What a crazy time to be alive. So many of us have been waiting through this difficult “economic circumstance” for signs that things might be getting a little better. We can’t help but continue to scour the horizon for the little glimpse to encourage us. I think it was Confucius who said, “You cannot step twice into the same river.” For those of us in the housing business, I think this is particularly true. “When will things hit bottom? Will we know it when they do? What will be the signs? How will we know?”

I watch the industry news as closely as anyone. An optimist at heart, I watch for any indicator that can bring some hope to what has now been a long, dry period. My prediction is that there will not be any single, strong sign that things are getting back to “normal.” As a wise commentator once said, “Normal is just a setting on your dryer.”

So what do we look for? Like you, I long for the signs that something is afoot—something that will restore hope, and promise that business will pick up and we will all benefit from some new energy that will breathe life into our daily existence.

The very, very, good news for me is that I have seen a couple of tiny glimpses of what it might be. Thank goodness for the creative, inventive energies of the talented folks in our industry. Everybody wants to succeed, and all around me there are little sparks of peers who desire to usher in a new period of work, satisfaction and prosperity.

Today, as I routinely do on Sundays, I perused the business section of my local paper. I always check the sales figures for homes. In my zip code, this is the first time in a dreadfully long time that the median sales price for singe-family residences were up—albeit only by a couple of percentage points. Still and all, this generates a little “warm fuzzy” for me as an observer. It appears we are entering the third or so month in a row where sales are above the year-ago period.

This can mean a couple of things. Number one, prices have fallen to the extent that the market now seems primed for entry by buyers who have waited patiently for “capitulation,” or for the median single-family home price to be attractive enough for them to cross their fingers and jump into the market. Increasing sales indicate that perhaps we have dug to the bottom of the hole, at least to the extent that new buyers can get back into the market. It is particularly encouraging to see the return of sales to the buyers who are seeking shelter, and not just a “flip” potential or an investment.

Maybe the stimulus package, with its modest benefit for first time homebuyers, is having the desired effect. That’s a lovely thought to contemplate. As these novices enter the market, they may well have the effect of stabilizing it—which would be a great thing.

One story in particular grabbed my attention. A small local bank in my region, which has historically trod the largely conservative path of making loans to parties it felt could actually service them, has re-entered the residential mortgage market after bowing out in 2007. The article I read indicated the leaders of this establishment felt there was an adequate market segment of folks with decent credit who could now find a home to call their own. Wonderful. This firm even anticipates hiring a few people to help write these loans. So, in other words, the money originates locally, the sales occur locally, and the benefit to the employment picture is local as well.

Could we actually be scraping bottom? Little by little, the tiny sprouts of renewed activity seem to be appearing. Thank goodness. To quote George Harrison, “It’s been a long, cold, lonely winter.” Spring is here. The ice is slowly melting. A foundation is being formed, on which to move forward with a new paradigm, a return to sanity, and a return to satisfaction for those of us who seek to house the incredible pent-up demand for shelter that the pundits continue to tell me exists.

Call me Pollyanna, but my eyes are fixed on a brighter tomorrow. “Here comes the sun.” Do you believe it?

(Daniel Gehman is principal at Thomas Cox Architects. He can be reached at DanielG@tca-arch.com)

Frankie: (as the Rat Pack carry Von Zipper away) Toodle-ooo Mouseketeers! (Annette Funicello as Dee Dee is standing next to him.)
Beach Blanket Bingo, (c) Alta Vista Productions 1965

Florida, the favored retirement Mecca and employment destination of choice is anticipating a dip in population growth, running at the lowest level in almost 60 years. According to research recently released by the University of Florida, projected growth has declined more than 90 percent off of the annual average between 2002 and 2006.

Both job creation losses and the housing bust are cited as failures according to the report, as primary reasons why they expect to see population loss. Last year, the state lost 350,000 jobs.

The current data still manages some bright spots, including an estimated 37,000 people likely moving to Florida from 2008 to 2010. And Florida remains a favored tourist destination, albeit at a slower pace than several years ago.

The real impact, as the excess housing inventory is absorbed, and affordability returns to a more structured pace is the loss of significant numbers of highly mobile, qualified renters. It will take, by most estimates, between 6 and 10 years for levels of rental demand to return to anything even remotely close to normal, in all but a few places. Hardest hit will be south Florida, followed by central parts of the state.

It then comes down to investment considerations. Florida, considered by many to be overbuilt, overpriced and with limited elasticity in pricing for rentals, is seemingly less attractive than other regions of the United States. In many respects, Florida, a perennial favorite among sun worshippers is losing its status as a Wall Street investment grade market. The one word most often used to describe Florida by investment managers is “disaster.”

The volume of foreclosures and the balance between documented and undocumented residents in South Florida will assure the survival of lower cost housing, and limit the price growth many investors are hoping for. In most neighborhoods, volumes of foreclosure have risen to levels that have created a drag on existing home sales, and as prices collapse, so too it seems do the dreams and aspirations of long time Florida residents.

Recently, Justin Gredier, associate director of HHF, was quoted as saying, “if people weren’t moving here because of the jump in a number of alligator attacks, it would be more concerning long term.”

If only it were that simple.

(Jack Kern is the Managing Director Kern Investment Research, LLC and hangs out at the beach in Ft. Lauderdale occasionally, trying to recapture his spent youth, wasted practicing rock guitar and drinking tequila. He enjoys seeing wild life on the beach, except for that nagging suspicion that somehow if you just built the right kind of condo over there…)

I am on the Pickens Plan thing and when they ask me to send along form letters to my reps, I usually do. Eventually, I will receive an equally form reply from whoever. Below is Sen Hutchison’s most recent reply. To be honest, it could have come from any Senator. In fact, maybe there is a secret government web site that generates pithy replies on their behalf – like YouCanFoolSomeOfThePeople.gov or something. (If so, they need to improve the speed of turn around. I think I sent my email over a month ago.)  Anyway, sometimes when I read this rubbish I am less than amused.

Summing up what I read below:

Euphemisms – effective to avoid offending one’s social sensibilities, totally ineffective when avoiding reality.

“Our economy is facing dramatic challenges” = we are staring into the eyes of amoral greed and regulatory ineptitude.

“Conditions are rapidly evolving, creating volatility and uncertainty” = we are clueless from one day to the next.

“Economic downturn” = near total paralysis of capital flows and hemorrhaging unemployment.

Religion – belief founded on systematic faith, typically en masse; root of most large scale recorded atrocities since we began keeping track.

“Passed on a party line vote” – evidently our core issues, and more importantly the solutions, are actually rooted in partisan ideology. What a relief! The solution obviously lies in simply casting a Hebrews versus Gentiles light to clarify the discussion. In the comfort of the party we are absolved of the bother and nuisance of forming a thoughtful and balanced strategy. Surely if the Republicans just kill all the Democrats (or possibly the other way round) we will have found the elusive vaccine.

Conjecture – sounds great as long as you don’t pay attention.

 “History teaches …” Oh, if only that were true. Actually, history chronicles and, even then with such bias to the perception of the author as to render its veracity dubious.

“I…will…spend the funding immediately and effectively” in one statement and “consider the long-term consequences” in the next. Diametric positions taken with the liberty of a fictional novelist, possibly a history teacher.

If I were to reduce into Cliff’s Notes, on behalf of the good Senator, I think it might come out something like this: “We are experiencing the minor discomfort akin to child birth. However, we have a solution that is really quite simple. We will take a bunch of money and give it to everybody. If we hurry we can make the pain go away quicker, sort of like taking 200 aspirin instead of 2 at the onset of a headache. Then we will cleanse the population through the systematic genocide of all dissenting opinions. I appreciate hearing from you and others of your persuasion. I hope you will not hesitate to contact me on any issue of concern to you. Relax. We will be in touch again soon.”

I am a political agnostic so don’t believe that any party holds the secret key to anything more profound than the senatorial washroom. In the end, it is human beings of all manner of political and cultural heritage that have brought about the present mess. I suspect it will require a similarly diverse lot to clean it up. And, as we all know, history teaches us that there is never any satisfaction or success in a witchhunt.
 
(Jeff Roper is principal scientist and chief product officer at M|PF Yieldstar. He can be reached at 972.820.3920 or 214.636.6017.)

“I disagree with people who think you learn more from getting beat up than you do from winning.” –Tom Cruise, actor, producer, controversial talk show guest and couch jumper.
 

AIG is in the news again, and this time it’s about the bonus payments to undeserving executives. As you can imagine, just about every pundit and a bunch of congress members all have opinions, and not surprisingly, they don’t agree. I think the issue has been fundamentally overblown, and if you take away the politics and headline grabbing news, this is a pretty simple issue.

Let me illustrate the point.

Just the other night, I was out to dinner with some colleagues and the conversation turned to federal policy. After a few drinks, someone made the observation that Tim Geithner was probably the kid most likely to be beaten up on the playground when he was in elementary school. While that might have been true, he’s now getting his revenge. With the unbridled power of the Treasury department, Geithner is in a position to plot the futures of almost every American. I can only imagine how much fun he’s having with people demanding his resignation while enjoying the support of the president.

AIG, if the facts that are out there are correct, paid bonus money because under their contracts, they were obligated to do so. That, in my humble opinion is the issue. Whether it’s politically expedient to dislike the decision is one thing, but I would hope that by rule of law, we’d respect AIG for following the terms of their agreements. I would find it reprehensible if other businesses felt they could make rule changes just because some idiot in Congress, (Richard “aw shucks, I’m stupid” Shelby for example R-Alabama) could force them to do so.

I think they ought to allow the AIG execs to keep the bonus, but instead of returning it, they should punish them by requiring them to listen to Barney Frank (D-MA) read the children’s book, “The Little Engine that Could,” over and over again, maybe 50 times. I believe a Republican version of the book was released not too long ago, called, “It seemed like a good idea at the time,” but I couldn’t find my copy.

Above all else, politics is a blood sport. Talk shows as chroniclers of public sentiment and Rush “the pill” Limbaugh’s constant barrage of inane observations, the concept that we are a nation of laws has to mean something. I can tell you that I know of many developers and owners who opted out of international real estate deals for just that reason. Even my friends in Canada recognize that AIG, while acting in it’s own incredibly foolish self interest, had a right to do so, and everyone respects Canada.

We have a right, as taxpayers to demand that public officials be held accountable for their actions, especially in the way that TARP, TALF, HASP and other programs have been managed, but let’s give Treasury Secretary Tim Geithner a chance to do his job. The last thing we need is instability in cabinet positions, and now is the time to stop beating him up.

(Jack Kern is the managing director of Kern Investment Research. He can be reached at 301.601.900 or jkern@kernIRC.com.)

“I am not worried about the deficit. It is big enough to take care of itself.”
President Ronald Reagan

Colorado National Bank, Colorado Springs, Colo. just failed. It was taken over by Herring Bank, Amarillo Texas. (I wonder what the logo is for Herring Bank?)
Teambank, N.A. of Paola, Kan. just failed. It was taken over by Great Southern Bank, Springfield, Miss. FirstCity Bank of Stockbridge, Ga. just failed. They couldn’t find a bank to take it over.

So we have real distress in small town America – Colorado Springs, Paola and Stockbridge. Not exactly household names, but representative of how the financial meltdown is shaping up across the nation. When a recession hits small towns, you know we’re at the bottom.

FDIC finally closed on the sale of Indymac Federal Bank, in Pasadena, Calif. and selected OneWest Bank, a “newly formed Pasadena, Calif.-based FSB organized by IMB HoldCo.

Who in the world is IMBHoldCo?

A consortium of equity and hedge funds, counting among their investors J.C. Flowers and Co., Dune Capital Management (Steve Mnuchin, a former Goldman Sachs guy), John Paulson, who made billions betting against the U.S. housing markets, global financier George Soros, who almost single handedly brought down European currency markets with his monumental trades, and computer scion Michael Dell, among others. The new bank is also being run by a former Merrill guy, Terry Laughlin.

With the attractiveness of lending at the Fed window, and TARP, TALF and HASP in full swing at this point, it seems traditional lending and bank ownership is running upside down. As you might imagine, the Federal budget deficit looms, and is running at an unprecedented rate. The numbers are so large at this point that it pales by comparison to earlier historical norms.

So why do we care?

As the banking industry is reinstated as a matter or course, it is unavoidable that failed institutions will be absorbed by better-funded entities that pass the stress test. The Fed will make sure that plenty of liquidity flows to whatever sectors of the economy need it in order to avoid an even deeper recession. Smaller banks will be increasingly bought by larger banks and ultimately, the Colorado Springs, Paola and Springfield communities will be worse off because of it. It is safe to say that this economy and some of the Fed policies are going to be the death of community banking and the end of the kinds of innovative local lending that helped these small towns in the first place.

You see, the growing Federal deficit has a rather curious, somewhat unintended consequence. As the investments are made at the institutional level, the huge deficit actually redistributes wealth to the larger segments of the banking industry, and causes the most vulnerable to merge or be put into receivership, an end in either event. What control existed from the Citibanks and Bank of Americas before will only be magnified.

The most egregious part of the congressional earmarks, beyond the immediately corrupting influence they have, is that they add needlessly to the deficit. Ultimately this financial engineering is going cause the greatest loss in commercial freedom we’ve seen since the start of World War 2, and the negative numbers are just coming in now. The real fear isn’t higher inflation, but higher prices that affect everything. If the deficit doesn’t get resolved quickly, expect to see more stress in markets and even lower consumer confidence.

There is a solution to ending the federal deficit. Just ask yourself, how much are you willing to give up?

(Jack Kern is the managing director of Kern Investment Research. He can be reached at 301.601.900 or jkern@kernIRC.com.)

Well, if you will pardon the cheesy intro, allow me to relay my feelings following a day-long seminar featuring each of these engaging speakers, in addition to Joel Bess, Eric Jacobsen and the extremely articulate Roberta Ahmanson. Holy cow! Seriously, it was a lot for one person to absorb. I can’t recall the last time any industry-related daylong seminar was so intellectually stimulating. What is my measure of “intellectually stimulating,” you may ask. To hear Alexis de Tocqueville quoted three times before lunch is a pretty good yardstick for me.

The conference at which all this great learning plus reasoning poured forth was the Restoring Community Conference in Anaheim, which was sponsored by the City of Anaheim together with the Building Industry Association of Orange County. At the core of the gathering was the question, “What is the role of Sacred Space in restoring community?”

Naturally, that conjures all sorts of related questions, like “What is ‘sacred space’?” or, even more to the point, “What is community?” I assure you that the attendees of this conference heard it from every angle.

The essence of the answer, though, was summed up eloquently by Andres Duany, who remarked that in his experience, in addition to the conference being “weird” (due to its emphasis on the spiritual realm), it was the first gathering of planners in his recent experience in which PEOPLE were at the core, rather than, say, the environment or the government. Sure, there were discussions of public space, and the role of religious institutions in forming it, but the corollary themes developed throughout the course of the day, including “The Importance of Beauty in Restoring Community,” were almost singularly focused on the needs of the individual: for connecting, for fellowship, for finding meaning in the course of everyday life.

Frankly, it was astonishing. Kotkin emphasized the critical American distinctive that we still value families, and that as a consequence, our population is growing, in contrast to the populations of most European countries. Families, as he noted, generally need a little more space than their urban counterparts—so they head for the suburbs. There is nothing ignoble about this. Yet, as generations post baby-boom raise their children, they long for some of the cultural niceties the city offers—walkable nodes of culture and entertainment. Therefore, new “village centers” are springing up in the suburbs to provide that for them.

Mr. Duany, a picture of elegance and wit, delivered the most quotable line of the day: “The attempt to make everything excellent will make everything mediocre.” Translation: “Open your eyes and look around: not every street can be excellent. There must still be places of service and mess. Don’t kid yourself or aim unnecessarily high.” At the same time, Duany’s work emphasizes the point that just about every type of community in our culture can accept greater density without residual sacrifice—from inner ring shopping malls to ex-urban 1-acre lot subdivisions (where local food might be grown and harvested on all that excess acreage.)

Appropriately, David Brooks wrapped up the day with his wry observations on ‘This American Life.’ In his lecture, he touched on themes from his new book, On Paradise Drive, which, is a bit all over the map, but ends with this very uplifting idea: Americans, in their thoughts, dreams and aspirations, are firmly grounded in the future—always have been, and always will be. This is a prescription for hope: all of us are anticipating a brighter future, and occasionally stumble over one another in our quest to bring it to fruition.

‘Ordinary’ people are not the enemy; they are us. At the end of the day, it’s a big tent we inhabit. There will be room for city hipsters, suburban families, ex-urban retirees and every imaginable shade of household in between. And they will all need to be housed and served, in ways that satisfy their longings, while taking pains to create “sustainable” communities. The future is a wonderful place, and the fact that we can all have a part in bringing it to be while seeking the details that enrich the lives of all kinds of people and while shaping the environment for those who will follow us generations from now, is a strange and wonderful experience.

Welcome to the future.

BONUS POST

Hiding in Plain Sight

OK, this post is a little off-topic, but I had to write about it. My wife and I live in a sort of suburban neighborhood, about 45 years old. The density is about 4 DU per acre and the homes are largely semi-custom. We’ve been here almost 14 years—long enough to see a few folks come and go.

For the first ten years or so, the neighbors across our back fence (110 feet) were a quiet, mature Chinese-American couple. I know they did a lot to spruce up their house before selling it about 3 years ago for nearly $900,000. We understood the buyers to be an off-site owner who purchased the property for two mature family members, one of whom was disabled. Well enough, we thought.

Three years passed without incident. The gentlemen (as we supposed) who lived in the house were beyond quiet—they were essentially invisible. I guess this should have aroused our suspicion, but hindsight is always 20/20, as they say.

Last November, I was on my way home from a celebratory excursion to a local theme park when my wife called me, distressed. Several police officers had gathered around the house next door, and there was considerable shouting and brandishing of weapons, followed by gunshots and eerie silence.

I skated by the house soon after—and the evidence of the shooting was spattered across the front porch. Gross. But, after that evening’s incident, there was only a brief flurry of activity with folks moving stuff out of the house, and then nothing, for months.

Recently as I was sitting on my back porch, a voice called through the crack in the fence, “Um, excuse me, sir?” We knew the house had been put up for sale. Obviously, this was a realtor. “Can you tell me anything about what happened at this house?”

“Hang on,” I said, “I’ll come over.”

I went next door and explained the history to the best of my ability. The realtor asked me, “Have you seen the inside of the house?” I hadn’t, except for the time that the Chinese couple had moved out. I was now overwhelmingly curious. “Can I take a look inside?”

There was no way I could have been prepared for what I saw next. When our original neighbors had moved out, we toured the house, and appreciated the improvements they had made, including the kitchen and the new laminate flooring. What I saw when I walked into the house almost defies description—it reminded me of the killer’s house in “Silence of the Lambs,” or maybe even the disgusting domicile from the “incestuous mutant” episode of “The X Files.” Honestly, it was beyond repulsive. A nice, modestly improved suburban house had been butchered into a rabbit warren of tiny, darkened rooms with mysterious passages between them. Trash and debris were strewn everywhere, making it difficult to even walk through. The ceilings were wired to support a grid of grow lights, together with an elaborate sprinkling system. In case you haven’t guessed it by now, my NEXT DOOR NEIGHBOR’S house had been transformed into a sophisticated pot farming operation, all while we slept peacefully next door. Only the kitchen, one bedroom, and one bathroom had been reserved for their original function. I’m still slightly in shock—especially over the bathroom area where one of the residents had obviously endured his final bleed-out.

So now the drug business is gone, even though the growing pots and lights remain in one of the rooms. The nice young couple looking at the house, oddly, did not seem egregiously deterred by its condition, or b
y my story. And that’s just a little freaky.

I hope there’s a buyer soon. But I’ll tell you, I wouldn’t pay more than maybe $250K for this property (if I had the money—or the stomach to put it all back together.) My wife and I still look at each other and shake our heads. How could this have been going on so close to us without us having the slightest clue? Was the cover story that good?

I guess I don’t fault myself for not being more involved. On the other hand, I don’t expect I won’t get to know the next owners, whoever they are. Once bitten, twice shy.

(Daniel Gehman is principal at Thomas Cox Architects)

Unlike other sectors of commercial real estate, the multi-housing sector is lucky in that we still have construction financing available to us.

We are talking government-insured construction financing. And no, the financing does not require that the developer build low-income, or rent-restricted, housing in any way. Neither is it a “voucher program” etc. Get this right: this type of financing applies to market-rate apartments.

The architecture firm Humphreys and Partners Architects LP recently sponsored a webinar on Federal Housing Administration-insured financing, in particular focusing on the FHA “221(d)(4)” program for new construction and substantial rehab (FHA also makes possible acquisition/rehab and refinancing under other programs).

As an indication of the thirst for financing in the industry, the response to the webinar was overwhelming, with 681 registered by early this week that had attended or downloaded the web- and telephone-based conference with three mortgage bankers [click here to read the report in this issue of Multi-Housing Finance & Investment].

According to Mark Humphreys, president of Humphreys and Partners, he was only trying to be helpful in trying to educate his clients or potential clients about the program. “What’s amazing,” he acknowledges to MHN, is the number of multi-housing developers who still do not know about the program. He says when he takes informal surveys at trade shows, only maybe 6-8 out of an audience of 150 people would indicate they are aware of FHA-insured construction financing.

One of the downsides to the program for developers is that it requires payment of Davis Bacon wages. But some of the other disadvantages of using the “government” program, such as long lead times and “brain damage,” have been sharply reduced by measures taken this past decade by the Department of Housing and Urban Development (HUD). HUD has radically streamlined aspects of the program and application process, for example guaranteeing maximum application processing times. Depending on the field office processing the application, the whole application process can take two months.

And some of the statutory restrictions on the volume of such financing the Federal government can insure has been drastically eased, thanks to legislative work in the past decade by housing associations such as the National Association of Home Builders.

(Keat Foong is executive editor at Multi-Housing News)

Given the never-ending stream of bleak economic news of late, the stock market’s one-day surge on Tuesday was taken as a welcome sign. The major indices all saw their highest single-day gains of the year thus far, but whether the rally can be sustained for even a few days is, of course, another matter entirely.

Meanwhile, the $410 billion spending bill just passed by the Senate will be enough to fund the government’s operations for the remainder of the fiscal year. Despite clearing the Senate by a vote of 62-35, critics assailed what they claimed were nearly $8 billion in earmarks. However, the Obama administration said the bill was a holdover from the Bush era and blamed the pork on the previous administration.

In an employment market, where most companies are shedding jobs like there’s no tomorrow—which, for some firms, might be near the truth—telecom giant AT&T is bucking the trend, with plans to add 3,000 jobs this year. Yes, you read that right—add. The new positions are part of a multibillion-dollar capital spending program which will total between $17 billion and $18 billion in 2009. Two thirds of the money will go toward building up the firm’s wireless and broadband networks to accommodate a 50 percent increase in AT&T’s data traffic each year, the company said.

And now back to the aforementioned bleak economic news.

On the opposite end of the job growth spectrum from AT&T, the hedge fund industry could lose some 20,000 positions this year, according to a report by financial recruiting firm The Options Group. That figure breaks out to a 14 percent job loss for the industry, which had seen rapid growth and soaring profits over the past decade up until the collapse of the subprime mortgage securities industry, in which many hedge funds were heavily invested. 

And the credit markets continue to take a beating. The latest figures released by Fitch Ratings revealed that delinquency rates for credit card payments reached record highs for the second straight month. The index, which measured the number of payments more than 60 days late through January, surged 4.04 percent, beating out the then-record 3.75 percent increase of the previous month. Despite decreased spending by consumers, job losses and plummeting investment values have forced more Americans to rely on credit cards for basic necessities.

Zooming out to a global scale, the picture is not any prettier. The head of the International Monetary Fund (IMF) said the world economy could see overall growth fall below zero this year. IMF Managing Director Dominique Strauss-Kahn blamed the strangled growth on deleveraging by financial institutions and a collapse in consumer and business confidence that has dragged down global demand and trade.

Not to be outdone in the gloomy outlook category, the World Bank said the global economy is in danger of falling to its worst performance level since the Great Depression, and predicted global industrial production could fall by as much as 15 percent this year.

It seems clear that, even if the stock market can stay on an uptick for a while, the global economy is in for a rough ride for the foreseeable future.

If we all expect the development paradigm is actually going to shift, there are many cases in which we must actually be out there pushing it. I’m coming up to a situation in my own back yard. This means, I may actually have the opportunity to “put my money where my mouth is” and come out in support of something which I find positive for my community.

It revolves around a senior housing development planned for a site within a mile of my home. This community came to my attention through a tiny neighborhood newspaper I receive in the mail. An article had been written by a representative from our local “advisory council,” which I find to be an elaborated title for a homeowners’ association. Mind you, I don’t belong to an association; in fact, I don’t even live in an incorporated city, but in a random slice of county area.

Frankly, I found the article to be unfair, particularly in the way it played with semantics—calling a senior living community a “commercial” use, with all the baggage the term implied. Anyway—I contacted the source of the article and suggested I thought the development proposal had been misrepresented. I was assured that the article was untimely, and that the real community hearings would occur in the future. Fine.

Now, in the past week, I have received many notices from the “advisory council” indicating there might be more activity in the planning of this particular site. They seem to be in quite a lather. One of the notices included a link to the developers of this proposed site.

First off, the land was donated to the archdiocese of my neighborhood by a local well-known landowner. It was originally intended to be a church and a school, but is now designed to be a combination active and assisted-living seniors community. To approve the residential use, a zone change is required.

The natives have taken this to be a near catastrophe. If this development is approved, how many more “high density” projects will follow on the coat tails of this precedent? The rhetoric coming from the advisory council circumnavigates the fact that the property fronts on one of the busiest streets in our suburb, and only backs up to single-family dwellings, of which about a quarter are two-story. That is, it is a perfect site for a moderately dense multifamily senior project as a transition from the busy commercial corridor to the single-family neighborhoods beyond.

And, lest I be hasty in my knee-jerk capitulation, I have reviewed the site plan. In my opinion, the developers have gone to extraordinary lengths to design a sensitive and transitional community. In fact, probably due to the fact that the land basis is zero, the developer is able to use such strategies as single-story bungalows to ease the transition from the neighboring single-family neighborhoods, and to limit the height of the main building to 35’, largely by putting one level of parking underground. This would never work if they had to pay market prices for the land! This is a jewel of a community!

So what shall I do? Does my involvement in the multifamily business make my opinion invalid? On the contrary, I find it my duty to attempt to persuade my fine neighbors that this proposed project is both appropriate for its site, and sensitively designed (though I might throw in my two cents regarding sustainability issues). This means I will need to attend the community meetings, perhaps even contact the developer, and let them know I like the proposed design, and would be willing to speak in its support at community hearings. Yes, this will require some time commitment from me, and will be far from convenient. But what’s conviction if we’re not willing to back it with our time and treasure?

I’ll see you at the hearings.

(Daniel Gehman is principal at Thomas Cox Architects)

“If economists could manage to get themselves thought of as humble, competent people on a level with dentists, that would be splendid.”—John Maynard Keynes (British economist and writer, 1883-1946)

There are certain professions where the level of expertise and necessary practice are best left undiscovered. Example include professional fishing, working at a water treatment plant and attending Zamboni Driving School. (Question, does anyone actually flunk out of Zamboni Driving School?)

Another profession, equally steeped in mystery, surrounded by tons of charts, tables, miscellaneous facts and doyennes of desire (think Erin Burnett) is economics. With almost a secret alchemy, economists have the cool demeanor, even under the most difficult circumstances to offer an opinion, no matter how misplaced, and have very little concern about being challenged. We depend on them for guidance against the ceaseless flow of federal and local data, and listen to their pronouncements about difficult market conditions, and future economic policies as if they are incarnates of the Oracle at Delphi (not Larry Ellison, the other one.)

Here’s an example of their fortune-telling skills:

Percentage in March, 2007 feeling that monetary policy is “about right,” 81%, and now a year later 63%. Where were they a year ago? At the beach?

Percentage saying that stimulus package will have a modest impact shortening the recession, 60.3%, with 29.4% saying it will have little or no impact.

Now taking these two facts, an economist would draw the conclusion this way:

How can monetary policy be ok at 63% if only 60.3% believe in the short-term value of the stimulus package? Where did the other guys go?

A non-economist (a Congressman for example) would say, 29.5% feel that the stimulus package will have little benefit, let’s vote for it.

Coincidentally the same group of economists, and there are 252 of them, when asked if the TARP Rescue plan should include funds for foreclosure relief said yes (38%) and no (45%). Since the political winds seem to seed a change in spending priorities, the ones saying no probably need to get on the ball, and the others should start lining up speaking engagements.

So much for economic consensus! When Keynes made his statement about dentists, he didn’t envision CNBC and rock star prognosticator status for economists. Now with bubbles in tech, housing and the stock market all bursting, economists have become Rodney Dangerfields, (I don’t get no respect,) quietly pleading their forecasts on any news outlet that will carry it.

I shudder to think about how the administration and the treasury policy wonks are listening to the President’s Council of Economic Advisors and continuing to ignore meaningful, salient facts. The last time someone tried this, they had a special place to go and seek out knowledge, and ultimately that didn’t work either.

It was called Stonehenge. (And the U.K. economy hasn’t been the same since.)

(Jack Kern is the managing director of Kern Investment Research, and while he won’t admit to being an economist, he won’t deny it either. He is known for having called both the recession and the stock market decline correctly, and still can’t get a decent corned beef on rye, except in Manhattan.)

A disclaimer: No economists were consulted or harmed in the making of this column.

© 2011 MHN Blog Suffusion theme by Sayontan Sinha

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