A few days ago at the city council study session there were
three presentations by Hollister’s Department of Development
Services. The Code Enforcement Officer, Mike Chambless, reported on
the city’s enforcement activities for 2007. Director of Development
Services, William Avera, reported on the progress of the Growth
Management Rating Scale. And Redevelopment Agency Manager, April
Wooden, covered the Agency’s financial status, current and
potential future projects.
A few days ago at the city council study session there were three presentations by Hollister’s Department of Development Services. The Code Enforcement Officer, Mike Chambless, reported on the city’s enforcement activities for 2007. Director of Development Services, William Avera, reported on the progress of the Growth Management Rating Scale. And Redevelopment Agency Manager, April Wooden, covered the Agency’s financial status, current and potential future projects.
The good news is that the staff was well prepared, assertive and proactive. I did not agree with their every position, but you could see that they had done a lot of homework. The very bad news is that the current state of the economy is going to have an adverse effect on almost every aspect of the city’s plans, already thin, to advance economically. If we don’t move to stop the bleeding right now, the problems are just going to worse and last much longer.
How bad can it get? No one knows. In December, there were more than 400 homes on the market in Hollister and only 19 of them, less than 5 percent, closed sale. The prices have dropped more than 10 percent, in some cases perhaps 20 percent.
The total estimate of foreclosures, bank-owned and delinquent properties varies wildly, anywhere from less than a 100 to more than 500. Abandoned properties are particularly problematic because they pull down the values of nearby homes and start a wave of rolling blight. When the wastewater treatment plant is put online, it’s likely that the building surge we counted on to reduce the sewer rates will be delayed at least a year, maybe much more.
For a long time investor and consumer confidence has been the underpinning of our economic system; now you can almost see it melting away as we take financial body blows. Our expensive local housing discouraged many speculators. Therefore, we are doing better than many other areas when it comes to housing. However, due to our lack of economic development in other areas, we have no backup.
If you think that these problems will not affect you, then you are either independently wealthy or you have never seen anyone laid off. The financial crisis is tipping the economy toward recession while food and energy prices continue to rise, and that’s a very bad combination that could result in the worst of all worlds, “stagflation.”
As with an emergency room faced with a life-threatening situation, the city government must get moving – stat. To that end, April Wooden had two excellent suggestions to fight foreclosure and rolling blight and to fill some homes.
First, use some of those inert RDA funds to put in a foreclosure prevention program. The program would provide evaluation and education to help the owners in marginal situations decide if they can reasonably save their properties and show them how to do so. Then the RDA should help identify, educate and encourage the small core of fully qualified first-time buyers who did not dive into the subprime market because they were responsible consumers. They now have a chance to reap the benefit of lower prices as a reward.
The city currently requires developers to either build low-cost housing as part of their projects or make in-lieu payments to fund it. It takes the sale of many new homes at inflated prices to generate a sufficient return to fund even one low-cost housing unit. Therefore, in light of the condition of the housing market, I was surprised that the city council was still focusing so much on low-cost housing plans – that is putting the cart before the horse because all new development is currently at risk for years.
Anther problem is that there was no discussion of any program to ensure that only people who are well established in the city or county get priority for subsidized or low-cost housing. Without that protection, the low-cost housing acts as a magnet for the economically disadvantaged from other geographical areas and there is no net decrease in our needs no matter how hard we try to reduce the problem.
The city council needs to get their priorities straight and get moving fast. Hollister does not have the economic wherewithal to glide through the current housing crash if it is aggravated by a recession. If we protect the taxpayers, the people who pay the bills, we can ride it out. If they go down, everything goes down with them.
