May 20, 2013
WIN – WIN

FORTHOUGHT
INTENT: To broaden the reach of the campaign by offering solutions

The issues that Cities and the Nation are experiencing today, have been building for decades. They have a political and corporate component, both are rooted in power; win – lose.


Prelude to disaster

In the beginning, “supply side economics” looked like it might work. The memories of the painful recession(s) from 1979 -1981 were fading, and economic activity was accelerating rapidly. Then:

  • 1987 Stock market looses 22% in one day (mini recession)
  • 1989 Junk Bonds tank (recession)
  • 1999 Proforma accounting for internet IPO's implode (recession)
  • 2008 Sub prime mortgages collapse (the great recession)
  • 2010 > Present Banks abandon their REO's (economic stagnation)

Starting in the 1980's, with deregulation of the financial sector, the roles of Cities and Banks diverged. Prior to that time, both of them had a symbiotic relationship: Cities provided a hub where people lived and commerce occurred. Banks helped underwrite that economic activity and everyone prospered.

Since the 1980's, trillions of dollars were lost to flimflam products and practices, i.e. junk bonds, the LIBOR scandal and shady IPOs. Fraud is not allowed by Municipal Code. Cities do have absolute dominion within their boundaries when it comes to these types of practices. Instead of engaging the banks about their behavior, Cities turned a blind eye in the name of “economic progress”.

 

Broadening the Campaign

The downtown corridor had been struggling for a number of years: poor sales and layoffs were the norm. Many businesses were unable to survive.

As each of these 100's of houses in the City were foreclosed upon, significant amounts of spending power (85K+ each) disappeared. Each and every one of these foreclosures impacted businesses and jobs. It also affected the City's finances.

I will be showing how all of these problems are interconnected. People are now able to see the way things are, and a way to fix them. I am not going to blame, rather I am going to show how fixing one problem, also fixes another.

The key to turning this situation around is getting the banks out of the foreclosure business. To do that, the banks need an incentive to sell their distressed properties. The easiest way to motivate them, is to improve house prices.

The sorry state the City neighborhoods had been allowed to reach was counterproductive to this goal.

 

LETTER TO THE COUNCIL


Dear Council Members,

There are hundreds, maybe even a thousand, foreclosed houses sitting empty in Burien. Each and everyone of them destabilizes our neighborhoods, and deny the City revenues to provide services that are required by law. A few of the affects are:

  • There are no utility, phone, or cable taxes being collected.
  • Businesses are losing customers and B&O tax revenues decline.
  • Sales tax collections are slumping as businesses leave Burien.

The average house in Burien sells for just over $200K. That would require an income of about $85K to buy that house plus a stellar credit report. Most of that $85K would be spent initially in Burien. For every twelve houses sold, over one million dollars in new purchasing power would be brought into our City.

  • Businesses activity would start to revive.
  • Hiring of employees would occur.
  • Sales and B&O tax revenue would increase.
  • Utility & communication type taxes would increase.

The Banks must be given an incentive to unload their foreclosed properties. The incentives I am talking about are for the banks to improve their balance sheet by selling off their foreclosed house portfolios into an improving housing market. Then millions of dollars in new money would come pouring into Burien.

Unfortunately, Burien house values continue to remain weak. When home buyers see slumlord dwellings and abandoned bank repos that our City Manager chooses to ignore, they spend their money elsewhere or pay rock bottom prices. This further exacerbates the downward home price trend.

I believe it is time to define the City Manager's job description using existing Washington State Law. The majority of the City Council continue to give high marks for performance that is contrary to the City Manager's job description as defined in RCW 35A.13.080 (4). Specifically, the City Manager is tasked with faithfully executing the BMC under Washington State Law. Yet, he doesn't lift a finger, except under duress, when confronted by slumlords and abandoned bank repos even though the law clearly requires action to be taken.

I believe it is in the Community's best interest that the City Manager be proactive. I am not just referring to Code Enforcement. I am talking about as a way of approaching the governance of the City as a whole. A proactive City Manager would be looking for ways to get the Banks out of the repo business so that our City can move forward. Instead of doing what is required, the City Manager has ignored the neighborhoods, which is causing the City to drift downward. This Council approved approach is costing us an additional $200 million dollars a year in lost property values.

I want the City Council to address this issue directly and unequivocally. I propose that the Council put some skin on the line by publicly directing the City Manager to start enforcing the BMC immediately using a 40 hour abatement program against these houses outlined in my May 6th Public Comment. Remember, this is a revenue positive solution. This announcement will send a powerful signal to new home buyers and residents alike, that Burien will not allow these type of houses to go unchallenged any longer.

Everyone will know it, and the effect will be palpable.

  • Neighborhoods will become cleaner and more desirable.
  • More people will want to move into Burien.
  • Houses will sell faster.
  • House prices will improve.
  • Burien businesses will expand.
  • Jobs will be created.

An additional benefit will be that the structural deficit that Burien faces will start to be dealt with, without raising new taxes.

Dick West

 

RCW 35A.13.080

City manager — Powers and duties.

The powers and duties of the city manager shall be:

  1. To have general supervision over the administrative affairs of the code city;

  2. To appoint and remove at any time all department heads, officers, and employees of the code city, except members of the council, and subject to the provisions of any applicable law, rule, or regulation relating to civil service: PROVIDED, That the council may provide for the appointment by the mayor, subject to confirmation by the council, of a city planning commission, and other advisory citizens' committees, commissions, and boards advisory to the city council: PROVIDED FURTHER, That if the municipal judge of the code city is appointed, such appointment shall be made by the city manager subject to confirmation by the council, for a four year term. The council may cause an audit to be made of any department or office of the code city government and may select the persons to make it, without the advice or consent of the city manager;

  3. To attend all meetings of the council at which his or her attendance may be required by that body;

  4. To see that all laws and ordinances are faithfully executed, subject to the authority which the council may grant the mayor to maintain law and order in times of emergency;

  5. To recommend for adoption by the council such measures as he or she may deem necessary or expedient;

  6. To prepare and submit to the council such reports as may be required by that body or as he or she may deem it advisable to submit;

  7. To keep the council fully advised of the financial condition of the code city and its future needs;

  8.  To prepare and submit to the council a proposed budget for the fiscal year, as required by chapter 35A.33 RCW, and to be responsible for its administration upon adoption;

  9. To perform such other duties as the council may determine by ordinance or resolution.


  10. [2009 c 549 § 3025; 1987 c 3 § 17; 1967 ex.s. c 119 § 35A.13.080.]

    Notes:
         Severability -- 1987 c 3
    : See note following RCW 3.70.010.

 

RECONNAISSANCE
May 20, 2013

Information on the increased net worth each house brings in is found in the King County Assessor's Office. Burien's current house value is 200K. Traditional lending would require a household income of 85K plus a credit score in excess of 775.
Using the Assessor's information underscores the inaction. Showing the added spending power of 85K per house calls into question the City Manager's judgment of not dealing with this issue proactively.

I also refer to State Law about the City Manager's responsibility to faithfully execute all ordinances and laws.
The refusal to follow State Law names the problem.

I am also referring to the Burien budget when I talk about utility, phone, and garbage taxes.
Referring to budget points where the City Manager has authority, yet didn't exercise it, thus costing the City needed revenue.

The request that the Council put some skin on the line was from the previous meeting where the Council wanted the School district to do the same with the drop out rate.
The “skin on the line” is a way of mirroring what the Council asks of others but don't do themselves.

The high marks I referred to were from the City Manager's evaluation that was published in both of the media outlets in Burien. The media acquired these through the Public Records Request. Click here to see the evaluation.
Pointing out high marks calls into question the Council's judgment when the results are abysmal.

 

AFTERTHOUGHT

Problems and Opportunities

I believe the Country can be moved forward by making a case for change at the local level. This is not only where the problems are happening; its also where the solutions can be implemented to create opportunities.

City Managers are paid to see the big picture and navigate the City to generate wealth for all. When that is not happening, a sense of despair descends upon the City. Gloom is everywhere.

On the other hand, articulating a solution will capture peoples attention. In doing that from the podium, there is pressure on City Hall to clean up the issues.

 

Present Day

Skinning the banks may sound good to many. The reality is, it polarizes people. When people become polarized they frequently begin to blame. The road of life always has a fork in it: Blame or solution. You can't have both, a choice has to be made.

The road of blame is juicy. Righteousness is palpable. Down that road further, is a place called revenge; people fighting each other, solution isn't found here. At the end of this road is a cul de sac called apathy. The last thing I want is my audience going to blame. People who find themselves in this place, frequently experience despair, and believe their voice doesn't count – they often don't vote.

The road of solution is often not visited in political settings. It is simply straightforward talking about what is going on in the neighborhood, sans theatrics. This road does not have a cul de sac. Rather, it extends onward beyond the horizon. Along the way are are opportunities to create wealth. Solutions are what attract people's attention for change.

 

Incentives

Engaging the banks on what is going on right now, not yesterday, but right now, is where results are found. Giving them a reason to close the chapter on the Subprime fiasco will help not only them, but also the City and the neighborhoods.

They need a reason to sell their foreclosed properties. The motivation I am talking about is increasing house values by getting these blights cleaned up.

 

Connecting the dots

Building consensus from the podium for change, is easy. I:

  • Show what is happening
  • Show the costs
  • Show how it is impacting other parts of the City.
  • Share solutions that people can understand.

As my campaign unfolds, you will see how I connect the dots in my City. The dots may be different in your City, but they are still interconnected. Sharing them will create solutions, and positive results.