Great article in the Wall Street Journal about the glut of condos being built across the country. Just looking around, you can see the same thing happening here, especially in downtown CdA. It’s been the goal of the Mayor and the LCDC to attract part time, condo-dwelling gentry to the area to improve Coeur d’Alene’s economic conditions. Bad move.
Here is a link to the article, through I’m not sure you can read it; wsj.com requires a subscription so the site may be blocked. In case you can’t read the article, here are some highlights:
The condominium market is about to get worse as many cities brace for a flood of new supply this year — the result of construction started at the height of the housing boom.
Well, not only construction here, but development underwritten with taxpayer dollars. Nothing like some good ol’ LCDC cash to make that all-consuming fire burn hotter and faster.
The new building comes on top of unprecedented supply. The U.S. finished 2007 with a supply of condos large enough to absorb 10 months of demand, the highest level since the National Association of Realtors began the tally in 1999.
The deluge means bad news for developers and potentially lower prices, including in cities such as Atlanta and Dallas that have avoided the worst of the housing bust. If defaults and foreclosures rise, lenders will feel the pain too.
Narrow vision hard at work. To focus on “the good we do” means that a government body often ignores the side effects. For example, the Police Building in City Park was touted as perhaps a place for lost children to go. But then again, the building has no bathroom facilities. Is the assumption on the part of the City that lost children don’t have to pee?
Likewise, the rush to attract millionaires by supplying them with condos in Coeur d’Alene wasn’t well-thought through. The what-if situation involving banks and foreclosures wasn’t part of the picture. That’s what happens when you have a government agency with millions to spend and no solid plan.
Oh, and I say “attract millionaires” because, unlike Post Falls, the LCDC is not interested in attracting jobs, specifically the kind of career-level jobs sorely needed in Coeur d’Alene.
The news isn’t bad for everyone. Vulture buyers have started to circle, hoping to take advantage of foreclosed properties that banks may start dumping at fire-sale prices. Also, some condos are being converted to rental units, increasing supply for renters and putting downward pressure on prices.
Cool! Now we’re going to have a glut of rentals downtown. You know, I have nothing against renters. I was a renter for years. But when there are no career-level jobs in an area, you retain renters. They don’t have a chance to improve their situation. A community will thrive when it has home owners. I believe that would be a better vision for Coeur d’Alene. But thanks to a lack of vision, we could now be faced with the possibility of a glut of renters. That’s not good for any city.
You know, if the City practiced open government, and welcomed dissenting opinions, we would have an opportunity for input on things like this. Now we must deal with the consequences and, honestly, do you trust them to do the right thing?
gentry |ˈjentrē|
noun (often the gentry)
people of good social position, specifically (in the UK) the class of people next below the nobility in position and birth : a member of the landed gentry.
Comment by Dan — March 22, 2008 @ 10:08 am
how does a nationwide problem get dumped on the lap of the city’s urban renewal agency? oh yeah, everything is lcdc’s fault. i forgot.
Comment by reagan — March 22, 2008 @ 12:38 pm
Not everything. No one here has said that. My point is that the LCDC has been underwriting this type of large development. Consider the three condo towers downtown:
McEuan Terrace. LCDC funding $342,965
Sherman Lofts. LCDC funding $404,993
Parkside Tower. LCDC funding ~$800,000
This problem is not “dumped” on the LCDC. They paid for it. And I’m concerned because it’s taxpayer money.
Comment by Dan — March 22, 2008 @ 12:50 pm
Urban Renewal agencies in other Idaho cities have chosen to target companies bringing sustainable, career-level jobs instead of residential living units. Construction jobs are fleeting and base level service jobs catering to the wealthy, such as food service, hair, shop attendents, etc., are fine but don’t pay enough to live in our town now. In fact, at the CBNI (Concerned Businesses of North Idaho) forum last month, Moderator Freeman Duncan asked the URA reps from Post Falls, Hayden and CdA if their agencies fund residential. LCDC was the only one to answer “yes”.
Comment by mary — March 22, 2008 @ 2:19 pm
I wonder if we also have excessive commercial and office space as well? I’ve spoken with some retailers and service providers who received rent raise notices. They began looking and found they could do better elsewhere in CdA.
Comment by Bill — March 22, 2008 @ 4:32 pm
i understand that sherman lofts and parkside tower are not yet sold out, but mccuen terraces is. how much in property taxes does mccuen terrace pay and how does that compare to the amount of funding that was provided by lcdc?
Comment by reagan — March 22, 2008 @ 9:10 pm
Excellent and very appropriate question.
At the LCDC presentation to the City Council in February, it was reported that McEuen Terrace had paid back its obligation to the LCDC. What that means is that the $350,000 given to the developer by the LCDC had been recouped from the property taxes that the building paid. So, for the past 7 or so years that the tower has been open, it’s “improvement value” in taxes has gone to the LCDC, and the LCDC has paid that money back to the developer.
Now that the building is “off the books,” however, that same proportion of the building’s property taxes continues to go to the LCDC. Councilman Woody McEvers asked, quite logically, if the building’s property taxes could instead go back to the City, County, NIC, and other taxing entities. The answer was “No.” As long as the LCDC’s Downtown District exists, the taxes on McEuen Terrace will continue to flow into the agency. During the meeting, Tony Berns said that the money would go to fund other projects. What they are, we don’t know.
In California, the Urban Renewal law requires that projects that pay back their funding go immediately back onto the tax rolls. That could happen here. The City Council could order such a thing. The LCDC could modify their district to exclude paid-for projects. They don’t.
Comment by Dan — March 22, 2008 @ 9:22 pm
I can request the property tax statement for McEuen Terrace, if you like. The levy on the bare land goes to the taxing entities. The levy applied to the building, the “improvement,” goes the LCDC. Until 2021.
Comment by Dan — March 22, 2008 @ 9:24 pm
We may have workforce housing (condos) yet! LOL
Comment by concerned citizen — March 23, 2008 @ 8:16 am
A representative for Copper Basin Construction stated that the company had constructed condominiums for affordable housing in Post Falls but discovered that the targeted market preferred single family homes. The proposed development that was approved by Planning and Zoning will be constructed in the Landings in Coeur d’Alene.
Comment by Susie Snedaker — March 23, 2008 @ 1:16 pm
Nice timing on that “discovery,” Susie. You would think that when spending millions of dollars they would have, oh, research?
Comment by Dan — March 23, 2008 @ 2:11 pm
it looks like the loft’s “condo” owners get a great view of the posterior of the parkside as well as the mcEuan i guess it puts a perspective on the position one is in the condo crowd. it makes one wonder WHAT’S NEXT?
Comment by casper — March 24, 2008 @ 7:04 am
Well, Casper, Charlie Nipp, Chairman of LCDC and his business partner Steven Meyer, own the Bank of America building and the parking lots next to it–the whole south half of that block facing McEuen field. Seems likely they’ll be building something big along there. Let’s just hope that tax money is not part of the deal…you know how “blighted” that area is!
Comment by mary — March 24, 2008 @ 9:56 am
Casper: The original design for Parkside was a 9-story building (if my memory serves). It was far more squat originally, and I’m guessing that was the design that the Lofts condos was built to face. It was later in the process that the architects were allowed to increase the Parkside tower’s height by 10 additional levels.
There are many problems with the Lofts condo tower besides the overall ugly building. I’ve toured the model unit and it’s not the best design I’ve seen. At $600,000 for the bottom units, it’s outrageously over-priced. I also don’t believe that any of the units have sold. But do keep in mind that the $400,000 promised by the LCDC doesn’t materialize until the building starts paying property taxes, which can only happen when they sell units. So the developer has not yet been reimbursed for that $400,000 expense.
Comment by Dan — March 24, 2008 @ 10:16 am
Dan, are there any time limitations on how long the LCDC is on the hook to this developer for their promise to spend our tax dollars? In today’s market it could be quite a long time before any of these units are sold. Can they get out of this?
Comment by doubleseetripleeye — March 24, 2008 @ 10:55 am
No time limit, CCIII. Tony Berns explains this deal, an OPA (Owner Participation Agreement), as a “reverse loan.” The developer makes the improvements suggested by the LCDC. The LCDC agrees to fund the improvements via reimbursement through property taxes. If the building makes no property taxes, the LCDC is out nothing. The public is not on the hook.
This does raise an interesting question, however: If the LCDC funding was part of a package presented to a lender, how does that fix into the picture should the developer’s project default?
Comment by Dan — March 24, 2008 @ 11:03 am
Thanks for the clarification. I wonder who the lender was on this project.
Comment by doubleseetripleeye — March 24, 2008 @ 11:06 am
Update! During my morning constitutional, I toddled by the Lofts. There was a sign in the bottom east (right) unit that said “SOLD.” The wind kind of twisted the sign around, though it might be visible in the shot I took:
Comment by Dan — March 24, 2008 @ 12:29 pm
Dan, Is it the current valuation or is the basis set at the date of creation of the urban renewal district. Mike Patano knew his project was across the street from the Parkside project.
Comment by Susie Snedaker — March 25, 2008 @ 12:25 pm
I would argue that when Mike designed the building he knew of only the squat tower originally planned. Regardless, property taxes paid on the building are split. The value of the land in 1997 is levied and the taxes go to the taxing entities. The improvement value (current value minus the 1997 value) is levied and the taxes all go to the LCDC. Or they will go to the LCDC when the building is occupied. Right now the building pays the Occupancy Tax. I think that might go to the LDCD as well.
Because public money was spent to help this project, as yourself this question: As a citizen of Coeur d’Alene, how does this building benefit me given sacrifice I make in paying higher taxes?
Comment by Dan — March 25, 2008 @ 2:03 pm
Dan, I think that Mike was present when Monte Miller presented the project to the Design Review Commission. The presentation was out of courtesy as the project was outside the Downtown Design area as was Mike’s project.
Comment by Susie Snedaker — March 27, 2008 @ 2:13 pm