Get a politician talking and it's clear how Florida created the real estate bubble that blew up in its face. As St. Petersburg Times staff writers Michael Van Sickler, Marlene Sokol and John Martin reported last Sunday, revenue-hungry local governments bear considerable fault for the collapse in the housing market. Elected officials promoted urban sprawl as the pathway to success and often were rewarded with campaign contributions from the home builders who were cashing in on the binge. What happened in Hillsborough is a microcosm of the impact of such flawed, short-sighted policies throughout the state. The solution is certainly not more of the same unbridled development that helped trigger the recession, yet state and local governments have not learned their lesson.
The Times' analysis of home foreclosures in Hillsborough County showed that county commissioners approved huge housing projects in far-flung rural areas despite repeated warnings — some even from their own staffs — about overbuilding. The rush to pave over undeveloped fields encouraged investors to speculate and buy multiple properties in subdivisions where they never intended to live. It created a cycle of wildly inflated home prices and an environment where lenders chased buyers with increasingly reckless home mortgages.
In Hillsborough County, for example, investors accounted for almost half of the nearly 12,000 foreclosures filed on residential properties from 2007 to 2009, the Times found. By churning so many properties, flippers helped lay the foundation for the bubble to burst, giving Hillsborough one of the highest mortgage default rates in the state. Local officials were enablers every step of the way as flippers saw dollars signs and buyers bought more home than they could afford. Hillsborough County kept impact fees on new development artificially low, and it exempted new construction in vast areas from the fees entirely.
Commissioners argued at the time that waiving impact fees would bring nothing but benefits. New construction would improve living standards in high-poverty areas and ultimately pay for itself by adding to the tax base. But it should have been clear that low-income residents had no way to chase rising prices or to stay in these homes once the bubble in property values finally popped. Nor was there any need to waive impact fees amid the booming real estate market, especially given that Hillsborough had not raised its fees since the 1980s. The waivers cost the county at least $92 million in payments. In a new report this month, Hillsborough Circuit Court Clerk Pat Frank warned that current impact fees may not even cover "a reasonable percentage of the cost of growth."
Not surprisingly, politicians told the Times they feel no responsibility for helping create the cycle that contributed to the recession. Commissioner Jim Norman: "The free market was driving the construction of the homes." Dick Greco, then-Tampa mayor, predicted the city would benefit from having annexed thousands of acres in northern New Tampa once the economy recovers. The developers who backed city and county officials got rich clearing land or selling building materials. Meanwhile, the people who bought and live in some of these developments have seen the value of their homes drop by nearly half. Many neighborhoods are ghost towns as investors and homeowners have lost their property to the banks. And with empty houses has come an uptick in crime, as vacant properties become drug dens and storage for stolen goods.
Hillsborough's experience was not unique. Counties throughout the state are slashing budgets, laying off employees and closing parks and libraries to make up multimillion dollar deficits. Yet officials still haven't learned their lesson and believe the way to recover is to jump-start growth and start the cycle all over again.
Gov. Charlie Crist and the Legislature, urged on by the Florida Chamber of Commerce and other irresponsible business interests, eviscerated state growth management laws last spring by easing development rules and allowing builders to avoid paying for road improvements to handle the traffic their projects generate. Hillsborough has looked at ways to fast-track building permits. Last week, Hernando County commissioners recklessly cut county impact fees in half for all new construction even though the fees for new homes already are less than half those in neighboring Pasco County. Yet Hernando is millions short of paying its share for widening traffic-clogged County Line Road.
This is deja vu all over again. Florida's history is a roller-coaster of development booms and busts, of politicians granting developers' every wish without regard to the long-term consequences. It is time to break the cycle, not repeat it.