Category: land and how we use it

This local business owner gets it: land equals wealth equals power

Equinox Studios owner Sam Farrazaino, who says the blocks have given his neighborhood the feel of a “war zone,” has installed a number of the blocks around land he owns in Georgetown, although he says he used his “eco blocks” to “define parking” for his business, painted them to make them more attractive, and did not put them in the public right-of-way. “It’s a complicated… debate,” said Farrazaino, who described a rat infestation on a lot surrounded with RVs that made the ground look like “a moving carpet.” On the other hand, he said, “We keep pushing people around and saying we solved the problem, but the end result of the people with the power and land being able to push out that people that don’t have power and don’t have land is terrible.”‘

I couldn’t have scripted a better comment.

He’s exactly right: the ownership and control of land is what has created this problem and addressing that is the best, if not only, way out of it. My empathy for land owners/home owners who feel compelled to defend their wealth by knuckling those without land is pretty low. If they took a look at the city’s rental property database and realized how many homes in their neighborhood were rentals — maybe they own one themselves — and the corrosive impact that has on the city, they might see things differently. But I expect we’d hear “well, that’s just one house…what harm can it do?”

Last I looked, fully 20% of the homes in Seattle were rentals, off inventory, unavailable to be owned by people who live and work here, some owned by out-of-state investors, large and small. How do you think some of these globetrotting influencers underwrite their glamorous lives? Whatever happened to working for a living, for being able to live and invest in your community?

So what is to be done?

  • get rid of the state’s “Uniformity clause” that prevents taxing land as productive asset
  • institute a land tax/ground rent that discourages low-value uses of land (parking lots, brownfields, strip malls along busy arterials)
  • get rid of obsolete parking minimums and height restrictions on new developments, with a ground rent that will drive more dense land use

    • why so many restrictions on building use downtown?

    I was more surprised at what wasn’t previously allowed than that the mayor actually did something here:

    Seattle Mayor Jenny Durkan is sending an ordinance to the Seattle City Council that would allow the hundreds of empty storefronts in the downtown area to be used by more of the city’s entrepreneurs, according to a Tuesday news release from the city.

    As it stands now, those spaces are permitted only for very specific use. The mayor says this temporary ordinance, if approved, would change that by allowing the spaces to be used for bike parking, art installations, gyms, medical offices, museums, and other items not currently allowed under the city’s usage guidelines.

    So what was previously allowed? I guess retail shops, restaurants…and that’s it? So much for a vibrant and dynamic downtown core.

    The land in this city should be working as hard as the people who live here but our ownership/speculator class has no incentive to put land to productive use. This new program might help but I expect the landlords to push back against ideas they don’t like and with cost to hold land so low, there is no way to break their grip. Any city with a housing/affordability crisis and empty land/parking lots downtown has failed.

    Kropotkin on land

    Moreover — and it is here that the enormity of the whole proceeding becomes most glaring — the house owes its actual value to the profit which the owner can make out of it. Now, this profit results from the fact that his house is built in a town — that is, in an agglomeration of thousands of other houses, possessing paved streets, bridges, quays, and fine public buildings, well lighted, and affording to its inhabitants a thousand comforts and conveniences unknown in villages; a town in regular communication with other towns, and itself a centre of industry, commerce, science, and art; a town which the work of twenty or thirty generations has made habitable, healthy, and beautiful. A house in certain parts of Paris is valued at many thousands of pounds sterling, not because thousands of pounds’ worth of labour have been expended on that particular house, but because it is in Paris; because for centuries workmen, artists, thinkers, and men of learning and letters have contributed to make Paris what it is to-day—a centre of industry, commerce, politics, art, and science; because Paris has a past; because, thanks to literature, the names of its streets are household words in foreign countries as well as at home; because it is the fruit of eighteen centuries of toil, the work of fifty generations of the whole French nation.

    from “The Conquest of Bread”

    is this a serious question?

    As usual, a quick search for the word “land” turns up a disappointing number, in this case, 0.

    As Congress argues over the size of the infrastructure bill and how to pay for it, very little attention is being devoted to one of the most perplexing problems: Why does it cost so much more to build transportation networks in the US than in the rest of the world?

    Flip the question around and ask why China and Japan and various countries in Europe have built out their transit networks and compare their land use/ownership policies to those in the US. Private land ownership as a vestige of feudalism is one of the issues this country needs to address, not through expropriation but through recapturing the value through a ground rent/land value tax.

    I do not propose either to purchase or to confiscate private property in land. The first would be unjust; the second, needless. Let the individuals who now hold it still retain, if they want to, possession of what they are pleased to call their land. Let them continue to call it their land. Let them buy and sell, and bequeath and devise it. We may safely leave them the shell, if we take the kernel. It is not necessary to confiscate land; it is only necessary to confiscate rent.

    a couple of quick ones

    Land use decisions, reflected in zoning and tax/assessed values on land, drive inequality.

    Rich Houston teems with greenery and public parks.
    But unfair zoning laws mean its poorer communities of color bake in the hot sun

    Every weekday at 6am, 68-year-old Ana Adelea-Lopez walks through her Houston neighborhood to the bus stop.On the way, she passes a series of apartment complexes, telephone poles and metal fences on a long stretch of sidewalk. For the entirety of her walk, there’s not a single tree in sight.

    “You can’t even be on the street because of the heat,” said Adelea-Lopez who takes the bus to her seamstress job. “There aren’t a lot of trees. There are a lot of apartments. A lot of cement.”

    And alongside housing policy, road and transportation policies that favor car owners are driving a new kind of segregation, where those who can afford to migrate to cheaper housing will take their unearned wealth to the suburbs, leaving behind neglected city cores to fall in value until they are redeveloped by those who reclaim them — gentrification is never far behind.

    As the US has become more diverse, it has also become more racially segregated, a new study finds. Its lead author, Stephen Menendian, speaks about America’s failure to integrate

    Washington state’s “Uniformity” clause is what needs to be fought

    The lawsuits say taxing capital gains is unconstitutional because capital gains are property, and all property must be taxed at a uniform rate in Washington because of a 1933 state Supreme Court decision.

    I haven’t yet found the context for this decision but I suspect this was put in place to ensure the single tax (ground rent/land value tax) was never given a chance. Mason Gaffney has written about how economics has treated the idea of land as a part of capital: a moment’s thought would disprove that, as land predates labor and capital, as the fruit of labor, comes even later than that.

    Labor is prior to, and independent of, capital. Capital is only the fruit of labor, and could never have existed if labor had not first existed. Labor is the superior of capital, and deserves much the higher consideration. — Abraham Lincoln

    houses are no longer homes but assets, and every street is Wall Street

    Invest in a rental home for $100/share

    Imagine if you could invest $100 in a home of your own, at a reasonable multiple of your annual salary. Time was, you could buy a home for about 10,000 working hours, or 5 times your annual salary. Not really possible anymore but by all means, go off about the sanctity of single family assets homes.

    At a $15 minimum wage, that’s $30,000 a year, so there should be $300,000 homes — either freestanding or some kind of terrace/rowhouse or even a flat or apartment. Turns out even Seattle has houses that are valued at $300,000 but the land under them — something no one needs to buy — is worth more than the house.

    “Arrived is entirely focused on single-family homes, which we are very bullish on during the next 10 years,” Chouza said. “As new home construction has not and will likely not keep up with the growing demand, we believe there are strong appreciation trends over the next decade.”

    New home construction hasn’t kept up because land values encourage holding and discourage development: if the cost to hold an appreciating asset is 1% of its value, why would you develop it and pay tax on the development? And what do you bet the VCs and other investors in housing as an asset will fight any move to force land into productive use through ground rent or land tax? And they can count on local homeowners to go along, even as there is no evidence that development lowers existing property values and plenty that it raises values of nearby properties.

    “While single family homes sometimes can go through short-term cycles, the asset class has proven to be incredibly resilient and has shown consistent upward movement for the past 100 years,” Chouza added.

    “The asset class”…these are homes for families, not assets, but this is where late stage capitalism has brought us, to a place where everything is for rent, not for sale, where the media — music, books, movies — are a service, where you hope that Uber/Lyft can get you where you need to go.

    Turns out this was foretold…Imagine waking up one day to find that virtually every activity you engage in outside your immediate family has become a “paid-for” experience. It’s all part of a fundamental change taking place in the nature of business, contends Jeremy Rifkin. After several hundred years as the dominant organizing paradigm of civilization, the traditional market system is beginning to deconstruct. On the horizon looms the Age of Access, an era radically different from any we have known.

    The Transactional Age, where you can’t do anything without an exchange, but where your own value is undercut by the same entities who own what you need.

    The highest bidder, but not the highest bid

    Councilwoman Mosqueda has argued for an end to the sale of city land

    but I wonder if she knows how much this deal left on the table? It may been to the highest bidder but I don’t think it was the highest bid.

    My reading of the RFP was that the eventual buyer offered a ground rent option that would have paid about $1 million per acre per year for the 3 acre parcel.

    Maybe $3 million/year didn’t look like a good deal against $143 million but by those calculations, whoever negotiated that deal left more than $1 billion (with a b) on the table. True, it would have taken 99 years to collect it all but think of what kind of financial position that puts you in, to have a guaranteed revenue stream of more than $400 million per acre for one parcel. Imagine that across the full 500 acres set aside for downtown. That’s $4.25 million annualized, every acre, every year.

    I’ve never been able to learn who negotiated this on behalf of the city but I wonder if they ever ran the offer through a future value analysis and if so, how they opted for the fee simple sale.

    another take on a sovereign wealth fund

    This is a useful corollary to the idea of land rents or other sovereign wealth funds. These tiny nations cooperate to manage their local fish stocks, creating a prosperity dividend for their people and maintaining the health of their fisheries.

    The key to success, said Ludwig Kumoru, the outgoing chief executive of the PNA, was to jettison a system in which the PNA nations undercut each other in trying to sell fishing rights in their waters to foreign fleets – and replace it with another, called the Vessel-Day Scheme. That scheme sees them calculate how much tuna fishing is sustainable and then divides that amount up into fishing days for which fishing companies bid.

    “We set the minimum price of a day at US$8,000 a day, up from $2,500 at the beginning, but demand was so high that we’ve been getting $12,000 to $14,000 a day,” Kumoru said.

    “All our fish stocks are healthy,” said Transform Aqorau, a Solomon Islands lawyer who became the first chief executive of the PNA in 2010, and was largely responsible for introducing the scheme.

    “And they are likely are likely to remain healthy if recent levels of exploitation continue,” confirmed John Hampton, chief scientist as the Secretariat of the Pacific Community, the region’s top fisheries scientist.

    Like land, those increasingly valuable fish were not created by man: being owned by no one doesn’t mean anyone can take them for their own. Land, oil, the electromagnetic spectrum, as well as fish and wildlife of all kinds were not created by us or for our use: they should belong to all and their value recaptured for the benefit of all. These tiny island nations understand that better than the G7 leaders or any of the so-called developed nations.

    Don’t you need land for this to work?

    This isn’t a new idea but I get the argument that it’s bad for tradesfolk.

    “At 1,738 square feet of livable space, the custom, single-family home will feature three bedrooms, two full bathrooms, and overlook Clark Park, a center of activity with its community garden, ballfield, playground and recreation center. Approximately 70-80% of the home will be 3D printed, including all the internal and external walls; the remainder will be built using traditional construction methods. The home will be solar ready once construction is completed; Habitat Central Arizona is also pursuing LEED® Platinum certification and IBHS FORTIFIED Home™ designation.”

    The good news is, they needn’t worry as these “solutions” need land to be useful: if land was affordable in Tempe or anywhere else, houses would be built as needed. This might lower the cost by removing the need for labor — and the limitations that creates are called out in the article — but don’t laborers need jobs and houses too?

    Now, if someone was making these to be stacked in a multilevel arrangement, like the Habitat project at Expo 67 or the various “apodment” or capsule hotels we see, it would make more sense. And that would be a more interesting design challenge: how to make a living unit that would be installed into a larger cluster, where services (sanitary, power, ingress/egress) all meet up, would be something to see.

    But if the answer is always single family homes on their own lot — a private park at the expense of a more useful public space — we are asking the wrong question.