Wednesday, February 27, 2008

Another Entry into the Daily Sprawl...

"Hold On Tight, Things Are Getting Rougher" file:
Gasoline prices, which for months lagged the big run-up in the price of oil, are suddenly rising quickly, with some experts fearing they could hit $4 a gallon by spring. Diesel is hitting new records daily and oil closed at an all-time high on Tuesday of $100.88 a barrel.

The increases could not come at a worse time for the economy. With growth slowing, high energy prices that were once easily absorbed by consumers are now more likely to act as a drag on household budgets, leaving people with less money to spend elsewhere. These costs could exacerbate the nation's economic woes, piling a fresh energy shock on top of the turmoil in credit and housing.
Here's the whole story.

"You're adding an oil shock on top of a crunch on credit and a housing collapse," said Nigel Gault, an economist at Global Insight. "Even the U.S. economy cannot withstand all of that at the same time."
What's the significance of this? Well, there's alot--one of the major ones being that it will become increasingly important to live in a neighborhood where you can walk to meet some daily needs like recreate, worship, socialize, and even buy basic sundries like milk and bread.

Levitt Goes Bankrupt... of the poster children of suburban sprawl has historically been Levittown.

Guess what?

The Levitt company has now gone bankrupt.

Photo courtesy of

Monday, February 25, 2008

Surburban Slums?

According to this article, the so-called advantages of suburban (sprawl) living may begin to disappear pretty quickly:
If gasoline and heating costs continue to rise, conventional suburban living may not be much of a bargain in the future. And as more Americans, particularly affluent Americans, move into urban communities, families may find that some of the suburbs’ other big advantages—better schools and safer communities—have eroded. Schooling and safety are likely to improve in urban areas, as those areas continue to gentrify; they may worsen in many suburbs if the tax base—often highly dependent on house values and new development—deteriorates. Many of the fringe counties in the Washington, D.C., metropolitan area, for instance, are projecting big budget deficits in 2008. Only Washington itself is expecting a large surplus. Fifteen years ago, this budget situation was reversed.

Saturday, February 23, 2008

A New Form of "Redlining"?

That's what this article suggests:
In an effort to stem the bleeding, mortgage firms have instituted a bunch of new policies, one of which has drawn pretty heavy criticism from consumer advocacy groups and some in the lending industry itself. They call it new "redlining". It all started when Fannie Mae in December announced that from mid-January on it would require an extra 5% down payment from loans originated in declining areas. A declining, or high-risk, area could be an entire county, a metropolitan area or a zip code. Since last summer Fannie Mae has been labeling certain areas as declining and now it urged banks to use practically any available statistics to do their own risk assessments. Several national lenders have followed that advice and promptly stirred up the controversy.

Peak Oil Update...

Bloomberg Headline: "Oil at $100 May Look `Cheap' Within Five Years, Alfa Bank Says"

Read the story here.

This one, too.

Congressional Efforts

This NYT article discusses several Congressional efforts under consideration to deal with the housing mess. Notably, all of them seem somewhat too complex for their own good.

After all, do we really need a new federal agency to deal with this?

Anyhow, we'll keep you updated on legislative efforts to fix what some are beginning to think might be an almost unfixable situation:
Bank of America, which is in the process of acquiring Countrywide Financial and has potentially huge exposure, has circulated a proposal to create a new federal agency that would buy vast quantities of delinquent mortgages at a deep discount and replace them with fixed-rate federally guaranteed loans.

The bank warned that tightening credit conditions were leading to “escalating levels of delinquency and default among borrowers” and “an unprecedented number” of homes that would enter foreclosure.

Administration officials have given the Bank of America plan a cold reception. But the idea is similar to one proposed by Senator Christopher J. Dodd, Democrat of Connecticut and chairman of the Senate Banking Committee.

Bankrupt Cities?

While not unprecedented, the possibility of entire cities going bankrupt is an ominous reminder that even government bodies have solvency realities:
Broken street lights will not be quickly fixed, overgrown trees will not be trimmed unless they are unsafe and new development reviews may be delayed.

Those are some impacts of proposed cuts to Vallejo's public works department.

A draft fiscal emergency plan calls for maintaining a bare minimum of municipal services in public works, planning, human resources, economic development and other city divisions.

Released last week, the draft plan may undergo substantial revision before the City Council votes on it Tuesday. A city solvency plan is dependent on police and fire unions agreeing to pay cuts and reductions in minimum staffing levels.

Drastic cuts in city services are required to plug a $6 million general fund shortfall. Top city officials say the city is slated to run out of money by the end of April, and Vallejo may need to file for bankruptcy. All $4 million in general fund reserves have been spent.

Could an Unexpected Beneficiary of...

...the housing situation school clinics?

The WSJ law blog thinks that might be the case:
Ever since the economy started slowing down several months ago, the Law Blog has tracked how the sub-prime crisis and the credit crunch have affected the legal market — from layoffs to litigation. But a recent article in the Daily News tipped us off to an area of lawyering we forgot to check in on: law school clinics.

The Land Use Prof Blog... revisiting its skepticism of the demise of America's auto-centric suburbs. Read the story here.

Thursday, February 21, 2008

President Bush... right on this one:
Bush went on to say, "I think this economy is down because we built too many houses, and the economy is adjusting." He then touted his economic stimulus plan to kick back $157 billion in tax rebates.

It's indeed clear that in many housing markets overspeculation and building have resulted in falling real estate prices, as things adjust. It seems that our nation's tendency to sprawl ever outward has caused more trouble than loss of wildlife habitat and resource consumption. It hasn't been particularly sustainable when it comes to our pocketbooks, either.

Miami Opts to Introduce...

...its extensive Miami 21 development code rewrite all at once instead of in phases:
Some Miami residents and commissioners have gotten their wish. Miami 21, the city's proposed new zoning code and blueprint for growth, is to be rolled out through the whole city rather than section by section.
One hitch: the new arrangement means it will be at least eight months before the plan can be implemented.
It's been in the works since 2005.
Consultants Duany Plater-Zyberk had been designing the blueprint by quadrant, beginning with the city's eastern section, which includes downtown and Brickell.
The process drew criticism from commissioners representing other areas, who feared their residents would be left out of the planning process that eastern quadrant residents were privy to.
Some worried also that having two different zoning codes — Miami 21 in the east and the current code in the rest of the city — could cause confusion and allow developers in other areas to continue building under current rules.
Read the whole story about this Smart Growth-friendly code here.

Wednesday, February 20, 2008

Great News for Montgomery!

As our readers may know, Daily Sprawl comes to you from Montgomery, Alabama.

Just today, the Congress for New Urbanism announced that the A&P Development here in Alabama's state capital has won the state's first CNU Charter Award.

Click here for more details. Below is the full text announcement:
Location: Montgomery, Alabama, USA. Town center development

Charter Award Winner:

Located in the Old Cloverdale neighborhood of Montgomery, this project is the city's first mixed-use development. Founded at the turn of the century, Old Cloverdale was the state's first landscape garden residential area and was connected with downtown Montgomery by the City's streetcar system. Large oak trees, historic homes, churches, schools, and serene parks provide a pleasant setting for the community's residents, however the commercial center has suffered from decades of neglect as suburban sprawl pulled retail and residential away.

The developer sought to revitalize the area through this infill initiative by creating more residences, reestablishing the area's pedestrian connection by rebuilding sidewalks, locating parking on the street and at the rear of the project, and establishing large outdoor dining areas and street-oriented shop fronts along the project's main frontages. Careful attention was paid to the scale of the mixed use component in relation to the neighborhood homes.

THe private investment in the project has been a catalyst for increased investment in the neighborhood. A neighborhood design charrette focusing on further increasing pedestrian connections and infill development immediately followed the project's constructions. Additionally, a large public works project will soon narrow the road fronting the project which will create additional sidewalks, increase on street parking, add shade providing street trees and produce a traffic calmed environment appealing to the safety and comfort of pedestrians.

Overall, the neighborhood has a renewed sense of community and civic pride as people throughout the city come to experience vibrant urbanism at the neighborhood scale.

Lessons learned: Work to instigate positive, lasting changes to city regulations including zoning codes and guidelines for infill development. Parking can be the biggest stumbling block of good projects, and this project was only possible through the willingness of the city's planning department to allow us to conform to SmartCode parking standards. Care should be taken to make sure that innovative mixed use building designs are fully integrated wth the intricacies of hte local building code. Landscaping matters and should receive the same careful thought and planning as building materials and finishes. Also, the architectural language and detail is integral to gaining neighborhood support for a project of this scale.

Tuesday, February 19, 2008

Twelve Steps Toward...

...the current financial situation getting worse.

That's the subject of this article which features analysis by one of the few commentators to predict the existing situation as early as 2006.

Ultimately, the article concludes:
The risks are indeed high and the ability of the authorities to deal with them more limited than most people hope. This is not to suggest that there are no ways out. Unfortunately, they are poisonous ones. In the last resort, governments resolve financial crises. This is an iron law. Rescues can occur via overt government assumption of bad debt, inflation, or both. Japan chose the first, much to the distaste of its ministry of finance. But Japan is a creditor country whose savers have complete confidence in the solvency of their government. The US, however, is a debtor. It must keep the trust of foreigners. Should it fail to do so, the inflationary solution becomes probable. This is quite enough to explain why gold costs $920 an ounce.

The connection between the bursting of the housing bubble and the fragility of the financial system has created huge dangers, for the US and the rest of the world. The US public sector is now coming to the rescue, led by the Fed. In the end, they will succeed. But the journey is likely to be wretchedly uncomfortable.
Not surprisingly, the sprawling housing market makes a notable appearance in the Top 12. Nothing like a true market solution to an unsustainable problem.

Monday, February 18, 2008

Subprime Loans and...

...and civil rights issues?
The civil rights movement has its work cut out for the movement on the financial front, as indicated by the lawsuit against a dozen subprime mortgage lenders reported in the current issue of Crisis magazine, published by the National Association for the Advancement of Colored People.

The NAACP filed the class action in federal court against lenders including banks. They deny racial discrimination or other wrongdoing in what has become an international scandal triggered by subprime mortgages.
Read the entire story here:

The Tough Choices...

...that sprawl can cause.

Early Criticism for... of the Bush Administration's non-regulatory responses to the housing problems:
The Bush Administration's latest initiative, Project Lifeline, exemplifies its hands-off approach to the workings of the market. In fact, it's not a government program at all. It's a statement of intent by six major lenders—Bank of America (BAC), Citigroup (C), Countrywide Financial (CFC), JPMorgan Chase (JPM), Washington Mutual (WM), and Wells Fargo (WFC)—that they will stop the clock on foreclosure for 30 days for borrowers who are identified by the lenders as good candidates for a home-saving workout. The banks, in the words of a Bank of America press release, "will target severely delinquent borrowers to encourage them to respond to their mortgage servicer and pursue loan modification options."
Obviously, the big question is what, if any, binding effect this "Statement of Intent" has on the participants. Anyone familiar with this type document?

Friday, February 15, 2008

Bear Stearns Joins...

...the list of firms facing potential legal trouble out of the subprime housing situation:
Now, thanks to WSJ colleague Kate Kelly, we’ve got details. She reports on a developing criminal investigation into the Bear hedge fund fallout. Citing people familiar with the matter, Kelly writes that on an April 25 conference call Bear fund manager Ralph Cioffi told participants he was “cautiously optimistic” about the bank’s ability to hedge its holdings of securities tied to subrime. Meanwhile, back in March, Cioffi moved $2 million of his own money out of one of the troubled Bear funds, Kelly’s sources say. Also, Cioffi allegedly continued to voice his concern to colleagues about the withering states of the credit markets and subprime securities, and wondered aloud whether they could ruin his funds.

During the April conference call, the story says, a participant wondered whether packaged mortgage securities in the fund — called collateralized debt obligations, or CDOs — were tied to subprime assets. Cioffi allegedly replied that he didn’t have time to teach “CDO 101.”

According to the WSJ, federal prosecutors in Brooklyn began a criminal probe last summer, and are now looking at whether the disparity between the alleged public and private comments could constitute fraud. Supboenas have not yet been issued, and Bear itself, according to the story, is unlikely to be indicted.

Wednesday, February 13, 2008

Unanticipated Effects...

This story discusses how some Americans are paying their monthly housing payments just as they are supposed to--yet still losing their lodging.


Because they are renters and their landlords are defaulting on the mortgage for the dwelling.

This strikes us as one of the most discouraging unanticipated effects of the current housing dilemma.

Tuesday, February 12, 2008

A Coming "Wave" of Lawsuits?

That's what one Wall St. analyst-type is predicting:

Merrill Lynch, Citigroup, and others clearly sold products not suitable for retail customers to retail customers. However, these companies are likely to maintain they did so in "good faith".

Fees and risks were not properly disclosed. The issue of undisclosed fees may prove to be extremely fertile ground for litigation.

Inappropriate relationships by so called "independent advisers" will come under legal scrutiny.

There will be grounds for lawsuits for recommendations that amount to "churning".

A mammoth wave of lawsuits against Bear Stearns (BSC), Merrill Lync (MER), Citigroup (C), Lehman (LEH), Morgan Stanley (MS), Goldman Sachs (GC), JPMorgan (JPM) and others is likely on the way.

By agreeing to reimburse Springfield, Merrill Lynch may have inadvertently opened the door for more litigation.

Merrill Lynch, Citigroup and other got caught up in their own CDO Ponzi schemes once the pool of greater fools ran out. A hornet's nest of litigation is now on the way. Legal bees will be buzzing over this for a long, long time.
One interesting theory that we recently heard is that Congress may step in and essentially reach a global settlement on these issues because, if it doesn't, the fear is that the financial markets may delay fully disclosing the true extent of their issues/liabilities.

Not sure of the likelihood of this happening, but I'd definitely keep an eye on bills being filed in the House.

Bus Rapid Transit

Bus Rapid Transit (or BRT) is one of the more debated forms of mass transit.

This video provides an interesting discussion of how it works in one South American city.

Sunday, February 10, 2008

"The Rise of the Mortgage Walkers"

Sounds like a James Cameron flick, eh?

Unfortunately, this one isn't fiction:
"The apparent willingness of borrowers to 'walk away' from mortgage debt," the analysts noted, "has contributed to extraordinary high levels of early default" on loans issued during the 18 months before the mortgage bubble burst. It expects losses to reach 21% of initial loan balances for subprime mortgages issued in 2006 and 26% for those issued in early 2007.

Such behavior, where not precipitated by willful fraud, shows that American homebuyers supposedly duped by their lenders aren't so dumb. They're perfectly capable of acting rationally without political interference.

While mortgage fraud has abounded in recent years, voluntary foreclosures are not by themselves evidence of a newfound irresponsibility on Americans' part. To be sure, until recently, mass-scale voluntary foreclosures were unthinkable. But markets have changed, and people are changing their behavior in response.

Subprime Legal Update...

In this continuing series (one that we expect will grow quite rapidly) Daily Sprawl is highlighting some of the lawsuits that come out of the subprime/sprawl mess.

This week's headliner is the Massachusetts Secretary of State suing Merrill Lynch for alleged fraud in selling a mortgage security that went from nearly $14 billion in value to essentially none at all. The alleged party to be defrauded was the City of Springfield.

Even more interesting is the fact that Merrill offered to pay the affected municipality back the purchase price, yet, despite the offer, was still dinged by state for a fraud complaint:
The top securities regulator in Massachusetts accused Merrill Lynch on Friday of defrauding the city of Springfield with subprime-linked investments, casting light on how Wall Street banks sold complex mortgage securities that are now plummeting in value as the housing slump deepens.

William Galvin, the Massachusetts secretary of state, filed a civil fraud complaint against Merrill a day after the firm took the unusual step of agreeing to reimburse Springfield for losses on the investments. Merrill agreed to buy back the securities at their original value, $13.9 million, after determining that its brokers had not been authorized by Springfield to buy the securities on the city’s behalf.

“They are alleging fraud against a municipality, which carries with it much more gravitas than a simple lawsuit,” Mark A. Flessner, a partner at Sonnenschein Nath & Rosenthal in Chicago, said of the complaint. An official in Mr. Galvin’s office said the Springfield case was part of a larger investigation into Merrill’s sales of similar investments to other Massachusetts towns and cities.
For a copy of the complaint and exhibit, click here.

Images from Newnan, Georgia...

Newnan is about 30 miles outside of Atlanta between Montgomery and Georgia's capital city.

While staying here a few weeks back, we drove through "Historic Newnan". All in all, it's a decent courthouse-style downtown that has remained in pretty good shape. Unfortunately, these were the only images that really drew our camera's eye.

The last image is Newnan's historic hospital...probably the most interesting that we've seen in the Southeast. Proof that there's no need to concede hospital campuses to Special Districts under the SmartCode.

Yeah, We Know It's Pretty Much...

...a gimmick, but, hey, it's a pretty good bet to offer if you really want to win:
The peak-oil debate no longer is a matter just of the planet’s future. Now it’s the subject of a one-sided $100,000 bet.

Reveling in the role of the fly tweaking the elephant, a group of peak-oil proponents has challenged prominent oil-industry consultancy Cambridge Energy Research Associates to a not-so-friendly wager.

If CERA proves correct in its prediction that global oil production will rise by 20 million barrels per day by 2017, then the challengers, the Association for the Study of Peak Oil & Gas, will hand CERA a check for $100,000 nine years hence. If oil production falls short of CERA’s projection, as the group known as ASPO projects, ASPO will get the bragging rights and the check – and donate the money to charity.

Mass Transit Sprawl?

Typically, mass transit is viewed as a counter-balance to vehicular-driven sprawl.

But, this article suggests that even mass transit can be a sprawl-generator:
Lawrence Solomon writes in Saturday's Financial Post that billions in taxpayer dollars are funding uneconomic transit lines that spread the tentacles of urban sprawl ever farther.

"In the popular conception, the private automobile causes sprawl and public transit is either benign or beneficial as a factor of development. This misreads history, including fairly recent history."
Definitely an interesting analysis as it shows that even a positive idea--like reducing vehicular miles traveled through increasing transit--can be implemented in unsustainable ways.

Saturday, February 9, 2008

Here's What Daily Sprawl is reading these days...

The Omnivore's Dilemma.

While the title may not sound sprawl-related, it actually ties into the issues of food production and how fossil fuels have changed the way we eat.

In doing so, it asks several interesting questions. For instance, is "organic" really a sustainable option if those organic bananas arrived at your grocer via plane from Chile?

Very thought-provoking. So much so that, after finding the book at a clearance sale at this wonderful little bookstore/coffee shop, Daily Sprawl has been fascinated by The Omnivore's Dilemma.

Friday, February 8, 2008

It's well-established that...

...sprawl gobbles up water at an alarming rate. Now, in response, one state apparently wants to gobble up a little of another:
A resolution in Georgia's legislature proposes to move the Tennessee-Georgia boundary about a mile to the north of where it now lies, which could put Kyle right back into the state he left 15 years ago.

The proposal elicited instant ridicule from residents of the area on Thursday, as well as tongue-in-cheek saber rattling from Tennessee lawmakers.

One state senator offered to settle the issue with a football game. Another suggested floating an armada of University of Tennessee fans down the Tennessee River to defend the state's territory.

But behind the amusement is a serious issue that has bedeviled the Southeast: access to water. If the border is redrawn, the new state line would fall across Nickajack Reservoir. That would allow parched Georgians to tap into the waters of the dammed Tennessee River.

Thursday, February 7, 2008

Well, it appears that the Daily Sprawl recommendation was the kiss of death as Romney has officially "suspended" his campaign.

That's unfortunate because none of the remaining candidates from either party really seem to grasp the importance of this issue as the former Gov. Romney did.

We'll go back and review their records and proposals again and see if any of the remaining candidates warrant recognition on this topic.

Tuesday, February 5, 2008

Daily Sprawl Recommends...

If smart growth and sprawl are important issues for you, the good news is that Daily Sprawl has reviewed both the proposals and previous actions of all the major candidates--both Republican and Democrat.

While many of them promoted sprawl solutions that Daily Sprawl also embraces, we have nevertheless concluded that the best candidate to address smart growth/sprawl issues--based on his record and his proposals--is Mitt Romney.

In particular, during his governorship in Massachusetts, he made some strong strides toward reducing suburban sprawl growth.

You can read more here:
The Republican governor led the fight to control sprawl and bring more affordable housing to the Bay State with groundbreaking laws and a dramatic reorganization of state agencies. In 2003, he combined transportation, housing, environmental and energy agencies into a super-agency, charged it with stopping runaway suburban growth, then appointed a Democrat environmentalist to run it. By comparison, Connecticut is still nibbling around the edges of smart growth.
A final point: this recommendation does not necessarily mean that we are voting for Mr. Romney. Only that, on issues of sprawl and smart growth, his track record and proposals are the strongest among all of the major candidates in both parties.

The Electric Costs of Sprawl...

This situation could get dicey for D.C. and beyond:
Electric power has already become painfully expensive in Washington and its suburbs. Now, local utilities say, it could become something even worse: scarce.

With its humming data centers and air-conditioned mansions, the region is using 18 percent more electricity than in 2001. And as demand has gone up, so have prices. Some homeowners have seen their rates jump by half or more.

Utility and government officials say the region has to face the idea that its demand for electricity could overtake the supply. In a little more than three years, they say, lights could flicker off in rolling blackouts.
Note: this article is from the Washington Post and not some random blog. Meaning that, they would not likely be reporting such significant issues without feeling very confident about their sourcing.

Stay tuned.

Monday, February 4, 2008

My Article in the Latest...

issue of Future Montgomery covers the debut of the Hampstead project. You can read it online here or find free hard copies throughout town.

Saturday, February 2, 2008

Sorry about the lack of recent posts. I've been so focused on the upcoming Super Tuesday (hoping, vainly, that at least one of the candidates on either side would take up this issue in a prominent way).

But, we're back with this Business Week cover article (it has an excellent podcast to go with it):
Why might housing prices plunge violently from here? Remember the two powerful forces that pushed them up: lax lending standards and the conviction that housing is a fail-safe investment. Now both are working in reverse, depressing demand for housing faster than homebuilders can rein in supply. By reinstituting safeguards such as down payments and proof of income, lenders have disqualified thousands of potential buyers. And many people who do qualify have lost the desire to buy. "A down market is getting baked into expectations," says Chris Flanagan, head of research in JPMorgan Chase's (JPM) asset-backed securities group. "People say: I'm not buying until prices are lower.'" He predicts prices will fall about 25%, bottoming in 2010.

Nobody can be sure how far prices will decline. Still, if prices drop that much, it could mean big trouble for the U.S. economy, which is already on the brink of recession. It would blow a hole in the balance sheets of banks and households, slicing more than $5 trillion off household wealth. That's roughly the size of the drop in stock market wealth from the peak in early 2000, a big reason for the recession of 2001. Yale economist Robert J. Shiller, a longtime housing bear, points out that a housing decline that started in 1925 and ran until 1932 weakened banks and contributed to the Great Depression, which started in the U.S. in 1929.