sets a public hearing for the plans and specifications for a Recycling Center addition. The project includes a 2,000 square foot addition, a new baler and docks. The improvements will increase capacity, efficiency and marketability of our commodities (direct marketing versus going through a commodity broker). In total, the project will cost around $900,000. 

G.2.c) This item establishes an immediate moratorium for the issuance of rental permits for single family dwellings in most areas of the city. In my last post, I suggested we exercise caution... the use of a moratorium is an all-powerful exercise of local power because it suspends rights and privileges without due process. A moratorium should only be used in cases of grave injustice (normally a result of the law), health, safety or welfare. It must have compelling public purpose, it must also be time-based (i.e. not indefinite). To many people, the moratorium is the ultimate solution, but at best, it is a stop-gap measure while we collect our thoughts - not quite the public emergency.

Aside from the occasional alien invasion or some force majeure event, I have a difficult time even thinking about the possibility. When Iowa Supreme Court cases are cited to defend the legality, it is a signal that we are on shaky ground. We live in a University community, all kinds want to live in the confluence of the University and Downtown - it's a dynamic market, plain and simple. Yet after months of study, we are no closer to understanding the problem or the solutions.

The issue is as emotional as it is complex, for me it is personal. I live in the neighborhood that people are constantly calling on as being blighted, deteriorated, on the brink of collapse. I feel compelled to invite anyone to my porch to see the vibrancy and niceties that surround this place... the mature trees, waving pedestrians, cruising bicycles, bursting elementary schools, diverse, inclusive neighbors and active neighborhood organizations. It is remarkably affordable compared to covenant-bound neighborhoods. It is conveniently located between a nationally recognized University and Downtown. Sure there are challenges, but the benefits and compatibility of lifestyle attracts not only me, but all strata of life.

Through this moratorium we will continue to study, debate and contemplate how to save our traditional neighborhoods through rules and regulation. We will point fingers and assess blame to landlords, real estate agents, tenants and home owners. But we continue to miss the big point - this is the market at work; it is working as anyone with rudimentary understanding of economics would expect. In the face of change, there are those that benefit and others that take exception. There are still more that work for the betterment of their neighborhoods (CHP, NCNA, OPNA...) with great success.

Supply and demand. Demand is steadily increasing, especially as UNI enrollment rebounds and approaches record levels. Demand for different property types is impacted by location, price and living compatibility. As supply is arbitrarily limited through regulation (or by planning-induced scarcity), rental prices increase. As rental prices increase, it sends signals to the market (i.e. investors) to create more supply. The market will create more supply in the most cost efficiently and timely manner possible. This causes more single-family conversions. If conversions aren't allowed, prices will increase for even the most marginal properties and nothing changes in the neighborhood. Existing landlords win, tenants lose, owner-occupied impacts are neutral at best.

In the end, the group that suffers the most are those that can afford it the least - tenants. Dare I say it, we've defined the problem as renters, as students. We are in the process of demonizing the very source of social vibrancy, economic stability and intellectual stimulus that we claim to prize so much.  If we fail to understand the underlying economics, our solutions will miss the target, and we will be dealing with unfortunate, unintended consequences for years to come.

In an effort to understand 'target' impacts, I offered this impact matrix to help objectively guide our problem/solutions approach. Based on this approach, I would prioritize efforts based on highest impact. 

 ImpactMatrix.JPG

Alas, consider this motion a notice to all property owners, small business people and tenants - the city is going to do its best to determine which interventions will successfully redefine residential living in Cedar Falls. Suffice to say, we got the first intervention right - enforce our existing codes. We picked the low-hanging fruit and now we are ready to prune the rest of the tree. But rather than prune, I fear we grabbed the chainsaw and are cutting into the trunk.

-Nick's Briefs-

Why I live in a rental. On August 15th, I took the first step to convert my house to a rental. I paid the $110 for a permit and 1709Clay.jpginspection. While I have no intention to move, I wanted to preserve my property rights as owner of my property. If some unfortunate, unforeseen circumstance were to happen, I want to manage my property according to my own volition. Under no circumstance would I want to subject myself to the demeaning city hardship board to grant a variance according to my condition. Every act, every regulation of government is a restriction of some freedom - some are justified, some are not. I view this particular moratorium as a flippant abuse of local government. Since there is no way of knowing where rules, laws and regulations of Cedar Falls will land, I chose to preserve my rights.

This isn't the first time... I have written on the topics of rentals in our city. Even if you do not agree, at least you know that I am always thinking about this issue and hundreds of other votes that City Council must contemplate.

On the moratorium: http://www.nicktaiber.com/nick_s_council_connection_4aug2014 (moratorium to be formally considered on August 18)
On the general state of rental things: http://www.nicktaiber.com/nick_s_council_connection_21july2014 
On the multi-unit conversion ban: http://www.nicktaiber.com/nick_s_council_connection_10_february_2014 (ban passed)
On turning owner-occupied units to rental: http://www.nicktaiber.com/forced_conversion (expanded definition dropped)

Showing 7 reactions

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  • Thanks Aaron. Policy makers, especially at the local level, don’t always have the luxury of perfect information or facts. We must act on observation, experience and all forms of understanding – from economics to sociology. I concede that my rhetoric may impact the argument, but no facts will directly support predictions on increasing or decreasing enrollment – this is the process of inference. If the latest information is any indication, enrollment will increase (we will know in a week or two). Dr. Ruud’s enthusiasm (and insinuating statements) in front of the regents further supports the prediction. I redact the word ‘record’ and replace it with ‘recent high’. My choice of words could always improve, my weekend writing will never win the Pulitzer.

    Since council acted without perfect facts on the moratorium nor were the impacts of the regulation duly evaluated – economic, sociological or otherwise – you could easily argue that the moratorium decision was without basis. The number of conversions was the primary argument, but no counter-facts such as ‘reversions’ or new housing starts were cited. Council received numerous correspondence on the topic, the most intriguing was an appraiser’s view (which didn’t support the moratorium). I will ask permission to share it.

    I have a disdain for bad regulation. My greatest fear is that the moratorium and follow-up regulations turn into an insidious form of socio-economic discrimination, a modern form of Jim Crow laws. You can’t pick your neighbors, but you can certainly ‘zone them out’. The action/impact matrix attempts to account for such things. It goes beyond inclusion and adds other terms form the sustainability lexicon. As I eluded to earlier, it is one data point, my own. It is meant to be supplemented by other input. More importantly, I it helps us explore process improvement and thoughtful recommendations.
    Thanks!
  • Thanks for the dialogue Nick. Your response, in part, makes my point. Your post triggered my response not because of any strong opinion I hold about the moratorium but more the cavalier assertion of fact that was used to support your argument. In your post, you wrote “Demand (for rentals) is steadily increasing, especially as UNI enrollment rebounds and approaches record levels.“ This assertion is false yet critical to your argument that current demand pressure for rentals makes a short term moratorium a bad idea. In the face of numbers, you answer with President Rudd’s numbers showing and increase in applications and accepted applications over last year. It is good that you acknowledge that these numbers do not translate 1 to 1 to enrollment. But total enrollment does not just mean incoming freshmen, for total enrollment to increase those among the other classes must not leave at a greater rate than freshman join. At any rate, this reality falls far short of “UNI enrollment rebounds and approaches record levels.”

    My critique is not just of your post but of the failure of argument generally in the public forum spurred by dis- and mis-information. If people are not careful about providing accurate facts or, if the facts they have are qualified, being honest about it, then the quality of argument suffers immensely and, ultimately, policymaking. There is little persuasive strength to an argument/opinion that is posited with easily discredited factual assumptions. So, when the rationale in your argument is gutted of a factual basis, it reads more as a disdain of regulation and not a reasoned criticism of the particular moratorium.

    As to the matrix, the question remains begging, where do the numbers come from?
  • Thanks Aaron for the comments. Going off memory, President Ruud reported to the Board of Regents that applications were up 28%, accepted apps were 18% higher. How that translates into enrollment remains to be seen. Yet with his leadership, I believe the University is on a good path.

    If rents are lowering (and I would agree they are), this should be seen as a positive for both students and owner-occupiers. Students will graduate with less debt and their living options should expand. For the investor, compressing profit margins will challenge return on investment targets. Couple this with increasing credit costs (the days of easy money are nearing the end), it doesn’t bode well for the real estate investor. The market may be near equilibrium.

    The impact matrix attempts to offer a more objective approach than ‘just do something’ without fully understanding the impacts. The value and weight scale could use subject matter experts and full review. And it is intended to be an aggregation survey,not one person’s opinion. I hope the task force will at least consider it. In absence of perfect facts and data (the city does not even track the number of lapsed permits or ‘reversions’ (if this is the term)), this may be the best we can do. The action-impact matrix isn’t perfect, but it is better than gut feel.

    I hope we can quickly move from the moratorium to well-thought approaches (tactics and planning) for neighborhood development.
  • I join the conversation not so much to opine on the merits of the moratorium but to comment on some of your argument. First, you state that “Demand is steadily increasing, especially as UNI enrollment rebounds and approaches record levels.“ It maybe that you are privy to the advanced forecast for 2014 at UNI and I am not, if so and you are correct, it is good news for our community.

    The information I have shows a steady decline in enrollment since the precipitous drop following the unfortunate program cuts. Here are the numbers for the past 5 years:
    2009 . . . . 13080
    2010 . . . . 13201
    2011 . . . . 13168
    2012 . . . . 12273
    2013 . . . . 12159
    http://www.library.uni.edu/collections/special-collections/uni-fact-sheet#Enroll
    Last year was the lowest year since 1989.

    Anecdotally, as a long time resident of CF, I am not seeing the evidence of increasing demand for rental property. To the contrary, there are FOR RENT signs still posted in my neighborhood at properties that were always able to rent via word of mouth. And, again, through my own personal contacts, some landlords are lowering their rent just to get it rented. Seems as good a time as any to avoid a negative impact on the market yet allow for study and planning in land use.

    Second, your matrix. You state: “I offered this impact matrix to help objectively guide our problem/solutions approach. Based on this approach, I would prioritize efforts based on highest impact.” I am curious how the weight is determined and the meaning within the matrix of the numbers (i.e. there value and positive v. negative). Are they based on data? Even if so, “weight” is a subjective term. “I would prioritize” is not objective, it is subjective. So, unless there is some non-value laden objective database resulting in the matrix, it is a table of your opinions and not an objective guide. As a consequence, I do not see it adding much to your conclusion.

    Again, I have not taken the time to analyze the pros and cons of the moratorium. I suggest only that for your position to be given the contemplation and discourse it deserves, a better factual effort should be made to support it. Opinions in the form of rubrics to sign objectivity do not help, nor do sweeping factual claims at the crux of the argument that are erroneous. If the factual basis of the claim is so easily impugned, so to is the conclusion and any value it may have is weakened or lost.
  • Thanks Mary. I hope people don’t misunderstand my position. I am very supportive of a number of actions that address constituent concerns for quality of life and neighborhood vitality. The moratorium, however, is not a solution in my opinion. When evaluating the actions, we have to measure impacts against target objectives (affordability, nuisance abatement, transportation/parking, etc.). This is what I attempted to do in my action/impact matrix. Our end goal is the same, but we may differ on the means. Thanks for your comments!
  • I have heard myself described as a neighborhood activist. I think that’s a fair description after years of working for stabilization of the College Hill neighborhood. I haven’t spoken publically on the Task Force deliberations. I’ve listened to what others have said and tried to remove words like “all” and “every” from my conversations. But as one of my councilmen your comments today can’t go unanswered.

    Those that live next to poorly managed properties do feel that they are suffering an injustice that challenges their welfare and threatens their safety. After listening to their stories how could you not feel a compelling public purpose to act?

    It’s personal for a lot of people, longtime residents as well as new home buyers, are all being affected. I may not have a rudimentary understanding of economics but I do know people are having to move while selling their homes a below market value due to the decline of homes around them. I do take exception that we’re supposed to be o.k. with market forces allowing some of our wonderful neighborhoods to deteriorate.

    Take a drive through the College Hill neighborhood. School starts soon and I’ve never seen so many “For Rent” signs in yards. We have more than enough supply. I’m sure those market forces are what’s causing many rental property owners to protest.

    Your concern for the ones you seem to think suffer the most, tenants, is interesting. I don’t think all of them are college students. Many come
    because they think it’s where the action is. They can rent an apartment in one of the older homes that was long ago converted to as many as
    seven individual units. They can divide the rent, sleep on the floor and party to their hearts content.

    But what about those students that you feel add to our social vibrancy, economic stability and intellectual stimulation? Ask the family that recently shared their experience of indecent exposure in the window across the street or phallic show sculptures in the front yard, how that’s going for them? I say, “Enough, Nick”.

    If, as a college community, we are given the task of providing a “higher
    education” to our temporary residents then let’s give them a sense of neighborhood responsibility so they can leave here understanding both
    the pride of community and civic responsibility. Cedar Falls is not just one last fling before they grow-up.

    I respect your desire to preserve individual rights. I just wish that as my councilman, you were as passionately concerned about my rights as a
    property owner. We’re all invested, some for profit and some simply for
    pride of ownership. -Mary Brammer
  • Let's have a Moratorium (said mockingly). That and more in the City Hall Connection. http://www.nicktaiber.com/nick_s_council_connection_18aug2014?recruiter_id=2