The following is an expanded transcription – edited only for clarity and grammar – of the 2007 Real Estate Roundtable printed in our December 2007 issue.
Real Estate Roundtable
Moderated by Bob Andelman
bob@andelman.com
Let’s talk commercial real estate.
This roundtable is an anticipated annual feature in this magazine, a chance to talk about all things real estate. It’s an obvious read for those in the field. But for those not, the savvy executive or business owner has come to know that trends in real estate often are reliable predictors and/or reflections of the general business climate.
This year we brought together six folks from the commercial side, representing a cross-section of professions and locations. We met at The Centre Club in the Westshore Wyndham Hotel in Tampa for two hours of provocative conversation and debate.
The panelists:
Moderator of the panel is Bob Andelman, a regular contributor to this magazine, author of nine books and originator of the Mr. Media website.
MADDUX BUSINESS REPORT: Ron, tell us a little bit about how the past year affected you and in your role with the real estate.
RON WEAVER: It's been much better than we expected, worse in regard to residential, of course, than probably anyone would have expected two or three years ago. There are troubles with respect to most every kind of residential product, with the possible exception of apartments, which are enjoying a little bit of rebound from people being unable to afford a house, a yard, a mortgage, its increasing rate. But retail, we see as strong, but not likely to last strong for another 18 months. We'll have to pay the price of less housetops. Maybe not that much, when you get right down to it, because the dynamic of retail doesn't necessarily follow the slowdown in housetops.
And thirdly, offices enjoyed a pleasant rebound, which industrial has been strong, so we've seen a pretty good year, better than we thought we would.
RAY SANDELLI: I’ll answer that in the context of how we currently see the commercial markets. I think the positive aspect right now is that, fundamentally, the markets are sound in terms of supply, demand and value. That’s why I probably don’t have some of the angst that perhaps others may be experiencing.
It’s when we get away from the fundamentals that we see serious consequences of our actions. Go back to the days of the “new economy,” when they were trying to change the very basic economics of a business model. I remember when they said Warren Buffett just didn’t get “it”. Of course, the new economy ultimately crashed and burned and Mr. Buffett’s fundamental and studied approach continues to drive ever increasing, sound returns.
In the capital markets right now the focus is, “Do we understand the true market fundamentals? How do we underwrite with sound data and prudent assumptions? How do we assess and manage risk?” Sustainable value is built on a foundation of solid fundamentals and an educated approach in decisions going forward.
We've had so much new housing built in the last couple of years and so many people have come into the area, I question this theory that retail's going to slow down because housing structures have slowed down. It seems like we've had so many new people come in and build the base of previous demand for retail. Should we really be expecting retail or retail construction to slow down?
WEAVER: Some of each, but not a lot, because many retail leases are adaptations to new business models for retailing, and there's obsolescence and there's a heavy demand for new kinds of retail offerings. I think it probably will slow down some; it will not slow down proportional, obviously, to the slow down of residential. Plus we have a demand for retail that's been accumulating and I think it'll take a year or two for some of that kind of demand for retail to be fulfilled.
And then the prospect of a recovery in two or three years will cause retail maybe to get ahead of the competition and build ahead of the next wave of houses, is what I think it's going to be a soft landing for retail, but it will definitely suffer some.
GREG BROWN: I would echo Ron's sentiments, to a certain extent. We've seen a slowdown in residential, as everybody else has, but Polk County is trying to fill the void between Orlando and Tampa, and office/retail/industrial remains very, very strong, particularly in the Highway 27 corridor. We're somewhat of a nexus of Orlando/Tampa. And a heavy component of our business is vacation, especially as it relates to European clients, folks buying homes, you know, whether they be second homes or vacation or simply investment property. We've seen a lot of that demand. It has slowed to a trickle, but, you know, with the buying power that the Europeans have right now, the slowdown hasn't had much of an impact on them as it has people borrowing stateside.
We’re seeing a tremendous impact, not only from the tightening of the ability to get debt, but impact fees in Polk County are a big, big deal right now.
There was already an issue of whether Polk has enough water and sewage capacity for new construction, right?
BROWN: Yes. In my opinion, I don't think the local municipalities were quite ready for the wave that was coming. It was probably three or four times what they were expecting. We've put up impact fee credits ahead of time, when you don't really know when you're going to get the benefit of those impact fees. The cities on the ridge – Davenport, Haines City, Dundee, Lake Wales – they're getting their house in order, and the slowdown could be a blessing to them to be able to catch up, to be able to serve the new developments that'll be up when the market turns.
BRIAN KENNELLY: To touch base on the office component of Sarasota and Manatee counties the last 12 to 18 months, it's been very stable. Our vacancy rates have been lower than regional and national averages, but over the last six to eight months, we're seeing that change somewhat. With some new product coming online in the market and then some sublease space coming online, we're seeing our vacancy rates increase, but to levels that are still well within acceptable parameters, the 11- to 12-percent range, that bring it back to more of a norm.
We were artificially low for a long period of time in that market, in the 7- to 8-percent range. But as Greg points out impact fees will certainly impact future growth in both the counties that we operate in. For example, Manatee County just tripled the impact fees for medical office space, from about $7 to $23, essentially, putting in a moratorium on any medical development in that county. I think that's probably going to be an issue that all of us are struggling with regionally.
Sarasota went through a development moratorium of its own some time ago.
KENNELLY: It was a soft moratorium, if there is such a thing.
Was Sarasota, at that point, kind of where Polk is now, where there was so much coming on that it needed to take a breather?
KENNELLY: I think it's probably a fair comparison, not being totally up to speed. But I think it's the perception that there's been so much growth, and I think some of the political people just can't get their hands around it. I think it's more of an exaggerated issue.
Sarasota County's growth lags behind the balance of the West Coast of Florida, so the growth had been controlled in that county, but it's still perceived as a growth issue.
BRENDA DOHRING: We primarily tend to focus in urban areas. And on the urban side, it all feels new. Everything is kind of fresh. There are younger people wanting to live in urban areas, so you've got retrofit going on, which goes in with the whole new green stuff because you're reusing materials instead of taking down additional land. I think the whole green movement is really going to help.
As I travel around the country, we see that everywhere. I think that there's going to be incredible opportunity inside our cities, where people can try to figure out how to change the density. You talked about impact fees, and that's a great thing inside of cities – and a motivation – because a lot of times, they don't have impact fees.
When we redeveloped the old Walgreen’s (in downtown Tampa), 20,000 square feet, we didn't even give impact fees a consideration until we got a call from somebody, who had obviously called everybody else in all of downtown, because he had impact fee credits and he was trying to sell them. That was the first time that I heard about that stuff. It's like wetlands mitigation, but I didn't realize we had impact fees. People would sell them, and I didn't have to buy any, so that was good.
There will be some opportunities in urban areas, but larger urban properties like the Class C buildings that are big in any downtown, it's a real commitment. It's very difficult, as you can't typically retrofit them because their cores are not just right. Their infrastructure is really bad and it takes a lot longer.
In most urban areas, Class C is going to be retrofit or torn down, and there's enough room in rent to make that happen. We're a little bit behind the curve in Tampa, from what I see everywhere.
Has urban Tampa been affected by the slowdown that hit other markets, or is it still moving ahead? We did have an announcement of a major office tower in the midst of all this.
DOHRING: I think sometimes perception becomes reality and that's impacting, particularly on the residential condo market, what we see coming out of all our cities. People ask me every day, "Isn't it just awful?" No, it's not awful, but what you're hearing all the time leads you to believe that it's just dead in the water and terrible.
But the good news is, people that like to move into a lot of those urban areas and into those urban condos don't sit around tables like this and talk, don't even read the newspaper. They just get their news from "The Daily Show," and so they're not as impacted as all of us might be. I'm not sure if that ignorance is bliss but…
They're just living their lives; they're not worrying about what everyone's talking about.
DOHRING: Exactly. They're motivated differently than those that read all the time.
SANDELLI: In a broader scale, I think when you look at where we are geographically, I see it as a global economy. We have a number of ports within the state that are very important to future commerce. Do you know that CSX’s intermodal piece will connect roughly 75 percent of the US population?
We’re an important part of that logistical supply assembly, so I think that by where we are geographically, we’re the beneficiary.
Do you feel or see the same kinds of angst locally in real estate? I mean, you open the newspaper it's all we're talking about. You turn on CNN or CNBC, they're talking about it. Personally, I haven't sensed it in this marketplace. Am I just well insulated?
SANDELLI: We don't stick our heads in sand. There are certainly some issues, but if you looked at the supply of homes that was simply for demand based on in-migration, that was one thing. But then we got into the investors and then we got into the speculating, so there were some fears of involvement there that got away from the fundamentals, and I think that's where you're seeing the suffering. The suffering is on the speculators, probably next on some of the investors.
But those who needed homes, because of job growth, it gave them the financial underpinnings to support the homes that they bought.
NANCY SURAK: As a land sales consultant, we cover the entire Tampa Bay region and then even outward from there into some of Polk, generally into Sumter, all the way up to Wildwood, so we see a lot of what's happening across all of the regions.
I focus up towards the north and Pasco/Hernando and see what's happening in those communities. But if you look at the last year as it relates specifically to land transactions – I was thinking about this driving in – it's certainly not been very static. It's been an exceptionally dynamic 12 months. We came off of enormously large land deals throughout the region that won fantastic awards that, today, we couldn't re-create. The buyers for those deals have gone away, primarily, because they were residentially focused.
That, to me, is certainly where it's driving everything else right now. It's driving the media. It's driving Ron's office. It's, I'm sure, stressing Brenda out from an appraisal standpoint. It's driving our office. That segment, in itself, is in a vacuum.
And as local economies – whether it's Hernando or Pasco or even Tampa – adjust and inventory gets burned off, the rebound will be different in different areas. It really becomes that localization of real estate. As a result of that, commercial real estate gets impacted.
You talked about retail growth. Retail office/industrial, those sectors all remain exceptionally strong, but I am already seeing – in the land business, we do tend to see trends or what we fear might be trends. If our phones literally will begin to dip in the number of calls that come into the office, we notice it, and we'll say, "Gosh, you know, how many phone calls did you get this morning?" That's an indicator. It's that quick in our office, because all we do is land. And when that demand comes down, it's evident.
How were your phone calls yesterday?
SURAK: My phone calls have actually been very, very good.
SANDELLI: I just got two!
DOHRING: That's why she started talking about phone calls, it was subliminal.
SURAK. With the downturn in residential, it opens up opportunities for everybody else to get to play. But I am seeing a pullback from some of the industrial land buyers, a lot of the REITs, because they're all returning to fundamentals. And I've been saying that for a while. Where are our jobs? Jobs – our job growth drives everything. It should never be our investors or our foreign population. It's got to be tied back to how many jobs we're creating. As long as we're doing that, everything else should work its way out.
But without that, without the Committee of 100 or the jobs coming, those REITs that are building our industrial space and the Class A office space, have to pay attention to where that demand is going to be when their product comes out of the market.
When you talked about retail, certainly, throughout the entire region there were pockets of pent-up demand that will work its way through. I just finished a report in southern Pasco County. In a 10-mile radius, I identified 26 independent retail projects that are in some sort of planning stage that should break ground here in the next 18 months. There's an enormous amount of space coming online, but a lot of that is driven by the demand that already exists there today that's underserved.
SANDELLI: I'll add something to that. I think that – again, going back to the fundamentals, as you talked about – the developers in the market today, because of some of the challenges that go into putting product up, are very careful about what they put up. They're factoring in the cost. They've got a lot of time and money in to get to the development, so I think they're much more cautious, as opposed to the early '90s, when people were building for tax reasons. You know, again, it wasn't based on supply and demand. It was based on economic gain through another vehicle, and we hurt ourselves. I think it, again, goes back to the market, because people look at it more carefully. Now, with the credit issue, we're going to be even further scrutinizing.
WEAVER: I think the two or three of the sectors we just talked about are really like the St. Johns River, which, at certain points, flows both ways. There were parts of the retail sector where you have the providers of the furnishings of the houses that aren't being built were stopping cold the next hundred stores. It's kind of startling and, of course, distressing, but you turn around and look next door – and you reminded me of it, Brian – and you see the health and the educational services and the professional services, and they're still going strong and may for at least another year or two. So like the St. Johns River, it's flowing both ways. There are truly people who are rushing into these parts of retail niches and rushing out of those retail niches, sometimes even switching buildings, literally just switching buildings, when we talk about new formats.
The whole job growth phenomenon is that, the end of the year, we'll record 118,000 new jobs. This month, we had 4,000 less. Some people call that the summer and some people call that seasonal and some people say that that lack of job growth won't last. But what if it does, as far as the fact that some of the next year is going to need to have circumspection with respect to both office and industrial, if we don't get our job growth going? I think maybe it simplifies our job growth, the way some of you just said, and focus very, very hard on it because unlike speculators and investors who took the chances, the job growth is absolutely 100 percent a nuclear issue for us, the next three years.
DOHRING: What I think is interesting is that while on the land side everything is getting and taking longer and longer and longer and longer – we have more regulation, we have more stuff that takes longer. On the construction side, because of different material types we can use and technologies and coordination, things are going up so much faster. And I think because of construction, we kind of don't picture it. But I'll tell you what, when I'm out along that corridor, Suncoast, and I can go out and ride my bike one day and then go out the next and there's Target and six out-parcels built, and it happened in what appears to me – I guess I'm not riding my bike as often as I think.
Talking about the big-box building boom, I think we sometimes get so caught up in the deal side of stuff, but getting through the process is taking longer. But from the ready to go to final, okay, turn the key and now we're open for business, has gotten much shorter and so that helps with the whole inventory, because those people can better manage what is really a tough inventory to manage in any setting.
WEAVER: The laid-off construction workers from residential worked all night, and the bids came in at 12 to 16 percent lower because they didn't have the residential to pour concrete that night.
SURAK: I think what you're seeing, too, is response from what Ray said – the global economy. We all saw that in our U.S. economy with manufacturing jobs being exported. A lot of those jobs that were lost were not so much placed somewhere else. It's though the technology allowed them to manage that process more effectively, like inventories.
People aren't going to continue to build if the equation changes midstream. They will pull the plug. Whereas, I think in the residential sector, a lot of that denial was in the market for a long time and, in particular, Hillsborough County. Building continued to occur and, as a result, there was a lot of inventory sitting on the ground, and that's really where I think the mass media has honed in.
But outside of that, I don't see the speculation everywhere else. And what I do see is where residential developers or even home builders were willing to continue to run up the price on the land side because eventually it was going to be the price that everybody paid; in order to buy a house, that's what it was going to cost. I don't see that in the other sectors, office and industrial and multifamily. They dig their heels in, as they say, "Our numbers will not work at that price. Here's what we can do."
And it's not only what can work in downtown Tampa cannot work in Brandon, cannot work in Pinellas County, so there is a shifting of numbers up and down in those markets because of other demand and other projects and impact fees and the cost of time to get a project out of the ground.
SANDELLI: Going back to the retail piece, I think there's been a little bit of a bifurcation in the market. Take, for instance, Cypress Town Center, Richard Jacobs' property, that was designed and built to address the growing expansion of our community.
But on the other hand, you know, you take a look at Publix, the new GreenWise stores, with decks, multi-levels, doing the in-fill. You know, that's the stuff that's interesting to me, and I think that's a function of where growth has gone: drive times, infrastructure challenges. Fort Lauderdale was somewhat confined because of I-95 and the ocean, so it grew along the coast. But then Westin grew, and people would drive from Westin to downtown until that became a market unto itself. People didn't want to make that drive; they wanted the proximity to Las Olas Boulevard, the urban core development.
I think we're seeing that, to some degree, here. We're seeing whole new communities develop, morph. I'm very pleased with what I've seen downtown. I think Novare and Intown Group and Greg Minder did a fabulous job with their project. I think it was a great location. I think the price point was right on. Obviously they're doing their second phase there. And they delivered a nice addition to the skyline. I had my daughter downtown – I was Mr. Mom this week – and attended a hockey game, and she said, "Dad, what a beautiful building."
DOHRING: Two more coming behind it.
Hidden River Corporate Park actually sold land for residential a few years ago, which freaked a lot of people out at the time, because the demand was so high for that. Now that things have kind of cooled off with residential, is anyone seeing any kind of change where maybe something that was zoned for residential is going to switch to something else?
SURAK: I'm not aware of anything that's happening today, but I've been predicting, in our office and at my home, that that's the next wave, that before Hometown Democracy happens, or is imminent, we'll see some of our residential lands go back in for changes, perhaps even to future land uses that they may have been changed from, especially along our interstate corridors and in Hillsborough County, where a lot of that industrial land, which was our future job base, got changed to residential. A lot of that's still sitting on the ground today. Before it's all said and done, I think we'll see that shift back.
Certainly on the townhome product, that is already happening with multifamily for-rent apartments, and it's a different designation. Depending on where the land is, it's different. In some cases, it's just a matter of resubmitting a site plan; in other cases, it's another situation there for increased density or for maybe higher restrictions. That's happening. But outside of that segment, I'm not seeing a lot.
WEAVER: We're seeing three or four cusps of some beginnings, just as you said so well, really, and the four areas – first of all, medical, as you see in that impact-fee increase, Brian, is replacing residential, ironically, because I think it's still growing. As a result, you actually take that residential piece and it'll go adult congregate living, assisted living, nursing home, the new senior model, maybe even through medical or medical office, interestingly, because of the continuing expansion of that sector, which obviously few are, unfortunately, trying to take advantage of.
Secondly, we see the cusp of golf courses, great buildings even converting to non-golf course uses. It's fascinating. And the price point, you can get a little more for elegance out there that you didn't have to manicure and have golf balls going by. You get a price point almost as good as that open view of the wetland as you could for a golf course, which, of course, 30 years ago would have been unheard of.
The third cusp we're seeing is the type of residential switching dramatically, where you're zoned for thousands of income residential, and now you have 1,600 new-model non-single family residential clusters, zero lot lines, products for people who had trouble in this last year or two affording a yard.
Does anyone have any thoughts on how the real estate market business changes daily? For example, is the government and the agencies that are involved in all this responding any faster today than they did five or ten years ago? Are there shifts in the market?
DOHRING: Does he want a universal vote? If you wanted a vote, I think you'd get that from this entire group.
How does that affect the market? If the market changes so rapidly and it's dipping, is it a good thing that maybe government doesn't move that fast to make these changes?
DOHRING: It can never be good when you have constraints that don't have knowledge behind them. Government will never be as quick as private industry. Of course, it can't happen. But if it lags so much it can never be good, it's impossible. And additional layers don't help good development, so the problem that you have is unbelievable. They always blamed it, before, on, "Oh, we can't get anything through permitting because we've got all these residential permits."
Well, that's kind of gone away, so now what's the problem? And there's still a problem, but it's a culture problem that happens in most governments, at that level, and they have to work on that. It's very, very challenging, and we all know it. But we've seen, all across this country, places where when you have a government that at least its top leadership can implement something or change culture, get dialogue going and give people the power to think as opposed to check off boxes, amazing things can happen. And then everybody is for the same team. Everybody wants to see good happen, and then it does. But it's tough.
SANDELLI: Any time you're in a high-growth mode, things are moving so fast. There's so much stuff that's coming into the public sector, but they're trying to make the right decisions, and the challenge is to not make the same mistakes that happened in the past. I think that they're trying to be methodical about it. I think they're trying to look long-term, but they're dealing with a lot of needs.
I don't think there's ever been a more important time for a public-private type of collaboration. On the public side, when the economy's good, people are throwing money at a lot of people that know the system. People are being pulled out of that public sector and offered other opportunities, so you have rifts inside the organization. You end up with people on the real estate side that came from other agencies that don't understand the process, and it's cumbersome enough.
But then the other side is the private side. These people want to move fast. They want to do things. And I don't think smart growth comes from one or the other. I think it comes from some type of collaboration, and if there's a breakdown, that's where I see the breakdown. I just don't see the vehicle that says, "This is how we're collectively going to move forward."
DOHRING: I tell you who has mastered that is our dear friend, Greg Minder.
SANDELLI: Absolutely.
DOHRING: Greg Minder, coming into downtown, immersed himself in that. And the group that we put together of all the property owners in downtown, the Uptown Council, is also evidence of that. When we held our first meeting, we ended up with 40 people sitting in the room where we expected 15, and it was because they said, "You know, we're all business people, but we care about downtown. We want to get this done."
Greg, of course, was at the table, and the Tampa Theatre was represented and the Performing Arts Center, and they all recognize what you just said: If we can just get the public sector to talk to us – we're not asking for handouts. We'll raise money to help with parking issues. We'll raise money to get better lighting. So you had the business side really willing to step forward to do what you're talking about.
SANDELLI: I think there are a number of groups that have that intent. I'll use the Tampa Downtown Partnership. It's a great combination of the public and private sector. The question is: Who has the authority or the ability, if we want to look at condemnation or if we want to have a real master plan that we can economically drive and have some power to? That's what we're looking at.
BROWN: I couldn't agree more, in saying it's a two-way street. There's a tremendous amount of mistrust between both sides. If you're the developer, talking to the appropriate agencies, looking out for your development, oftentimes we cast it as the governmental bureaucrat across the table from me that has really very little interest in what impacts my life, and vice versa. I think we, as the development community, can do a better job of conveying our position rather than just blasting a municipality in a paper or things like that, because we're business people, and we struggle to make money just like everybody else, whether we're building widgets or building buildings.
Look at an issue like impact fees, for instance. On a 50,000-square foot office building we're contemplating building in Polk County, my impact fees will be over half a million dollars. Well, at the end of the day, that's a – on top of tax, of anywhere between 9 to 12 percent. If you go try to levy that exact tax on Johnny widget maker or the guy making milk or oranges, that's a big problem. I mean, there's – I don't know of any business that can absorb that sort of tax and not expect it to affect the bottom line.
So it's a two-way street, and I absolutely agree that the municipalities are, you know, sometimes slow to react, but I think we could do a better job of conveying what impacts us so that we could do a better job of delivering what the community wants.
Can anyone point to a community, or a county, where the concurrency, the comp plan, and the development rules that were set in place 15, 20 years ago, are working well for that community, and if it has worked for both private and business interests?
SANDELLI: I think there are a two or three of them – this year, especially – that have achieved a new balance. They have awakened to, for example, an insufficient amount of office and industrial, and they have turned around and said, "Wait a minute. Why are people living here and working 25 miles south of here? Why don't we have them live and work here?"
And so they're actually changing their codes, adapting these very vehicles that we just talked about, the concurrency rules and the comp plans, and they're actually saying, "Lower the impact fees 40 percent for office and retail and then double them for residential."
Now, I'm not encouraging that we double them for residential, but they're lowering them for office and retail. Contrast them with the jurisdictions we've already talked about who are raising them mathematically, instead of thoughtfully or strategically the way a few governments are actually coming around.
Second example, they're taking the subject of time of process, and instead of just taking the moaning and whining and saying, "Oh, they'll always moan and whine about delays," and realizing that, after about a year, your delay becomes a leapfrog and the good stuff will go somewhere else, along with the mediocre stuff. As a result, they may not get it back for 10 or 20 years.
To re-seed a good attitude like you just spoke of takes longer than to say, "Oh, look, we're reformed" announced in the morning paper. It takes a while to re-instill a culture of trust, a culture of facilitation, a culture of the listening to real issues, which you point out so well, listening to the real issues. So yes, there are signs of hope on the horizon that governments are getting it, and governments are working at some kind of balance with the realities of amount of impact fees, comp planning, concurrency moratoria, etc.
SURAK: Thank you for pointing out all the good things that Pasco County is doing.
WEAVER: And others. There are a few others.
SURAK: The process in Pasco County last year, with the impact-fee discussion and the numbers that they started off with, really created an invisible red line around the county that, at least for our office, really made deals either go away or it took a while. We had to really baby-sit things that were in the pipeline.
We're beyond that now, thankfully, and the county did come out, with the help of the EDC, of which I'm now on the board. It's doing great things, saying, "We want your office and we want your industrial and for that, we're going to give you less impact fees than we would have done before."
But you're right. It takes a long time to communicate that back out to the marketplace. You know, it took me almost an hour, at 6:30 this morning, to get down here. I don't tend to leave before 8 o'clock because I don't want to make the commute down the Suncoast Parkway. So I would welcome that, and I would imagine all my neighbors would just rejoice with a Class A office space.
Mike Hogan, at NorthPointe, is doing a beautiful addition to the community, and I think we'll see more of it. But I just can't wait for more of it to come online. I think it really depends on which municipality you're talking about. When you lump them altogether, you can't help to feel negative towards them. But there are some within our region that I think are just phenomenal to do projects in.
WEAVER: Like Lakeland, over the years.
SURAK: Zephyrhills, I've got a number of deals in Zephyrhills, and I know the development manager, so if I leave a message, I get a phone call back within half a day, which you don't see everywhere. They're very welcoming of new projects and wanting to see their community flourish.
DOHRING: And that's what it takes. Ray said it best. And Ray, you get very involved in a lot of economic levels. The Downtown Partnership has been an amazing vehicle for downtown. There's no doubt about it.
But we don't have anyone governmental sitting at this table today, and that's the kind of outreach – just your decision to bring humans together. We humans, we have to slow down enough to make that happen, because we have to talk to them. They're humans. The one thing I guarantee you, there are very few people in governmental office that don't want to wake up every morning and do a good job. Absolutely.
SANDELLI: I had an opportunity to do a review of the real estate department of the city with Chuck Davis, Randall Reed and some other great people who really care about what they were trying to do. Great pride in what they do, typical frustrations within a certain structure. But what was interesting about it is the fact that we took the public and private pieces together and said, "Here's where it affects us."
Amazingly, we got a call back about two months ago and they said they wanted to see us again. It was like, "Uh-Oh, what happened?" But we went back, and they reported back to the committee that did the work, and I thought, “Wow, how infrequently do you see that, where people actually take what you have, work through it, try to process solutions and give you some feedback?” Which encourages you to go back again, if you're ever called on, because it's actually being utilized.
WEAVER: The City of Tampa has worked hard as well, and for different concerns than we've just talked about, further out of the urban center. They adopted a transportation concurrency exception area in the city of Tampa, south of Fowler Avenue, because they realized that by enforcing a concurrency moratoria in that part of Tampa, south of Fowler, they were, in effect, stopping growth, when, in fact, some of the growth was going to in-fill and you're going to have shorter trip links and internal transfer and transit, all of which made sense. They actually engaged in some proactive, balanced addressing of a concurrency moratorium issue by having a transportation currency exception area south of Fowler. Then north of Fowler, they left the concurrency in effect. So, in a sense, the City of Tampa, as you said, has been among the jurisdictions in the last couple of years that has been thoughtful and proactive.
There's been other cities throughout the area that have been very dynamic and aggressive and thoughtful about their downtown and the like.
KENNELLY: It's encouraging to hear. From the South Tampa Bay region, I think we're still struggling, trying to put the jobs where the people live and do that "live, work and play," of which Lakewood Ranch has made an extreme effort, being the master planned community, to do that. But there still are struggles in South Tampa Bay to make the alteration to the comp plan and to be proactive and to cut down the trip links and to capture the demands. So it's encouraging. Hopefully that can be contagious…
DOHRING: Trickle down.
KENNELLY: … in Manatee County.
SANDELLI: One thing we didn't talk about is the power and influence that the community associations have today, going forward, and why it's so important to bring those groups in. A few years ago, we did a plan for the Downtown Partnership, and we had a town hall meeting at Tampa Prep. We expected 75 or 80 people show. We had 300 show up.
I think if you create the forum, the structure, a lot of people will come together. Whether it's public, private, community leaders, private sector, people want to be involved. As long as they have a voice, they'll have something to say.
Has the rush to purchase commercial properties at premium prices slowed down? And what drives, or was driving, that market?
SANDELLI: Right now what we have in the market is – you know, there is plenty of money in the marketplace. It's just different money. And I think what we're seeing is there's interest in real estate and on the selling side, there's interest in the buying side, there's plenty of money there. What we have is a difference between pricing expectations on the selling side and the underwriting criteria on the buy side. And so what we're dealing with right now is, simply, how do we move off of something that we're selling for a six cap, to something that may now sell for a base that's much higher? That's the negotiation that we're finding right now: How do you take the new cost money and merge that with pricing?
And for people that have unrealistic expectations in some cases, they don't want to let go of that, and it's hard to let go. If they want to make a difference, it's going to have to adjust, because, again, it goes back to underwriting.
I think the banks and insurance companies have not been able to play over the last couple years because they couldn't make the numbers work. Our standard saying is "I'm popular again," you know, "It's come back to me." I think they're very interested, because what the hedge funds did was slice and dice the risk so that it was somewhat invisible. That wasn't the case. The risk was there. I think now we're getting back to where we started the conversation, back to the fundamental look at things, and that always wins.
Are the doctors and lawyers out of the market?
DOHRING: No.
BROWN: Hopefully.
DOHRING: It always comes down to talking about cap rates.
WEAVER: They'll be back.
DOHRING: No one really understands cap rates, but we talk about them. You know, you have people like you who start out as an analytical person. And I can tell you the Ellwood Method of developing the cap rate and you turn on, you turn off, and all the craziness, but cap rates went down as low as 4 percent on stuff, which was absolutely unbelievable, and there was no way, from a fundamental standpoint.
I'd have a market value of property at $30 million, a cost that would be, oh, somewhere maybe around $25 million, and I'd have an income side to that same analysis that would be down at about $19 million. I mean, it was just absurd, and there was no way to reconcile other than there's too much money that wasn't technology that now came into real estate, and they have to put it somewhere temporarily. And that will all move and change, but it was a very difficult time for a while.
That did trickle down into the price market, I think, and a lot of us in all of our counties handle things in the $2 million to $5 million property level. Most of the bulk of all transactions that typically happen in our MSA are deals – we all hear about the big ones, but something like, what, 8 percent of all really fall in the $2 million to $5 million price range.
So just like the residential housing impacts, this whole thing about people buying stuff and hearing about the REITs and the big buildings that only get 4 and 5 percent caps started some investors – maybe the doctors; maybe that's where it came from – going, "Well, that's an acceptable return for me," and so that drove that a great, great number of deals.
We have definitely seen that stop. The banks put somewhat of a stop to it. We were talking earlier about financial institutions and where they are. What happens in the banking side is they go to the same meetings. And what they really hear coming down from the Feds is all the problems with the trouble loans on the residential side, which leads them to change their policy coming out of credit, and it impacts their commercial loans as well.
But, you know, doctors can still get 100 percent financing, for the most part. That's not really going to go away, but it's the other people – and we are definitely seeing a little bit of a slowdown, particularly in the under-a-million dollar deal. People that can have some cash available, enough to put down 20 percent, 25 percent on a deal, have a couple hundred thousand dollars sitting around.
KENNELLY: I think a lot of that price ramp-up over those years, too, was based on replacement costs. Construction costs were just going through the roof in a global economy and all the global factors, Katrina and the likes, affecting materials and then the land values going up. So, again, I think a lot of those numbers were justified, simply because, "Well, we can't justify the rent, but we can justify it as cheaper than replacement value." And so it does shape the fundamentals. Now, with some easing of construction over the last several months, I think some of that justification may change.
What markets are hot? What markets are not? Either by community or category? And that's looking forward, the next 12 months. Is there anything?
DOHRING: I really believe over the next 12 months, the opportunity is to get in and do retrofitting. The rent differential is available, not just in downtowns, by the way, but go out to Carrollwood, for instance, and you will see that all the shopping centers that were put up in Carrollwood 15 or 20 years ago all have brand-new faces. They're all looking new. You can go to any established community and see the same thing happening. So I think there's a tremendous opportunity in retrofit going on.
SANDELLI: You have a built-in tenant base. You don't have to go through all the challenges of developing a new project, so I think people that are there, doing business, in most cases, they don't want to move. So they come in and freshen it up and make it right for the community. I think it's positive. I agree.
DOHRING: The biggest thing is risk. When you go to do a brand-new development, you've got your lease-up time, you've got all the pre-leasing. The banks did a good job back in the '90s saying, “We must have pre-leasing.” These times aren't so bad for us old folks, when you look at them. Before pre-leasing, back in the '90s, it was, "No, you build a building. We'll lease it later."
So, you know, I think the banks have really helped in many ways in federal regulations of how they can lend. But to retrofit, you'll have as much risk as you have doing a new project. It's just that much – the age of the production are less now, no matter how you look at it. But what happens is, it takes a long time for the spread between the rents to really make sense. What we see is it literally has to be at least a $6 spread before it even gets close to making sense to do a retrofit on something.
SANDELLI: I think the industrial market is very strong. The office market's great. A lot of that has been along the major corridors, which is not new; they are extending the boundary out a little bit north and south on 75. So I think it was a very well thought-out strategic approach, as opposed to people come in and saying, "I want to be at Main and Main. I want to be in and out in 24 months." I mean, that's not really what you're looking for.
We did a study in our office one day – we do these “lunch ‘n’ learn” things – and we put up a map of the state of Florida, a night shot from the shuttle. You see all the lights. The question was: "We're at 17 million people, and we're going to have to 25 million. What is the logistical supply chain to supply to make sure that this state works efficiently when we grow by seven or eight million people?" And we met with CSX, we met with the ports and so on and so forth, and tried to put the pieces altogether. I'm not sure you can come up with a definitive answer, but the point is that you're trying to think about how that impacts. On a smaller scale, that's how people looking at the market, "What's my proximity to residential? What's my drive times?"
I think it's very, very important in that logistical supply chain – what's the cost of fuel? How are we going to move product within the state more efficiently? I think that's why we're looking at different types of container vessels, different port work. I flew to Freeport and met with Hutchison Whampoa. To look at what they're doing in Freeport is tremendous. Those are things that are happening.
DOHRING: I'd like to hear from Polk. I just think Polk is an amazing opportunity to kind of bring everything together. Can you enlighten us?
BROWN: That's one of our selling tools, and it's allowed us to capture a lot of the large industrial users because you can't find a hundred-acre tract of land (elsewhere).
But to go back to what we were talking about as it relates to Polk, it's all going to be driven by infrastructure. Always has, always will; water, sewer, roads. That's going back to fundamentals; it's never been any more true than it is now, especially as growth continues to push the envelope of what the existing infrastructure can support.
So you get into the secondary and tertiary markets. To give you an instance, there is a Wal-Mart distribution center in Winter Haven, which is now a very hot corridor, the 27 corridor, for distribution centers, and there was a recent announcement of a large distribution center going to Haines City. Wal-Mart's been there for 20 years, when there really wasn't anything on the east side of Winter Haven as it relates to distribution facilities. We got a lot of phone calls on the 27 corridor, because in Polk County, you're within 90 miles or 90 minutes of 8-million people, and that's one of the reasons that led CSX to locate the ILC there, independent that it had all the infrastructure fundamentals there. It made a lot of sense to be able to disburse to the rest of the state.
Eight or nine years ago, if you would have started talking about that and people would have checked what was in your coffee. We are excited about the growth that Polk is going to experience based upon that, because of the infrastructure and the access to the roads. It may take you 20 minutes to get out of the core areas to get to the road where you can get your product to the customer, you don't quite have that in Polk yet, assuming the infrastructure and the allocation of dollars will be there to, you know, anticipate and support that growth.
WEAVER: It's hard to pick three hot from the three not. I'm struggling. Maybe you guys can help me. Obviously, condos are not hot. Retail related to struggling housing is not hot. And then the jurisdictions which are raising impact fees, where nearby you can go five miles away and impact fees are half or a third, they're not hot, and they're like a five-year-old that looks around to see if they got away with it, you know, to see if they can get away with these impact fees, sometimes going up and down.
As far as what is hot in this particular transitional market, health care's staying hot. Education is staying hot because people are having to retrain to keep up with all these changes we've been talking about. Professional services are still hot. Whether they should be or not, they're still hot. And business services are still relatively hot. Governments, like Pasco, that encourage certain kind of uses, like office, are becoming more hot. And south Hillsborough a good example of where some of the project types are catching up – a large number of the houses that were built, additional transportation improvements on the way, and consortia of the developers to build U.S. 301 and other roads that held them up for five or ten years, they're not getting built by public-private consortia. For folks pitching in to fix the web system, they're getting hot, probably with some self-help to restore their place in some of the hot new markets, and Polk County has enormous opportunities.
DOHRING: When we talk about hot, where are we going to see values and prices – real values – rise?
People still buy real estate as a hedge, and they're looking for it to appreciate. And I'm biased because I love urban and I love redevelopment, but one's fundamental. You know what's shocking to me? I've heard everybody in this room talk about fundamentals today, yet developers and real estate people, we're all just nuts, right? We never look at real numbers. What do we hear over and over today? “We're all about the fundamentals.” One of the fundamentals on supply and demand is something finite. Well, you know what? In Pinellas County, the land is finite.
In any urban area you go to, the boundaries of that are finite and so there are greater opportunity for appreciation. It has to happen because of the supply and demand factors. I think when you really look at it, nobody can come and put another shopping center up next to you. Nobody can come and put in another small office complex. Granted, yes, in a downtown area, once in a while, you get another big office coming up, but it's that very, very fundamental that's going to help, because people like to know, "My real estate's going to appreciate."
Since we have so many real estate people in the room, I am accepting bids on the air rights over my house in northeast St. Pete. There's a lot of sky up there. And for the right price, we could work something out.
SURAK: I'm high on Pinellas County right now. I have an apartment deal – a land deal – that's about to go contract, hopefully today. And, you know, everybody keeps telling me you can't find land, and I tell some of my smaller users who wants 3 acres on U.S. 19 in the heart of Pinellas County that it doesn't exist for under $3 million, and they look at me like I'm crazy. I'm like, "It's not out there." But one acre doesn't exist for under $3 million.
There are deals that make sense, but it all goes back to what Ray said earlier; it's that expectation of the seller and the price that they want to get and what the buyer can afford to pay.
Residential real estate got upside down. Everything else, I think, is okay. I've had to educate sellers pretty aggressively on what increases in impact fees really do to the value of their land. And taking that time to say, "Hey, I know I represent this buyer, but here's why our offer isn't what your price expectation is. Here are the reasons why, and not just in rhetoric, but in numbers. It's $250,000 more for this impact fee to build what we want to build there. We can go under contract and try to figure it out, or you can wait. But the reality is, you're going to continue to hear that type of message from other suitors." So we're seeing a lot of that.
In terns of market segments, I think multi-family will remain hot, and I think a big part of that is the fallout financially. Nobody can really gauge where the prices are going to be. It appears on statistics that we've hit the bottom locally, but nobody really knows. "Should I sell now? Because it might go down more in '08, and where is my value going to be in '09? Can I buy now?" And the one thing that I have not heard at all this morning is what the impact of our up-and-coming echo-boomers are going to do to this next wave. We've got an enormous population that's coming of age, historically, that is ready to buy houses and they're paralyzed right now. I know a lot of them. I've got babysitters, people that are teachers for my kids at school – they're paralyzed. They are deathly afraid of buying a home or putting their money somewhere where, "Geez, if I had waited four months or six months, I might have gotten a better deal." So they rent instead, and that will continue, I think, for a while. Until we see an uptake, I think that renting will be very popular.
WEAVER: There may be a new series like "Married With Children." I think it's going to be called "Penting Up With Children."
SURAK: They're all moving back home, right?
WEAVER: Both ways – either back home or they're in an apartment. That's an amazingly important gauge of the accumulating demand. You make a great point about the echo boomers.
SANDELLI: I think the other part of it, it's not only the cost of the home but it's the impact of taxes and insurance, and that goes into the whole equation.
SURAK: What can they afford?
SANDELLI: "I may be able to buy at discount price. What's the taxes and insurance going to be? Can I make that all work?"
My daughter's a senior at Florida, and I sent her a budget yesterday because she's got an interview, and I said, "Do you have any idea what you think you're going to need?" She said, "I'll get the job, then I'll figure it out." I said, "No."
I said, "Let me put it together in a little scenario, and I'll send it to you. This much net at this tax rate, you're going to have this much gross. If you need X and they offer you three quarters of that..."
In 2007, the Legislature created a Bay Area Transportation Authority for the first time, something that, in and of itself, a lot of people thought would never happen, and the expectation in creating that agency is that there will be some form of mass transit, some form of light rail, that follows. Does anyone, A) believe that this is going to happen, that we will have a unified transit approach? And, B) how will it affect real estate and where we build and what we do?
DOHRING: It's definitely going to have an impact, and it's primarily more in the outlying areas. For instance, I have an employee who drives in from Citrus County to downtown Tampa every single day. We've given her some flex hours, because two days out of every five that she works, we get a phone call that says, "I'm stuck." And she's mostly stuck where that whole merging of the Suncoast Parkway happens.
So I think we're going to have great impact on our outlying areas for that. That being said, there's less ridership that comes from there. People that do that stuff a lot tend to like it for the little short trips, kind of like what we're seeing trying to connect Ybor City to downtown Tampa in a trolley system. Or Pinellas County downtown, you know, St. Pete has got a great little system.
So I think what the public has to see is, is it really worth it? It has to come off in little bites – you can't eat that entire elephant, as we all know – and have some successes.
The best part of all was what you said, that they came together. They all started talking. That's what we were talking about when we started this. If you can get public and private and just humans, like we are today, together to talk, great things can be accomplished.
SURAK: I think it'll happen, but I think it'll be a very long process. But I think what you'll see before that is an additional push – whether it's Polk or Sarasota or Pasco or Hernando – outward to build those office products or those industrial products so that where people live, they can have that 10-minute commute to work. And that hour that they've sat – or hour and a half, in some cases – I live 23 minutes from my office, but it never takes me 23 minutes to get there unless I'm doing it at 9 o'clock at night. It takes me, a lot of times, 50 minutes. Wow. If I could get that hour and a half back every day by working closer to home, that's a beautiful thing for quality of life.
So I think you'll see that. You'll see much more of a push for telecommuting before you'll see the light rail, but it'll all kind of come together at the same time, and, hopefully be a beautiful thing for the overall region.
DOHRING: You mentioned something we haven't talked about, which is the technology side and things like telecommuting and hoteling offices and stuff like that. I'll go out on limb here and tell you, it has pretty much failed. People do not want to telecommute. Offices and companies can't work together because they can't get together like this. It is failing. And I will go further out on a limb and tell you that it's happening slowly here, but in other places, people are moving from the suburbs, for the very first time since the '50s, into cities, and that's a phenomenal statistic. It's the 50 and above group. They're tired of it, and they're moving in – please, go google and see what's going on in populations inside of cities. Look to the '50s. It's been almost 50 years since it's happened, and it is absolutely happening.
The dream of having a front yard doesn't mean that much to a lot of baby boomers anymore. They want service, high service. For instance, the one Project 12 that is coming into downtown is a hoteling concept, so it's got restaurants on the ground floor, hotel, and residential. That's what people are looking for, and our young people are absolutely looking for that. They really want it all to be concise. They don't want to impact the environment with fumes, and all of that stuff is all impacting tremendously. It's going to be fun to watch people move into cities.
SANDELLI: We did the study for the Downtown Partnership. We talked about why people want to live downtown. It wasn't because of distance and time. It wasn't because of fumes; people want to be downtown because they want to be around other people. It's kind of like when people said Blockbuster Video would kill the movie theaters. Movie theaters have done well, because people want to go out. They want to meet other people. It's kind of like "Cheers," where everybody knows your name. I think that's really the dynamic of downtown that people are looking for. It's that social interaction. Why else was the community of Celebration created with porches on the front?
I live in Tampa Palms. I've had people come over and go, "Where is everybody?" And the answer is, "Out back."
DOHRING: They drove in, closed the garage door; we haven't seen them. It's like big tall office buildings.
SANDELLI: This is a very important part. It kind of goes back to why you're here today; it's interaction that you're looking for, and it gets lost in the technology.
WEAVER: I think you may have answered the eight-year versus the 28-year question of transit reality, because the reason we might have it in eight instead of 28 years is because you have to have a formula of enlightened leadership, not afraid to take the financial studies that don't work and just say, "Well, then, what would you have to change?"
And you've just touched on it together, which is, when you can go from this meeting downtown, stay socializing, get on the stop three blocks from here, get off the stop three blocks from each offices in downtown, guess what? I can read some of this on the way back. I can see all of you and all our other friends going between Westshore and downtown.
Guess what? To get in my car, pay 160 bucks for a parking space downtown there or 80 bucks for a parking space out here in Westshore and pay for the gas and the car and the insurance and all of that, when I could just get on that stop three blocks from here back to three blocks from the heart of Westshore – Westshore and downtown are almost becoming one. So we start with the success link, socializing on the way to the stop, socializing in the car, or reading stuff, relaxing, enjoying, looking, phoning, whatever, safely, and then get off and get into your office, these first two, three, four links, if we all commit to do it and get other people committed to making it happen.
DOHRING: Well, I think part of the charm on this – and I hate to belabor it – is that in cities that have light rail and commuting, their working population is smarter because they have time to read and they use that time more wisely.
WEAVER: They learn more about their business on the drive.
DOHRING: What do we learn in an hour and a half driving?
SANDELLI: One eye on the BlackBerry…
DOHRING: It's not a good thing.
To get back to mass transit, there has to be some tax money to pay for that: impact fees, tax money. One of the things that happened this year is Florida local governments were told, "We're going back a year. Cut 7 percent from that."
Is anyone worried about the impact, the rather sudden impact of cutbacks on property tax and the way the government's spending that and how that's going to affect things going forward? All we're hearing about is local governments having to pare back with things like economic development being impacted. Is anyone concerned about that going forward and how that will affect us a year from now?
BROWN: It's fascinating to me because I cut my teeth in the Washington, D.C./Baltimore market. I was actually talking to Ron a little bit about this before we got started. I see incredible similarities with Baltimore and Tampa being very similar port towns, and Washington, D.C. and Orlando being very similar because they both have such a large artificial driver of their economy, tourism versus the federal government.
Thirty years ago, what we were talking about with mass transit in the metro DC area was just being able to breathe in these days. And 30 years ago, it was literally tooth and nail whether mass transit was going to get approved, whether it was going to happen. But it led to fantastic things, like the Dulles Technology Corridor, and some of the largest companies in the country are headquartered there.
The interesting part now with the decrease in revenue that all these municipalities are going to be incurring is how these sort of projects still stay on the books without laying off teachers or firefighters or those other sorts of industries. How will they plan smartly for the smart growth, because guys like me are in there complaining about impact fees and those sorts of things that they still see as a huge source of revenue. It's going to be compounded, because revenues are going to go down, just simply independent of what else is going on. There aren't as many sales and new housing starts, and they've been forecasting budgets based on this dramatic increase in what residential revenues are going to be put forth to them.
So that would be more of a concern to me, not letting the short-term budget shake out. There's no doubt in this room the government will find a way to make money. I don't think that's the issue. The issue is to make sure that the necessary dollars are still allocated to facilitate the growth, especially for things like mass transit and infrastructure.
KENNELLY: I think there has to be some physical responsibility. And I think the way that trickles down is if they have to mandate it, to try to light that fire. All of our counties have had a windfall over the last number of years, via the assessed values going through the roof and they're able to throw us a bone by decreasing the millage rate a fraction of what the assessed values are going up. My question to the counties as a whole is: Where did all the dollars go? And what did we see from it?
I've got to say, some of it's probably waste. So I think there does need to be some fiscal responsibility, and it circles back – we've said it a number of times – to fundamentals. When we look at developing deals or an employer comes to town, they're going to look at fundamentals, and the pro formas, and say, "What are my real estate taxes?" And when they have $2, $3, $4 a foot in reoccurring annual tax on top of all their other operating expenses, I think it's really a deterrent for employers to locate. We need the jobs to have a diverse economy, so the property-tax issue ties in as a whole.
Let's talk Hometown Democracy. I was at the St. Petersburg Public Library last week and there was a, for lack of a better term, soccer mom -- she was actually wearing a soccer T-shirt – out with a little card table, trying to get people to sign a petition to support Hometown Democracy. We knew for some time this was coming. There's been a lot of talk, there's been some skepticism. Apparently it's upon us. I'm wondering how people feel about that in this room and how it will affect you in what you do, what you will do if it comes to pass?
BROWN: I may be going back to college, because – I don't know if it'll be the death of the development, but – the folks that sign those petitions have no idea the ramifications of what they're about to sign up for.
SURAK: I think it's devastating for my personal future. For me personally and for my husband, it's devastating if it passes. I was really mulling over it last night, thinking about what does it really mean to me, and I kept coming back to, I'm more afraid of what it means just as a general citizen, if something of this magnitude could get on our Constitution, that really negates the whole purpose of our local government and why they're there. I worry about the floodgates of other things afterwards. You start with a hot topic, and what could potentially be next? I think it really takes the power of folks putting people in those positions to make the decisions that the rest of us either cannot or don't want to be involved or don't have the time to really become fully educated.
I worry about more the legal ramifications of that and what might be next?
BROWN: I heard a good analogy. I can't credit the proper person, but he made the analogy that if you didn't like the car you were driving to work because of fuel mileage but you still lived 30 miles from your office, it would be the equivalent of trading your car in for a skateboard.
WEAVER: That's a good analogy.
SANDELLI: I think the name implies there's broad participation in the process, but think about how poor our voter turnout is in general, number one; secondly, how uninformed the majority of those voters are on the issues. I mean, they can pick a president or mayor. Once it gets beyond that … And the third thing is, are you going to have people making a decision that may affect the community that I live in, from far away, who has no idea whether this is a good idea or bad idea?
So I mean, you can look at it a lot of different ways, but to simply look at it from – the tendency is to say, "Hometown Democracy, everybody has a voice." Well, not everybody's going to have a voice, because the voters are going to purportedly have a voice. That's a small fraction. They're not going to understand what's on the ballot. The sad thing, too, is that a lot of people that are collecting these signatures, they're not there because they believe in it; they're getting paid.
SURAK: And they're not there because they're a soccer mom. That's a beautiful branding that we're all seeing.
SANDELLI: Ask what team! They're there collecting because they're getting paid for it, I'm sure.
WEAVER: It is, indeed, going to be devastating if it passes. Hopefully, it won't. But if it does, three different governors – I’ve spoken to one Democrat and two Republican – and Lawton Chiles said, when it first came out, that representative democracy was chosen for a reason, because, in many instances, direct democracy does not work. And this is one of those classic examples. Charlie Christ has come out and said that it would be devastating to job growth and the economic development, because it would.
And the very issues we've talked about this morning would be among the first heard, because if you don't get in by November 2008, everything will be frozen. My family and I, in August, went to Pompeii, and there in 79 A.D., those folks were covered in 23 feet of ash, and they were frozen in their suffocating anguish.
We'll go into suffocating anguish, and people won't even know it's coming. They think it sounds good or they don't understand it. They're on the way to the car with ice cream melting, they'll sign anything. They're going to get to the ballot; it's not going to be properly understood, with all due respect. The electorate's a lot smarter than we think they are. In fact, that's why I think – you know, since people are smarter than that, they'll be all the more regretful when they realize – kind of like the Bee Gees' song, "I Started the Joke That Started the Whole World Crying."
This kind of empowerment isn't empowerment at all. What it is, is it's taking the staffs of the governments that are doing a good job, not perfect, but they're doing a good job. It takes the elected officials we elected, who spend time in listening and gathering the real stories, taking all that away from them and basically gutting all our representative democracy, putting everything to a direct ballot. And if there are 8,000 members, how can the electorate get informed enough to make an intelligent decision? How can they possibly figure it all – even a hundred or a few hundred in each jurisdiction at the ballot box and how can you wait a year for the kinds of response to the retail shortening of trips, internal capture, building of new communities, redevelopment? Everything we talked about this morning is in grave jeopardy if we engage in that kind of gutting of the whole process.
SANDELLI: It's, unfortunately, coming at a time where, because of what's happened with taxes and insurance, that people have a mistrust that the elected officials can work through this issue and delivering to them something that's agreeable to them. That is the concern I have.
BROWN: The scary part is, somehow the public will equate overbuilding, supply outpacing demand, as it does in any free-market trade, that somehow there's a corollary between that and what the existing municipalities have done and that somehow, if I sign up for this petition, we won't have that problem. That is incredibly scary.
I assume that the real estate industry looks at it and says, "Okay. If it passes, it won't be a problem. There just won't be any development, because who wants to go through that process?"
WEAVER: Or even densification.
SURAK: Or redevelopment in our downtown.
WEAVER: Redevelopment is what it takes to fix mistakes we made in the first place.
The government won't want to go through the process.
SANDELLI: People have a tendency to look at this simply as commercial development. This is a change to the comprehensive plan.
WEAVER: Increase or decrease intensities; hospitals, schools, roads, capital improvement plans changes, transit and comp plan…
SURAK: Exits off your interstates, everything.
KENNELLY: I think the risk level goes up again. Can you imagine going through the normal process with your county and your County Commissioners, going through staff, and then receiving all of that and all the risks that you assume, then having to go to the ballot? You can't quantify that risk level, so I think that will shut things down.
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