Tuesday, December 2, 2008

Home values in Cooper City, among other things...

According to the latest Zillow Real Estate Market Reports, home values in Cooper City decreased -20.60% in the third quarter of 2008, compared to the third quarter of 2007. Nationally, home values decreased -9.7% during this same period. U.S. home values continued to slide for the seventh consecutive quarter, declining 9.7 percent from a year ago, and falling 12.8 percent since the market peak in 2006.

This is also the first quarter that a significant number of markets show flat or negative five-year annualized change. Additionally, one-third of homes sold in the past 12 months sold for a loss, and 14.3 percent of all homeowners have negative equity.

This report highlights that the current national crisis is affecting our Cooper City residents regarding their home values more than it is affecting the nation as a whole.

As such, I believe that it is incumbent upon my fellow commissioners and city staff to economize to the maximum extent that is prudent, not to stick to a budget that increases the cities expenditures by 18.5%, including numerous "nice to do" and pork barrel projects. Things like a 150% increase in the item for the city's anniversary seem beyond the pale in spending for items that have no true need for such an increase and are largely for show and tell. This is a small item, but it is symptomatic and a mere example of a budget that contains a lot of "wish list" items that included $250K for a records building, $900K for subsidies for water conservation, a code re-write to the tune of $300K to $500K by the time its all said and done.

This is not the year to indulge desires and personal agenda's, but rather the real needs of the city. It is also becoming clear that there is also more bad news on the way for the city and its residents...

1. The large losses in the city's pension funds will have to be made up, largely from the tax payers and those using city services, along with our reserves. So far, the new commission has done nothing to even recognize and face the problem, let alone to develop a short and long term plan to resolve the apparent problem. Pensions and benefit solutions are not easy, but ignoring it simply makes it worse. The commission recently appointed a few so called 'experts' to the Pension Fund Board. Where are they and what are their specific plans of action? Nary a word has come from the Pension Board.

2. The "recovery" and build-out of Monterra will be further delayed. Even when it begins to build out again, those 1,700 new residences will be a drag on the value of all other existing residences in Cooper City. This means either a further decline in existing home values, or a much longer time for existing homeowners to recover some of the declines they have experienced. That is, those 1,700 new homes will not help the average existing resident at all for many years to come. Quite the opposite...

Regarding the future homeowners in Monterra, the special development district has been increasing their borrowing that is to be repaid, not by the developers, but by the future homeowners. As the build-out is extended the interest charges climb, accrue and the future burdens (special annual assessments) get to be bigger and bigger. This will increase the overage cost of home ownership in Cooper City and decrease the economic attractiveness of our community. One can believe that those new homeowners will look to the city to provide funds to help mitigate their burden in one form or another---that is the other 10,000 owners of existing residences.

The state Governor, legislature and the people have voted to reduce the burden of local and state taxes and fees on all Floridians and the residents of Cooper City. They rather obviously want the governments to spend less money in total, be more efficient, and cut out the waste and pork barrel largess going to special interests and their lobbyists.

The response of many governments has been, on the contrary, to hike fees and other assessments. This has happened in Cooper City. Some of our elected officials and staff just do not seem to want to do what the people, on the whole, want them to do. Therefore, we have the 18.5% increases in the city budget at a time where doing so is simply unconscionable.

It is past time for the commission to start going over the 2009, budget part-by-part, line-by-line, with an approach that says: If you cannot justify your request with an objective benefit to cost evaluation, then the item will be held to an amount for 2009 that is 1% les than the rate of inflation. I will expect the city staff to obtain 1% efficiency improvements as being well within the abilities of competent professionals.