Sunday, June 07, 2009

On Property and Policy

City officials always seem to be promoting a solution to this or that problem. Seldom do they discuss why the problem exists in the first place. How can you solve a problem if you don't know why it exists?

Consider the various proposals to keep area homes in good condition. So why are some home owners allowing their properties to deteriorate? We need to know the answer to that question before we can shape policy to address the problem.

Are the property owners in question just bad people who don't care or are they making rational investment decisions? If your answer is the former, then you might like spanking them with fines, new ordinances etc... but perhaps they are acting rationally.

What rational person would allow their property to deteriorate and decrease in value? Well, first we must understand that spending money on home maintainence is just one of millions of investment choices available to us. Are new windows a smarter investment than car repairs, school tuition, a 401K contribution? Perhaps some property owners have detirmined that property improvements in Racine are not a good investment.

Property taxes are high in Racine. Property improvements cost money AND result in even higher property taxes year after year. Property owners can't pick up and move their homes to avoid the high taxes but they can gradually divest from Racine. They can allow their properties to decline in value while choosing to invest their money elsewhere - where they think they will get a better return.

We can villify them, harrass them, or fine them and hasten their exit from Racine. But nobody is taking their place - we have a declining population.

A far better idea is to ask whether such people are behaving rationally, and if so, we should respond with rational policies to address the problem.


Paul said...


You make an excellent point, and I would like to comment.

I live in a "historic home" within the proposed district. I am opposed to the plan primarily because it fails to address what is in my opinion, the root cause of the problem. That is, the plan does nothing to address economic growth! Economic growth solves alot of ills, including declining property values.

We need to attract innovative small and start-up businesses to Racine in industries that offer jobs for the 21st century. These jobs don't necessarily have to be "high-tech", as long as they pay good wages.

If we can bring jobs to Racine, people will begin to buy homes in the "historic district" and other areas, rehabilitate them, and attempt to improve the quality of life in their neighborhood. When that happens property values go up without the intervention of clueless bureaucrats!

What is Racine doing to encourage new business formation? Nothing really. My suggestion is put the historic district on hold and develop a plan that encourages innovative firms, start-ups, and technology companies to locate within the city.


Denis Navratil said...

City policies actually discourage investment. Businesses are forced to jump through hoops like getting conditional use permits etc... such that business formation now is an increasingly politicized process. In the past year or so I have witnessed government interference in the housing market, convenience lending market, convenience store/liquor store market etc... and of course they are just making things more difficult and costly. The city needs to get its act together and stop hassling wealth producers and job creators. Then, as you say Paul, some problems will just take care of themselves. I am glad you oppose the historic/power grab ordinance. Despite vocal opposition from folks like yourself, the city is pressing forward. I hope you stick with this and fight it. I know I will.

Anonymous said...

Colt is in this fight too. and will not end his fight until the root of this is gone in this case Brian O'Connell of City Development.

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