All the Talk of Housing Costs

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I listen to all the talk on how to reduce housing costs from government officials and am amused and disheartened by the lack of industry involvement and thus understanding of the industry by those proposing cures. Much of the discussion is similar to the other conversations on inflation. (I gave some thoughts on inflation here.) Locally, I have been involved with Jack Davis’s Faith Based Housing Committee, the UWMC Housing Matters group, MACOG’s Marshall County Housing Study, One Marshall County’s Housing & Infrastructure Committee and the newly formed Marshall County Community Development Corporation (MCCDC) of which I’m a board member. Back before this I was on Culver’s Entry Level Housing Committee and the MC Crossroads Housing Committee. In all of these meetings, I can only name one other person from the construction industry, no others from the development industry and only a two or three from the rental industry that have been included. The unfortunate thing is that the industry has been blamed in some of these meetings, making it harder to ask them to consider participation.

The general theory is that the reason for the higher housing costs is all due to scarcity. The study done for the Housing Matters group came up with a deficit of 1,300 dwelling units for Marshall County. There is no doubt that scarcity is a factor, but more housing isn’t the panacea. Assuming costs are totally contingent on demand assumes that housing building contractors are taking advantage and price gouging because they can. In most situations, that is not the case. There are underlying inflation costs that have caused material and labor costs to spiral up. This is a problem that travels up from the bottom of the material supply chain. At a certain point, if demand starts to be satisfied, the incentive to build new housing goes away.

There are couple of other effects that seem to be overlooked. The first of these is the increase in property values. It is often stated in these meetings, that more new housing will make existing housing stock more affordable. Sounds good right? Until you’re the existing homeowner hoping to profit from your home sale. If some of these plans are successful, some who have counted on their home’s value appreciation will see a reduction in their net worth. The second effect is how this will affect property taxes for the county and municipalities. These governmental entities, while understanding the challenge to potential homeowners, have benefited from the increase in property values. While this is tempered by homestead exemptions, it has still been a net benefit as commercial residential property is affected as well.

The bursting of the housing bubble in 2008 has contributed to this problem as well. As so often happens, the pendulum has swung from the easy credit days back then to credit tightening to theoretically prevent another bubble. Homeowners need to show more steady income. Commercial residential developers/builders have to do the same, meeting a higher income to debt service ratio to satisfy lenders.

Add to these things, all of the new energy codes, safety standards and zoning hurdles and you find that building new homes is not always an easy prospect. Locally, there are attempts underway to start a land bank, streamline processes and in some cases provide short-term, low-interest loans. On the national scale, there are ideas bandied about such as 50 year mortgages, releasing government land for home construction and making down payments on a home something you can take from and/or hold in your 401(k) plan. All are interesting ideas, but not necessarily things that will make an immediate difference or be proven to be correct responses quickly.

I don’t see this problem going away quickly. Some of the “solutions” may result in unintended consequences. As is often the case, it may be best to let the market figure it out over time, but to the extent that it can be solved externally, I don’t think it will happen without all the players around the same table.

Exit Interviews for Businesses

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Max’s Playhouse (before)

Brandy Pohl announced the closing of Max’s Playhouse late last year. We worked with Brandy and her Architect, SRKM Architecture, on the remodeling required to bring the buildings up to early childcare standards in 2019-2020. (See this 2019 post after getting BZA approval.) We completely changed the look of the old duplex to give it a modern, clean, professional feel. We became friends and her business journey has been of interest to me. No one can accuse Brandy of not being passionate about her business and childcare in general. It was sad to see her journey in Culver end the way it did.

Brandy posted an offer to explain what transpired, causing the business model to fail, to anyone interested. This was to tell her story about why she closed, how she got to that point, and how she saw that affecting Culver. Only three people from Culver responded and in the end, only two of us showed up.

Max’s Playhouse (after)

I am not going to attempt to tell Brandy’s story. It is hers to tell. But what struck me is that this isn’t a story about just a failed business. She has other similar businesses that are successful in other communities. This is a story of a business that couldn’t make it in Culver… A business that was struggling and, openly and publicly, questioning its ability to continue in Culver, while posts on Culver’s list serve, TGL, were asking for additional childcare facilities.

This was a somewhat unique opportunity. Unless there is a public statement about a retirement, most businesses close quietly. Business failures, even when beyond the owner’s control like this one, are hard to talk about. They usually involve financial costs and sometimes worse, like in this case, shattered dreams. I was disappointed there were no elected officials that took Brandy up on this. (Marty Oosterbaan was there from the CRC.) I’m not privy to whether they have met privately with her, but this seemed like a forum where they should have been represented. This was the chance for a rare, business exit interview.

The town is embarking on a new downtown redevelopment study. As I understand it, this is geared towards several goals, two of the most prominent being; 1) filling vacant commercial buildings and 2) preparing existing and new businesses to serve the growth expected from The Dunes development. Bringing in new businesses is much tougher than supporting existing businesses, and while not directly in the downtown target area, Culver just added another business vacancy with the loss of Max’s Playhouse. There doesn’t seem to be a question that this was a needed service.

I’ve learned from Brandy that childcare is a difficult business in Indiana. Unlike what we are hearing about the Minnesota debacle, there is excessive oversight paperwork, with many standards to meet. On top of that, it would appear that the rules change, at a minimum with every administration, but in general every year or so. That’s a tough model within which to work.

I would suggest that Culver could work on some form of business exit interview strategy. You would hope that there is communication before it comes to the point of a business closing, but if not, there should be an attempt to learn from any turnover happening. This could be something that the new consultant helps develop. Having the consultant do some of these along with a town official could provide valuable insight. A perfect example: How valuable would it be to the NFP group trying to revive the theater to know the personal and financial challenges that caused the theater to close? Others that fulfilled a perceived need that would merit a conversation, would be: 1) The Bennett family, who recently closed a second generation contracting and appliance business, 2) Don Baker, who ran a bicycle shop (Which seems like a natural fit with the push for trails and other outdoor recreation.), 3) Kyle Pugh, who ran the Axe to the Max axe throwing venue (Another entertainment venue that is a perceived missing piece in Culver.), and 4) George & Tammy Pesek, who moved the Evil Czeck Brewery (Another popular request.) and the Corndance to South Bend.

In the past, MCEDC has helped fill this role with their BEAR (Business Expansion And Retention) interviews, but MCEDC’s focus is more industrial. Also, when interviews are conducted, they need to be done in a friendly, open manor, rather than accusatory. Town officials can’t be offended when shortcomings are pointed out. Often, to the town’s credit, some of the shortcomings I heard turned out to be communication issues not actual deficiencies, i.e. there was a program or other service available of which the business was unaware. Culver generally does a good job of communicating, but respectful non-defensive listening is a part of that.

In whatever format, asking what businesses need in order to thrive is never a wasted effort, but it can become wasted if there is no follow up. In most cases, the exit interview is too late, but ongoing conversations could help eliminate the need for them.

Website Update

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Face Palm

The previous version of our website was at least 17 years old, since that’s when the first blog post went up. Hard to believe. The website and the blog are as much my way of tracking time as they are a marketing tool.

In any case, Andrew Baker of Baker Technology Services LLC got our site updated before the host pulled the plug on the unsupported items. We’re still on WordPress, but we have a new theme and some new plugins. If you’ve experienced any connection issues, they may be due to Andrew taking the site up and down as he works the bugs out. If you run across broken links, missing pages, etc., let me know and I’ll try and clean those up. As usual with these things, they turn out to be harder than initially anticipated, so this has been a lengthy process.

The site has a slightly different feel and addresses somethings a little differently, which I’ll need to learn. Andrew was able to add a few tweaks, like the Easterday “E” in your browser tab when you are on the site. (I a m sure that has a name that I don’t know…) Some things are gone for now, like some of the slide shows, but I’ll get those figured out eventually.

I’ll try and get back to a more regular schedule of posts as we slide into 2026. Hate to let my lurkers down! Here’s hoping you all have a Happy, Healthy & Prosperous New Year!

Filibusters, Shutdowns and other General Government BS

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This post fully embraces the “rant” designation, so scroll on if you don’t want my political opinion piece. Listening to the back and forth over the past month and a half has been tiring and frustrating. The Democrats’ position has seemed pretty untenable, considering they (Democrats while in power) passed the Affordable Care Act (ACA) without Republican support, they (Democrats while in power) passed the Covid enhancements to the ACA, which included the sunset provision that’s upon us, without Republican support and now, while not in power, they (Democrats) are demanding the Republicans fix it. In response, the Republicans have proposed paying everyone during the shutdown, despite the fact that the whole reason for the shutdown is there’s no money appropriated to do so. In typical Federal Government fashion. the only solutions either side seem to be able to see is to throw more money at problems.

Every time there is a government shutdown, they seem to put more rules in place to make the next one less painful… somewhat defeating the whole point of it. Why do a shutdown if no one is going to notice? After one of the last shutdowns, things were changed to assure that government employees would be reimbursed for lost wages, even though they weren’t working. No business could survive that way… The latest enhancement to that is that government employees will not even have to wait until the end of the shutdown to get paid! The ones laid off are already getting a paid vacation, but if the current proposal goes through, they’ll get a regular paycheck while off. I guess, “Why not?” All the Senators and Representatives got their check!!! They still managed to collect taxes though…

Side Note: Everyone should have an emergency fund, because it’s rare to have a 100% guaranteed income, but if you work in an industry (government) where these shutdowns occur regularly, it’s even more important. There is no question of IF there will be another government shutdown, only when… I have a hard time working up a lot of sympathy for those that were surprised by this.

James Stewart as Jefferson Smith filibustering on floor of the Senate

There was some talk about changing the Senate rules to eliminate the filibuster. It may be on the way out the door anyway, as there was an attempt to eliminate it in the last Democrat controlled Congress, but was stopped by just two moderate Democrats. And they’re not in office anymore… I am fully against its elimination. I think the minority party should have some vehicle to slow and bring to attention bad legislation, but it shouldn’t be painless. Otherwise, like this time, it’s just obstruction for no benefit. There was no pain for Senators in this latest shutdown filibuster. Sometime in the 1970’s the rules were changed to allow a filibuster to only require an objection. Yes, that’s a simplification, but accurate. Before that time, a Senator or group of Senators would have had to speak continuously on the floor of the Senate to keep the filibuster in effect, a la 1939 movie, Mr. Smith Goes to Washington. There was pain for all involved as the Senate had to stay in session and those filibustering had to hold the floor for hours on end, speaking into the record. The new rules are lazy and painless. If you want to take a stand against something, you should have to actually stand!

With very few exceptions, most Americans didn’t feel any effects of the shutdown, as most things continued as is. Only “nonessential” workers were furloughed. It wasn’t until the SNAP program began to run out of money and the airlines began to feel the air traffic controller pinch that anyone really perked up. Senators cared about SNAP, because those are actual voters affected. They didn’t care about not paying air traffic controllers, until it escalated to the fear of constituents complaining about not getting to fly home for the holidays.

In my opinion, pain and risk form the answer. Senators should feel some pain when they determine something should be filibustered and their constituents should feel some pain during a shutdown in order to get their attention. Senators should have been afraid of their actions getting their constituents attention for something that resulted in nothing. As is, the whole thing was low cost theatre that had very little effect on anything.

Veterans Day Celebrations in the Midst of Turmoil – J.R. Gaylor

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J.R. Gaylor

With turmoil foreign and domestic, we pause today to celebrate the living veterans for their service, their patriotism, their love of country and willingness to sacrifice in defense of our country. As important as it is to defend ourselves against foreign threats as our veterans have nobly served, there are some very insidious threats we are facing with America against itself.

Specifically, I am referring to the acceptability—by far too many—of the lawlessness we see happening, as well as the twisted logic behind the lawlessness.

We are seeing the direct contrast of the “broken window” theory versus “progressive criminal justice” model.

The theory of the “Broken Window” holds that addressing minor crimes like vandalism, public intoxication, and minor theft creates an atmosphere of order and lawfulness versus “progressive criminal justice” which promotes reforms such as ending cash bail, not prosecuting misdemeanors, and early release of offenders.

The justification behind this “progressive” thought is ‘because someone told a lie, it doesn’t make them a liar’. Or ‘because someone took a bribe, it doesn’t make them corrupt’. In other words, ‘if a crime is committed and no one is responsible, was there actually a crime at all’?

Famously said, “a great civilization is not conquered from without until it has destroyed itself from within.”

Next July 4th, we will celebrate 250 years of the great American experiment of Independence under a Constitutional Republic from which we aspire to form a more perfect union, establish justice, ensure domestic tranquility and provide for the common defense.

Let us aspire to recapture that vision.

J.R. Gaylor President/CEO; ABC IN/KY