@eloisanews, nice article on #Sonoma grad rates ...

Eloísa Ruano González
image available at @eloisanews

So, I don't personally know Eloísa Ruano González. I do read her articles via the Press Democrat from time to time, though.  Her writing caught my eye earlier this year regarding Cloverdale High; recently it was a piece about graduation rates in Sonoma County overall. I'm typically favorably disposed towards education writers, particularly those that focus on the interplay between education and economics, and so I'm very supportive of Eloísa for focusing on statistics for the different parts of Sonoma County.

Of course, a well researched article on an important subject often makes people want more of the same, and I thus wonder whether an article on the County's A-G graduation rate might now be a good idea, too. For those who find education jargon impenetrable, that's the difference between whether a graduate has or has not met the college entry requirements for the University of California ("UC") or for the California State University ("CSU"). The technical requirements of A-G completion are complicated, but can (very roughly) be boiled down to passing the second semester of Algebra II with a C- or better.

Most parents and voters think that a graduate's a graduate, and that anyone receiving their diploma is ready for college, but that's not necessarily the case.  And that's where Sonoma County seems to have trouble, because while the statewide rate for A-G is 43.4%, in Sonoma County it's only 33.7% (for my friends and neighbors reading this post, Sonoma Valley High's rate is 47.2%).  I feel like I'd really like to see our educators explain the overall rate of preparation for college being achieved by Sonoma County's high school graduates to a reporter like Eloísa ...

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.

Regarding Roundabouts.

A brief post today, about what can be a surprisingly vigorous debate.  Speaking with Ron Willis on Thursday, we discussed Sonoma Valley's issues with affordable housing, which turned into a conversation about traffic congestion.  The two are more closely linked than they may at first appear. As many are aware, the traffic problems Sonoma experiences are exacerbated by so many employees of local businesses who cannot afford to reside in the community they serve, and must commute 90 minutes or more (a topic that has come up on this blog before) to find affordable housing for their families.  Reform of local housing policy could help unlock the consequent roadway snarls.

Ron and I also touched on the physical layout of Sonoma's roadways, noting that increasing capacity isn't really consistent with the previously expressed preferences of local voters, but that roadway improvements have made a difference in mitigating congestion. We agreed that a nice example was the construction of a roundabout by the County of Sonoma on Arnold Drive, a project that was, at times, controversial.

The intersection had been a notorious problem for years.  One of the nice features of Google Maps is that it contains a time series of photographs of the roadway. The earliest images (from 2007) actually show two CHP officers trying (in vain) to clear the traffic backup -- Google's Maps service allows users to see just how bad the situation was prior to the County's efforts.



While the cost of the project surprised some (~$2 million), and was considered larger than expected, it eliminated the daily backup of twenty to thirty cars turning right onto Agua Caliente Boulevard that frustrated so many drivers, and that disjointedly interrupted the otherwise rural tenor of Sonoma Valley with a mess of cars more reminiscent of the MacArthur Maze. The improvement has since received wide acclaim. Advancing the map from Google to 2015 illustrates the complete transformation of the intersection and the restoration of the pastoral character of the area.

Arnold Drive Roundabout, 2015.

Image available at http://tinyurl.com/gw5gl4f

The takeaway, for me, is that persistent efforts to improve the quality of Sonoma Valley's infrastructure is a key part of the strategy necessary to address Sonoma's affordable housing crisis. The evidence shows that the situation continues to worsen, and indeed to become more extreme as the months pass. Perhaps the roundabout solution points the way to other ideas that might help resolve the situation, with Sonoma borrowing even more ideas from the Garden City movement than just Ebenezer Howard's traffic innovations.

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 ...

About Arnold Field ...

On Tuesday, Sonoma Valley's school board heard from some City residents with concerns that construction at the combined SVHS/Adele Harrison/Prestwood Elementary campus would hurt their property values. This is (of course) a common situation whenever a school district builds the regular improvements and expansions that their educational mission requires.  I think most everyone has sympathy for the neighbors' concerns. But empirical research shows that their fears aren't backed by the facts. Chris Neilson and Seth Zimmerman demonstrated (in their increasingly-widely cited research) that neighborhood school construction actually improves property values. "[B]y six years after building occupancy, school construction increases reading scores by 0.15 standard deviations relative to the year before building occupancy ... school construction raised home prices in affected neighborhoods by roughly 10%, and led to increased public school enrollment."

The proposed sports complex, in particular, has alarmed some nearby homeowners, who focused their concerns on the stadium. But the research, again, supports the District. Larissa Davies, a United Kingdom based researcher into the subject, conducted a thorough review of the US and UK literature on the impact of football and soccer stadia. Her internationally recognized study found that "proposals to locate stadia in urban areas often prompt a negative reaction from local communities, fearing a decline in property prices ... in contrast to this widely held belief, sports stadia can actually enhance the value of residential property ... stadia also contribute indirectly to property value through the creation of pride, confidence and enhanced image of an area."

Arnold Field

180 1st St. West, Sonoma, CA 95476
Image courtesy Google Pedometer

service available at http://tinyurl.com/oxzphxa

The neighbors did have an alternative proposal.  In listening to the different speakers, I noted that they brought up more than once the argument that Arnold Field was a fine alternative to a high school stadium.  On the surface, that argument looks good, but as a person who's been involved with the nonprofit that administers the field, and having played on it quite a bit myself, I know that the (generally undiscussed) truth is that Arnold Field isn't long enough to play football on safely, and it isn't in compliance with the law. A football field must be 360 feet long, surrounded by a further safety buffer of 15 feet. As the attached picture (created using Google Pedometer) shows, the length from fence-to-fence at Arnold Field is 116.3 meters, which amounts to ten feet short of the required space for the safety buffer.  The cramped quarters leave no space for accessible routes alongside the playing surface, a DSA requirement for California school facilities.

Spaulding Field
309 Westwood Plaza, Los Angeles, CA 90095
Image courtesy Google Pedometer

service available at http://tinyurl.com/oxzphxa

The safe and legal way to deal with that situation is a non-regulation size field; UCLA's practice field is a good example.  Rather than unsafely stretch the playing surface to a fence, the UCLA Athletics Department shortened the football practice field adjacent to Pauley Pavilion by 20 yards (a careful observer of the Google Pedometer image on the right will note there are no 40 yard lines).  By doing so, the University preserved the buffers and accessible routes required by statute. It would be great if Sonoma had the kind of alternative UCLA has to playing on their practice field, but the Dragons can't simply decamp like the Bruins to the Rose Bowl on Game Day.

But length isn't the only problem posed by Arnold Field. The baseball locker rooms at Arnold are probably too small for baseball; they're clearly inadequate for football. The beautiful, pristine baseball outfield often gets churned into a mudscape during football season, and to be back at its best for spring, it needs rest from December until mid-March, preventing women's soccer from relying on it for winter practice. Arnold Field has no track, and doesn't have space for one to be installed. And the location itself, which might have been helpful in Sonoma's railroad days, when adjacency to a Depot could have aided traveling teams, is a hindrance today, when 1st St W jams with traffic after home football games, adding to the already-unmanageable traffic congestion around the Plaza.

Meanwhile, SVUSD has specific requirements for a variety of sports that are consistent with its mission to ensure healthy minds in healthy bodies. California (and the nation) faces a physical education crisis.  Sonoma High's track is in such dilapidated condition that home meets had to be held at away locations this past spring. Women's soccer, whose schedule is planned to be moved to winter, will require a lighted field for play purposes, one that, practically, must be field turf given the sloppy, unplayable condition of grass fields in January and February.  Sonoma High's football team, meanwhile, still needs a safe and statutorily-compliant home field.

There have been some suggestions that SVUSD could "take over" Arnold Field and improve the facilities. That presents a lot of problems.  California educational facilities have higher than normal construction standards, just like hospitals and police stations.  State regulations prescribe that particular elements (things as mundane as the layout and size of walkways) conform to those standards. Bringing the facility into compliance would be far more expensive than moving a fence or building locker rooms, even if the baseball constituency would agree to replace the grass field with turf. And all that presupposes the property could be taken into trust as an educational facility in cooperation with the County.

The truth is that Arnold Field is a great baseball field. Mario Alioto, and all of the baseball supporters and boosters, have maintained it as a labor of love. Their hard work has caused the community to over-rely on the facility, and sometimes to over-use it. Arnold Field should be dedicated to baseball–a move that would be in keeping with the long term trend away from multipurpose civic stadiums to those dedicated to a specific use, from the San Jose Earthquakes amazing new Avaya Stadium, to the jewel that AT&T Park has become along the waterfront in San Francisco.

Arnold Field is a historical facility, steeped in the memories made there.  But physically, it is a product of another time. Easing the pressure on the facility will allow site-specific baseball improvements to be made, enhancing the experience for Sonoma's high school baseball team, as well as the Little League, Babe Ruth, and now the Stompers that call it home.  It will avoid the potentially serious legal liability the District, the County, and even the City could all face by allowing use to continue at a field we know doesn't meet contemporary safety guidelines.  It will mitigate traffic on and around the Square, and will ensure the women's soccer team will play in the appropriate facilities our Lady Dragons deserve.

Restorative Justice, and the Sonoma County Teen Court.

It must have been the fall of 1992.  There was an article in the Santa Rosa Press Democrat, talking about Sonoma County's new diversion program for the juvenile courts. They were looking for teenage volunteers, to serve as attorneys.  The cases would be real, referred by different local police departments. A meeting was set a few weeks out, and there was a phone number for more information.

About 30 high school students showed up. We heard from a panel of court officials and criminal defense attorneys. All of the accused were misdemeanor defendants, and they had to admit guilt to participate in the program in the first place. The goal was to attempt to reintegrate them into the community, while sending a message about unacceptable behavior. Our job would be to explain, to the jury of teenagers, what had happened, after piecing together a police report and hearing from the client.

I was a typical over-scheduled accelerated student in high school, with honors and AP courses, football practices, and play rehearsals, so the time commitment mattered.  But the program held my attention.  The teen court illuminated the fabric of the lives of the families working their way through the system, for the parents would usually come to court, too. So many of the situations I encountered cried out for more effective social services and, above all else, for empowering schools so that the courts wouldn't be called in so often to pick up the pieces.

Sonoma County Main Adult Detention Facility

Photo available at http://tinyurl.com/obt3p8q

The hearings were in a courtroom at Sonoma County's Main Adult Detention Facility (jail). I must have handled at least 50 cases before heading to college. Most ended with the defendant making restitution and doing some community service, including sitting on a later-convened teen court jury. The program successfully reduced recidivism–the data I've seen indicated the rate was substantially lower than normal.  Further, the impact on the lives of the volunteer teenagers is revealing; a number of them (I think, actually, all) went on to complete law school and become attorneys.

The program went on for some time after I graduated from high school. About a decade later it became a victim of budget cuts, back when things were so bad Santa Rosa had to turn off streetlights to save money. But the restorative justice principles that the system embodied have only become more relevant in education and in juvenile justice since.  Teen courts like Sonoma County's promote accountability and community protection, but they also foster the development of competency in the defendants, a point that deserves special attention.

About a year ago I taught a class with one of the Sonoma County Superior Court judges at our Juvenile Hall, for the toughest kids in the system.  The last question of the 90 minute session was the most poignant.  The guy looked like he might have been 16, and he was clearly bright as hell.  He was very specific with us. He wanted to know if a felony conviction as a juvenile would, when he became an adult, prevent him from becoming an attorney.

For that young man understanding and mastering the principles of justice represented something special.  It was power, but also it seemed to signify achievement. The aspirational element that is so often the motivating spark to commence a legal education was clearly there. The emphatic reply he received from us was that it was wide open for him.

And that is the final element I choose to illustrate what the Sonoma County Teen Court was all about. For teen courts are special because they require the defendants to then participate in the system as jurors. It causes them to witness the functioning of the court as a person responsible for the wielding of power, rather than just as a defendant, feeling confused and helpless when subject to it.

Dyan Foster

Photo available at http://tinyurl.com/negx47u

This is at the core of restorative justice-that the system should help reweave the fabric of the community torn by the transgression, rather than focus only on punitive retaliation. In a smaller way, when those defendants served, they took a certain amount of ownership of the system. Like the young man in juvenile hall, they developed an understanding of the importance of justice, something particularly clear to those who have once been judged themselves.

I hear that, possibly, the program may be restored by the County. On the merits, I'm in favor. But quite apart from whether that decision is made one way or the other, as readers of this blog are doubtless aware, as a lawyer, education sits at the center of my practice. The kernel of that comes from the Sonoma County Teen Court, and a 17-year old version of me, who as a teen attorney was trying to understand how people's lives had caused them to bump into the police, and how more effective education could have helped so many avoid such problems in the first place. And for that, I owe a continuing debt of thanks to  Dyan Foster and Routes for Youth, who made the program possible.

@SVUSD1 @svhsdragons 2015-16 Budget "Best 3 Year Projection in Years."

The Sonoma Valley Unified School District had the first read of its 2015-16 budget on Tuesday night, presented by John Bartolome, the District's Chief Business Official.  John, for those of you who don't know him, is a graduate of Purdue University, helps out faithfully with the Sonoma Valley High School Wrestling Team, and apparently is one hell of a golfer.  He also had the chance, with this budget, to give Sonoma Valley Unified some of the best budget news it has ever had. I got the video courtesy of SVTV, which is very much appreciated. The video runs about 20 minutes, but I recommend it to anyone interested in a succinct picture of how things now look after the past half-decade of cuts.

John does a very nice job of explaining what's taking place; there's some terminology that can be confusing. To make sure nobody gets lost, LCFF stands for "Local Control Funding Formula," which is the new (reformed) method of financing public schools in California.  It was supposed to be phased in to its planned level through 2021–that is, schools weren't planned to be fully funded in California for another half a decade.  But, given the improvement in California's budget, school funding under LCFF has reached 70% of the 2021 figure. 

There's some discussion of deficit spending.  The district "planned" to run a deficit in the last year, and has done so for several years; that was due probably to the conservative projections made on funding.  When the local economy takes it in the teeth, that's what reserves are, of course, for, and the level of State funding has gotten to the point where the budget is essentially balanced as of 2017-18, which is a very significant change from years past.

There's also some discussion in the presentation of the concept of "Basic Aid," which is a special system under the line of legislative responses to Serrano v. Priest that allows some Districts to receive more funding than others due to their very high levels of property tax received.  During the most recent economic mess, State funding fell so low that Sonoma Valley actually became a Basic Aid district–which is expected to end in the next year.  Not a bad thing, as John points out, but instead more of a sign of the consequences of an economic recovery (... or of another speculative bubble).