Friday, May 29, 2009

Optimism is dangerous?? Only in Kingman I suppose.

Here we go, I haven't done one of these in awhile but I think it is a fine time to dust off the scissors and make work.

I realize that not as many pairs of eyes will see this response as compared to if I simply responded on the KDMiner's website, but since it is still practically impossible to include simple things like live links when commenting there I'm bringing it here. Sometimes I get the feeling that in the hallowed halls of Western News & Info Inc. they still believe that dial up access to the Internet is cutting edge (but at least they have a website, can't say the same for the other local rag).

Today's exercise in proper scissor use is dedicated to a comment left by the head local pessimist, purveyor empty rhetoric, promulgator of doom and gloom, and otherwise good dude and fellow blogger Loyd Peterson.

You can find the article that Mr. Peterson left a comment on right here (not only does he appear in the comments, quotes from Loyd are also included in the article... he is everywhere these days... even wrote a letter to the editor. Might as well call the Miner's website the Kingman Daily Loyd). Here is the comment...

Posted: Friday, May 29, 2009
Article comment by: Loyd

Mayor Salem touts himself as a "glass half full" kinda guy. What he refuses to acknowledge is the fact that the glass is still draining. That's denial and that is a dangerous attitude.

So basically it is dangerous to perhaps be an optimist?? Maybe Loyd just wishes that everyone could be as curmudgeon as he is on a daily basis?? Prolly.

And actually I've heard the mayor say, even in public meetings, that he is hoping to do something positive to help affect new economic development in our local area. Now I might be wrong, but to me that sounds like acknowledgment and certainly not denial. So Loyd is wrong on this one.

The mayor and the rest of the elected city leaders know full well that economic times aren't all that great here in Kingman... they've made multiple mentions of this at meetings-a-plenty. There are many various reasons as to why the local economic straights are dire at the moment... including citizens in public decrying new developments, new developers, and new investment -- all of which had eyes on this market not that long ago.

Auto dealerships and businesses are closing which means less license fees and sales taxes. People are keeping their car longer which drops registration fees even more.

No doubt that Loyd is right about businesses in trouble and even closing here in Kingman, but I'm curious as to why he used 'auto dealerships' as an example. The local Chrysler and GM dealerships did not get a letter from our federal government informing them that they have to close up shop. And as far as the Toyota dealership goes... it didn't close.

Here it is in fact in the photo above. Looks NEW in fact. It also looks like it is now located in Lake Havasu City. Oh and here is their website touting their new location. So it appears that only Kingman is 'losing' out on this one. See sales at this dealership will still bring in sales tax dollars to Mohave County and the state of Arizona, just as it is when it was located in Kingman. It's just the municipal sales tax dollars will now go to Lake Havasu.

And here is the kicker... the land that the new dealership is located on was developed via a public/private partnership between the developer and the city of Havasu. It happens to also be located right next to a new retail shopping center (complete with a brand new movie complex) that opened about a year ago. Doesn't sound quite like Havasu is heeding that insane advice of Loyd's to hide in a shell.

So the use of 'auto dealerships' by Loyd is misleading at best. It should not come as a surprise to anyone that has been following along.

The state is in a net exodus mode meaning our population is declining -- more reductions. State projections are forecasting further sales tax declines and continuing revenue drops.

Hopefully Loyd doesn't throw a hip out when dancing the jig to this news. News he surely revels in as he has been clearly against growth for as long, at least, since he retired. He got his you know.

There is a proposed moratorium in the state legislature to cut off impact fees state wide for three years -- further reducing all cities' revenues. The real estate foreclosure slide is deepening with 1 in 8 mortgages in some level of distress. Anyone that can still see rainbows needs to get out the Windex and get after those glasses.

Not only do I see rainbows... but I see unicorns as well. It is all very pleasant actually.

Impact fees, here in Kingman anyway, haven't raised the kind of moohlah they were hoping for when the fees were introduced (some impact). Raising fees and/or taxes in a declining market doesn't make much sense and never has, and most folks get that.

As far as foreclosure issues are concerned... well part of the problem there is the lack of demand. Sure there are many other reasons that have led to this huge problem, but part of the problem can be addressed by increasing demand. Typically you will find many other communities trying to do this by easing restrictions or offering incentives on development and welcoming new investment to a community in hopes of greater opportunity and increased jobs. People tend to want to be part of something optimistic... but that's right... being an optimist is akin to a dangerous attitude -- so sayeth the king of all negativity.

It's a whole new ball game now and clinging to unrealistic goals is foolhardy.

What goals?? If the goals are to improve the quality of life in Kingman, why is that foolhardy?? Just because Loyd has a narrow view of things and won't consider other possible solutions that many other communities utilize during tough economic times, it doesn't mean that the quest is foolhardy.

Loyd likes to say that if only Kingman would reduce spending during the economic tough times and hide in a shell... once the economy picks backs up somehow magically Kingman will have 24 gozillion dollars to spend all willy nilly. Once again... do nothing until the economy comes back to full speed ahead... and voila... millions upon millions of dollars at our disposal. My question is... just how does the local economy just suddenly come back to full speed ahead?? It is just as silly of a notion as increasing the federal deficit by a magnitude of four and then proceeding to tell folks that by the end of a presidential term that the deficit would be cut in half. Hey it's nice that the deficit is cut in half and all... but it is still two times more than it first was before the spending binge. Not logical.

Loyd is also solidly in the belief that hyper inflation is on our collective doorstep... and I happen to agree for the most part. Yet Loyd's shell hiding theory is even less logical when you add in the inflation factor. I just don't see the reasoning behind waiting all this out only to pay for improvements at much higher costs after inflation takes hold. It is why his criticism of the city paying $300,000 for a building downtown this last year doesn't have clarity. He'd much rather have waited until the economy and inflation adjusts up accordingly to still have the city need a building and pay maybe a couple of million when all is said and done. In other words... so much for those millions upon millions of dollars that just seemed to appear out of nowhere by hiding in a shell. At best whatever dollars were saved today would be lucky to have the same buying power when the economy comes roaring back (which is no guarantee especially if the game plan is simply to hide in a shell until it does).

Strong leadership is required right now and that does not include trying to find new ways to raise taxes and spend taxpayers' money. It can be made no clearer that the city will be under ongoing and increasing pressure on the revenue side of the budget sheet.

Nothing like stating the obvious there Loyd. I can't even buy a Toyota in Kingman to help fund the city treasury any longer. Of course there is going to be pressure on the revenue side of the budget sheet.

As long as conditions aren't addressed to optimize economic activity here in Kingman, even up to the point that it would be stupid not to do business in Kingman -- instead of setting up 8,000 obstacles that would otherwise lead to increased economic activity, revenues will continue to slide. The answer is NOT to hide in a shell at a time like this because if this community does it won't be long until some important city service goes bye-bye, further eroding the quality of life that Kingman currently offers.

Further spending cuts are the only reasonable alternative.

No... certainly not the only reasonable alternative... not by a mile. Maybe I need to spend 5 minutes searching for other communities and their current and ongoing efforts to improve economic conditions again... it's been awhile since I've done that as well.

Promoting new revenue sources can't be done by hiding in a shell. New revenue sources usually ride on the back of new investment and development into the area. Working with folks that have capital and a willingness to take on some risk on their part are just the right sort that a community could use right about now.

And I'll admit that finding those willing to take on risk won't be easy in times like this. It will take strong leadership to help that along. But other communities are doing it and I think it is more than likely that the Kingman community is being left behind... only to catch up under hyper inflation conditions. Hiding in a shell is easy, yet produces nothing.

Lastly I'll say that spending taxpayer money just for the sake of spending it is NOT something I am supporting. In fact I haven't called for more municipal spending in this post, and I'm not necessarily in favor of passing a bond measure just for the hell of it. I may be tempted to vote yes on a bond measure or an increase in taxes... only if I believe there will actually be a community benefit derived from the cost of whatever the item or the issue happens to be. As of right now... there is NOTHING on the table.

Even Loyd has praised the city... that's right I said praised... in recent times for how they've managed the budget process. He has mentioned the 'belt-tightening' the city has done and even followed up with his satisfaction with city services still even in the face of this poor economy. That, though, is only half the battle. Keeping a close eye on spending is a very good thing... but what is being done to increase revenues?? Not a surprise that Loyd won't address that though given the fact that he is against growth related issues... i.e. growth leads to increased revenues.

Personally I have reduced spending in the face of my own business revenues sliding... but at the same time I'm working towards increasing revenue opportunities in my business by thinking out of the box (I hate that cliche but in this case it really works). I have reduced my fees that I charge clients in the hopes of perhaps gaining a larger volume of business. I've created and continue to create new programs that will hopefully incentivize potential clients to choose me as their representative. I'm looking for new ways to increase revenues in what has been a very difficult time in my own personal economy. Some things I have tried have worked, some have failed... but especially in times like these -- hiding in a shell won't bring home the bacon.

I want the city leaders to be on the forefront of communities that are leading the way out of the doldrums the current economy is in. That will call for reasonable actions that draw in new interest to the Kingman area in the hope of further positive development and yes... new growth.

Wednesday, May 27, 2009

AZ state legislature is tackling 'impact fees'

There is a proposed amendment to SB 1035 that seems to be adding and editing quite a bit on what municipalities can or cannot do regarding development fees -- otherwise known as 'impact fees'. Yes... a touchy subject here in Kingman for the last few years, but it has been quiet on that front lately.

Click the link above to see the entire document. I just gazed at it quickly for the last five minutes but I thought I'd copy a few bits below (all added emphasis mine)...

Sec. 3. Section 9-463.05, Arizona Revised Statutes, is amended to read:

9-463.05. Development fees; imposition by cities and towns; infrastructure improvements plan; annual report; limitation on actions; definitions

A. A municipality may assess development fees to offset costs to the municipality associated with providing necessary public services to a development. COSTS SHALL ONLY INCLUDE the costs of infrastructure, improvements, real property, engineering and architectural services, AND financing costs.

B. Development fees assessed by a municipality under this section MUST MEET the following requirements:

1. Development fees shall result in a beneficial use to the development.

2. The amount of the fee must be reasonably related and reasonably attributable to the development’s share of infrastructure improvements made necessary by the development.

3. The development fee shall not exceed a proportionate share of the costs incurred or to be incurred by the governmental entity in providing necessary services to development.

4. Costs for correction of existing defects in a public facility may not be included in the impact fee.

5. Costs for facilities made necessary by a development shall be based on the same level of service provided to existing residents in the municipality. to the extent that the infrastructure improvement plan requires facilities to be created or modified to improve the level of service provided to existing residents in the municipality, the costs of new or modified facilities shall be apportioned commensurately among development and existing residents.

6. The municipality shall calculate the development fee based on the infrastructure improvements plan, which must be adopted before the commencement of the development fee study.

Items 2 through 6 of subsection B are all proposed additions to this section. I cleaned up the wording in subsections A and B, be sure to click on the link to read how it is offered on the format document.

Skipping ahead to something else...

12. This section does not prohibit the municipality from supporting projects in the infrastructure improvements plan in whole or in part with revenues other than impact fees. A municipality may waive impact fees in whole or in part for a particular development but to the extent that it does so, it must provide that the amount of funds that would have been collected through the waived impact fee shall be replaced with other specified revenues.

Again, so far I've only skimmed through this document but this added item (item 12 under subsection B) is interesting to me so far.

This next one is even better...

K. Notwithstanding any other law, beginning June 1, 2009 through May 31, 2012, a municipality shall not impose or assess any development fees pursuant to this section. Beginning June 1, 2012, a municipality may impose a development fee or modify an existing development fee pursuant to this section.

I'm no legislator or anything, but this looks like a moratorium on 'impact fees' for the time period described above. Get your preliminary plats ready!!

Here is another...

Sec. 5. Title 9, chapter 7, article 1, Arizona Revised Statutes, is amended by adding section 9-805, to read:

9-805. Building code moratorium on residential and commercial buildings

Beginning June 1, 2009 through May 31, 2012, any new or modified residential or commercial building code or other related code that is adopted by a municipality does not apply to a residential or commercial building that received a final site plan or subdivision plat, planned area development or similar approval by a municipality before May 1, 2009. This section does not prohibit any code changes to the extent and duration required to comply with conditions for federal stimulus funding.

Looks like somebody has been successful with their lobbying attempts lately. Yet I think that this is probably a good deal. Many developments have been put on hold because of the economy and it is possible that a municipality could change codes and ordinances in the next few years that could be quite costly to developers to abide by... ultimately raising costs on the consumer.

Unless of course there is federal stimulus money on the line for the state... that is.

Maybe this is why it has been quite on the local 'impact fee' resistance scene lately. To me, it looks like these changes favor the development community a bit over the local municipality.

Tuesday, May 26, 2009

Some say that it is time...

From Saturday's NY Times...

“You need to buy when there’s blood in the streets,” he said with a shrug. “Even if it’s your own blood.”

Surprising and interesting read.

A man, his iPod, and some trisodium phosphate...

Just looking a my brand new farmers sunburn and I'm reminded of this past weekend. No, not fun in the sun angling for fish on Lake Mead for me this time. Not some golf event for that matter either. Nope, instead I decided to tackle a few projects in my backyard over the holiday weekend.

The lawn needed to be aerated and had to do it manually, plus it was time to kick up the watering schedule a bit. Some of the rose bushes were already getting too large so I cut them back to size.

And then there was the outdoor teak wood furniture set that I have been trying to take care of practically since the day my wife and I bought the set back in 2002.

For the most part regular maintenance on the furniture included some sanding and then cleaning up with a solution of Simple Green and water, but there is a little more to the why of it all. You see, when we first bought this gorgeous furniture and put it all together we had this wild idea to head to the hardware store and buy some sort of oil finish. We should have never done that. Since that time we haven't really been as pleased with the kinda expensive set. Sure, we've used that furniture each and every time we've had folks over for cookouts and the like but sealing the teak wood, as we came to find out is what we did, messed things up.

Since that time a couple of times a year, or so, I've been sanding off the finish then washing it with a solution and walking away. Over time the more natural look has come back but it had left me without a better solution as to how to maintain the teak wood of the furniture.

So I hopped on the internetz to take a gander to see if anyone else had anything on how to care for teak wood. I sifted through mostly product information for the most part and prices on teak wood care products ranged all over the place from about $30 to $200. Well, I've been burned on a product before (the oil/sealant stuff from way back when) and didn't want to plunk down a bunch of dollars on something that would cause the same mess over again (can't blame me really). But eventually I came across a bit of information that said a solution of trisodium phosphate, regular bleach, and water would help do the trick. It didn't sound like a huge expense (but I didn't know what trisodium phosphate was) so I again headed to the hardware store to check it out. Found the stuff at the paint department and decided to pick up a small box of it in powder form for like $5 bucks. The results can be seen below...

I have to say that I didn't set up the chairs in true before and after succession. The chair on the left is the finished product of my labor. The color is as close to what it was the day we put the furniture together. I finished with a light sanding by hand.

On the far right is the condition of the chair before anything was done, just simply the elements of time and weather since the last time I sanded and cleaned. The chair in the middle is how the furniture has looked after a sanding and cleaning with the solution I mentioned at the beginning. For the most part I didn't mind the look of sanding and cleaning but that was before I saw the results of the trisodium phosphate/bleach solution.

All in all, once I started to use the new (to me) solution to clean the furniture time went by pretty quickly and compared to staining the furniture it was a snap timewise. The large table and the six chairs took most of Monday, but the weather was reasonable (I thought anyway) for this kind of activity and I had the iPod on random play for and reconnected with tunes I probably haven't played in more than 10 years or so. I think I may be looking forward to the fall season to perhaps give this sort of maintenance another go and hopefully will have a fully charged iPod for listening pleasure.

The point of this post is just to sort of pay it forward, so to speak. Maybe somebody else out there in the vast internetz is pondering the same sort of activity and hopefully the before and after photos will be of some help if they happen to land on this site after a search.

Good day.

A couple of Monday links...

I certainly hope you all had a nice (and safe) holiday weekend. Just trying to get back into the swing of things myself and wanted to pass along a link or two.

The first one comes from Jay Thompson's Phoenix Real Estate Guy's blog from last Sunday. The subject matter deals with his local market (Phoenix) listing success. There you will see some pretty charts, but more importantly Jay shares the reasoning for the noticeable increased 'success' rate for listings. While I don't have the same particular sort of data for our local market, I'll go on a limb and suggest that the numbers that Jay portrays in terms of percentages are similar here in Kingman. Please click the link and read.

Next up is a post from fellow Mohave County real estate blogger, Broker of Bullhead/Laughlin Realty, and all around good guy Evan Fuchs of Bullhead City Blog. Evan has been taking part in a local community leadership program and last week they took a little field trip (on a school bus even) and visited key points of economic development in the county. This included a visit to the Kingman Airport Authority as well as the Mohave County Economic Development Department here in Kingman. Please read the rest at the link. Good stuff.

While I'm at it, don't forget that you can listen to the things that both Evan and I cover on our podcasts at Mohave Real Talk. The latest episode is up and we'll be recording another show this evening.

Friday, May 22, 2009

Government program to help improve property (203k)

So you've been thinking about buying a new (to you) single family home and want to take advantage of the cutthroat pricing offered by the banks on their foreclosed homes. You've even taken the opportunity to view a few of these 'deals' based on price, but in many cases realize that there could be thousands of extra dollars needed to improve the housing unit to make it what I term as live in ready.

No question that there can be issues with some of the foreclosed listings available on the market. Foreclosed properties often were not taken care of all that well by the previous owner that was facing a distressing financial situation. Face it folks, those that are about to get evicted by the lender usually don't go to great lengths to keep the home in tip top shape.

I've seen many instances where the carpet needs to be replaced. Maybe some disrepair to the exterior or issues with the electrical or plumbing systems. No matter what kind of repairs might be needed, one thing is for certain at the moment... the banks that own these distressed assets are doing very little to improve the marketability of the homes and property.

I stumbled across a program offered by the U.S. Department of Housing and Urban Development that may be of help to some buyers looking to take advantage of the low price offerings but may not have the extra available funds to make the house feel like a home when the deal is closed and the buyer takes over as owner.

Read more about the program here.

Some excerpts...

The Federal Housing Administration (FHA), which is part of the Department of Housing and Urban Development (HUD), administers various single family mortgage insurance programs. These programs operate through FHA-approved lending institutions which submit applications to have the property appraised and have the buyer's credit approved. These lenders fund the mortgage loans which the Department insures. HUD does not make direct loans to help people buy homes.

The Section 203(k) program is the Department's primary program for the rehabilitation and repair of single family properties. As such, it is an important tool for community and neighborhood revitalization and for expanding homeownership opportunities. Since these are the primary goals of HUD, the Department believes that Section 203(k) is an important program and we intend to continue to strongly support the program and the lenders that participate in it.

Many lenders have successfully used the Section 203(k) program in partnership with state and local housing agencies and nonprofit organizations to rehabilitate properties. These lenders, along with state and local government agencies, have found ways to combine Section 203(k) with other financial resources, such as HUD's HOME, HOPE, and Community Development Block Grant Programs, to assist borrowers. Several state housing finance agencies have designed programs, specifically for use with Section 203(k) and some lenders have also used the expertise of local housing agencies and nonprofit organizations to help manage the rehabilitation processing.

The Department also believes that the Section 203(k) program is an excellent means for lenders to demonstrate their commitment to lending in lower income communities and to help meet their responsibilities under the Community Reinvestment Act (CRA). HUD is committed to increasing homeownership opportunities for families in these communities and Section 203(k) is an excellent product for use with CRA-type lending programs.

If you have questions about the 203(k) program or are interested in getting a 203(k) insured mortgage loan, we suggest that you get in touch with an FHA-approved lender in your area or the Homeownership Center in your area.


How the Program Can Be Used

To purchase a dwelling and the land on which the dwelling is located and rehabilitate it, and to refinance existing indebtedness and rehabilitate such a dwelling, the mortgage must be a first lien on the property and the loan proceeds (other than rehabilitation funds) must be available before the rehabilitation begins.


Eligible Improvements

Luxury items and improvements are not eligible as a cost rehabilitation. However, the homeowner can use the 203(k) program to finance such items as painting, room additions, decks and other items even if the home does not need any other improvements. All health, safety and energy conservation items must be addressed prior to completing general home improvements.

There is plenty more information at the link.

It's been awhile...

Been away for a bit so I thought that I'd do some catching up. And I think a good place to start is some information on an upcoming Arizona Supreme Court decision on a public/private partnership issue taking place down in the Phoenix area.

More at this link...

The Arizona Supreme Court will consider the CityNorth incentive agreement case on June 1. The court will not actually hear the case that day. Instead, it will decide whether to accept the case for review.

The case could have major implications for cities and developers, who often make deals in which a certain amount of sales-tax collections is rebated to the developer as an incentive to build in that community.

Of course one of the major implications might be on a certain public infrastructure project talked about here in this community for many years now. Yep, talking Kingman Crossing basically. A couple of months back our city leaders indicated that because of this court case that the city and some interested developers would put off continuing discussions towards a public/private partnership to facilitate the development of a proposed traffic interchange in the area of Kingman Crossing.

I've blogged about this here and here for some background.

Earlier this month there was discussion on the ongoing issue that appeared on the Horizon PBS show with attorneys debating the CityNorth 'incentives'. Video below.

For what it is worth I posted an article written by Mr. Gammage on this blog back in September of last year and I have emailed back and forth on the Goldwater Institute's views on public/private partnership agreements for public infrastructure with Mr. Bolick over the last few months. I find both gentlemen extremely interesting and knowledgeable on these subjects.

Now I'm not trying to be an expert on the CityNorth deal or the court case being considered by the Arizona Supreme Court, but frankly I don't see similarities between any proposed public infrastructure improvement here in Kingman via a public/private partnership and the legal issues brought forth by the plaintiffs in the CityNorth ordeal.

If you watched the video above, please click on this link for the Horizon's produced video explaining the CityNorth case with one of the plaintiffs, Arizona State Senator Ken Cheuvront. (I couldn't find a video that could be embedded like the video above for this, sorry). As you watch both videos carefully you will get a better understanding about what the issues are... and really none of them have anything to do with true public infrastructure.

From the transcript from that video (I do suggest you view the entire video though) comes this FROM ONE OF THE PLAINTIFF'S...

Ken Cheuvront:
It is completely a fairness issue. If you are somebody who is competing with a retailer or restaurant in CityNorth and getting a tax advantage and you're not, it's really hard to compete, especially in this market. And to me when the cities are picking the losers and winners, that's just not right. As someone who's invested a lot of my own money in my companies I want to make sure that I have a level playing field, and if my competitor is giving special tax treatment or giveaways, that's going to put me at a disadvantage and probably my income is going to be affected by that.

David Majure: voice over
In the summer have you 2007 the city of Phoenix promised to cover the cost of 3,180 garage parking spaces at CityNorth. That includes 200 park-and-ride spaces for long-term use by the public free of charge. Phoenix agreed to make annual payments equal to half the amount of sales taxes it collects from stores at CityNorth. The payments would stop after 11 years or $97.4 million, whichever comes first. The city would start making those payments only after 1.2 million square feet of retail space is open for business. But that agreement is on hold. The Goldwater institute filed a lawsuit claiming it violates Arizona's constitution. Senator Ken Cheuvront signed on as a plaintiff. He says tax incentives make sense in some cases but not for retail development.

Ken Cheuvront:
If it is for the infrastructure, for building the roads, the sewers, you know, public amenities that would be built anyway, and going to be reimbursed for that, yes, I think that there is room for that. But if it's just to help that one business get a leg up at the expense of other businesses, no. I think that's unfair and it really is against the Arizona constitution.

Emphasis mine above.

I do hope that folks begin to see the difference as to what is being challenged and how it isn't even the same thing that has been only talked about here in our community.

The city of Phoenix promised the developer that it would pay the retail developer for the parking structure that would likely serve to benefit the developer more so than the public (that is the gist of the legal action the way I'm reading and following along). I'll leave that decision to the Supreme Court.

It is NOT the same as a new traffic interchange that offers the public here in Kingman greater convenience, safety, and perhaps increased economic opportunities that would directly benefit the community. The sort of thing that one of the plaintiff's in the CityNorth case alludes to as something there is room for.

Based on the very few facts that exist in the very loosely proposed public/private partnership attempt for a solution at Kingman Crossing the developer is not asking for an 'incentive' that would tilt the playing field for any other business. They would be asking for a 'reimbursement' for the the funding of a very public infrastructure project. That is it, there is nothing else on the table at this point (nothing official by all accounts).

It is time to start having this discussion again in this community... this time WITH the facts not the scare tactics of 'out of control' development or 'slaughterhouse' rhetoric. The city leaders insist that there is a need to emphasize economic development here in Kingman... and this issue has been staring at them for a long time. Time to do something about it.

Tuesday, May 12, 2009

Another solar power generating plant in the works

Sure to make some news is the report of another solar power generating plant with plans to develop here in the Mohave County/Kingman area.

I thank Dave Hawkins for allowing me to post these articles. A couple of quick comments below.



by Dave Hawkins

A development company proposes a renewable energy project of unprecedented scale in Mohave County. Mitchell Dong, the Executive Director for Mohave Sun Power LLC, touts the $2-billion project in a 27-minute early April presentation at the Harvard Club that is posted on the internet.

"Our company is building the Hualapai Valley Solar project," Dong said. "It's the largest planned solar project in the world."

The proposed 340-megawatt facility would be constructed on private property near Red Lake, about 27 miles north of Kingman. The company has an agreement to purchase a 4,160 acre site from Jim Rhodes should it succeed in its effort to secure a vast array of federal, state and local permits and approvals required for project development.

Project Manager Greg Bartlett, headquartered at the Mohave Sun Power office in Tempe, said Rhodes is simply selling the property and is not involved in the solar-thermal project.

Dong explained that the sun would be harnessed through a network of solar collectors spread over a five square mile area.

"It's a parabolic trough, or a 'U'-shaped mirror that reflects or concentrates the sunlight by a factor of 100 to this thin tube of transfer fluid," Dong said. "In this case, it's a synthetic oil heated to 800 degrees by the sun's light. There are rows and rows of these collectors and this 800 degree oil is pumped to a central power block, a central location where that hot oil goes to a boiler. It makes steam and drives a single steam turbine."

Dong said heat will be stored in molten salt that would allow the plant to generate power at night or when cloud cover diminishes solar radiation to the desert floor. He said the operation would require annual use of 1,500-3,000 acre feet of water.

Bartlett said company officials are well aware that use of groundwater is a sensitive subject. He noted, however, that the area had been targeted for residential development that would consume more water than the proposed solar facility.

Proposed use of groundwater from the Hualapai Valley basin is noted in application materials the company has submitted with Mohave County.

"The Arizona Water Atlas shows an increase in the Hualapai Valley water basin's cultural water demand from 3,850 acre-feet/year in 1971 to 8,300 acre-feet/year in 2003," the application stated. "The increase of cultural water demand may correlate with a negative net water-level change in portions of the Hualapai Valley water basin, however, wells in proximity to the Project Site have experienced a net water-level increase from water year 1996-2006."

Bartlett said water quality and quantity issues are the focus of ongoing hydrological study. The project will require zoning changes and plan amendments at the local level and Bartlett said company officials welcome public scrutiny and input.

"That's a very important part of the whole process. We embrace that," Bartlett said. He added that the company looks forward to initial feedback when project related matters are initially expected to be heard in Mohave County sometime in June.

"If there's anything we can do to mitigate concerns over water usage---we've got what we think is the best engineering team in the world but---people might have some ideas for us," Bartlett said. "So to learn what the concerns are early gives us time to kind of integrate that into final design of the project."

Bartlett said up to 1,500 jobs would be provided during peak construction of the facility that should be generating power by late 2013. He said more than 100 people would staff the plant once it is operating.

"The impact on the country, the state and the county is pretty dramatic," Bartlett said. "There's lots of tax revenues that will be coming in. There's lots of jobs that will be created. It's an exciting time."

Bartlett said the project might attract businesses that manufacture mirrors and other components needed for the solar-thermal facility. The Spain-based Albiasa company plan to build a similar 200-megawatt solar thermal power plant about 50 miles southeast of Kingman could fuel additional demand for like products.

Bartlett said local production of such products would provide additional economic benefit for the region. Developers would also realize savings associated with cost of transporting the components.

The project site is within two miles of a utility corridor and Mohave Sun Power seeks interconnection to the power grid operated by the Western Area Power Administraton through a 500 kV transmission line. The company has also entered discussions with utility companies interested in securing electricity through a Power Purchase Agreement.

Bartlett said rapid project development is necessary to take advantage of the availability of federal stimulus package funding and tax incentives. The project is on pace to evolve from concept to reality within four years.

"It's a very aggressive timetable for a project of this size when you look at all of the permits you need---the Air Quality permit, the Aquifer Protection permit, the Environmental Impact Statement, the Certificate of Environmental Compatibility from the ACC (Arizona Corporation Commission)---all of those permits," Bartlett said. "That's a lot of work."



by Dave Hawkins

The Executive Director of the company planning to build the world's largest solar power plant north of Kingman has a monumental vision. Mohave Sun Power's Mitchell L. Dong believes the sun can be harnessed to produce all of the energy needs of the world.

In an early April presentation at the Harvard Club in New York that has been posted on the internet Dong stated the sun delivers enough energy in one hour to supply all that would be consumed on earth in an entire year. He said that the sun delivers to earth the amount of energy that would be produced by 174 million nuclear power plants.

The key, Dong said, is development of all of the infrastructure required to harvest the sun.

"If we covered 20,000 square miles of U.S. deserts with solar panels, solar collectors or mirrors...we can produce close to 4 million gigawatt hours a year, which is the energy consumption of the United States," Dong said. "So by using only 4% of our deserts, we can supply all of the electricity of the United States."

Through similar use of lesser portions of the Sahara, Kalahari, Gobi and Australian deserts, all of the world's energy needs could be generated through solar power development, according to Dong.

"The solar grand plan is a bold plan. It's visionary," Dong said. "Some think it's idealistic or too much of a dream, but I think it's feasible and doable."

Dong said ten large scale solar power plants are in operation and ten more are under construction. He said some 3,000 facilities could be constructed in the United States over the next 40 years to supply all of the nation's power needs.

Dong said some 50,000 miles of additional transmission lines would have to be constructed to achieve the feat. And he said research and development successes would be needed to lower the cost and increase efficiencies of solar energy production.

Jack Ehrhardt, northwest Arizona's leading environmental activist and renewable energy advocate, cautiously embraces Dong's vision.

Ehrhardt applauds the 340-megawatt and 200-megawatt solar-thermal power plant projects that Mohave Sun Power and Albiasa propose to develop in Mohave County. But he said he is conflicted or contradicted by concern that the projects could consume well more than 100,000 acre feet of water over their 25-to-30 years of operation.

Ehrhardt emphasized that a commitment to development and deployment of the most resource-friendly technology is a must. He said renewable energy must be developed with a premium commitment to water conservation.

"We have to be exceptionally smart and conscious how we are using our water," Ehrhardt said. "We only have our aquifers to survive on."

Ehrhardt is a proponent of development and application of what he called hybrid wet/dry cool technology that would render power plants less reliant upon water consumption. Dong said dry cool technology is more expensive and less efficient in energy production.

"It cuts the output by 10% annually and as much as 20-30% on peak when the power is most needed by the utility," Dong said. "I don't think that the utilities and their ratepayers would be willing to pay the price to make an air-cooled solar power plant financially feasible."

Ehrhardt said any commercial use or application of water in any form of energy production, regardless of economics, requires urgent attention and scrutiny with a premium and additional value placed upon conservation of the resource. Ehrhardt said Dong himself draws scrutiny given prior sanction by the U.S. Securities and Exchange Commission (SEC).

The SEC announced in January, 2008 that it had reached a settlement agreement with Dong and Chronos Asset Management Inc., a company that Dong founded in 1995. The SEC issued an order imposing sanction and a cease-and-desist directive.

"The Order finds that Chronos and Dong engaged in a fraudulent market timing and late trading scheme. From January 2001 to September 2003, Chronos and Dong used deceptive means to continue market timing in mutual funds that had previously attempted to detect and restrict, or that otherwise would not have permitted, Chronos's trading," the SEC Order said. It said that Chronos and Dong willfully violated SEC trading rules.

The order imposed a penalty and interest sanction totaling nearly $2.2-million and Dong was suspended for 12 months from investment adviser or investment company activity.

"This represents to our community that he is someone who represents a company that we need to be concerned about," Ehrhardt said. "He (Dong) will have to be treated accordingly as someone who represents part of the greed that has crippled our country's economy."

Dong explained that Chronos Asset Management was a hedge fund with nearly $500-million in assets under its management at its peak. He said they traded mutual funds, equities, futures and other securities using a statistical arbitage approach and proprietary mathematical models developed by his partners, former statistics professors at Harvard and MIT.

"Eliot Spitzer, a regulator in NY State and the SEC, alleged that we traded improperly and after 5 years, we chose to settle the matter, without admitting any wrongdoing, rather than to litigate," Dong said. "We were pleased to close this chapter and move on."


I emphasized plenty in the first article. There will be an outcry about use of water and the resources from where water is going to come from (aquifers). I get that and believe it is on the developer of this development to make its case with the community. Should make for interesting times.

Some of us (including me) have been advocating for more jobs and growth and the fact of the matter is, if new jobs, opportunity, and investment come to the area -- more water resources will be used. Just can't get around that fact.

While the onus will be on the developer to prove that the water usage at the solar power generating plant won't adversely affect the Kingman and surrounding communities, to some degree it will also be on the folks that think new development will lead to the end of water resources in Mohave County. Those folks will no doubt be up in arms about these new water using developments and they need to effectively make their case if they take up the cause to limit jobs and opportunity in our community.

Sunday, May 10, 2009

April Sales Report (2009)

I noticed awhile back that the trees and flowers in the neighborhood are in full bloom. Must mean that April is over... and time for the latest housing sales report for the month of April here in the Kingman Arizona area.

This sales report offers some slight surprises. Prices for closings in April are down, down further than at anytime I have been posting these reports and down further than at any time since I've been keeping this sort of data (2004).

Unit sales were better in April this year than in the previous two years, but not by all that much (only a few units). But lower prices will likely continue to bring new buyers back to the market and the best part of the selling season is now underway.

So take a look at the data you take a lookers... after the disclaimer of course...

Disclaimer... all data compiled for this report comes from the WARDEX Data Exchange and does not include any sales activity from outside that resource. All research is done only on single family homes and there is no inclusion of modular homes, commercial properties, or vacant land. The geographical area researched includes; all areas within the boundaries of the city of Kingman, north Kingman, the Hualapai Mountain area, and the Valle Vista subdivisions. Click here to see maps of the included area's.

Listings and sales in units chart:

April proved to be a slow month compared to March. I thought that we'd see more closings in April based on the numbers of units under contract from the listings reports over the last two months. I still think that the number of closings will increase this year as compared to last year (and even the year before) when all is said and done for 2009. But like I tell the nice folks that ask about the current market... at least the market for sales is better than terrible.

Average listings and sales averages chart:

Keep in mind that the blue line and accompanying dollar amounts articulate the data for the average price of a new listing hitting the market for that month. The red line and dollar amounts are for the average price of a housing unit that closed in that month. To me, the continued gap between the average data dollar amounts tells me that wanna be sellers (for the most part) aren't either getting the data or believing the data. Sellers are still responding too slowly to the market.

2006 through 2009 unit sales chart:

Last month I was able to say that sales in units were up 63% from the previous year... this month though... sales were up 7%. But you know what?? I'll take it. Up is better than down. And even if you look at last months unit sales figure as being somewhat disappointing, the pace that is being set so far this year is clearly better than the previous two years.

2006 through 2009 average price chart:

The average dollar amount shown for April is the lowest average dollar amount reported since I've been tracking this sort of data (2004). So welcome to 2003, again.

Sales price average is down 45% from the previous year and down 16% from the previous month.

2006 through 2009 median price chart:

The median price figure for April is also the lowest figure ever reported based on my collected data going back to 2004. There were two months in '04 that reported median prices in the five figure range but both were higher than April of 2009.

The price range of all sales in April 2009 was from $18,000 - $270,000

Average SFR statistics:

Data tables for all sales tracked in April 2009

Price Data
ItemApr. '09
Average Price per Unit Sold $106,303
Median Price per Unit Sold $95,000
Average Price per Square Foot $72

House Data
Item Apr. '09
Ave Living Space per Square Foot 1,467
Year Built 1992

Marketing Data
ItemApr. '09
Days on Market to Contract 97
Days on Market to Close 136
Price Reductions on Market $15,763
Negotiated Price Concessions $4,822
Total Price Concessions $20,585
Total Percent Conceded

Bonus Charts:

Just rapid and very noticeable changes over the last year.

Just a quick comment on this chart. It almost appears that a trend is forming. The red part of the bar indicated the amount of dollars conceded during negotiations between a buyer and a seller. It seems that this figure is getting a bit tighter. Still, it is the blue part of the bar that remains somewhat consistent. That figure represents the price reductions sellers have made during the time since it first was placed on the market to induce a buyer to make an offer. That part of the bar might indicate a matter of a few weeks or even over a years worth of time gone by until it was priced close enough to true market value to attract a buyer. Or in other words, wasted time.

Foreclosure Impact:

Again, basically 60% of the sales in April were on foreclosed bank owned property.

Traditional Seller vs. Bank Owned sales comparison for April 2009

Price Data
ItemTraditional Seller
Bank Owned
Total Units Sold in Month
Average Price per Unit Sold $121,198$95,921
Median Price per Unit Sold $121,500$92,250
Average Price per Square Foot $86$64

House Data
Item Traditional SellerBank Owned
Ave Living Space per Square Foot 1,4131,504
Year Built 19931991

Marketing Data
ItemTraditional Seller Bank Owned
Days on Market to Contract 10294
Days on Market to Close 141132
Price Reductions on Market $16,606$15,177
Negotiated Price Concessions $4,000$5,393
Total Price Concessions $20,606$20,570
Total Percent Conceded14.5%

Wrap Up:

I've said it before about how bad foreclosures are for neighborhoods and the community. It is clear from the data that the negative impacts of the foreclosures are mostly being felt by existing property owners. Any property owner that knows of a friend, family member, and/or neighbor facing financial distress that includes status of property should be talking those distressed folks into contacting someone that might be able to help the situation. Someone like an attorney, a professional negotiator, and/or maybe even a Realtor.

The situation is what it is... there is no getting around it... unless folks decide to do something about it. I talk to people all the time that want to simply stay in their homes and I suggest they contact their lender to see if they can work out a loan modification to hopefully get the costs down to somewhere affordable. Others aren't as lucky and will ultimately face losing their property to the bank, but those folks should consider a short sale. Again, folks facing distress can attempt to make arrangements with their lender to do just that. It isn't easy and it certainly is not what I would consider fun.

If distressed property owners don't want to go it alone with that sort of solution, there are other alternatives that include hiring a representative to help. Yes, that would probably mean a cost out of pocket up front. But if there is someone that can help a distressed property owner from facing foreclosure or bankruptcy, and even perhaps keep themselves in the home they love at an affordable cost, it seems to me that it would be worth it.

Look at all the charts again. Please decide to do something about it.

Thursday, May 07, 2009

Property rights under attack (what else in new??)

I'll just say that I'm happy as can be that I don't live in California... but what is happening there could happen in a place like Kingman perhaps some day so I thought I'd pass this link along.

City Forces Property Owner to Give Up Right to Vote: Ninth Circuit Argument

by Timothy Sandefur

Tomorrow I will be arguing the case of Griswold v. City of Carlsbad in the Ninth Circuit Court of Appeals in Pasadena, California. This is an astonishing case in which city officials forced the Griswold family to give up their constitutionally protected right to vote in exchange for a building permit. Hard as that might be to believe, it is actually not unique: it's actually quite common for local governments to abuse permits by forcing property owners to give up money or land or other rights.

Please read the whole thing.

Loan modification...

To any possible property owners in financial distress out there, you don't need me to tell you that all is not well these days. I do quite a bit of writing and commenting about the local housing market and am often asked something along the lines of: what will it take to get the market back in order??

My answer usually involves the high number of listings that are on the market compared to the number of buyers that are currently 'in' the market. There simply is no balance at this time, and I really don't see balance coming back to our market anytime soon.

More and more foreclosures will be appearing on the for sale market and that is a double whammy for the market. Let me quickly explain. First it is possible that the property owner in distress tried unsuccessfully to sell their home before foreclosure. Most of the time listed at a higher price than what the market would draw buyers to. So the home basically 'sat there' for a certain period of time.

Next the home and property was foreclosed on by the bank. While there isn't any data to accurately state how long before the bank puts the home back on the market for sale, it wouldn't be a surprise that it could take a couple of months. So it is not a stretch that this property just basically 'sat there' for six months to a year. And now that it has been foreclosed on, it will likely sell for pennies on the dollar... good for the buyer, and I'm not ashamed of helping buyers get an even better price deal, but not so good for the property itself or for the neighborhood.

Again one property likely on the market a couple of times within a year's time leading to more properties listed for sale than there are likely buyers in the market. Bad for the market. Bad.

So if at all possible, the best scenario for the current market is for property owners in financial distress to stay in the home for as long as possible. One of the best ways to try to do this is to negotiate with the lender that holds the mortgage on the property in an effort to reduce the cost of ownership to a level that is affordable again for the distressed property owner. If successful, it is likely that the property won't be listed for sale (in some cases more than once). I'm talking loan modification.

Of course there are some risks with modification. Just Google loan modification fraud to see many warnings. You don't want to be in a worse situation that you might already be (if you are a property owner in financial distress).

But at the very least, a distressed property owner needs to be aware of possible solutions.

Here is a list of things to consider for distressed property owners for loan modification. Taken from this link ten steps to negotiating an affordable loan modification...

It can be tempting to bend the truth when you are trying to convince a lender to approve a loan modification. Only by laying all of your cards on the table and disclosing the truth can you begin to develop and implement solutions that will put you back on the path to long-term financial health.

As far as your lender is concerned, it all boils down to money. You are most likely to be approved if you can show modifying your loan will cost the lender less than a foreclosure.

Expressing anger toward your lender puts you in an extremely disadvantageous position. For example, your lender may decide that you are unreasonable and that foreclosing would be less costly overall.

In order to expedite the situation, find out exactly which forms you need to fill out and which documents your lender needs to process your application. Make sure you provide everything to your lender or representative in the manner specified.

Before meeting with your lender, make sure you spend some time figuring out what you want and need. For example, how much can you realistically afford to pay each month?

Loan modifications typically take between 30-90 days from start to finish. During this time, avoid the temptation to micromanage the process. To alleviate unnecessary anxiety, ask your lender for an anticipated timeline.

Put a tracking system in place today and start developing a budget to ensure you are not spending more money than you are earning.

If anything changes related to your financial situation, be sure to keep your loan modification representative or lender in the loop.

If the loan modification is unaffordable or makes your budget so tight that you are only one car repair or medical bill away from defaulting again, head back to the negotiating table to try to work out a better deal.

The key to success is discipline and commitment. All the effort you spend setting up a plan is of no use if you don’t follow the plan you created or agreed to.

I am currently working with a professional negotiator that can be hired for services such as loan modification. If you have more questions, I'd be glad to help.

And here is a link to more information about loan modification from the site called

Wednesday, May 06, 2009

More econ development efforts from other places...

Haven't done this in awhile and being that I had 5 minutes to search the Interwebz, I found some happenings on the economic development front.

City council okays money for economic development

Wednesday May 06 2009, 12:38pm

Norwalk City Council took the first step toward more funding for economic development Tuesday by passing an emergency ordinance to free up $5,000 for the Norwalk Economic Development Corp.

In last week's work session, Mayor Sue Lesch and Ellen Heinz, NEDC director, said the money would be used to support existing manufacturing companies by helping them diversify their businesses, compete for new businesses and build on international connections Norwalk already has.

Hey now.

Genesee County partners with neighboring counties to spur economic development
by Melissa Burden | The Flint Journal
Tuesday May 05, 2009, 4:50 PM

PONTIAC, Michigan -- There's a change of attitude these days when it comes to economic development.

Genesee County will fight to bring jobs and economic development here, but it's taking a more regional approach to do it.

Genesee County on Tuesday inked a partnership in the nonpartisan Economic Growth Alliance during a news conference at a hotel here, joining Oakland, Livingston and St. Clair counties in a collaborative effort to spur economic development, growth and diversification in the area.

"You think and act regionally to benefit locally," said Michael Brown, interim mayor of the City of Flint.

I like the aggressive wording at the beginning of this article. 'Change of attitude' towards economic development and 'will fight' to bring jobs to the area. Would love to see the local daily rag print words like this someday about economic development efforts in Kingman... soon.

Food-processing plant to create 54 jobs near Whiteville

Published: Tuesday, May 5, 2009 at 11:51 a.m.

Nice Blends Corp. will open a food-processing plant near Whiteville, investing $1.5 million and creating 54 jobs over three years, according to the Columbus County Economic Development Commission.

The company is moving from the Bronx in New York City and has bought a 57,000-square-foot building in the Southeast Regional Park on N.C. 130.


North Carolina’s Southeast Partnership, which markets 11 counties to businesses, last fall brought the lead on Nice Blends to the commission, director Justin Smith said Tuesday.

The Columbus County Board of Commissioners awarded a performance-based incentive grant of $46,455 over five years based on Nice Blends investing $1.5 million and creating 54 jobs within three years, Smith said.

Additionally, the company paid about $1 million for its building, but that was not part of the incentive agreement and is not included in the $1.5 million, Smith explained.

Performance-based incentives?? You don't say.

Investments brings jobs?? Who'd a thunk it??

And now this last one is my favorite of the day. Read this to see if you get the same sorts of feelings as I did when I read it for the first time.

Agawam shows plenty of potential
Wednesday, May 06, 2009

AGAWAM - Information from a recent workshop examining future goals for the city will help shape an economic development plan now in the works.

The plan will direct future economic growth in the community by identifying parcels of land appropriate for development .

I can think of a parcel of land appropriate for development here in Kingman. Sits just off the Interstate and is currently used as a non-official dumping ground. In fact the city owns this land.

It also will examine what kind of infrastructure the community needs, including sewer, water, schools and community centers, said Planning and Community Development Director Deborah S. Dachos.

The Planning Department is using a $69,150 state grant to fund an economic development plan for Agawam. The Pioneer Valley Planning Commission is conducting the study.

The plan, which should be completed by December, would then determine what zoning amendments and infrastructure investments would be needed to create feasible future development sites, Dachos said.

The state government bailed on helping our community with an obvious infrastructure need, for shame. Yet Kingman still has needs. Time to get creative.

The plan also would identify any other municipal barriers to commercial development (such as the local permitting process, labor suitability, and quality of life factors) and identify strategies to address these barriers.

I'm not sure if any of our local municipal barriers have been addressed or not, but I've heard rumblings that the new prominent project has faced several challenges. Sorta the same that has been heard on other commercial projects in the past. Couple that with the micro-nit-picking that goes on when any investor/developer tries to come into the area (the biggest barrier IMO) and it appears much work still needs to be done. Oh and might as well throw in impact fees into the discussion as well as they are not helping economic development.

The plan calls for public outreach to assure that the new development is consistent with community goals and to gain support for any zoning changes or infrastructure investments that will ultimately need to be made.

A "visioning" workshop held on April 29 drew a mixture of comments about the city's development.

Residents Peter H. and Jill M. Hallock said they would like to do their shopping in Agawam.

"We go to Wal-Mart in Westfield, and we have to park way out in the boondocks because so many people shop there," said Peter Hallock, of 71 Perry Lane. "We're sick of having to leave town to buy a shirt. We don't have a decent restaurant to go to as far as I'm concerned."

Obviously not the same challenges here (we have a Wal-Mart) but the sentiment is nearly the same. Just replace Agawam with Kingman and the statement would probably look like this... "Residents 'X' and 'Y' said they would like to do more of their shopping in Kingman"... which no doubt would help the 'Shop Here' economic development plan currently in place.

As part of the two-hour workshop, planning officials discussed results of a retail survey of residents.

The survey revealed that many people travel outside of Agawam to shop to find a greater section of retail goods and services.

"We heard a lot of comments about a need for Target, Wal-Mart or Kohl's," said Jessica Allan, senior planner with the Pioneer Valley Planning Commission,.

The survey results, with comments from residents, are posted on the city of Agawam's Web site.

Sounds so familiar. Community residents wanting -- no not more public services but instead -- more commercial services. And at least in Kingman, more commercial services lead to more sales tax dollars collected. No-duh solutions are slapping me in the face right about now (actually for a few years now).

Marc Horne, of the Dukakis Center for Urban and Regional Policy at Northeastern University, presented the results of an "economic development self-assessment tool" undertaken as part of the economic development plan.

The self assessment tool examines Agawam's ability to promote commercial and industrial development, Dachos said.

Horne's presentation, which was based on information the town of Agawam submitted, looked at what Agawam has to offer to spur business growth. It included traffic flow, proximity to universities, quality of available space, rents, and timeliness of approvals from various boards, among other categories.

Agawam has a lot of positive attributes, including a low crime rate, affordable housing and good schools.

However, its commercial and industrial tax rate, at $25.64 per $1,000 of assessed value, is higher than some other communities, Horne said.

I wonder what an economic development self-assessment tool might produce here in Kingman at the moment. Probably something a bit similar as what was copied above to some degree, but that just means that more work needs to be done (and covered by the local media).

But at this point, we know more about what is happening in Agawam in regards to economic development than we do here in Kingman. That has to change.

Tuesday, May 05, 2009

To tax... or not to tax??

While some folks insist that all governments do (local or otherwise) is attempt to grow, I'm finding more and more examples of local governments forced to explore spending reductions. It is good to see.

From this article here

More employee layoffs and the elimination of many recreational programs will be part of Gilbert Town Council meeting Tuesday as members vote on $12 million in proposed budget reductions.

The cuts include layoffs of at least eight current employees and the elimination of all special events, youth sports and teen and special needs programs.

Employees not let go would be required to take 12 days off without pay during the upcoming fiscal year, according to a newsletter sent to employees by Town Manager George Pettit Thursday afternoon. The fiscal year begins July 1.

Town officials have projected a spending shortfall of roughly $15 million over the next five years due to continued weakness in the economy. The service reductions and layoffs will save the town about $4 million and the employee furloughs another $2.5 million from the general fund, where most daily operations are funded.

I guess the interwebz...

I read an article last week in the NY Times covering the decline of housing prices in Phoenix. For whatever reason I was inspired to read it again and it got me thinking (yes dangerous of me to think I get that).

But, not so much of the 'why' the prices declined... that is pretty evident and basic economics 101 stuff (lack of buyers for the prices of the homes on the market).

I'm thinking more of the 'why' prices have declined so quickly. Here is the snippet of the article linked here...

Phoenix has achieved the unwelcome distinction of becoming the first major American city where home prices have fallen in half since the market peaked in the middle of the decade, according to data released Tuesday.

Though historical statistics are scant, experts said the precipitous decline probably had few if any equals in modern times.

Even during the Depression, I’m not sure prices fell this quickly,” said Karl Guntermann, a professor of real estate at Arizona State University.

The professor is not sure because data from that time (The Great Depression) is hard to come by. But that is not the case today is it??

Well I don't think it is. Sharing information is practically the clarion call in these current times. Everyone's doing it... it seems.

One of the main reasons I started this blog was to share local information about the housing market here in the Kingman area. I got really tired of looking for such information (that didn't seem to exist) and had been collecting data for a couple of years on the market before MOCO hit the Internet. So that decision was easy and at least a few hundred people a month stop by this blog to see some of the information.

This blog certainly wasn't the first that provided local housing information (actually it was the first in this area, but not the first in the state or beyond) I was inspired by others in the real estate industry that were doing much the same thing on their blogs and websites. Add in that I had received email inquiries about the market which told me that others wanted to see the best data possible, and no matter how large or scant -- there was a market or demand for the information (not a financially beneficial market to my wallet, as yet anyway, but an intellectual market for certain).

People... out there... somewhere... demand relevant information on practically everything. The Internet provides the outlet of information and others take it upon themselves to supply the information. It works rather well I must say.

So back to my thinking... I surmise that if the Internet was around for the Great Depression era, housing prices (any asset class actually) probably would have declined at a faster rate than it had (depending on the best guesses of professors and historians). Today with all the information a mouse click away practically, the masses (buyers in this case) figured out that at the peak prices of a few years ago -- prices were too high and left the market.

That left the sellers, of course, holding the bag so to speak. There was no easy transition to a buyers market (if you want to call it that). Seemingly one day it was clearly a sellers market, and the next day -- clearly something else. So in essence I don't think the rapid rate of decline in housing prices is all that shocking, given the circumstances.

My feeling is that the best remedy for an overinflated market is a corrected market... as soon as possible. The Internet is having a huge impact on the correction from my view of things.

Sounds like a party...

I'm talking Tea Party here for a second. Here is one bit about a Tea Party organizer that was denied the opportunity to speak in front of city council (not here in Kingman).

City Council votes to deny public speaker

by Bob Gough, editor,

Along a party line vote, the Quincy City Council denied a written request to speak by a taxpaying resident of the city.

Steve McQueen, one of the organizers of the Quincy Tea Party effort, requested to speak on the recently approved $31.2 million budget and water and sewer rate increases.

When it came time to vote to open the floor to allow the speaker, a mixed voice vote took place. A roll call vote ensued and the seven Democrats denied McQueen's opportunity to speak while six Republicans voted to allow him to speak.

Shameful that this was allowed to happen, but I'm not all that alarmed that we'd see this sort of denial to speak in front of our own local city council.

Also it is examples like the above (as well as Tea Party attendees being called out as racists -- actually by our own local media) that tells me that these Tea Party movements might actually become something else... a new political party. Hopefully the momentum continues.

Monday, May 04, 2009

A bit of Monday reading...

I saw a very good article posted online at City Journal. It is worth checking out. I will post some highlights of the Arizona discussion below and hopefully that wets your appetite enough to click on the link to read the whole thing...

Over the last few decades, when New Yorkers and Californians tired of paying high taxes to fund big government, they tended to migrate to what we might call the JetBlue states: Arizona, Florida, and Nevada. In those three low-tax refuges, the construction industry swelled to build houses for the new residents. And the construction workers themselves needed houses, providing jobs for still more construction workers. All the new people needed new places to shop, as well as new doctors, dentists, and restaurants. The local financial industry also grew and grew, filling office parks with the folks who did the back-office work for all the mortgages that New York bankers were eagerly approving. The result: double-digit population growth.

But during the boom times, elected officials in Arizona, Florida, and Nevada took a page out of the old states’ playbook, driving up spending at an unsustainable pace. Now that the growth of the low-tax states has hit a wall, shattering revenues, they face a tough choice: they can raise taxes to fund permanently higher costs, or they can aggressively cut spending. So far, it’s proving surprisingly easy for them to choose Option One, taking a small step toward transforming themselves into the high-tax states that so many of their own residents have fled.

Option two simply cannot be an option for republican state legislators, not with them gaining more seats in the last election AND losing the spendy-spend former governor (now the Secretary of Homeland Security).

A third of Arizona’s mortgage borrowers are now “under water,” according to the real-estate research group First American CoreLogic—meaning that they owe more money on their mortgages than their houses are currently worth.

And that one is tough to digest, but certainly believable -- unfortunately.

But in terms of flagrant profligacy during the good times, Arizona, Nevada, and Florida—those low-taxing, low-spending, every-man-for-himself states—have put New York and California to shame. Between 2000 and 2008, Arizona state spending (after inflation) grew by 41 percent, outpacing population growth by 12 percentage points.

This is why it is so important to choose our elected officials wisely here in Arizona at this time.

Similarly, the town has built a state-of-the-art library that looks more like a Barnes & Noble, where kids and adults take advantage of the late hours to read after work and school. (Queen Creek Mayor Art) Sanders doesn’t seem to prefer the public sector to the private sector for any particular task. But some basic service functions seem invariably to gravitate to the public sector, as the population evolves from a few farmers with their own informal network of services to individual homeowners, often from out of state, who expect the government to provide such services and much more.

Yet most of the three states’ dizzying spending isn’t the consequence of new public services required by new towns. It’s instead due to those culprits familiar to budget hawks on the East and West Coasts: education and health care. In Arizona, for example, education spending is up 32 percent in the past four years alone, outpacing the rest of the budget, says Byron Schlomach, director of the Center for Economic Prosperity at the Goldwater Institute. (Among other things, the spending pays for a new full-day kindergarten program for public school students.) Health care has more than held its own, too, as former governor Janet Napolitano tried diligently to expand Medicaid eligibility to middle-class families.

I've said before that I'm on the fence on education spending. I don't have children and likely won't be having any children that will utilize public education, so I can be selfish if I really wanted to be. My concern however on the spending is where and how is it being spent. I get the feeling that it is based primarily on administration (based on other articles and information I have posted). My hope is that some school district in Arizona can show the kind of leadership needed, one that can do more with less. Improve the education in the classroom, take care of the teachers, and limit the bureaucracy.

Why haven’t the JetBlue states reduced spending when faced with the downturn, instead of turning to new taxes? A big reason is the growing power of special interests that depend on taxpayer dollars, making these once-frugal states look a bit more like California and New York.

Any special interest entity depending on Arizona taxpayer dollars should fail, IMO. How about running an audit on any government department that requests increases in funding?? Let's just see why they need more and if they've spent the current alloted dollars in a productive manner.

Both Lawrence and Schlomach believe that demography has a lot to do with this shift. “The biggest risk is Californians moving here,” says Schlomach. “They are fleeing California, but they don’t have any notion of why it’s expensive to live there.” They don’t realize that part of the reason it’s still “not super-expensive here” is the relatively small extent of government services, he adds. Echoes Lawrence: much of the population increase into Nevada is from California, and “they’re taking their voting culture with them.”

Well, you get what you pay for and if you really want big-huge-out-of-control government, then you probably shouldn't want to move to Arizona. State leaders (again) have a golden opportunity to beat back all the expensive and unproductive ideas that new residents feel entitled to bring to Arizona. While Arizona has come a long way from the days of the wild-wild west... nothing wrong with simply remaining in the wild west. Not everyone here drinks Chablis or is otherwise all that cosmopolitan.

Bottom line, less government is better government.

Besides immediate, massive budget deficits born of boom-era spending, the frontier states face additional challenges, familiar to residents of older states. One involves infrastructure reinvestment. When high-growth states invest in brand-new infrastructure, they can be confident that new tax revenues—from the new development that the infrastructure will support—will pay for it. But it’s another thing altogether to keep investing in the same old infrastructure just to maintain your current tax revenues and prevent your existing residents and businesses from fleeing, as states like New York and California must do.

For the first time, in many cases, the JetBlue states must do this work of reinvesting in aging infrastructure. The American Waterworks Association has said of Arizona’s vast water-infrastructure needs that the state now faces the “dawn of the replacement era.”

New infrastructure brings new opportunities to help pay for replacement infrastructure, that is the way that I have always seen it. It is why I've been a strong proponent of proposed projects that would bring more opportunity to our area. When a community doesn't have the new growth to help pay for the costs, then it is the community that will ultimately part with more costs to pay for it (kind of like the increase in the local water bills lately).

And Arizona’s freedom-loving culture suggests that it won’t be turning fully to Gotham-style big government any time soon. When I asked various people there how the government ought to help, nobody advocated mass-scale homeowner bailouts. Sanders, the mayor of Queen Creek, didn’t cry about foreclosures in his town, grumble about plummeting property-tax revenues, or ask for government money. Many Arizonans seem to have acquired a new understanding of how markets work, rather than a new distrust of them. As Marylee Bell, a Queen Creek restaurant owner, says, “It makes sense for people who overpaid to lose their homes and rent them back from people who didn’t.” (Bell’s idea for an improved economic bailout plan from the White House: “Cut taxes.”) Stories are also starting to emerge of people who just purchased a house for $189,000 that had sold two years ago for $425,000.

Unfortunately, there are some local folks that simply don't get the concept of how markets work and their voices have helped turn would be new opportunities away from the area.

Demographically, too, the frontier states’ future still seems fundamentally sound, if based less on scorching growth in people and property values. If the past 200 years are any guide, the nation will keep getting bigger, and people will still seek cheaper places to live, something that Arizona, Florida, and Nevada have on offer once again.

Well... as long as the price is right, so to speak. I seriously doubt that lending will ever be like it was from say 1998 on up to about 2006 again, the fundamentals in Arizona could round back into shape to offer steady and reasonable growth.

I repeat, the whole article is worth reading (and longer than the bits I copied on this blog). What I took away from the article is that Arizona truly has an opportunity to be a shining example. Arizona won't be THE choice for every person in this country, a country that is simply too diverse. And that is fine really. Hopefully Arizona can simply appeal to folks that love independence, liberty, freedom, and the rule of law. Nothing wrong with actually portraying the state as the 'wild west'.

Big government has failed the citizens of California... we do not need to see it happen in Arizona.