Amendment to Stop Overdevelopment and Decline of Housing Prices Rejected

Unending Dependence on Development Florida's Dilemma

Article Courtesy of The Sankei Shimbun (Translation)
By By Hiroo Watanabe , Washington correspondent for The Sankei Shimbun

Published December 20, 2010 


TAMPA , Fla. -- On November 2nd, the voting day of the midterm elections, Florida had a local referendum which may indicate the future of state, which has been suffering from the most serious real estate crisis in the U.S.  An amendment of the state constitution, which would provide citizens the right to vote on changes of land development plans in their communities, was considered by the voters. The Amendment was originally aimed to stem overdevelopment which has caused a continuous decline of housing prices and the destruction of environment.  As a result of all-out opposition campaign by the local business community, the amendment was rejected, however, the battle which divided Floridians revealed a dilemma for the whole US economy, which remains dependent on the oversupply of housing even after the current financial crisis has ended.

Spreading out in front of me is a vast housing land, on which, however, only several houses are seen. It used to be wetland. The windows without curtains are evidence that no one lives in these houses. This housing land is located in Pasco County , north of Tampa on the West Coast in Florida . This ‘unfinished’ new town has been under development since 2004. According to the original plan, there should have been 6,000 houses built on 4800 acres of land.  However, in reality, only about 230 units have been constructed.

“We sometimes see deer, but rarely people”, says Bill Baldwin, 69, who is with his wife and a dog on a leash. They moved into the county from Chicago twelve years ago, attracted by lower state taxes and the moderate weather. Looking at the land covered by weeds, they comment bitterly, “This is why the housing market can never get out of the bottom”.  

The county with a population of approximately 460,000 has already approved “300,000 residential units” for its future house building plan. The agricultural lands, forests, and wetlands which were sources of the drinking water supply for the residents of Florida have been transformed into residential lands one after another. The county has five commissioners who have the power to approve all changes in land use. A family member of one of the commissioners owns a real estate company. It is said that the commissioner’s family has sold some of its own farm land for development.

Because of the cozy relationship between developers and municipalities, so many residential areas and houses have been built and never occupied.  ”The residents don’t have any choice but to watch quietly as their property values decline” Jill Yelverton, one local resident, says. She was a journalist and continues opposing the overdevelopment in her community.

 Land speculation in Florida was one of the triggers of the Great Depression in 1930s. Still, real estate has been the biggest industry of the state, forming the most influential business group, not only economically but also politically. The influx of population from the Midwest and Northeast where the winters are very cold has helped the industry grow continuously. In the 2000’s, the abundant money accelerated by the Federal Reserve's low interest rate policy flowed into Florida from Wall Street, allowing housing development in the area to become overheated. Tens of thousands of mortgages were securitized by Wall Street’s investment bankers and were sold to investors all over the world. The ‘Lehman Shock’ in 2008 made these securities worthless. In a sense, Florida was one of the epicenters of the current global financial crisis just as much as Wall Street.

Nonetheless, Florida still remains dependent on the ‘housing economy’. Even now, there are 300,000~400,000 vacant houses in the state. Despite that, in the last three years, local governments have approved changes in land use which will add 550,000 dwelling units along with more than 1.4 billion square feet of commercial space. This space is equivalent to 2,780 Tokyo Domes, the home ground of Yomiuri Giants baseball team. These lands are waiting for construction.

 The excessive inventory is making housing prices decline further. So many homeowners, despite their difficulty in making payments, can neither refinance their mortgages nor sell their houses, because they owe more than the current property value. As a result, the foreclosure rate in Florida is still the worst in the United States.

 Florid’s politics and economy, of developers, by developers, and for developers, shall not work anymore”, Lesley Blackner, 48, a lawyer in Palm Beach, asserts. She was one of the volunteers who led ‘Florida Hometown Democracy’, a local residents’ campaign for the establishment of Amendment 4 to the state constitution. The amendment, which was rejected by voters in a state referendum on November 2nd, would require that any amendment to a community’s local comprehensive growth plan must be approved by a majority of that community’s voters. The amendment was expected to stop the overdevelopment which totally ignores the actual population growth and the impact on the environment in a community by seeking the residents’ will, and could have been a revolutionary attempt for United States .

According to local opinion polls conducted in May, Amendment 4 got the support of sixty percent of the population in Florida. Local business groups were afraid that development could slow down and local companies could lose business opportunities if the amendment were approved. The campaign to oppose the amendment led by the state Chamber of Commerce accelerated.

“Amendment 4 kills jobs and raises taxes”. The television ads launched by the opposition group which called for voters to ‘vote no’ on the amendment produced such a huge impact that it changed the public opinion of Amendment 4. Candidates running in the midterm elections regardless of party announced opposition to the Amendment, fearing being labeled ‘anti-job candidates’. Local newspapers, whose advertising revenues are dependent on the region’s businesses, published editorials against Amendment 4 one after another.

Finally, the approval rate for Amendment 4 began to decline. In the state referendum on November 2nd, only 33% of the voters approved the amendment, while 67% of them opposed it. “The people chose the status quo”, Blackner said.

Volunteers are filled with a sense of powerlessness. Looking back at their campaign, one of them says, “We challenged Florida’s culture of growth”. The referendum in Florida highlighted the fact that both politics and business in the U.S. have started to pursue their short-term benefits again as if they have forgotten the lessons of the recent bubble.