Showing posts with label #California. Show all posts
Showing posts with label #California. Show all posts

Tuesday, April 18, 2023

Economics and the Mona Lisa Smile.

"Mona Lisa."
Leonardo da Vinci.

The Economist this morning observes that economic forecasting has become increasingly unpredictable, with analysts struggling to accurately forecast many key international measures. Contributing to the confusion are challenges in data collection and interpretation due to Covid-19 disruptions and declining response rates to official surveys. The pandemic caused significant fluctuations in growth, complicating seasonal adjustments in economic numbers. Also, reduced response rates to surveys may have led to increased data volatility and potential bias, as non-respondents tend to be less prosperous, which could distort income statistics. The article uses the ambiguous "smile" of Mona Lisa, painted by Leonardo da Vinci via the sfumato technique, as a metaphor for the difficulty of discerning the true state of the economic environment given this unpredictable data. 

One source of confusion arises from the discrepancy between "hard" and "soft" data—objective indicators such as unemployment rates, and subjective variables like individuals' future expectations. Typically, these two classifications of data are congruent. However, at present, they exhibit a stark contrast. "Soft" measures indicate a recessionary trend, while "hard" measures suggest a reasonable economic expansion. This divergence may be attributed to the public's discontent with inflation. In affluent nations, prices continue to escalate at an annual rate of 9%.

Economic measures really matter for government budgeting, as California's Legislative Analyst's office (LAO) relies upon that data in planning future budgets. Necessarily, many of the points the Economist makes about uncertainty get resolved by the LAO in the "negative" (that is, they accept the more dire forecast). As the LAO (accurately) writes in their 23-24 budget analysis, the U.S. economy experienced rapid expansion from summer 2020 through 2021 due to pandemic-related federal stimulus. However, this growth was (as far as the LAO is concerned, and many others) unsustainable, leading to record low unemployment and supply chain challenges, causing consumer prices to rise 8% year-on-year. To combat inflation, the LAO points out that the Federal Reserve has enacted large interest rate increases throughout 2022. The LAO interprets the hard data it sees, that California is experiencing decreased home and car sales and falling stock prices, as well as weaker state tax collections, and concludes there is a slowdown in the economy. 

The LAO, though, is looking at some of the same data as the writers of the Economist, and thus notes that while overly optimistic projections could result in future shortfalls, an excessively pessimistic projection could lead to premature cuts to public services. Further, despite all the foregoing, the LAO points out that "the state can afford to maintain its existing school and community college programs and provide a cost-of-living adjustment of up to 8.38 percent in 2023-24," which would essentially meet the rate of inflation for educational funding in California. Despite the economy's sfumato, at least that is clear. 

Tuesday, April 11, 2023

Carriage Court in Santa Rosa.

"A mobile home park in West Miami, Florida"
By Dr Zak 
https://tinyurl.com/22c4uctp
In Wikipedia, CC BY-SA 3.0
https://tinyurl.com/2y9chhga 


Carriage Court, a mobile home park for seniors in Santa Rosa, it is reported today by the Press Democrat's Marisa Endicott, is being converted to an all-ages park by new management company Harmony Communities. The company claims that the change is necessary for the park to stay afloat and make a profit. However, residents are concerned about potential displacement and culture shift, as many of them rely on fixed incomes and have limited options if costs increase. The change comes in response to Santa Rosa's new mobile home rent control ordinance, which limits how much park owners can raise rent, according to Nick Ubaldi, regional manager for Harmony Communities. 

Residents are also worried about Harmony Communities' track record of litigation over evictions and rent increases. The company is involved in multiple lawsuits across the state and has a reputation for strict rule enforcement and eviction attempts. The Golden State Manufactured-home Owners League has noted that Harmony's "reputation is terrible." The director of communications for Harmony Communities identifies as a crude epithet, Heywood Jablóm, a false name and a classic sign of a bad actor. Indeed, Mariah Thompson, a staff attorney with California Rural Legal Assistance, noted that Harmony Communities will "often just see what they can get away with[.]” 

Mobile home parks, especially in American culture, are stereotypically viewed as lower-income housing for occupants living at or below the poverty line who have low social status. As Wikipedia notes, despite the advances in trailer home technology, the image survives. Residents, especially the elderly, can be targets for unscrupulous business practices. 

Here, Ubaldi is contending that an updated rent control ordinance, designed to protect senior citizens, is in fact the source of senior citizens' distress. This is an obvious attempt to reverse victim and offender, which is harmful to the democratic process, beyond the specific harm it inflicts on the residents of Carriage Court. Sowing confusion and undermining accountability only weakens the norms we all rely upon to effectively address our housing crisis, which is bad and getting worse. Ideas, like housing, are more of a public good, like a forest, than a commercial context, like a marketplace.  We all must recognize that public discourse is vulnerable to the same damage that can be suffered by the woods should the balance between individual advantage and long-term sustainability be violated callously.

Monday, April 10, 2023

Attendance, Housing, and Basic Aid.

 Sonoma County's 40 public school districts continue to see attendance declines. The lack of housing and a steadily declining birth rate are among the factors contributing to the decline. Sonoma County is predicted to experience a 16.9% enrollment drop by 2031, the fourth worst in California, as reported by the Press Democrat. In the past five years, Sonoma Valley has already experienced an 18.9% decrease in attendance, and as a trustee, I am familiar with the very profound changes that can cause. 

The article elides past some distinctions that are worth noting. First, school funding in California is based on attendance (the so-called "ADA," or average daily attendance), not enrollment (ADA is usually about 90% of enrollment, although there is a lot of variation).  Paying attention to the attendance figure will be the more reliable indicator of the state of school finance going forward in Sonoma County. 

Second, and related to the first point, is that as of November 2022, 16 of the 40 school districts in Sonoma County were "basic aid" districts, whose revenues do not change with either attendance or enrollment. In 2021‑22, the state had 118 basic aid school districts (about 13 percent of all districts).  As attendance continues to drop, more and more Sonoma County districts will become basic aid. Basic aid will increasingly be the default rule in Sonoma County. These districts (like Sonoma Valley) will ironically end up with more money per student given declining attendance, which is why many of these districts may very well not be interested in district consolidation intended to cut costs, as such consolidation would in fact reduce per-student funding.  There are a number of these districts in San Mateo, Santa Clara, and Marin counties, those counties having had many of the same housing issues as Sonoma County for a longer period of time, and the trend in those counties has generally been against consolidation of districts.   

A final point, which comes up here from time to time. "Affordable Housing" is a term of art in many respects, and while there is a shortage of housing that can be afforded in Sonoma County by most people, that is different from "Affordable Housing." Sonoma County just lacks housing, period. Narrowing the issue using the term of art is probably not the most helpful, because it obscures the fact that the response to the crisis needs to be comprehensive.

Wednesday, April 5, 2023

Housing, a Public Good.

Wikipedia contributors. (2021, September 15).
Public housing.
In Wikipedia, The Free Encyclopedia.
Retrieved April 5, 2023

Yesterday, the Sonoma County Board of Supervisors held a first reading of a proposed "camping" law, which seeks to ban unhoused individuals from sleeping in specific public areas, such as the Joe Rodota Trail. Sonoma County has a huge challenge on its hands, with a 2022 countywide census finding 2,800 homeless people, of which only 800 were living in shelters. More shelters, transitional housing, and affordable housing are needed, along with social services such as mental health care and substance abuse treatment. 

But I think the core of the problem is different. I think we need to see housing as a public good, and not as a market. Vienna (60%), Singapore (80%), Sweden, Hong Kong (50%), Finland (20%), and the Netherlands (30%) have all managed to house very significant parts of their population by recognizing that housing is a public good and should be the object of concerted action. 

Sonoma County should prioritize the provision of more housing to effectively address homelessness. By repurposing sites, our County could become a "net zero" employer itself, setting a powerful example. As the county's largest employer, this initiative would have a significant impact on the housing crisis and substantially benefit working and middle-class families.

Encouraging government and employers to adopt a "net zero" position in how their operations impact the local housing ecosystem would be a good start. By taking responsibility for the housing needs of their employees and community, government and employers can play an active role in addressing homelessness and providing equitable access to housing for all. We need to focus on creating long-term solutions, not just temporary fixes.

Tuesday, May 15, 2018

The Return of #Cash.

Image available at http://tinyurl.com/yaxw3y5g
Just a brief note today, regarding reporters who are pointing to an economic and financial shift.  Extraordinarily low interest rates have had a significant impact on asset prices in Sonoma Valley (as I blogged about here, here, and here).  In 2015, Robert Shiller pointed out that in the San Francisco Bay Area, that most people expected annual home price increases over the next decade of 5%. However, more than a quarter of respondents thought prices would increase each year by 10% or more. Many of the second group leveraged (and profited impressively) as real property prices have continued to rise over the intervening 36 months.

courtesy the Board of Governors of the Federal
Reserve System (US), retrieved from the Federal 
Reserve Bank of St. Louis [FREDMay 15. 2018. 
 May 15, 2018. Excel data and graph available here.
Today, though, there is evidence that change is afoot, as the yield on "cash" (short term Treasuries) now exceeds the dividends on a broad range of stocks (the S&P 500).  The Financial Times' graph, courtesy of John Authers, is on the right.  I extended the graph back a bit (to 1933) just to get a longer perspective, via FRED and multpl. For about a thirty year period, dividends were generally always higher, until some point in June of 1963, when the rule flipped. Cash was king, more or less constantly, for the following ~2,335 weeks, until February of 2008. There are periods where these two measures briefly "invert" from the norm in both eras (e.g. 1959 for dividends, 2002 for cash), but it's unusual.

What does it mean? Stanford economist Bob Hall (who continues as chairman of the academic panel that dates American business cycles) notes that, economic syncopation being what it is, “[t]he next recession will come out of the blue ... just like all of its predecessors.” However, the Economist has pointed out previously that this economic cycle is already running exceptionally long at ~105 months, and it is now more than a year past the average of the last three (the longest ever, March of 91-March 01, was 120 months).  Meanwhile, valuations continue to be particularly rich (the Shiller PE is at 32.33, in excess of the '29 crash and only matched by the dot-com bubble). My sense is that the financial columnists pointing to this data are wondering how "out of the blue" a contraction could be at this point. Which is an interesting point to consider, when one reflects on the power of narratives in financial markets.

Tuesday, May 24, 2016

What Do Bubbles Look Like, Pt. 3.

Today, I'm revisiting a post from last November, and a followup from March of this year. I had blogged about a property for sale on Austin Avenue, in the Prestwood neighborhood of Sonoma. The asking price was $2,295,000; the house was a little under 1,900 square feet. There was some disbelief at the listing, given the property had sold in November of 2010 for $407,500. But it duly sold for $2 million. 

Zillow advertisement, May 24, 2016.
image available at http://tinyurl.com/zae624d 
I'd speculated that this market could continue for another summer, and perhaps even two. Today is just a small update; I was browsing Zillow for unrelated reasons and saw the image at the right. 348 Patten, which had sold for $725,000 in November of 2013, is now at $2.8 million; Zillow estimates the house is for sale for about $994 per square foot.  To put that in perspective, the most expensive zip code in the USA (10007, also know as Tribeca, New York) has prices per square foot of about $2,829 (yes, the source is Business Insider, but bear with me).  Atherton, at #2, is $1,669 per square foot, and there are four more above $1,000 (33109, Fisher Island in Miami, $1,586; 92662, Balboa Island in Orange County, $1,443; 90401, Downtown Santa Monica, $1,304; and 02108, Beacon Hill in Boston, $1,290). The next on the list is actually below 348 Patten, and that 92118, Coronado, in San Diego, at a mere $866 per square foot. 

Board of Governors of the Federal Reserve System (US)
Multiple Series
retrieved from Federal Reserve Bank of St. Louis [FRED]
May 23, 2016, available at http://tinyurl.com/p4cmzyv
The one thing that all those locations have in common is access to an extraordinary job market; whether it's downtown Manhattan, Palo Alto, Miami Metro, The OC, LA's Westside, or Greater Boston, there is a nexus of price and productivity evident in each instance. Sonoma, though, is much different; the economy is orders of magnitude less intense.  Perhaps the most striking contrast is the property Zillow listed immediately below; a George Ranch home, 4,500 square feet, on 8 acres, with 5 bathrooms, for (only?) $2.3 million. 

I've turned from time to time to the graph on the right as an illustration of where markets have been moving since June of 2009. Since I first posted this graph, the situation has actually gotten more extreme. I continue to think that prices may hold up through the summer, but expecting real estate to continue to appreciate along this trend line increasingly strains credulity.

Wednesday, August 12, 2015

What Do Bubbles Look Like, Pt. 2.

Today, I'm revisiting a post from last November. I had blogged about a property for sale on Austin Avenue, in the Prestwood neighborhood of Sonoma. The asking price was $2,295,000; the house was a little under 1,900 square feet. There was some disbelief at the listing, given the property had sold in November of 2010 for $407,500.

As was expected, the property didn't sell, and was reduced in price in January of 2015, but only to slightly less than $2 million. And that's where it sold, on March 12th of 2015, for $907 per square foot. That amounts to about a 200% return on the investment, given the 14 months and three weeks the property was held. The turn of events produced a certain amount of amazement and head shaking; talk of a bubble would frequently follow.

Board of Governors of the Federal Reserve System (US)
Multiple Series
retrieved from Federal Reserve Bank of St. Louis [FRED]
August 11, 2015, available at http://tinyurl.com/p4cmzyv 
I kind of fell into a trap of presuming that rapid appreciation automatically meant a bubble exists.  However, I wanted to get an idea of what asset prices in Sonoma look like contrasted with other assets.  And once again, I turned to the St. Louis Federal Reserve Bank's excellent data analysis tool, FRED, to give me some perspective. 

The electric blue line through the center of the graphic is the Case-Shiller Home Price Index for the San Francisco Bay Area. I indexed it on the trough of the last US recession, June of 2009.  I also put in the same index for Cleveland (the dark blue dashed line) and Las Vegas (light blue dashed line). 

I chose Cleveland as a comparison because its residential real property prices were basically increasing at a modest fixed rate for years, which is what you'd (more or less) expect of a heavily regulated market dominated by government lenders.  Las Vegas, in contrast, is one of the more heinous examples of the real estate bubble; the pronounced rapid rise around 2006 is clear.  Prices in Cleveland have now been declining-to-flat for nearly a decade, and while Las Vegas has seen a recent increase, the change is nothing like 2004-06. But in San Francisco prices have nearly returned to their peak.

There's something of an obvious culprit, of course.  While the increase in house prices is remarkable, the increase in stock market prices is even more striking.  White the sharp rise in gold-and-oil prices (the yellow and black lines, respectively) during Obama's first term are clear, those markets have gone through serious corrections in the last 24 months.  But the NASDAQ's rise (solid green line) continues unabated, and unlike the dot-com era, the broader markets have followed (the dashed green lines are the S&P 500 and the Wilshire 5000).  

Sticking the label "bubble" on this situation, though, requires clearing one more hurdle. Bubbles aren't just mispricing, where people think something's valuable and, after time, it becomes clear they were wrong. Instead, bubbles, as Noah Smith nicely explained in a column back in March, depend on greater fool speculation–that someone else will pay an even higher price for the same asset tomorrow.

When it comes to home prices in the San Francisco Bay Area real property market, no less an authority than Robert Shiller himself argues such extravagant expectations (and market inefficiencies) are indeed what's driving prices, creating the potential for a Minsky moment. His point (distilled) is that the lack of short selling and the difficulties associated with increasing supply are behind the problem:
"In San Francisco, for example, we found that while the median expectation for annual home price increases over the next 10 years was only 5 percent, a quarter of the respondents said they thought prices would increase each year by 10 percent or more. That would mean a net 150 percent increase in a decade. These people are apparently not thinking about the supply response that so big a price increase would generate. People like this could bid prices in some places so high that eventually the local market will collapse. Yet the smart money can’t find a profitable way to correct such errors today ... [t]he bottom line is that there is no reason to assume that the real estate market is even close to efficient. You may want to buy a house if you love it and can afford it. But remember that you cannot safely rely on 'comparable sales' to judge that the price is fair. The market isn’t efficient enough for that."
Presuming that we are in a bubble, the hard question is, when do we expect it to end? For a way to think about how to answer that question, I point to the Economist.  In an article from last year, the newspaper noted that this particular economic cycle is already running long at 74 months; if it continues through May 2017 it will pass the average of the last three. Prices may very well hold in Sonoma so long as the expansion continues. Thus we may see a seller's market in the Valley of the Moon for another summer, and perhaps even for two.

It always seems odd to me, however, that given the regularity of booms and busts, that we all still struggle to remind ourselves that this time isn't any different, and these conditions will end as all such expansions do.  It is a truth Stanford economist Bob Hall (chairman of the academic panel that dates American business cycles) reminds us of when he points out that, economic syncopation being what it is, “[t]he next recession will come out of the blue ... just like all of its predecessors.” Perhaps we can take some comfort from our pattern of failing to constrain our expectations, even after three and a half thousand years of this stuff, and recognize it as a part of the human condition.

Knowledge of the problem, though, doesn't mean we should be sanguine about the consequences for individuals exposed to the volatility.  The family home is the primary asset of the vast majority of households. It is worth remembering that during each of the last three recessions, as the graph above shows, prices for San Francisco residential real estate have fallen. Sometimes, the collapse has been rather spectacular. It's food for thought, I imagine, for those in the Bay Area who are expecting ten percent appreciation per year for the next decade or more ...

Wednesday, June 3, 2015

The Fall of Measure A, and Roadway Congestion Pricing.

In the wake of the defeat of Sonoma County's Measure A yesterday, I started thinking about what other alternatives are available to mitigate Sonoma County's roadway issues.  As many of the readers of this blog are aware, Measure A was a quarter-cent sales tax in Sonoma County intended to fund pavement improvements.  The stories in the press before the election focused on the low quality of Sonoma County's roads, and indeed there's ample evidence of the problem. Sonoma County is generally considered to have the worst Pavement Condition Index of any county in the San Francisco Bay Area. That's saying something, as the region isn't known for the quality of its roadways.

However, the Sonoma County Board of Supervisors' proposed solution, a sales tax, always seemed strange to me from a policy standpoint. Sales taxes are regressive, and aren't closely tied to the use of the roadways. Gas taxes have historically been used to fund maintenance (let alone improvement) because the use of the roads was (loosely) tied to the amount of tax paid. Of course, that system in the United States has been failing for decades. Improved fuel economy has delinked miles travelled from the amount of tax paid. But there's also another problem with fuel taxes. 

That problem turns on the primary complaint of voters when it comes to matters such as these.  It isn't actually the quality of the roadways. Instead, it's typically roadway congestion. For, as no less an authority than Harvard psychology professor Daniel Gilbert has noted, "[d]riving in traffic is a different kind of hell every day."  So, while charging users for miles driven isn't a bad solution, charging them for driving those miles at the most congested times in the highest traffic areas is generally best. It provides revenue to improve the roads not based on the damage done to the road, but instead on the inconvenience imposed on all the other voters for inefficient timing of one's travel of the right-of-way. 

I concede, without argument, that, for the moment, for Sonoma County, trying to introduce a comprehensive system of congestion charges is asking too much. While Sonoma Valley's per-square-foot real estate prices may be approaching those of London or Singapore, that doesn't means the voters are yet ready for Zurich or Stockholm style road pricing. But there is lower hanging fruit whose benefits could be substantial.

 Highway 37/121 Juncture
Heavy Traffic in dark black
Take, for instance, the junction of Highways 37 and 121 in the southeastern corner of Sonoma County. As many are aware, the traffic in the afternoon heading from Sonoma County into Solano County, where 37 shrinks from two lanes to one, produces epic traffic jams. The problem isn't inter-Sonoma County traffic– instead it's the commuters trying to reach Solano County. For residents of Sonoma Valley returning home from San Francisco, it's a regular annoyance. For a tourist destination like the City of Sonoma, it's a foot on their economic windpipe. The Press Democrat has reported on the problem before, and motorists have even started petitions asking for help with the situation.

The nasty congestion at 37 is a classic example of the overuse of a public good (a free highway). Since each driver need not pay any fee to use the roadway, commuters over-exploit Highway 37. Each motorist gets a small benefit from traveling the road, and many are motivated to maximize their use by traveling it every workday, becoming reliant on it. Yet the costs of their use are imposed on the residents of Sonoma County, whose use (and the use of their tourists) is less (often, much less) intense.  Pretty frequently, the problem snowballs around 3 PM, until the resource collapses, in the form of a traffic nightmare. 

The irony of all this is that the builders of the roadway were well aware of these kinds of problems.  Indeed, Highway 37 was originally built as the "Sears Point Toll Road," managed by the Golden Gate Ferry. The imposition of tolls is an obvious solution to the tragedy of the commons–frequent users pay a higher price.  But when the State of California purchased the roadway in 1938, the tolls were eliminated. 

Now, that was probably a decent idea during the Great Depression. Collecting tolls in that era was much more disruptive than billing the FasTrak equipped cars of today, and spending on roads to improve the general welfare was politically uncontroversial. But the technical problems of toll billing have long been resolved, as the improvement in traffic on the Golden Gate Bridge heading into San Francisco since mandatory electronic toll collection began in March of 2013 illustrates. And the overall impact of congestion charges worldwide has been positive, from London to Singapore.
Toll Monitoring Station, Singapore. 
Photo Courtesy Michele Simoni

User fees imposed on Highway 37 from Sonoma to Vallejo (a step toll is preferred) would improve the ability of tourists to reach upvalley destinations in a timely fashion. Such a solution is consistent with the history of the roadway. It helps resolve the primary concern of the voters, congestion, while avoiding politically impractical roadway expansion.  It provides revenue to resolve the pressing policy problem, roadway maintenance. And it promotes efficient use of a public good. At a stroke, it uses technology to help resolve a series of different thorny problems. 

This kind of a solution isn't limited to the junction of 37 and 121. The politics of such a solution at  San Antonio Creek are somewhat different (the commuters causing congestion there are residents of the County, those at 37/121 generally are not).  But if the remedy proves practical at Sears Point, there are other locations where such congestion pricing would make a great deal of sense (for instance, upon entering Sonoma Valley ...).  

Before yesterday's vote, congestion pricing in Sonoma County was largely a mere gedankenexperiment.   But after the failure of Measure A, it's another matter entirely.  As Ernest Rutherford was fond of saying, "[w]e've got no money, so we've got to think." In that vein, I suggest it is going to have to be creativity, then, rather than higher taxes, that Sonoma County will have to rely upon to resolve its long term traffic problems.

Thursday, April 9, 2015

Freshman Teams, Student Performance, and the Case For SVUSD's Master Plan.

So, it's my birthday today, and those of you that know me will be unsurprised that my gift to myself was speaking at "Career Day" at Adele Harrison Middle School in Sonoma. I always find it rewarding to talk with students about their plans for the future. But this year, and in this instance, I had just that little extra bit of a reason to be positive. Because I've been spending some time reviewing the consistently increasing performances delivered by students just like those I spoke to today when they reach Sonoma Valley High.

---

Data courtesy Sonoma Valley Unified School District.
Framework from Elaine M. Allensworth,
Julia A. Gwynne, Paul Moore, and
Marisa de la Torre, "Middle Grade Indicators of
Readiness in Chicago Public Schools.”
available online at http://tinyurl.com/myq87ag
On the right is a graph tabulated from freshman grade information at Sonoma Valley High since 2006. But first, a bit of background.

Recent research shows that middle school attendance and GPA, when combined, are the single best predictor of high school GPA. Qualitatively, most (public) high schools grade students similarly; however, similar students perform differently depending on school, with some schools improving performance up to .5 of a grade point – and with most of those benefits received by the students between a 1.0 and a 3.0. Those student who manage to reach or exceed a 3.0 in high school increase both their chances of attending college, and graduating from college, the higher their GPA moves.

The study really caught my eye because, beginning in 2011, Sonoma Valley High School created their Freshman Teams, small communities of incoming students with shared schedules. To the extent that the context students enter high school can affect performance, should the Freshman Teams have been functioning positively, an improvement of approximately .5 of a GPA would be expected, with the primary benefits impacting students who would have earned between a 1.0 and a 3.0.

And lo and behold the graph shows exactly what I'd hoped when I started looking at this data. Since the program was instituted in the 2011-2012 school year, Sonoma Valley Unified has moved the majority of its students into the college-potential category as of the end of freshman year, nearly doubling the number in the top tier. Attendance improvements were positively correlated with GPA improvements. Further, as would be expected, the biggest GPA change impacted students between a 1.0 and a 3.0, with essentially a third of the students expected to fall into the range moving into the college potential or college probable tiers.

That wasn't all -- at the same time this was going on, the number of students taking accelerated coursework (math & language) nearly doubled.  Sonoma Valley High gives the students no break on grading for their initiative in choosing a harder schedule – there is no bonus weight assigned to their GPAs for this effort.  So not only are the students earning better grades, but they've been doing it taking harder classes at the same time.  

The students I saw at Adele will now more likely than not be in a position to pursue college when they attend Sonoma Valley High in the years to come. The full handout (with the citations and backup) is here.  And the question this data makes me ask myself is: will we give these students the schools and the facilities that their performance deserves?

Can we execute on our school district's Master Plan?

---

Poll, Sonoma Index-Tribune
screenshot taken February 12, 2015.
The voters of Sonoma have long been the heroes of their own community's schools, not leaving that role to the State of California.  The electors of the Valley, time and again, have fully committed to public stewardship of our educational infrastructure. As parents (and grandparents), our lived experience shows the enormous benefits to health, safety and education that have always accrued from carefully spending the money necessary to develop the structures, fields and facilities worthy of a Valley as successful as Sonoma.

The men and women of our community have always counted on their educators and trustees to manage — cautiously — the development of our school campuses.  We want our District to be neither the family shopping only for the day's needs at 7-11, nor the one gone Costco crazy.  Instead, we hope they'll be like a mom and dad sitting around the kitchen table, carefully deciding on the nutritious groceries they'll buy for the week ahead, before they go to the store.  For like that family, we as a community know we'll face expenses to maintain our District, and we'll have to frugally weigh options, one against the other.

I think this is the moment that we find ourselves at that table. For notwithstanding the emergence of a second dot-com bubble to our south, interest rates remain at historic lows because investment and demand in America remains depressed.  These conditions were not seen for seventy years, and it is quite possible they will not be seen again for another seventy.   As prudent shoppers, now is the time to write our list of the purchases we know we're going to need — the framework for accelerating our students into the balance of the 21st century that lies ahead.

The green eye shade of the accountant, and the graphs of the economist make the dry case for improving our schools — that action now can reap outsized dividends, consequences we will see in the improved living standards and enhanced productivity of our entire community. But it is our concern for justice that should ultimately resolve questions in favor of an investment in our shared future.  It is no accident that I started this section with a rewrite of the first sentence of David Copperfield, Dickens' story of individual perseverance despite an undisciplined heart. Our shared belief is that America is defined by the notion that the condition of your birth does not determine the outcome of your life, a truth voiced by both Paul Ryan and Elizabeth Warren. Whether Republican or Democrat, liberal or conservative, our covenant with our future selves is that education will remain the key to unlocking the American Dream.

However, it is our common fear that each element that leads to such success is eroding before our eyes. We find ourselves in a time where educational opportunity in the United States has become inverted. We are one of only two members of the G20 that spends more on richer students than poorer (the other is Turkey). We cannot rely on the State of California to resolve these issues for us. Our Governor is backing away from California's School Facilities Program.  The State is essentially leaving Districts like ours on their own in providing for future school facilities and modernization.

This is where the case for implementing the District's master plans, now,  for all of the campuses, finds real traction. As Winston Churchill said, "we shape our buildings; thereafter they shape us."  The voters of Sonoma have a once-in-a-generation opportunity to shape the future of the Valley for decades to come — and there is no one else ready, willing, and capable of doing so. We can put in place the scaffolding our students, the voters of tomorrow, will need to succeed.  

We have an opportunity to make educational equality more than a dream.  We have a chance to make it a reality.  

---

So despite being another year older, I found in the faces of our students reason for optimism.  But I also found a challenge and a call to action.  Rare indeed are opportunities such as the one available to the voters of Sonoma today. It is my hope, and indeed I believe we can make it our shared goal as a community, for us all to pull together to create the infrastructure to match the performances being delivered by our teachers and students.

And so I say to the students who gave me a resounding cheer today when their principal told them all it was my birthday, that we can see that they are doing their part.  And that I hope that, as voters, that we will now be able to do ours.

Monday, March 23, 2015

Turnout, Serrano, and the Outlier.

Percentage Voter Turnout Above (Below) Expected
Versus Number of Registered Voters
California Primary Election, June 4, 2014
Results available at http://tinyurl.com/l3xbpqw  
Back in June of 2014, I took a look at the provisional results of the California Primary. It was partly due to a comment in a newspaper article arguing the Bay Area leads the State in voter turnout.  Based on the data, I concluded
that the northern counties, and those of the Sierra foothills should really hold the title.

I've wanted to revisit the final results for a while. I did so today. The coefficient of determination was essentially unchanged (R²=.757 versus R²=.758). In doing so, though, I realized there was a way to get at the point Paul Mitchell, the vice-president of Political Data Inc., had made to the newspaper reporter that led to my post in the first place.

Paul had contended that "[p]oor people from Sonoma are far more likely to cast a ballot than someone living in poverty in Echo Park [Los Angeles]." This time, after plotting the results, I then set the y-axis to 100% of turnout as predicted by the trend line, leaving the x-axis at the number of registered voters per county.  Graphing the data this way actually supports Paul's argument – that Sonoma County is the outlier from the trend.  Sonoma County comes in at 137% of expected turnout, the highest in the table.

Voter turnout has been on my mind because of a line from Serrano v. Priest that's come up here before.  In contemporary discussions of education, the "twin themes" of the Serrano I decision tend to be collapsed into one – "[t]he pivotal position of education to success in American society."  But it is the second of the twin themes, where Serrano I finds its support in Brown v. Board of Education, that causes me to return to this data.

I hand the microphone to California's former governor, circa 1954:
"[E]ducation is perhaps the most important function of state and local governments. Compulsory school attendance laws and the great expenditures for education both demonstrate our recognition of the importance of education to our democratic society. It is required in the performance of our most basic public responsibilities, even service in the armed forces. It is the very foundation of good citizenship." [Emphasis added.]
The language is lofty, but not complicated. Democratic society is (of course) based on voting. In performing that public responsibility, education is a lens allowing us to distinguish the differences between competing choices. But Earl Warren (and a unanimous Supreme Court behind him) say it's more – that education is the foundation of good citizenship. Education doesn't just help us when we step into the voting booth, it shows when we choose to go to the polls in the first place.  Education is the self-evident spark, pump primer, and boot loader of democracy.

And so I take that proposition, and come back to the graph once more.  And I ask myself – is it education in Sonoma County that has led to this result?

And if I accept for a moment that the statement is true, I then must turn to the far more difficult question.  For what, then, would I point to about Sonoma County that has made this difference?

And what can the rest of California learn from Sonoma's experience?

Wednesday, November 19, 2014

What Do Bubbles Look Like?

Sentinel Media Services
"Midcentury Modern in Sonoma"
 The San Francisco Chronicle, Nov 19, 2014
screenshot taken Nov. 19, 2014
The San Francisco Chronicle gets my attention today.  On a fairly regular basis, the paper features a particular piece of real estate for sale somewhere around the San Francisco Bay Area.

Today, they're publishing about a property on Austin Avenue, in the Prestwood neighborhood of Sonoma.  The asking price is $2,295,000. The house is a little under 1,900 square feet.

You can see the location here. One nice thing about Zillow is that it will show you the recent sale history of the property.  I took a screenshot of that, and that's on the right, too.  

The Zillow history shows that William Grecian tried to sell this property back in November of 2010 for $445,000; he couldn't find any takers.  He dropped the price to $420,000 in April of 2011, but still didn't find a buyer.  He dropped the price another $12,500 -- and that's when Laura and Richard Tackett made their offer, for $407,500 on July 15, 2011.  

Zillow.com
"826 Austin Ave, Sonoma"
 screenshot taken Nov. 19, 2014
available at http://tinyurl.com/krxbtzh
Laura and Richard held the property for 872 days.  On December 3, 2013, they listed it for sale at $648,000, a 59% price increase.  Laura and Richard figured the change in the real estate market meant that they'd just made an investment with approximately a 20% annual rate of return.  Of course, Richard and Laura were wrong; the property didn't sell for $648,000. 

Instead, it sold 17 days after listing for $730,000. 

More like a 26% annual return.  

The property was purchased by an LLC, which is more or less the general practice in California with real estate projects that are expected to appreciate significantly.  The registered agent for the LLC is Patrick Doyle of Petaluma, who's a general contractor and is the manager of the LLC. The Deed of Trust on the property (which I checked) reveals the equitable owners. The Deed of Trust is a public record and if anyone's particularly excited to find out who put up the money for this deal, feel free to head to the County of Sonoma's Recorder's office -- they're open 8-5 Monday through Friday.  

The LLC listed the property for sale on November 5, 2014.  The LLC held the property for 320 days.  I can't calculate the annual rate of return, because the calculator I use presumes that the values change monthly; here, the ∆ in the price is so substantial that the number of days included can change the implied rate of return.  But it looks like about a 215% presumed annual rate of return.

Comments, "Midcentury Modern in Sonoma"
Sentinel Media Services
The San Francisco Chronicle
screenshot taken Nov. 19, 2014
There are a great many things I could say about this situation. I'm going to hold those observations, and I think I'll revisit this blog post in a couple of years (months?), perhaps updating it with the transaction history of the address.  

At this point, though, I do want to draw attention to the comments about the house on the Chronicle's web site.  

One poster thought the property looked like a good "flip."  

Another wrote that "I can't believe anyone would pay over 2 million for this toy house."

Interesting.

Wednesday, January 29, 2014

#SOTU - "When Women Succeed, Sonoma Succeeds."


"It's time to do away with workplace policies that belong in a 'Mad Men' episode. This year, let's all come together – Congress, the White House, and businesses from Wall Street to Main Street – to give every woman the opportunity she deserves. Because I firmly believe when women succeed, America succeeds."
-Barack Obama, #SOTU, 1/28/2014  
The City of Sonoma has an eight member Planning Commission, entirely composed of middle-aged men. The six voting members from the City all live in expensive homes on the "East Side" (the average value exceeds a million dollars).  The Commission has become a class-and-gender monoculture that's failing in its basic role of providing predictable evaluations of the viability of any given project with the voters, because its members no longer represent the community -- the essence of representative democracy.  

Image available at http://tinyurl.com/mrwq7us
Change won't come easily. There are many in Precincts 1801 and 1805 that, like me, if asked, are inclined to turn down the opportunity to serve.  It's no accident that they would -- the system's built-in hostility to those perceived as "outsiders" shunts away potential representatives with a different view -- diverting them to places like the City's Cultural and Fine Arts Commission, which has ended up being composed of eight women. The selection process -- appointment -- encourages those motivated to participate to curry favor with elected politicians -- a craven process at best -- rather than to get to know their neighborhood, the essence of the metis our governmental system depends upon.

The problem's getting out of hand. The City faces expensive litigation that might have been avoided if the Planning Commissioners had been able to give voice to the concerns that led to the Council blocking AT&T's cell tower. Developers like SunLever can't count on the Planning Commission's approval to mean much of anything when the City Council's overruling unanimous decisions. And Measure B was a not-veiled-at-all effort to hamstring the ability of the Planning Commission to approve any hotels, a clear-cut vote of no-confidence from half of the electorate.

This post is devoted to explaining why allowing the situation to continue is outrageous. If this post makes you upset, that's a feature, not a bug. A body of unelected individuals, serving lengthy terms, that rarely (if ever) are subject to supervision or direction from the council (let alone frequent replacement) isn't democracy in action, and it isn't serving the best interests of the community.  When we establish a system that depends on a process of currying favor, we shouldn't be surprised when it gets dominated by wealthy, middle-aged men.  But Sonoma County's a different kind of a place -  it's a place where women win elections. The appointment process has produced a dramatically unbalanced group, and it should be changed. Promptly.

Because when women succeed, Sonoma succeeds.  

---

It's been an interesting ten weeks since Measure B went down to defeat, as illustrated by two sets of events.  The first is the City of Sonoma's turning down AT&T’s request to install a cell tower, and the second's a "meeting" called by Owen Smith of the SunLever Companies, regarding the old Sonoma Truck and Auto site on Broadway.  The loss by AT&T was surprising -- the proposal had won 7-0 at the Planning Commission level, and AT&T went so far as to seek reconsideration of the decision, which was denied (expensive litigation is now expected.) The meeting by the SunLever Companies was perhaps even more unusual -- the potential developer told participants he was "open to any reasonable idea" for the parcel -- the opposite of the choreographed presentation usually made to the public for what are preconceived projects.

And in the midst of these two issues, a third point, a quote from the Mayor, came to mind.  Tom Rouse (the only member of the City Council to vote to allow AT&T's cell tower) argued that the City should trust the unanimous decision of the Planning Commission. "We have a commission we put our trust in," he said, and "I must believe they did their homework."

Watching an elected leader deferring on the weighing of private rights versus public goods, trusting in an unelected commission to make decisions about the balance and character of the community, caused me to raise an eyebrow.  In general, that sort of decision making is at the core of why people run for a City Council seat -- they're personally engaged with the facts, motivated by a sense of duty to serve their constituents even where their individual interests are not at issue -- and that such leaders aren't therefore prone to defer to the decisions of unelected appointees whose relationship with the voters can be tenuous at best. 

Yet in a certain sense, I feel like Tom's not entirely wrong -- he should be able to rely on the Planning Commission. But he can't.  And then I realized why SunLever feels the need to go directly to the public rather than develop a proposal first ... and why AT&T (and indeed the Mayor) were surprised the cell tower went down to defeat. And it turns on the makeup of Sonoma's Planning Commission. 

---

Who planning commissioners are, as most every voter agrees regardless of what the voter knows about embodied cognition, is directly relevant to the execution of their duties. Their names are posted on the City's web site, and unless one of them is concealing a very significant secret, they're all men. Further, where the different commissioners live is anything but hidden -- their addresses are freely available on the web.

I've run the map on the right before; it is the map of the precinct returns for Measure B.  Those precincts in favor of hotel construction are in silver (gray).  I've gone and highlighted the lots where each of the six Sonoma residents who are voting members of the planning commission live, and have added flags so that the locations are clearer.  I also mapped the location of the residence of Tom Rouse (his flag is the yellow one).

As can be seen, every one of the six voting planning commissioners from the City lives in the portion of the town that voted to allow hotel construction; none live in the west, or “green” side of town.

"The Magnificent Seven,"
Image available at http://tinyurl.com/ml2uldv
I also grabbed the Zillow valuations for each of the properties.  The average value of a planning commissioner’s home in the City of Sonoma is $1.277 million (and one is over $2.5 million). I note that the Mayor's $1.462 million home is on 5th St E, and that he and the City's voting planning commission members are thus effectively the "Magnificent Seven" -- middle aged men living in expensive homes on the East Side of Sonoma.

But it wasn't until after hearing the President's State of the Union speech last night that I decided that I really should publish something about this.  Because criticizing the Planning Commission solely on the basis of the neighborhoods its members are drawn from is an instance of me pulling my punch.

Because the really atrocious part of this situation is that not a single member of the Planning Commission is female.

It's not hard to see why Tom Rouse felt he could trust the Planning Commission -- they pretty much all look and live exactly like he does.  But elections in Sonoma aren't solely decided by the policy preferences of the East Side of Sonoma, and the City Council doesn't measure decisions solely based on their acceptability in Precincts 1802, 1804, and 1813. The Planning Commission is an excellent vehicle for assessing projects to the degree it represents the community -- the essence of representative democracy --  and the unpredictability of the AT&T outcome and the uncertainty surrounding SunLever's project are evidence of the fact that the Planning Commission is failing in its basic role of providing predictable evaluations of the viability with the voters of any given project, due to the fact that it has become a class-and-gender monoculture. 

---

This situation has been a long time in the making.  Planning commissioners can serve three terms -- a two year term, followed by a four year, and then another two year term. Commissioners are rarely removed once appointed, and the ability of the City Council to take action to make the Planning Commission reflect the community is limited by the current status of the City's code.

But municipal codes can change.  And millionaire middle-aged men aren't the only occupants of the City of Sonoma.  Reform could include adding commissioners, changing the composition, or moving to a system where council members each appoint a commissioner (or two) to serve coterminously (as Sonoma County does).  But none of these would address the core problem that reform should be designed to address. 

There is no substitute in democracy for personal engagement with the facts.  Developing that kind of local knowledge means abandoning the influence-oriented appointment process we have in favor of the kind of institution that encourages metis -- democracy.  There is every reason to shift to direct election of planning commissioners on a per-precinct basis.
  
Precinct elections encourage Commissioners to get to know their neighborhoods. Such elections recognize the importance of the two-way relationship between our representatives and our government's professional staff -- that oftentimes it is our representatives who will explain our government's policies to us, rather than merely supervising the conduct of those decisions by the experts we hire in specific policy areas -- a function of elected officials that will only gain in importance with the burgeoning of smaller-scale "social" media. Frequent precinct elections (these should be two year terms) are a natural stepping stone for Commissioners to move to higher office, because it causes them to learn how to conduct smaller elections and develop campaign teams-- and developing qualified candidates by providing them a zone of proximal development is an important characteristic of any political system -- for we must recognize that we are constantly engaged in the process of developing our own leaders. 

For the development of those leaders, the nurturing our leaders, is why elections are really the solution to the problem we face.  As David McCuan, the Sonoma State political scientist, has noted before,  female candidates in Sonoma County typically do 5 to 8 percentage points better in elections than men. This is not a point that should surprise anyone -- there's a reason that Nicole Mann came from Rohnert Park ... or the New York Times national education reporter is from Petaluma ... or that the Maria Carrillo High women's soccer team is often the best in America.  Because when it's not about influence or favor, when it's on the merits, our voters reward the self-evident ability and achievement on display.

---

I can see how this argument would lead one to conclude that the City should change the Council itself to precinct elections.  This has come up in other cities in Sonoma County before.  The charter process is a burdensome, overwrought solution that's looking for a problem; a Council elected by the City proper encourages a broader view of problems, that allows an important second pass in any process of decision making, and one of the key reasons that direct elections work best at a lower level.  We want the Council to consider the common good, and Commission decisions are always subject to the retained power of the Council to overrule the Commission.

Pragmatically, electing commissioners is a process that could be done at the General Election on November 4. The Council should act, to ensure that the planning commission proceedings are a fair prediction of what will occur at the Council.  The appointment process has produced a dramatically unbalanced group of middle-aged men living in expensive homes nearly next door to each other. Cronyism has resulted in the exclusion of women from the decision-making process, to the detriment of our community. This situation should be brought to an end. Now.

---
"Nothing in life that's worth anything is easy."
-SFC Cory Remsburg.  
I quoted Obama to start this post, and I end with a link to the video of the key part of the speech.  Because the quote was the applause line of the night. When Nancy Pelosi stands to clap, and John McCain smiles in agreement ... when Dianne Feinstein rises and leads the standing ovation, it's clear that on a federal level, the unique characteristics of California, where Malala Yousafzai becomes Janet Yellen, should and very well could have the same power nationally as they can in our little town.  

Reforming Sonoma won't come easily.  Nothing worthwhile is, which was the second applause point of the evening, for Sergeant First Class Cory Remsburg.  But it is high time we take the action necessary to reform our small, broken, but important political system here in Sonoma.  All it takes is the same commitment to achievement, merit, and democracy that, increasingly, is defining the Golden State's model.  And the audience that is watching stretches far beyond the bounds of our own familiar shores ...