Archive for the 'Orlando' Category

A subprime wake-up call to curb spraw

We received this editorial recently from Alan Farago and after receiving his expressed written consent decided to republish it here for you to read. The original article appeared in the Orlando Sentinel on January 14, 2008

If there is a silver lining in the sharp contraction of housing markets across the nation, it is the impetus to reform a model for economic growth — suburban sprawl — that is fundamentally flawed.

The state investment pool — repository for taxpayer funds of municipalities in the state of Florida — sunk billions of dollars into leveraged financial products tied to suburban sprawl.

In other words, whether we like it or not — whether we are Democrat or Republican, environmentalists or developers — Florida invested in the dream, others profited from it, and now all taxpayers are at risk on the sprawl side of the ledger.

It’s time for some plain speaking: The financial system that underpins low-density, scattered development in Florida, most often viewed as platted subdivisions in wetlands or farmland, is bankrupt.

That is a problem because the sprawl model has been a big, if not the biggest, driver of Florida’s economy.

When policies about growth for construction and development are discussed by government, they are organized around rules and regulations for zoning and permitting.

But the true parameters for suburban sprawl aren’t set by rules or regulations or even by public choices on land use and development: They are established by banks and what banks can finance.

Most consumers hear about it in terms of “subprime mortgages.” The reality is different. Those who benefited most from the “ownership society” don’t live on Main Street; they work on Wall Street and made huge fees and commissions on speculative leverage, the underpinning of suburban sprawl.

There are many intermediaries — praetorian guards to the field generals of sprawl, each reaping a host of legal, engineering and lobbying fees. But the end goal of Wall Street’s sprawl arrangement was to persuade distant investors, through the assurances of ratings agencies and insurers, that any particular development — based on demographics, proximity to markets and even architectural and design parameters — would deliver returns with the same reliability as a similar set of box retailers or platted subdivisions in, say, Las Vegas.

Thus, the passion for preserving a local spring, or the Everglades, was blocked out by fractions and formulas claimed to diversify risks while guaranteeing a predictable, high stream of income to investors.

Not only have we lost our springs and much of the Everglades, the banks lost, too.

The banks didn’t lose roseate spoonbills or swallow-tailed kites. Instead, they lost hundreds of billions for investors, many of whom have abandoned the market for leveraged debt related to housing.

In other words, the spoonbills will come back sooner than the markets tied to debt for suburban sprawl. So, it is a good time to consider alternatives to a status quo that lost whatever leverage it had to reality.

Although its advocates claim the contrary, subdivisions far from places of residents’ jobs are not what the markets want; the subdivisions are what Wall Street can finance to its maximum benefit.

Those benefits are defined by the degree of leverage. Conversely, if one puts limits on leverage, attached to particular locations and property, it is possible to choke off sprawl the same way cancer researchers are learning to limit the spread of tumors by cutting off their blood supply.

It is time for a new model for growth that puts brakes to sprawl, matching what investors can expect to earn and what developers can finance to the true cost of protecting aquifers, the environment, and infrastructure that serves existing taxpayers.

For this to happen, Congress has to connect banking regulations, governing the issuance of financial debt such as mortgage-backed securities and such, to land use and the environment.

It is a tall order, but there is no better time than the middle of a crisis to consider new solutions. In the United States, the work of bond ratings, insurance, public and private debt has been deemed off-limits to scrutiny to all but the financially competent who are rewarded, in turn, by tipping the scales of equity to private interests.

During the housing boom, this worked especially well because everyone was a winner (except the poor and the environment). In The New York Times, Floyd Norris captured the formula in part: “It was the greatest credit party in history, made possible by a new financial architecture that moved much of the activities out of regulated institutions and into financial instruments that emphasized leverage over safety.”

The other part of the formula is the one that matters most: So long as leverage fails to account for the safety of our communities, we will be at the mercy of Wall Street and the masters of suburban sprawl. It is time to get smart and put handcuffs on a financial system that has been golden to all but the people who have to pay for them. That would be you and me, Florida taxpayers.

Alan Farago of Coral Gables, who writes about the environment, can be reached at alanfarago@yahoo.com. He wrote this commentary for the Orlando Sentinel.

Transitography 45: Next Stop, Fantasyland

Wednesday Headlines

  • MIA is experiencing a sudden surge of International Flights. American Airline’s recent announcement of 14 additional round trip flights to Colombian destinations (Baraquilla, Medellin, and Bogota) and year round, non-stop flights to Montevideo, Uruguay, further solidified the carrier’s position in Miami and Latin American. Meanwhile, South African Airways is also considering adding daily non-stop flights between Miami and Johannesburg and Brazil’s TAM is adding daily non-stop flights to Rio de Janeiro. There are also preliminary talks of Virgin America coming into the market within the next five years. Hopefully the recent surge of interest in MIA will justify the half billion dollars commissioners recently approved to complete the North Terminal project. The North Terminal, as we’ve discussed in the past, is about 1 billion dollars over budget, 393 days behind schedule, and the cause of our humiliating “exercising” train in Japan. I’d like to know how the Parsons/Odebrecht Joint Venture Contractor can justify a Billion dollars of cost overruns and more than a year in delays…Note: Parsons/Odebrecht is currently the contractor managing the MIA South Terminal (Over budget, Behind Schedule), Miami Intermodal Center (Over budget, Behind Schedule), MIA North Terminal (Over budget, Behind Schedule), MIA People Mover (Behind Schedule), and Odebrecht was the contractor in charge of the construction of the Carnival Center (Over budget and behind schedule, to say the least.) Anyone else see a worrisome trend evolving here? There’s a common denominator with Odebrecht: the County. The Question then becomes who’s responsible? The joint venture also placed a bid for the contract to build the Port of Miami Tunnel, however, a Spanish firm was granted that contract (that is unless some crazy idea that the firm should not be granted the job because of it’s own legal ties to Cuba becomes part of someone’s political agenda…)
  • In Eco News, Orlando will become the first city in the United States to operate a fleet of Hydrogen powered buses built by Ford. The city will use the 8 hydrogen buses to ferry passengers around the airport and convention center. Meanwhile GE today unveiled the first ever Hybrid Road locomotive…
  • Speaking of Buses, an MDTA bus plowed through a little Havana Church before sunrise today…
  • Floating Condos? Man, I hope this doesn’t catch on…
  • Good news for the California HSR initiative: A senate subcommittee has approved a 45-point, 2 Million Dollar initial budget…
  • The Holland Tunnel is facing 30+ minute delays at 5:30 on a Friday evening, how did this guy get through in 5 minutes? Watch the video to see…
  • Three Cents off each Gallon of Gas? Oh, you shouldn’t have! No, Really…

Update: Courtesy of Mark, in the Comments Below:

  • American Airlines will start daily flights to Valencia, Venezuela pending Venezuelan government approval this fall.
  • American Airlines will start four weekly flights each to Recife and Salvador da Bahia, in Brazil, later this year pending Brazilian government approval.
  • American Airlines is set to announce in a few weeks the launch of the only non-stop service between South Florida and Austin, Texas this fall.
  • American Airlines just launched new non-stops to Fayetteville, Arkansas and in June adds additional service to Charlotte, Cincinnati, Cleveland, Cozumel, Freeport, Jacksonville, Key West, Nassau, and Rio de Janeiro.
  • VARIG will resume service to Miami this December, with daily non-stop service to Rio de Janeiro.
  • AeroSur will increase service between Miami and Bolivia in June from 3x to 4x a week.
  • El Al just increased service between Miami and Tel Aviv last month, from 2x to 3x a week.
  • Aerolineas Argentinas will begin 5x weekly non-stop service between Miami and Sao Paulo on 1 September 2007.
  • AirTran will launch the only non-stop service between Miami and Kansas City on 7 November 2007. On the same day, they will launch the only low-fare non-stop service between Miami and Baltimore.
  • Ecuador’s AEROGAL has applied with the US DOT to fly to Miami, and is awaiting US approval to begin scheduled service later this year.
  • Iberia just increased Miami-Madrid service from daily to 10x weekly.
  • Air Plus Comet is planning to start four weekly flights between Miami and Madrid in November.
  • German airline LTU more than doubled MIA service last week. They now serve Miami 5x a week, instead of 2x. They have three flights a week from Dusseldorf, Germany and two flights a week from Munich, Germany.

Simply Remarkable…

Looking North for Some Obvious Answers

Perhaps Miami should look north for some answers on how to regulate our urban sprawl. Central Florida community leaders are presenting 4 alternatives on the future growth patterns the area can choose to take for regional developments and are allowing area residents to choose which path the region should take from now till 2050. I think its exceptional thinking on the part of city planners to choose a plan of action for regional growth over the next 40 years while educating the public on the negative effects sprawl will have on their community if the corrective measures aren’t taken. The report is inclusive of urban growth and development patterns, environmental land conservation, area job opportunities, and public transportation. The plan proposes three better urban growth alternatives along with the typical “do-nothing” alternative which would continue the treacherous path of disruptive land use. Needless to say, the citizens are speaking out and are overwhelmingly deciding that the “do-nothing” alternative is not a reasonable plan of action and are instead opting to see denser, smarter developments in their community. Interestingly enough, the seemingly controversial streetcar is included in denser growth patterns, as is extended commuter rail and alternative transit (bike, bus, etc.)

Our region is in dire need of an area wide policy against current land usage patterns. Our neighbors to the north have realized this, why can’t we?

I found this on the myregion.org website, which has a wealth of information. One of their desired outcomes is something I have had a great deal of difficulty achieving with Miami residents since I started Transit Miami nearly a year ago:

Our Desired Outcomes:

  • Build a new regional mentality
  • Strengthen and create regional coalitions
  • Maximize opportunities and address challenges

Changing people’s minds will be the hardest objective for any visionary plan in this Country. The already disillusioned “American Dream” has morphed into an uncanny desire to lay claim to large tracts of land, repeatedly misuse resources, and generally live in an unsustainable manner. To attempt a reversal of this mindset would require a figurative amending of the constitution as well as widespread progressive leadership to reverse the suburbanization of American Culture witnessed over the prior six decades…

  • Heck, they even address the fragmentation which has occurred in the region…
  • Check out who is on board