Category Archives: Our Future

Business, Taxes and Government

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I was immersed in the “business” of Martin County one day last week as part of Leadership Class sponsored by the Stuart/Martin Chamber of Commerce of which I am a member. One day a month, we examine a slice of county life such as criminal justice or non-profits. This month it was business. Many people may still believe we only have retail and service businesses in the county, but that is far from the truth.

We have a strong and growing manufacturing sector.  Unlike the factories of several decades ago that had assembly lines of workers, these newer versions have far fewer employees and rely more on computers than wrenches. Manufacturing has high paying jobs and contributes proportionately more in taxes than other types of businesses. This is the good news. The bad news is that, like every tax payer, they also have their gripes about our county government.

As individuals, most love being situated in Martin County. They like our schools, amenities and life style. As business owners and leaders, they wish the county government was more business friendly. When I asked for specifics on what the county could do to help, their answers in most cases were more about attitudes than actual problems. I agree that perception, attitude and fair implementation are important to a business-friendly government.

I think much of the frustration lies in not being able to get concrete answers to questions. As someone who has been in the private sector his entire working life, what I want is answers to my questions. I can’t plan on maybe. The county commission needs to have definite enforceable policies so that the different departments can give exact answers when asked specific questions ranging from what can be built on a parcel to whether a use is allowable.

At the same time business needs to stop acting as if they are persecuted by our local government. It accomplishes nothing and business people begin to sound like a bunch of whiners. The very life style the business people applaud is the one that our current commissioners want to maintain. These are the commissioners and the vision that the majority of Martin County voters want. Voters don’t want a change in western Martin County. Voters don’t want to go above the 4 story height limit. Voters want things to remain like they are regardless of whether, in the long run, these policies are good, bad or indifferent for the economic health of the county.

The real problem with our county is the percentage of income that is generated by for-profit businesses. For example, in the Leadership Class I mentioned earlier, 80% of the participants either work for a non-profit or the government. This is no entrepreneurial bunch. How can we, as a county or a nation survive, when so much of our economic activity is based on taxes or donated dollars? This ironically includes the Business Development Board which receives the bulk of its funding from taxes.

Private business is no stranger to receiving governmental handouts either. Several of the businesses that presented that day stated that they receive either government grants, loans or subsidies and are looking for more. This is far from capitalism as it is supposed to be practiced. While we may claim to want to be free of government constraint, we as a nation have embraced the culture of government handouts. Business is so use to relying on government money that perhaps AAF believes they really are a privately funded scheme instead of one counting on federal loan guarantees.

We need to re-evaluate this crony capitalism on the local, state and federal level. We have become a country where nothing can be done unless the government gives you a tax break, subsidy, grant or loan. I would contend we need a government that helps needy individuals with tax dollars but not businesses or nonprofits.  A free society is not based on every citizen’s ability to carry a gun to protect their freedom.  A free society happens when government stays far from economic development and allows the market to control economic destinies.

Trains, Society And Rights

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I read about one more train accident this morning involving a car in Los Angeles. As we know, this is no isolated freak occurrence. According to the Federal Railroad Administration, in 2014 there were 2,280 crashes involving cars and trains which resulted in 267 fatalities and 832 injuries. The statistics state that 50% of crashes happen within 5 miles of the motorist’s home, and that in car/train collisions, the motorist has a risk of being killed 20 times greater than a car/car crash.

While train/car accidents are significantly less than they were 30 years ago, are these reduced numbers of much comfort to the surviving families or to us as a society? In the wake of the horrific collision that occurred earlier this year in suburban New York, the Wall Street Journal reported last week that New York’s version of railroad police now are giving motorists tickets at rail crossings to prevent more crashes. An auto or truck is no match for either a lumbering freight or a high speed passenger train.

In 1847, New York City authorized freight rails to run in the center of an avenue on the west side of Manhattan.  At that point in time, Manhattan had a population of less than 500,000 most of who lived and worked below 14th Street which was far from the rails. As population grew, the trains running at street level killed more and more people. At one point, they had “cowboys” on horses waving flags in front of the trains to warn people. Eventually in 1929, Robert Moses elevated those Westside freight rails and it became known as the “High Line”. With the growth of interstate trucking and the loss of manufacturing in Manhattan, the “High Line” was eventually abandoned resulting in a neglected ruin. With imagination and tenacity, visionaries turned the “High Line” into a park that people from all over the world come to visit today.

I mention the “High Line” to make a point.  Perhaps we are ready, as Manhattan was almost 90 years ago, to stop the fiction that a freight or passenger line can safely operate at road level in a populous corridor. How many derailments or accidents or deaths does it take before our state and federal governments sees this folly for what it is? Should we also have cowboys waving flags? When does the good of the many triumph over the interest of the few?

Sometimes individual rights must be curtailed for the greater good.  The nation decided that a cohesive society was better maintained by a policy of non-discrimination than the individual’s right to deny service based on race. No right is absolute including property rights. Time, demographics and new technology change what society deems appropriate and lawful. It may be that we reached a moment when the right to have a railroad in the center of a population hub consisting of millions of people is no longer feasible.

GLAMOUR!!!! GLITZ!!!! RAZZ MA TAZZ…AND ALL THAT JAZZ!!!!

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GLAMOUR!!!! GLITZ!!!! RAZZ MA TAZZ…AND ALL THAT JAZZ!!!!

That is what some people consider development or progress. The sizzle will give us the flair. Style will draw the crowds. Gimmicks will bring jobs and people flocking to our downtown. The substance and values of the place does not matter.   Let’s be like Las Olas in Fort Lauderdale or Lincoln Road in Miami Beach. Let us transpose our city to have the look and feel of Clematis Street or become Delray. That will spell success for us some say.  I am surprised someone hasn’t mentioned the noise and crowds of Bourbon Street, New Orleans for Stuart to emulate.

Some people (and for the most part not even residents of the city and in some cases not even Martin County) have big opinions on how we should look. How we should develop. Those are the people that are only looking to their bottom line for their businesses or real estate holdings. Commercial businesses are important but are only one piece of the puzzle for the health and wealth of a community. The citizens, residents and voters should be the deciding factor on what the soul of the city will be.

In Shakespeare’s Coriolanus, Sicinius asks the citizens: “What is a city but the people?” To which the crowd respond: “True, the people are the city.” I believe the people who live in the condos off Palm City Road and on East Ocean and in all our neighborhoods chose to live in Stuart not somewhere else because of what we represent. We have a real downtown not an “Entertainment District”. Our shops and restaurants are reflections of us. Are we Glamour or Glitz?

Let us do the hard work of revitalization where needed. Let us be the city where families of all ages want to buy homes and apartments and put down roots. Not occasionally come to have a good time and leave because the cacophony of noise is not where they want to live and raise their children. Let’s make sure that we incentivize homeowners to revitalize and expand their homes to increase our tax base. Though Martin County school board is in charge, we as citizens can embrace and volunteer to make Parker and Stuart Middle better so that families stay as their children become school age.

Stuart should be Stuart. We should capitalize on our “old Florida charm” and embrace our 4 story height limit to attract visitors. We need not resort to being pale copies of somewhere else. Hotels on bridges and seaplanes on our river or restaurants on roofs will not make us better or different than a hundred other places. Our “brand” is established let’s build on it not destroy it for the sake of the glib and the hype of the ridiculous.

Gossamer dreams of Eldorado or other such nonsense will only lead to the failure of our city. We do need a vital downtown. That is something we already have. I also believe you can’t make us something that we are not and succeed. We want to be Stuart not Delray or Clematis Street. We don’t want to be an “Entertainment District” with all that entails. That is a scenario for our demise because it will drive away most of the current patrons of our restaurants and downtown businesses.

Further on in the same scene in Coriolanus, Cominius states to the crowd:

“That is the way to lay the city flat;

To bring the roof to the foundation,

And bury all, which distinctly ranges,

In heaps and piles of ruin.”

 

To which Sicinius replies: “This deserves death”. I agree the idea of Stuart being Glamour, Glitz, Razz Ma Tazz and all that Jazz deserves the same. Once we as a city allow those things to occur we won’t be able to go back. I hope Stuartians as the Romans in Shakespeare’s play say the same. I don’t believe we want to become just another soulless purposeless dot on the Florida landscape so that maybe a few will make a little more to the detriment of the rest of us.

Northpoint Through The Prism Of Past, Present & Future

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Some at City Hall want to rent a spit of land known as Northpoint to a developer to build a hotel and restaurant. The location of the property is just on the north side of the old Roosevelt Bridge between Dixie Highway, the FEC track and rail road bridge. But before I venture my opinion on this project, I want to visit three different years in 20th century America. As you will see, the past is important to understanding my position on this project in the present but especially for the future.

The first year I want to examine is 1971. I began college that year. The apartment I rented was the first floor of a two family house in Queens, NY. My rent was $75 a month plus utilities. I had a full time job that paid $130 per week in a New York City hotel. The subway fare was 30 cents. The White Castle around the corner from my apartment charged 12 cents per slider. I ate there several times a week.

Now, it is 1953, the year of my birth. My mother told me the rent was $32.00 per month for our NYC apartment. The subway had just been raised from a dime to 15 cents. It was President Eisenhower’s first year in office, the Korean War ended and the minimum wage was 75 cents. Also 50% of American homes had a TV.

Lastly, let’s look at 1932 which is 83 years ago. The country was in the midst of the Great Depression. The U.S. GNP fell more that 13% and unemployment was 23.6%. Herbert Hoover was in the White House. You couldn’t buy a legal drink because Prohibition was still the law of the land. The New York City Subway was a nickel.

Do you think anyone in 1932 America could predict what our country would look like in 2015? In 1932 Stuart was 18 years old and Martin County was 7. There was radio, and talking pictures had been around for five years. Television, the internet and cellular phones were unknown. Hitler had yet to come to power in Germany. World War I was still referred to as the Great War. In 1932, forget about predicting what the world would look like in 2015, Americans couldn’t even see the world of 1943 and the inferno to come.

Understanding the above, if Stuart was negotiating a lease for Northpoint in 1932, what would the terms be? I would suspect vastly different than what they would be in 2015. But today Stuart is negotiating a lease for Northpoint that will run 83 years until 2098. Lease terms written for the Stuart of 2015 that will bind our children, grandchildren and in some cases great grandchildren. Will the terms and concept of this lease be relevant at the dawn of the 22nd century?

We are obligating the city of tomorrow with our actions today. We may have a legal right to do so, but we do not possess the moral right. There is just no possible way that this is good government. This action is done with a great deal of hubris and paternalism. I have other serious doubts and questions about this project. Even if I had no others, I could not in good conscience vote for this lease; which will bind the hands of future generations of Stuartians long after I and the present commission are gone.

LET CITIES PROVIDE URBAN SERVICES

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The next time one of your state legislators tell you that they are in favor of small government and letting the people decide don’t necessarily believe it. While they may mouth those platitudes to mirror the sentiments of most Floridians, they may still believe they know what is best for local governments and you. An example is a bill being introduced in the senate to take away the rights of municipalities to bring water and sewer projects forward.

Known as SB 442 it is emblematic of a problem that municipalities in non-chartered counties face. Over time non-chartered counties have come to resemble municipalities in the services they provide. This has resulted in a competition between municipalities and counties that Chapter 180, F.S. was written to avoid. Counties are very much political sub divisions of the state and were created to help the state government in providing state services.

On the other hand, municipalities are also creatures of the state but with the difference that they would be formed by a group of citizens under the auspices of the legislature to provide urban services such as water and sewer. The intention of “home rule” was to allow cities to be centers of urban life surrounded by the rural area in the unincorporated part of the county.  As time passed and the rural areas became urban with higher densities outside the existing city’s boundaries, the city would annex those unincorporated areas and provide urban services to the newly added residents.

The legislature should be encouraging more annexation of unincorporated areas into municipalities as they go from rural to urban. The legislature should also encourage builders of larger, newer developments to provide urban services and to incorporate as cities as part of the approval process.  By having only municipalities providing urban services, the schizophrenic nature of non-chartered counties in terms of what and whether to provide urban services would cease.

As a state, we need to distinguish between the functions that counties should provide and those that municipalities should. If each acted only within the scope of its responsibilities, then instead of competition developing, a symbiotic relationship would occur between non-chartered counties and their municipalities. This would further the people’s right to “home rule” and lessen the issues of “dual taxation.”

Counties need to remember that when surrounding areas are annexed into a municipality the people in those annexed areas are still citizens of the county. They still live within the county, they still vote within the county and they still pay county taxes. The nature of the services provided by the municipality is essential in allowing for increased density and development to occur in the area outside current municipal boundaries.  This development will occur and the citizens of the unincorporated area will demand urban services. Does it not make more sense to have the entity that was created to provide such service to do so? Annexation is a good thing and not something that should be looked on as an encroachment.

Own Versus Rent Even Government Has To Decide

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In the near future, Stuart will be offering the Triangle Property to developers. I believe the city is on the right track. Possible developers will ascertain uses for the property that are market oriented and not tied to any bureaucratic interpretation of what should be on the site. While a public component is not out of the question, there is no mandatory one. I am also encouraged that the city is not insisting that we net lease the parcel but is open to all possibilities.

That does not mean that the eventual developer will have no restrictions. The parcel still must meet current zoning and building codes. This will result in the developer having the same freedoms and restrictions that any owner of property would have.  It is truly market driven and not subject to bureaucratic dictates such as providing public parking. When placing any property out to bid, the city’s only interest should be whether the proposed buyer can close on the agreed upon terms.

The CRA can then take any proceeds and re-invest in other properties in the district to foster development. The purpose of a CRA is to help and promote private development in a designated area of the city. Government should not dictate and demand restrictions and uses to a buyer of city owned property simply because government was the seller of the property.

When government perverts the market by insisting on what should be built, it can result in adverse consequences not only on that property but also on the entire community.  Business should be left to the private sector. Government is notoriously bad at picking economic winners as witnessed by Digital Domain.  That is why I am, on principle, against Stuart being a landlord in almost every instance. If there will not be a public use for a property within a foreseeable period of time, it should be sold.

For many years, life insurance companies built and owned large real estate developments so that they would have predictable cash flows in order to pay claims.  Several centuries ago, Gompertz developed what became known as the “Law of Mortality”.  This is a mathematical formula that actuarially predicts how many people of a certain age will die each year. By owning these income streams, insurance companies proved to the regulators that they would have the money available to pay claims. Government is not an insurance company which needs streams of income. Government should not be in the private sector.

Being an owner of commercial real estate requires nimbleness and flexibility that governments, by their nature, do not possess. For argument’s sake, I will assume that during the course of the lease the tenant and assigns will make all rent payments as stipulated (with a lease of 50 or 80 or 99 years, this is a huge assumption). While land cannot technically become obsolete, the improvements upon it definitely do.  So even under the best case, the government will receive back an asset that is economically or physically obsolete. Which means it will have very little residual value.  You must have collected the correct amount of rent during the course of the lease or a loss will have occurred. The parties to this lease agreement are agreeing to rent terms for an economic future that is impossible to forecast.

I have been in the real estate business my entire career. I currently manage 500,000 square feet of commercial space and I have two non negotiable items. The first is that no lease term is for more than 15 years (the overwhelming majority of leases are for only 10 years) and the second is that there is a minimum percentage increase of rent every year with a CPI. Even after all these years I can’t predict market conditions for more than about a decade under the best of circumstances. Long leases lessen the value of the real estate if and when it has to be sold. Should the government have different requirements for the people’s real estate?

 

The Meaning of A Holiday

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Monday is a national holiday in honor of Dr. King. Our government, schools, banks and many offices will be closed. But, like so many of our holidays from the generic Presidents’ Day to Memorial Day to Veterans Day, we celebrate the day off but not the meaning of the day. Thanksgiving has turned into a national obsession to shop for Christmas gifts while forgetting why we are thankful and why we are giving gifts.

The commercialization of our civic and religious days ultimately blinds us to our beliefs as citizens and as a moral people. We need to reflect on the reasons why we have chosen to commemorate these few days in the year. The reasons are at the core and soul of who we are as a nation and a people. We should not be too busy or in too much of a hurry to forget what binds us together as Americans.

Our first civic holiday of the year is in honor of Martin Luther King. Before we rush out to the stores or a barbeque or just sit on the couch, let’s consider why we have chosen to remember this man. King recognized that a nation that said it believed in one thing but practiced another could not be truly great. The chasm between its stated principals and the way it behaved would eventually rupture and destroy our nation.

From the founding of the United States, we had the glowing rhetoric of Jefferson and the founders’ promises. Sadly, those promises were applied only to a very select group. In 1776, not only did the color of your skin matter, but your gender, religion and even whether you owned property determined if you could participate in government or hold office. Through the years, more and more Americans were accepted and were allowed to participate fully as citizens. Then, with Dr. King’s leadership, the last barriers to full civil equality began to tumble. The Plessey doctrine of “separate but equal” was no longer acceptable.

On Monday, we need to remember the time when your skin color determined where you went to school or rode on a bus. And, we need to remember the reasons for all our holidays. They were not proclaimed and instituted for a car sale or a football game. Those days are holidays to celebrate what we believe as a nation and as a people. Yes it is fine to relax and enjoy the day off, but never forget the reasons behind that day of leisure.

2014 A Good Year

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As we in Stuart and Martin County see the close of 2014, it has, for the most part, been a good year. What constitutes a good year is fairly subjective. There were no further releases from Lake Okeechobee this rainy season. However, water continues to find its way to our estuary through the various canals bringing unwanted nitrogen and phosphorus. We passed Amendment 1 which should give the state a dedicated money source to acquire and preserve land. The management and choice of what land to buy is in the hands of Tallahassee. Perhaps the citizens and the state pols will be in synch this time. As we have seen, just because we, the people, vote one way, the legislature and state executives have no problem ignoring our wishes.  One good example is the implementation of the fair redistricting amendment that the politicians and legislators went to court to prevent and used our tax dollars to pay to fight against us.

All Aboard Florida continues its plan to wreak havoc on Stuart and the rest of the Treasure Coast in spite of the immense grass roots uprising against moving forward. While it seems that Patrick Murphy and our local state legislative delegation is with us, Governor Scott, the legislature and Washington (including our two senators) are actively encouraging the plan or are silent. The good news is that it is still far from a done deal here on the Treasure Coast.

In Martin County, the one cent infrastructure sales tax was defeated by 72 votes. Though it was passed by Stuart residents, it was caught in the politics of Martin County. I believe it would have passed if past county commissions had used all of the funds from the last sales tax as intended. Instead, some of that money was used for things that many of us would not consider infrastructure such as Splash Water Park. Government should be concerned with infrastructure repair and improvements not theme parks. Martin County, Stuart and the other municipalities are now poorer for that earlier mistake.

The economy has rebounded with unemployment standing at 6%. While it was lower prior to the Great Recession it still is remarkable progress. Now that the economy is better, we need to encourage smart and sustainable growth within the urban service boundary. Martin County does need to grow in order to continue to be viable. The tax base needs to increase or the rest of us will pay more for fewer services.

Stuart also needs to grow … especially in population. We cannot sustain a city unless we have the people and resources to do so. If we cannot attract middle class young professionals, we will be a city of rich and poor.  The city cannot maintain services if less than 50% of the residents pay little or no tax. While Stuart is business oriented, the inequities of sales tax distribution allows the county to discourage business but still collect the overwhelming majority of sales tax (most of which is produced in the city). This is an inequity that cannot continue.

There were other good things that happened this year. We had a special meeting on the Palm City Road issues and the city commission will be sending the ideas expressed by the residents to the county for study and further implementation since they own the road.  The city commission also voted to have a camera installed in the chamber to record our meetings for viewing at home but also to have live streaming of the meetings in real time.

It seems to me that 2014 was a good year. While not many problems were solved, none are worse.  Maybe 2015 will be the year that we solve and eliminate some of those problems. I want to wish all a Happy and Prosperous New Year!

 

We Are Now #3!!!

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The New York Times reported that Florida has officially overtaken New York State in overall population. We are now #3!!! As a transplanted New Yorker (like10% of Florida’s population), I was a little sad. When I was born, New York had the largest population with California a distant second. Texas and Florida were not even in the top ten states. New York had industry and large companies, not only in my hometown of New York City, but throughout the state from Niagara Falls to Buffalo to Rochester to Syracuse, Troy and Albany.

Unfortunately, New York did not pay attention to the basics. The state and local governments thought they could tax and regulate industry indiscriminately without end. Both local and state governments looked at business and productive individuals as “marks” for the taking. These companies and individuals would pay and pay and the politicians would take and take.

At first, the government used those funds to build roads and infrastructure. An enviable state university system took shape. Some needed programs for the poor and even for the middle class were instituted. But politicians are politicians, so they began buying the votes of public employees by generous contracts, regulating businesses in every minute aspect and providing unsustainable welfare benefits to the poor. By 1975, when New York City was teetering on the brink of bankruptcy, close to 40% of the population was either on the dole or had government jobs.

Today New York is the Empire State in name only. Through governmental policies and a changing economy, the state is no longer considered an economic powerhouse. New York City has survived and even thrived in spite of its prevailing governing philosophy due to its uniqueness. But now, New York City is more and more a place of the very rich and the very poor. The working middle class that I grew up as part of is becoming less and less of the population because the businesses that would employ them have left the state.

Florida is now the third most populous state in the nation.  It has no income tax and comparatively few social programs. What it does have is an overabundance of government and nonprofit organizations – neither of which produce more national wealth. There is transference of dollars received from taxes and donations from the wealth-producing members of society to governmental and nonprofit employees in salaries and benefits. Both governmental and nonprofit employees now earn more than their counter parts in private industry.

Just like New York did in the 1960’s ‘70’s and 80’s, Florida by transferring dollars from one group to another without creating any new wealth will arrive at the same place. The state and our country cannot continue on this course without eventually bankrupting us. There is a place for both philanthropy and governmental service, but the bulk of those dollars cannot be used to pay employees and not build sustainable infrastructure, an educational system for our future economy and necessary social programs that lift the poor out of poverty by increasing their employment opportunities. Simple math tells us that a decreasing private sector cannot fund a larger and larger public one.

Why Is All Aboard Still Considered A viable Project?

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Why is All Aboard Florida still considered a viable project? The DES is nothing more than a cruel joke. It is supposed to be a serious study on the impacts that will occur if All Aboard is allowed to move forward. When will Tallahassee and Washington finally say enough and make them go away? Well don’t hold your breath waiting for that inevitability.

All Aboard Florida is an example of our capitalistic system run amuck. It is a story of the power of the lobbyist…the campaign contribution…the good old boy network at its worst. What is so galling is the fact that the company won’t even make an effort to mask their disdain for the process while we, the residents of the Treasure Coast, make an effort to decipher the DES and come up with alternatives to trains racing through our downtowns. The folks at All Aboard Florida couldn’t care less. They know that they have the politicians right where they put them.

These are neither bullet trains nor truly high speed. Those run through sealed corridors and at speeds not even anticipated by AAF. This is a sham perpetrated on all Americans but especially devastating to the Treasure Coast. Nothing that the company can do will change the insanity they want us to accept. Anyone who believes a stop in Stuart or Fort Pierce will ameliorate this destruction must be dreaming.

All Aboard Florida is a scheme in search of a reason to exist. Even with a stop in Stuart it is unlikely that I would use the train. Last week, my wife and I drove to Miami to catch a flight. In an hour and forty five minutes and for about $20 in gas and tolls we were there. No humping of bags up and down staircases or trying to get from our home to the station. A few days before that I drove to Orlando for a conference in a little less than two hours at about the same cost. There is no way that the train will be faster or less expensive or more convenient.

No, All Aboard is not a rational proposal. It is not a sound business model. It may be an excellent way to develop real estate in Miami but that could be accomplished without the havoc that this will wreak on the residents of the Treasure Coast. The company is willing to spend billions of tax payer money in order to build their properties. It could be in loans or government backed bonds or through subsidies, but in the end, there is no justification for this nonsensical scheme.