Tag:government
Blue Dot
It appears there is a nascent Blue Dot campaign in Culver. Don’t worry if you don’t know what that it is. I had to research it as well. Nebraska and Maine are the only two states that don’t award all of their electoral college votes to one candidate. In those states, two electoral college votes go with the state majority and the others are awarded by district. As with many states, the rural areas go red and the larger cities tend blue. With Nebraska being a deep red state, the blue dot campaign in Omaha is attempting to get at least one Nebraska electoral college vote for Kamala Harris.
This has me curious what statement is being made with the blue dot in Culver… If it’s a “made you look” thing, then I guess it was successful at least once. It caused me to hit the internet for an explanation. I guess it could be a statement of solidarity, since much like Nebraska, Indiana (and Culver and Marshall County) is pretty red. Culver often struggles to find Democrats to fill positions on boards that require political balance. Maybe they’re a Nebraska transplant and don’t understand the different differences in state election laws. Or they’re just a Cornhusker and this is another way to show college loyalty.
I’m not a fan of single ticket voting. Since there are no names or information with this campaign, I assume that’s what’s being suggested. The local (county) Republican party is also pushing a straight ticket campaign in some of their ads, and I feel the same way about that… particularly on lower ballet candidates. I am likewise not a fan of general get-out-the-vote drives when they are political party driven. There needs to be more done to promote voting as a privilege and that becoming an educated voter is important.
I am curious about the implications of Nebraska’s (since 1992) and Maine’s (since 1972) take on the winner-take-all electoral college system used by other states. I am definitely not in the camp that wants to eliminate the electoral college. Much like the Senate having two Senators per state, regardless of size and population, it is a means of protecting states’ rights and assuring that there is representation across the board for minority states. It is why we were formed as a Republic and not a true Democracy. (Though we are a Democratic Republic.) I would be interested in what an analysis of expanding the Nebraska scenario to other states would look like, but I couldn’t find it.
I’ll be watching for other blue dots in Culver. It’s an interesting development and if nothing else, another curiosity of small town Culver life.
County Development for the Future
There was a County Development for the Future meeting last week and after my post on collaboration, I was pleased to see that it went back to its roots this month. MCEDC president, Greg Hildebrand, gave an update on some of MCEDC’s activities in the past quarter. He then allowed Marshall County Plan Director, Ty Adley, to speak about an upcoming initiative to update the County Comprehensive Plan. From there it transitions to reports from the communities on their projects. A few of these were Stellar Region wrap-ups and READI 1 projects, but there were many discussing their submissions for READI 2.0.
The meeting was pretty positive, with everyone supporting each others’ initiatives and inviting each other to come see the results of their work. There was none of the negative competitive complaints that have been aired earlier this year. This could partially be due to many of those voices being absent, but if they had attended, I don’t think they would have had reason to express negativity. It was all good.
The idea of doing a new Comprehensive Plan for the county should be an opportunity for more collaboration and was my main take-away. It’s all about how it is created, accepted and used though. In the last couple of years, I have served on two comprehensive plan committees. The differing results have been somewhat stark.
Plymouth’s plan was embraced by the Plymouth Plan Commission and and the Plymouth Common Council and Administration. I think this had a lot to do with their participation on the process. Within a month of adoption, implementation meetings were started and subcommittees where formed. A zoning review committee was formed and some zoning ordinances changes suggested by the comp plan have already been passed. A marketing committee was formed and a new logo is already out there with buttons being passed out and new banners being placed on light poles. There is a sense of urgency and the need to continue the progress.
Culver has been making false starts. After Culver’s Stellar projects were finished and their projects from Marshall County Stellar were finished, Culver began an initiative they called Culver Crossroads, patterned after Marshall County Crossroads. (Marshall County Crossroads was the group that spearheaded and achieved Stellar Region designation for Marshall County.) Subcommittees were established and meeting were held. From those meetings it became clear that Culver’s Comprehensive Plan needed updating. Most of the easily achievable goals from the 2014 plan had been made through the Stellar designations. Culver Crossroads became the Comprehensive Plan committee. Culver started this project around the same time as Plymouth or a little earlier. Culver’s plan took longer to complete. There was much more community participation in Culver, but despite that, there was much more community rancor regarding the plan. The plan went through several additional community meetings and rewrites. But the biggest difference is that the Culver plan was completed last Spring and there has yet to be an implementation committee established. The Culver Plan Commission cancelled a meeting this summer because they didn’t have anything to do! Really? After the 2014 plan, the Culver council immediately created a strategic action plan and started working it. That lead to Culver’s Stellar designation. That same push isn’t happening this time. Not only that, the Culver Crossroads committee never officially disbanded, but effectively just evaporated and lost all momentum.
So here’s a short list Ty and the county plan commission can consider to make the post planning process successful:
- Keep the energy flowing. While there is generally some sense of relief that the planning process is done, there needs to be a conscious effort made push pass that and focus on the excitement of a new plan and the potential it represents.
- Encourage implementation by keeping the plan front and center. Plymouth has made it agenda item at council meetings and plan commission meetings much as both Plymouth and Culver did with Stellar. This means putting it on the commissioners’ meeting agenda and the plan commission agenda so it’s seen at every meeting and advances can be celebrated and any lost momentum is questioned.
- After their 2014 plan completion, the Culver town council created a Strategic Action Plan (SAP) pulling out the top items to pursue and identifying a budget to make this happen. Culver’s 2014 plan identified housing as a prime issue, created a housing subcommittee and that subcommittee’s research resulted in Culver’s pursuit of Stellar Community designation. This should be a function of the county commissioners, since they set the county direction and prepare budgets.
- As Plymouth has done this year, use the comprehensive plan committee to seed an implementation committee and new subcommittees to address specific issues. In some cases, new leaders have emerged where they had specific interests, but may not have had the same energy for the plan as a whole.
There are other things, but those are the top ones that I’ve seen be successful and move the plan forward. Good Luck Ty! This will be a big undertaking!
And good job Greg! MCEDC needs to keep “bringing the communities together” high on their priority list.
Wealth Tax
There is an old adage regarding investing that when your stocks are down, you haven’t actually lost any money until you sell the stock. Because of this, the corollary has always been, that likewise, the gain is not realized until you sell the stock. Gains and Losses “on paper” don’t really matter, until they are realized when they are converted to cash or traded for other things. President Biden and now candidate Harris, along with some members of Congress are pushing a Wealth Tax, which would tax these paper gains.
As an example, if you bought 100 shares of Apple’s stock in 2010, it was 6 dollars a share. It cost $600 to make that purchase. It is now over $200 per share so your $600 investment is worth upwards of $20,000 or a 33 times as much as when you bought it. But that gain is on paper. You’re not able to use that value to purchase anything until you sell the stock, at which time you’ll take a $5,800 capital gains haircut.
The wealth tax proposal suggests that you should pay tax on that unrealized gain now. But how will the unrealized tax be determined? Apple’s stock’s all time high was $237, but its highest day end value was $234. And on August 5th with the short crash, it was at $207. Those numbers all are within the past month. With the constant fluctuation of stock prices, will there be an arbitrary day chosen? The all time high? An average of the past year? At a minimum, this seems like a record keeping nightmare. Record keeping is already a problem with the current capital gain tax where you have to keep documentation of a stock purchase price, transaction costs, and splits along the way… sometimes over decades. This is worse with a business or property where you have to track expenditures on improvements, depreciation and other things that affect value.
Another local example is what has happened to many families around Lake Maxinkuckee. Their ancestors owned a lake cottage which was bought decades ago. The property was passed down to descendants. Not all of these descendants were wealthy, but suddenly they were wealthy on paper because of the appreciation in lake property values. They were then forced to sell property that may have been in the family for generations because they couldn’t afford the real estate taxes on the appreciated value. The wealth tax could be another hit on unrealized generational wealth like that.
In a Kiplinger.com article, John Goralka posits this concept about estate planning, “The cash people receive from you is more cash than you have.” This translates to day to day things as well. Wealthy people don’t live like Scrooge McDuck, with a vault in the back of their home where they swim in gold coins. How much money do you think Elon Musk or Jeff Bezos have that they can access immediately? More than me, I’m sure, but as a percentage of their wealth, I would guess the percentage is smaller. Wealth is generally tied up in “things” and those things are working to help you create more wealth. Some of those things employ people who provide goods and services. It’s likely that a wealth tax would require forced liquidation of those things to pay the tax. That would result in less investment in those things so that cash that should be put to work in the economy is held back in anticipation of tax liabilities.
John Goralka’s article has made me think about my own situation. I own my home and currently have no plans to sell it. That value adds to my net worth, but it’s not money I can spend. But when I die, that home will be converted to cash to distribute to heirs. A smaller version of what Elon Musk has with Tesla and Jeff Bezos has with Amazon, but the concept is the same.
In our current DEI world, it has become de rigueur to bash successful people. Hard work, saving and investing are out of fashion. Along with the wealth tax, there are discussions about taxing 401(k)s and IRAs where people have saved too much or invested successfully. Envy of wealth has replaced the aspirational goal of becoming wealthy. Most wealth is the result of some risk. Most wealth remains at risk as it remains invested. No government has been good at playing Robin Hood. We should push back on this, as a tax on those creating wealth by a government that can’t live within its means won’t end well.
Cost of doing business
The Pointe has been all over the news and social media lately due to the City of Plymouth deeming the property unsafe to occupy. This has forced the charitable community to jump to action to help the residents of the 16 units there. On top of the general low income housing shortage in Marshall County, there is the issue that this property was renting at the very low rate of $400 per month. To the best of my knowledge, this is not a subsidized housing site.
As has been described to me, the facility is a former nursing home, so the “units” are small rooms with half baths, i.e. a sink and toilet. They are set up with common (shared) men’s and women’s showers and a community kitchen. There has been some deferred maintenance that includes roof leaks leading to other damage. Pictures from the Pilot News indicate that there is some mold/mildew, but the level and danger from that would have to be professionally assessed.
The landlord is taking it on the chin for this. Again, I know none of the background, reasons for deferred maintenance, etc. But I do think the $400/month is an unworkable business model. So if all the work that is projected to be needed there is done, there’s no way it supports itself at that rental rate. Here are some numbers to start the conversation:
- The property was purchased by the current owner for $126,000 in 2006 per county records.
- The county lists the square footage of the property at 9,840sf. That’s roughly $13/sf which is dirt cheap. Assuming it had to be financed, most commercial loans require 20% down ($25,200), can only be financed for 20yrs (unlike a home with a 30 year mortgage) and with an interest lock of only 5 years, i.e. it has to be refinanced every five years. Lets assume a 5% loan rate (low right now, high a few years back), that gives you a monthly payment of $665/month or $7,980/yr.
- The county lists the yearly taxes for this property at: $5,634
- There was a past roof repair estimate of $85,000. Apparently there has been deterioration since then and we all know what inflation has done. For discussion, lets round that up to $100,000.
- Someone shared an estimate of $10,000 for a mold assessment.
- A low estimate for mold remediation would be $100,000, which assumes $5k per unit plus common areas.
- Mold remediation will require tearing into walls, ceilings, etc. From looking at the pictures, there is a lot of repair and remediation needed without that. Let’s put $160,000 towards the units and $40,000 for the common areas. (probably low.)
- For discussion, let’s put $60,000 towards clean-up and updates to the exterior.
- This will require building permits and since it’s commercial, so architectural plans to go to State. Architect fee: $25,000
- Permit fees and such: $5,000
- Minimum of 8 months to get it done, so no rent during that period.
So lets total that up as if someone were to buy this this and puts it back the way it should. That comes to $626,000. I think this is probably a cheap number, but it’s a starting point for this discussion.
First pass: 20% down = $125,200 The remaining $580,800 financed per the above at 5% = $45,996 in loan payments, against fully rented 16 units x $400/month x 12 months = $76,800. Seems like a decent return of $30,804, but remember, right now, plunking that $626,000 into a government bond funds would pay in excess of 5%, or a yearly return of $31,300 with no risk.
But lets do a second pass the way a developer would look at this:
- Rent: 16 units x $400 each x 12 months = $76,800
- 7% vacancy and bad debt = ($5,376)
- 7% management fee = ($5,000)
- Property Taxes = ($5,634)
- Administration and leasing = ($3,000)
- Maintenance Payroll – tax, benefits, etc. = ($9,000)
- Maintenance Contracts & Supplies = ($5,000)
- Utilities (All included) = ($12,000)
- Insurance = ($13,000)
- Misc = ($1,500)
- Debt Service = (45,996)
Now we’re at a loss of $28,706 despite some of those numbers being generously on the low side. Not including the time value of money, i.e. the $125,200 down payment would earn $6,350/yr at 5%. So looking at the first three numbers in the above list, it would take a rent increase of $173/unit to get to break even. Most banks won’t finance a break even project and most developers want to make some money and have some cushion for unforeseen things. And nowhere in there was any maintenance reserve savings for when the roof needs replaced again or whatever unforeseen problem comes up.
Granted, this is an extremely simplified analysis. It doesn’t take into account the benefits of depreciation, since those are only a benefit when there is profit. Likewise it doesn’t take into account any taxes on the theoretical income. It also doesn’t take into account any escalators for inflation. There would be a large spreadsheet that a commercial developer would run this through to make their analysis.
Minimum Rent to make this begin to work would need to be $700/month, when existing tenants say they are struggling with the current $400/month. Reality is more like $800 – $900 to get to comparable rates in Plymouth that make economic sense to cover the myriad of additional things that will come up in the renovation and the probably greater management, vacancy and bad debt costs that are likely. The significant age of the building warrants a large maintenance reserve.
But lets take a step back and do really, really rough math (because I don’t know their expenses) on existing conditions assuming with the initial investment of $126,000. Assume 20% down leaves $100,800 financed. Using the 5% interest rate number in the previous scenario, that’s $665/month = $7,980 per year.
- Rent: 16 units x $400 each x 12 months = $76,800
- 7% vacancy and bad debt = ($5,376)
- 7% management fee = ($5,000)
- Property Taxes = ($5,634)
- Administration and leasing = ($3,000)
- Maintenance Payroll – tax, benefits, etc. = ($9,000)
- Maintenance Contracts & Supplies = ($5,000)
- Utilities (All included) = ($12,000)
- Insurance = ($13,000)
- Misc = ($1,500)
- Debt Service = ($7,980)
This would give us a profit of $14,944/yr. There may be other expenses I haven’t put a number to and conversely there are those that would suggest the maintenance line items should be zeroed out, since maintenance has been less than needed. In any case, this is not a gold mine as it exists today.
This is the real life example of what I’ve said for years… I would rather have a leaky roof over my head than no roof at all. Some of these residents have been living that situation, but the City has (rightly) cited safety concerns that removed their leaky roof.
the $626,000 number is a low number for the renovation, but it’s an impossible number to duplicate that building. $626,000/9,840sf = $64/sf. New construction on a facility such as this would be in excess of $200/sf. It is also questionable that a new facility such as this would meet current zoning standards, though a variance might make it possible. Then there is the issue of where to put it. Even if built on the same site, rezoning would be required along with the variance. That would prompt the same NIMBY protests that Garden Court ran into with the two sites they considered for their project. Theoretically, Garden Court’s GC Horizons project should have been less objectionable as fully functioning apartments.
Plymouth as a community has some hard decisions to make regarding housing. Complaints are rampant about facilities like The Pointe, but solutions are few. As seen with The Pointe, just shutting down the problem facility without a viable alternative creates a different crisis. As seen with Garden Court’s GC Horizons project, those that step up with a solution are often disparaged. Mayor Listenberger is making efforts, but is getting a lot of pushback. It’s tough when there’s a cry to “Do Something!“, but it’s accompanied by a chorus of “But Not That!“… no matter what “that” is…
Some things never change… That’s just part of the cost of doing business…
Sunny Thoughts on Solar Panels
September 16, 2024
Kevin Berger
Commentary, Culver, Marshall County, Plymouth, Politics, Tips
Community, Culver, government, Tips, Trends
I’ve been watching/reading about all the Solar Farm controversy in Marshall County with a mixture of amusement and disappointment. While I don’t advocate unlimited rights to a property owner, I would advocate tipping the scale in favor of the owner’s decisions about use of their property. My main thought is how the more things change, the more they stay the same. This is a repeat of what happened when there was the discussion about wind farms in Marshall County a few years back. (Wind Farm Posts here and here.)
In both cases, spurious arguments are put forth, when I believe the real reason for disliking either of them is aesthetics. Those against them don’t like looking at them. As with wind farms, I can understand that and feel it is a valid argument. To each, there own… But it was a much more understandable argument regarding wind farms than solar panels.
The setbacks of 300′, 500′ or more being requested seem ridiculous. Marshall County isn’t a table top, but it is pretty darned flat. The high point in Marshall County is 895 MSL and the low point is 775 MSL with an average of 810 MSL per the Joint Highway Research Project by Purdue University. That’s not a whole lot of topographic relief and I’m suspicious that the low number is actually under water! That tells you that there aren’t many areas where a grove of 20′ to 30′ evergreens or mixed plantings wouldn’t hide what’s in the field from anyone on the ground; even from a distance. This would solve the concern some have expressed about the sun reflecting off the panels too. Large setbacks are usually used to protect against noise or odors, not visual issues that can be hidden by a vegetative buffer. These setbacks requested are meant to make property unbuildable unless it’s an excessively large tract of land. Admittedly, I’m pretty indifferent on the aesthetic issue, but I don’t know that a picked cornfield with an inactive sprinkler system sitting vacant from Fall until Spring is a particularly bucolic landscape view either. It is just one of those things that we live with and allow to the property owner.
There is the argument about chemicals from solar panels leaching into the soil. For the most part, new solar panels are solid state devices composed of silicon and glass, with trace amounts of gold, silver, copper and other valuable materials which people in the industry will be glad to retrieve and recycle. There is also the issue that most farmers are leasing land that is marginally productive as farmland, which requires large chemical applications to make them productive. Some of these properties were potato farms in the past, which required hundreds of pounds of fertilizer per acre. As part of this argument, I’ve heard, “Why not put solar panels up to cover parking lots and buildings first, before threatening farmland!?” If there was any merit to the chemical leaching argument, I would much rather have any bad things filtered through soil, rather than running directly into storm drains and thus, our rivers and streams. There’s enough of that coming off cars and trucks in parking lots and on streets. Not that I don’t see merit in solar panels for covered parking. But I assume it’s the same reason they don’t graze cows in solar farm fields. They would need to greatly beef up (pun intended) the support structures for cows rubbing against them and thus, even more so for cars.
There are those that express concern about the loss of farmland which currently produces food products. I would prefer to see some soil analysis and see solar farms placed only on marginally productive land, but much of the placement is based on access to the electric grid. To some extent this is self regulating with property owners making the economic decision themselves. I am sure, if the payout for farming was greater, the land would remain in crops. At it’s greatest proposed coverage, the proposed solar farms would only cover single digit percentages of the total Marshall County farmland available. Is this any different than allowing subdivisions to be built and lots to be sold for housing or industry? Plus, check out some of the interesting things Purdue University is suggesting for agrivoltaics. There are options to keep farms productive as food sources as well as for harvesting solar. They’re just two different ways of harvesting sunshine.
There are those that say solar is a boondoggle and wouldn’t make it without subsidies. Possibly, but farmers know how subsidies work as they are sometimes paid not to plant, told what to plant and subsidized for planting specific crops. They are well versed in how to play that game and how to achieve the best economic benefit from it. Are solar panels the solution to global warming? Hardly. Nor has much of what’s out there touted to change the weather ever resulted in the the reputed outcome. But let landowners take advantage of the rare opportunity to benefit from this one.
One thing that has come out in this that particularly scares me is the bonding or other means of providing for decommissioning of these installations at the end of their life. If we start down that path, where does it end? Drive around Marshall County and you will see abandoned silos, farm windmills, railroad beds on abandoned rail lines, railroad depots, grain elevators, former school buildings, houses, collapsing barns and unusable commercial buildings. That same argument could be used to say we should prevent any of those things happening again, but can you imagine the cost of construction if you had to plan/pay for end of life removal of EVERYTHING? Most construction puts significant funds at risk when the investment in these these things is made. The increased cost due to this increased risk would undoubtedly stop some expansions and new endeavors from happening. In the case of solar farms, you’re asking the companies involved to plan for the cost of removal 30 years from now. What does that look like and how would labor inflation costs balloon that? Building’s generally have lifespans of 2 to 4 times that. How does that even work!?
Again, I believe all of this amounts to spurious concerns, past the aesthetic issues. I’m not thrilled with the aesthetics of high voltage powerlines crisscrossing Marshall County, Those power lines are largely what makes Marshall County attractive to solar farms. But these things benefit my life. Stopping them means hurting other property owners and limiting their livelihoods. If we collectively care enough about stopping these things, then we should put our money where our mouth is and pool funds to purchase and control the property ourselves. Otherwise, be quiet and let progress move on…
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