Discussion - South End Proposed Neighborhood
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NOTE: The two letters below were recently written by Mark Duncan to the Bay City Commissioners and to the Editor (John Hiner) of the Bay City Times. Duncan is the Broker/Owner of ReMax Results in Bay County.
NOTE: Following, is Duncan's letter addressed to the John Hiner, Editor of the Bay City Times, regarding Duncan's perception of the proposal.
Dear Editor,
Long time reader, first time writer.
I think that's the way I'm supposed to start this letter. At least that's the way the callers start on the radio. I would like to start this off by thanking you and the Bay City Times staff for your informative coverage of local events and developments.
All too often we take for granted the benefits a local news paper has for the community. I am writing in regards to a series of articles written lately about the development of 50 acres of land in Bay City's South End.
Would I like to see the project go forward? Sure. Do I think the Developers should get a tax break? ABSOLUTELY NOT. Just because the City grossly over-paid for the property in the first place, that should not give the City the right to offer developers tax incentives to cut the City's losses.
As a Real Estate professional if I make a bad investment I lose money. I don't have the option of offering tax incentives just because I made a bad investment and neither should the city. And more importantly, the City Commissioners need to take into consideration the impact these tax incentives will have on the value of existing homes within the City limits.
The basic concept of supply and demand within a social economic community will always dictate the need for certain incentives. Our local community is at a critical and delicate state. With a declining population, we need to be very careful of overdeveloping in a sector that lacks sufficient demand.
Single family housing is one of these sectors that currently lack sufficient demand. Until our area can create addition employment opportunities our demand for single family homes will remain stable at best. And based on our last 10 year population decrease, the demand is declining. If the City Commissioners don't believe me they can look at the stable or declining property values over the last 5 years and the greatly extended market time on existing home sales.
By offering tax incentives for the Developers the City will only be creating a very short term increase in property tax revenue on the new homes that would be developed. However, without taking into consideration supply and demand, the City would be creating more long term problems.
First, the current home owners within the City limits who are currently having a difficult time selling their homes due to lack of demand would be negatively impacted by the additional competition, not to mention the unfair advantage the Developer would have in selling his homes with a 60% less tax rate.
Second, existing home owners would be required to sell their properties for greatly reduced prices in order to entice prospective buyers to purchase their homes over a new home with lower taxes. This would eventually reduce the overall tax revenue the city would receive on these existing homes.
And Third and worst of all, these reduced values due to over development will negatively affect the whole spectrum of homes in the City. If a $120,000 home is forced to sell for $90,000 just to compete with the new homes with greatly reduced property taxes, then you can see that the home that was at $90,000 will now be at $60,000 and all the way down the line until you get to our rental homes that are currently at $30,000 to $40,000.
These homes could easily be driven in value down to $5,000 to $10,000. At that point these rentals become extremely attractive to out-of-area slum lords that invite a less than desirable type of tenant to our City.
If you think I'm being over dramatic, take a look 10 miles to the south in Saginaw to see what the exact same effect of over-development or an unbalanced supply and demand has caused. I don't believe that any of us want to deal with the problems that Saginaw is dealing with. If a Developer believes the absorption rate in high enough to make the project profitable and beneficial to the community then He / She should proceed. If the project is not profitable and beneficial then the project won't proceed. (Absorption rate is the amount of additional homes that at fair market value can be added to any given market over a set period of time.)
Under this proposal the only one who would benefit from these tax breaks would be the Developer. And at too great of a cost to our City. The City should learn by their mistakes just like the rest of us. If you make a bad investment don't compound the problem by making a bigger mistake. Toby Bridges is a smart business man, and like any business man his goal is to make money. And I hope he does. But don't make his profit margins higher at the cost of the current property owners of Bay City. Tax incentives for single family homes in Bay City are a BAD IDEA.
So I'm asking all Property Owners in Bay City to please contact your local commissioner and let them know your not in favor of the tax incentives offered for the development of this property. Also be sure to thank them for their thankless job and their continued effort to grow and develop the City of Bay City into the Best City in Michigan to Live. We are moving forward. However, this is a bad step to take.
Well that's my two cents worth. Thanks again John.
Mark Duncan, Broker / Owner RE/MAX Results 989-686-3400
NOTE: Following, is Duncan's letter addressed to the Bay City Commissioners regarding Duncan's perception of the proposal.
Dear Commissioners,
Thank you again for allowing the Bay County REALTOR®® Association a voice at the Code Enforcement meeting the other night. As residents, business owners, and employees of local businesses we all have not only the right but also the obligation to voice our opinions about the direction the city leaders are taking us.
I also attended the City's Town Hall meeting this morning regarding the City's dire financial situation. As we all know our local problems stem from a difficult economic environment. This in turn has led to a steady decline in population and a decline in needed tax revenue. I do believe that there are steps the City can take that will lead us in the right direction. However, we must be careful to avoid a short term fix that will actually be another long term problem.
The first recommendation I offer is to list all of the City's excess property that they wish to dispose of with a Local REALTOR®. It is a proven fact that listed properties get much greater exposure and therefore result in much higher net proceeds to the seller even after brokerage fees are paid. Greater exposure results in greater interest. Greater interest results in a greater price. Having over 250 Real Estate Professionals working to sell these properties will be much more productive than the current process.
I would recommend that you send a list of the properties to a least four different local Real Estate Brokers and have each of them sit down and make a proposal to the City Commission. No different than you each would do if you were selling you own personal property. I would also recommend that you use at least two or three different Brokers to sell these properties. Different Brokers offer different services and areas of expertise.
The City should consider these REALTORS® an asset. REALTORS® are the front line in selling Bay City as the Greatest place to live.
The Second recommendation is in regards to the South end property the City has agreed to sell. If it is not too late, please rethink this decision. At least rethink the tax incentives. I don't think the City has evaluated the negative aspect of such a decision.
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