I visited the Garden to see the Celtics in person for the first time this year. I came away with mixed feelings in a variety of different areas. The over all feeling was one of disappointment as it was a fairly lackluster performance in front of the home crowd in a losing effort against the Wizards.
This was an eminently winnable game if two things happened. Paul Pierce had to do better than 5 for 13 from the free throw line and someone had to guard Antwan Jamison just a little bit. Jamison stood at the three point arc and calmly knocked down 4 for 5. Jamison shouldn't be a secret since he has recorded a couple of 50 point games in his career and had a huge college resume winning the Naismith award in his junior year. I am not sure whose responsibility he was defensively since nobody was close enough to pin the blame on.
The attendance was listed in the box score as 15,775 but I would bet that it was 70% of that. We had excellent seats with a face of $125 however you could get those tickets on the street for half that price or better before game time.
Despite the team's record so far and despite the rather spotty effort on Wednesday there is a lot to like about the team if you are a diehard with green in your veins.
Now the Mark Blount has finally been moved and his cadaver contract has been picked up by Minnesota, perhaps Doc Rivers will make a commitment to young big men Al Jefferson and Kendrick Perkins. Perkins showed well Wednesday with 8 points 3 boards and a couple of blocked shots. Jefferson never really got off the starting line with three points and a couple of boards in 16 minutes. Two guys just barely 21 are not going to carry the team however with this year strictly a development one then it is time for Rivers to stick these guys in the lineup and stay with them regardless of the outcome. Jefferson has a big time inside scoring game and could be a monster rebounder if he can get a regular rotation.
The point guard position seems to be set for the near term. Delonte West has proven to be a very savvy competitor. His stat line was full in every category with 5 boards, ten points, 9 assists, a steal and a block and over all a very entertaining game to watch. He seems to be near the ball all the time. He can stick the three, always looks for the open man and is committed to playing defense. Orien Greene seems to be a serviceable back up with a lot of upside potential. He is a very big point guard who might develop into a starter should he manage to find a medium ranger jump shot with dependability. Greene's growth marked the end of Marcus Banks tour of duty in Boston.
Paul Pierce is having his best year of his career. He contributed 11 boards 25 points and 6 assists. His failure at the foul line seemed more like an off night than a lack of commitment. He put in a team high 42 minutes and played hard in each one of them.
The rest of the Minnesota trade is Wally Scerbiak and Michael Olokawandi coming here and Ricky Davis going to Minnesota. I have to admit that I am sorry to see Ricky go. I have always disliked the on court persona of Ricky and was skeptical of his coming here. Ricky's bravado is not unique in the NBA and is indicative of what's wrong with "look at me" attitude of players in what is the ultimate team sport. However since being acquired Davis came to play every night, toned down his antics quite a bit and over all was a darn good player. At 28 years old, Ricky still has a lot of up side. I hope that his maturation progress continues and he reaches his ultimate potential.
Olokawandi has been the ultimate disappointment and is unlikely to be relied upon for any contribution here and will likely be let go at the end of the year when his contract expires. The difference between him and Blount is that Blount's contract had several more years to run. He was an intriguing offensive talent but simply disinterested in doing the dirty work of a seven footer. Mark loved the 15 foot jumper however rebounding or defending simply was not something he would do with any commitment. A case in point was Wednesday night. He had been languishing on the bench but Rivers went to him when the team needed some scoring. In 9 minutes he poured in 11 points but several times Washington players blew past him to score without so much as a wave. He netted one rebound but it was a mistake.
Scerbiak is no secret. He is a dead eye shooter with some defensive liabilities. He comes to a team that leads the league in field goal percentage so it is difficult to see the need for him to do anything out of the usual offensively. The defense has been hurt by losing Davis but probably helped by losing Blount and making a commitment to improve Jefferson with playing time.
No one can be sure if general manager Danny Ainge is through trading until the February 23 deadline passes but at some point a rotation has to be settled on and the guys they have must be given a good long look. The team is young and athletic and when they run and defend they are a lot of fun to watch. It is time to let them mature a little and see what we have.
Saturday, January 28, 2006
Thursday, January 26, 2006
The perils of democracy
The Palestinian elections are over and the world is shocked by the result. Hamas has defeated Fatah rather handily and now will control a majority of the Palestinian parliament. What's shocking is that anyone should be shocked by the outcome. Forgetting terrrorism and other external issues for a moment, there is one basic reason why Hamas has won.
All politics is local and on the local level Hamas has long been reported to be both honest and efficient in the delivery of constituent services in the areas in which they have had control. Conversely, the corruption in the ranks of the Fatah and Palestinian Authority run by the late Yasir Arafat was commonly known for its unrestrained greed. So given the opportunity to pick one over the other in a democratic process, the Palestinians opted for a cleaner delivery of municipal government.
Hamas' victory is a lot like the dog who chases the automobile. What does he do with it if he catches it? The capitals of Europe, and the United States and Israel have pretty much rung in with the same tone. In order for Hamas to deal effectively for the Palestinians they will have to renounce violence. This produces the real dilemma for Palestinian militants. While on the outside criticizing and disrupting and commiting murder they had no responsibility for results.
Now that they are the party in power, progress will fall directly on to their shoulders.
It will be interesting to see how this new political order evolves not only in Palestine but in other Middle Eastern countries as well. As the democratization of these countries progresses will responsible leadership emerge that recognizes that the political reality of that leadership requires the give and take of diplomacy and concession in order to achieve ones goals? Or will they attempt to maintain armed resistance and threats of destruction.
The ink is barely dry on the results and Hamas is learning a very quick lesson. The global power structure that they have to deal with is already laying terms and conditions in which they will be invited to the table as the legitimate representatives of the Palestinian people to sort out the issues of statehood and economic aid etc. If Hamas does not conform to these conditions and subsequently is unsuccessful in making progress for its people then they are subject to the very same fate that Fatah just suffered. They may be voted out of office. Let's see how long it takes them to turn from terrorists to politicians.
All politics is local and on the local level Hamas has long been reported to be both honest and efficient in the delivery of constituent services in the areas in which they have had control. Conversely, the corruption in the ranks of the Fatah and Palestinian Authority run by the late Yasir Arafat was commonly known for its unrestrained greed. So given the opportunity to pick one over the other in a democratic process, the Palestinians opted for a cleaner delivery of municipal government.
Hamas' victory is a lot like the dog who chases the automobile. What does he do with it if he catches it? The capitals of Europe, and the United States and Israel have pretty much rung in with the same tone. In order for Hamas to deal effectively for the Palestinians they will have to renounce violence. This produces the real dilemma for Palestinian militants. While on the outside criticizing and disrupting and commiting murder they had no responsibility for results.
Now that they are the party in power, progress will fall directly on to their shoulders.
It will be interesting to see how this new political order evolves not only in Palestine but in other Middle Eastern countries as well. As the democratization of these countries progresses will responsible leadership emerge that recognizes that the political reality of that leadership requires the give and take of diplomacy and concession in order to achieve ones goals? Or will they attempt to maintain armed resistance and threats of destruction.
The ink is barely dry on the results and Hamas is learning a very quick lesson. The global power structure that they have to deal with is already laying terms and conditions in which they will be invited to the table as the legitimate representatives of the Palestinian people to sort out the issues of statehood and economic aid etc. If Hamas does not conform to these conditions and subsequently is unsuccessful in making progress for its people then they are subject to the very same fate that Fatah just suffered. They may be voted out of office. Let's see how long it takes them to turn from terrorists to politicians.
Sunday, January 22, 2006
School Building Assistance
This weeks announcement by the Massachusetts School Building Authority of a freeze on aid to school construction does not bode well for Burlington's plans to upgrade school facilities in town. http://www.boston.com/news/local/massachusetts/articles/2006/01/22/state_freezes_aid_on_school_construction/
Since the defeat by one vote of the kindergarten center proposal several years ago, the town has been unable to reach any consensus on how to go forward in addressing the continued aging of the school inventory. The Marshall Simonds Middle School helped us out in the decision making process by having it's boilers fail and forcing the issue, however little else has been accomplished.
The school facilities study committee has been hard at work trying to come up with three potential courses of action for the school committee to present to the town, so far only one seems to be the favorite among the committee members. That strategy would be to demolish the Memorial School and build a new elementary school in front of the existing building site on the Winn Street ball fields.
This proposal does not address other issues such as the aging of the middle school and the Pine Glen and Fox Hill Schools. Nor does it take into consideration what should should be done with the old Wildwood School. The issue of whether or not it makes sense to take back the Meadowbrook does not seem to be on anybody's radar screen.
If you then add in the High School that is nearing 40 years old it is conceivable that the town could be faced with upwards of 80 million dollars in construction and renovation costs over the next decade or so.
Under normal circumstances the town could look to the state to absorb over 50% of the construction costs in payments beginning a couple of years after the approvals, bonding and construction began. All of this has been thrown into confusion by the events that have taken place over the past year or two.
On July 28, 2004, legislation was signed creating the Massachusetts School Building Authority as a new independent public authority. The effect of this was to transfer control of the School Building Assistance Program from the Department of Education to the Massachusetts School Building Authority. It is a new and independent governing body comprised of seven members of which the State Treasurer serves as Chairman. http://www.mass.gov/msba/index.htm
The passing of this legislation recognized that the state sponsored building program had gotten out of control and resulted in nearly ten billion dollars worth of school projects through out the state that were basically unfunded. The reform legislation put the program under the direction of the state treasurer and provided for a 1 cent portion of the state sales tax as a method to fund the program going forward.
Even with with these reforms the program has still been unmanageable because of a variety of factors that are out of the control of state and municipal officials and some that are easily controlled. Steel, concrete and petroleum costs are all significantly up. In addition you have the usual over runs because of design or site problems. Couple this with the prevailing wage act, which guarantees that the labor on any project will be the highest possible cost and you can see how a school project can become a white elephant.
One way for the state and the tax payers to draw the line on the cost of these projects is to reduce the enormous front end costs of the design of a school. Schools are not works of art. They are a utilitarian structure solely for the purpose of providing education. There is no reason that an elementary school should take on unique architectural and design difference from one community to another with one exception and that is site peculiarities.
The state should fund a design contest for three categories of buildings. Out of that competition should come three winners in each category, three high schools, three middle schools and three elementary schools. If a community wants state reimbursement for a school project then they would be limited to selecting one of the prepackaged designs already bought and paid for by the state.
This would not rein in run away construction costs however it would go a long way toward reducing the front end costs of re-inventing the wheel each time a community needs a building. Construction efficiencies would result simply from the repititon of constructiong the same type buildings. This of course would be bitterly opposed by the lobbyists who represent the architects.
Another way that could be examined but would also likely be opposed by special interests groups would be the conversion of existing office space into classrooms. Many communities in the commonwealth have an abundance of vacant office space that could be converted and rented at a substantial savings over what new construction would costs be.
Some significant changes have to be made because the current method is simply not sustainable.
Since the defeat by one vote of the kindergarten center proposal several years ago, the town has been unable to reach any consensus on how to go forward in addressing the continued aging of the school inventory. The Marshall Simonds Middle School helped us out in the decision making process by having it's boilers fail and forcing the issue, however little else has been accomplished.
The school facilities study committee has been hard at work trying to come up with three potential courses of action for the school committee to present to the town, so far only one seems to be the favorite among the committee members. That strategy would be to demolish the Memorial School and build a new elementary school in front of the existing building site on the Winn Street ball fields.
This proposal does not address other issues such as the aging of the middle school and the Pine Glen and Fox Hill Schools. Nor does it take into consideration what should should be done with the old Wildwood School. The issue of whether or not it makes sense to take back the Meadowbrook does not seem to be on anybody's radar screen.
If you then add in the High School that is nearing 40 years old it is conceivable that the town could be faced with upwards of 80 million dollars in construction and renovation costs over the next decade or so.
Under normal circumstances the town could look to the state to absorb over 50% of the construction costs in payments beginning a couple of years after the approvals, bonding and construction began. All of this has been thrown into confusion by the events that have taken place over the past year or two.
On July 28, 2004, legislation was signed creating the Massachusetts School Building Authority as a new independent public authority. The effect of this was to transfer control of the School Building Assistance Program from the Department of Education to the Massachusetts School Building Authority. It is a new and independent governing body comprised of seven members of which the State Treasurer serves as Chairman. http://www.mass.gov/msba/index.htm
The passing of this legislation recognized that the state sponsored building program had gotten out of control and resulted in nearly ten billion dollars worth of school projects through out the state that were basically unfunded. The reform legislation put the program under the direction of the state treasurer and provided for a 1 cent portion of the state sales tax as a method to fund the program going forward.
Even with with these reforms the program has still been unmanageable because of a variety of factors that are out of the control of state and municipal officials and some that are easily controlled. Steel, concrete and petroleum costs are all significantly up. In addition you have the usual over runs because of design or site problems. Couple this with the prevailing wage act, which guarantees that the labor on any project will be the highest possible cost and you can see how a school project can become a white elephant.
One way for the state and the tax payers to draw the line on the cost of these projects is to reduce the enormous front end costs of the design of a school. Schools are not works of art. They are a utilitarian structure solely for the purpose of providing education. There is no reason that an elementary school should take on unique architectural and design difference from one community to another with one exception and that is site peculiarities.
The state should fund a design contest for three categories of buildings. Out of that competition should come three winners in each category, three high schools, three middle schools and three elementary schools. If a community wants state reimbursement for a school project then they would be limited to selecting one of the prepackaged designs already bought and paid for by the state.
This would not rein in run away construction costs however it would go a long way toward reducing the front end costs of re-inventing the wheel each time a community needs a building. Construction efficiencies would result simply from the repititon of constructiong the same type buildings. This of course would be bitterly opposed by the lobbyists who represent the architects.
Another way that could be examined but would also likely be opposed by special interests groups would be the conversion of existing office space into classrooms. Many communities in the commonwealth have an abundance of vacant office space that could be converted and rented at a substantial savings over what new construction would costs be.
Some significant changes have to be made because the current method is simply not sustainable.
Monday, January 16, 2006
The Grandfather of our Country
January 17th marks the 300th birthday of Benjamin Franklin. Many volumes have been written since his death 216 years ago that explore his many accomplishments in a wide variety of endeavors. Despite this much time passing, Franklin’s list of achievements and his life’s work still stands up against the many generations of Americans that have followed him.
More impressive than any one achievement was his versatility in his ability to contribute in so many areas of daily 18th century life. If you lived in the colonies during that period more than likely your home was heated by a Franklin stove, your church was protected by Ben’s lightning rod, and your money was printed by him.
If you lived in Philadelphia you might have read books printed by him, or took them out of a library he started. Your buildings were protected by his fire brigade, fire insurance company or the night watch that he started. In his spare time he led a militia that protected your frontier.
Many a young man over the last two centuries has been lectured on Franklin’s industriousness and his axioms on how to lead a productive life. For today however it is another group of Americans that can take a lesson from Franklin.
The first of the baby boomers are entering their sixties and beginning the end game of their lives. As in every phase of their lives this demographic crowd will have a major impact on the future of the United States. How will the aging of this population contribute in a productive way for themselves and to our country?
It is useful to look back at Franklin and observe that his achievements in his old age are the ones that are likely to be the most indelibly etched in American history as more centuries go by.
In an era when the average life span was somewhere in the forties Franklin lived to be 84. It wasn’t an easy 84 as he was beset with maladies common to the times however despite these setbacks he was undaunted.
Just after his seventieth birthday Franklin was busy as a revolutionary involved by presiding at the constitutional convention, editing Jefferson’s work on the Declaration of Independence and becoming its oldest signer.
To put Franklin’s age in context it might be useful to compare him to some of the historical founding luminaries of the time, John Adams 41, Sam Adams 54, Thomas Jefferson 33, George Washington 44, John Jay 31, and John Hancock 39.
At 70 Franklin only BEGAN his contribution to the birth and defense of the fledgling nation. He spent the next nine years in Europe tirelessly working to provide financial and material support for the battle and subsequent peace back home. In 1782, he along with John Jay and John Adams negotiated The Treaty of Peace with Great Britain.
In 1785 he made his last voyage home however he still wasn’t done with his contributions. In 1787, he was elected president of the Pennsylvania Society for Promoting the Abolition of Slavery; as well servings as delegate to the Constitutional Convention.
As we all contemplate the aging process and where we fit in the scheme of things we might stop and once again take a very hard look at the old Ben Franklin. We can’t be him nor can we duplicate his achievement but we certainly can try to think like he did in his approach to all aspects of our lives.
More impressive than any one achievement was his versatility in his ability to contribute in so many areas of daily 18th century life. If you lived in the colonies during that period more than likely your home was heated by a Franklin stove, your church was protected by Ben’s lightning rod, and your money was printed by him.
If you lived in Philadelphia you might have read books printed by him, or took them out of a library he started. Your buildings were protected by his fire brigade, fire insurance company or the night watch that he started. In his spare time he led a militia that protected your frontier.
Many a young man over the last two centuries has been lectured on Franklin’s industriousness and his axioms on how to lead a productive life. For today however it is another group of Americans that can take a lesson from Franklin.
The first of the baby boomers are entering their sixties and beginning the end game of their lives. As in every phase of their lives this demographic crowd will have a major impact on the future of the United States. How will the aging of this population contribute in a productive way for themselves and to our country?
It is useful to look back at Franklin and observe that his achievements in his old age are the ones that are likely to be the most indelibly etched in American history as more centuries go by.
In an era when the average life span was somewhere in the forties Franklin lived to be 84. It wasn’t an easy 84 as he was beset with maladies common to the times however despite these setbacks he was undaunted.
Just after his seventieth birthday Franklin was busy as a revolutionary involved by presiding at the constitutional convention, editing Jefferson’s work on the Declaration of Independence and becoming its oldest signer.
To put Franklin’s age in context it might be useful to compare him to some of the historical founding luminaries of the time, John Adams 41, Sam Adams 54, Thomas Jefferson 33, George Washington 44, John Jay 31, and John Hancock 39.
At 70 Franklin only BEGAN his contribution to the birth and defense of the fledgling nation. He spent the next nine years in Europe tirelessly working to provide financial and material support for the battle and subsequent peace back home. In 1782, he along with John Jay and John Adams negotiated The Treaty of Peace with Great Britain.
In 1785 he made his last voyage home however he still wasn’t done with his contributions. In 1787, he was elected president of the Pennsylvania Society for Promoting the Abolition of Slavery; as well servings as delegate to the Constitutional Convention.
As we all contemplate the aging process and where we fit in the scheme of things we might stop and once again take a very hard look at the old Ben Franklin. We can’t be him nor can we duplicate his achievement but we certainly can try to think like he did in his approach to all aspects of our lives.
Saturday, January 14, 2006
Why are housing values and residential taxes way up?
The 22.3% average increase in the residential tax rate that we all received in the mail last month is the crowning blow in a trend that began in 2002. It is not a trend of unbridled spending, waste or corruption in municipal government. It is instead a natural process of a shifting of tax revenue from the commercial industrial sector to the residential sector. The shift has resulted in the extraordinary increase that has occurred in not only Burlington residential values but across the state and nation.
This shift can be seen vividly, both graphically and numerically in illustrations provided by Russ Washburn, Burlington Town Assessor, in the January town meeting warrant package. I read an article in the Globe Thursday that said that residential values in Massachusetts had jumped 50% over the past four years and then consulted our own information to determine if that was true in Burlington. In fiscal year 2002 our total residential value was $1,953,995,084. At the completion of this year's revaluation our total value had jumped to $3,006,687,085. Some of this can be attributed to new growth in housing. There has been new units added to the town's inventory during this period but certainly not 1 billion dollars worth. In fact the largest addition is not even fully on the tax rolls as of yet.
The illustration of the average single family home bears out a similar result. In 2002 the average home in Burlington was valued at $266,450 and this year came in at $406,990. Now some have argued that these values are incorrect since their home cannot be sold in the market at these values. One factor to keep in mind is that valuation is done a year behind so the value is a reflection of last years market. Even with this in mind however the values still stand up today based on comparable sales that have been recorded.
Every single family home sale that is recorded at the registry of deeds is kept in running order by date at the assessor's office. Those numbers show two very important things. Out of the 70 homes from the 2005 home sales list at random only 15 were below the 2006 average valuation of 406 thousand. More importantly, the average assessed value was 85% of what the selling price was.
What has exacerbated this shift in value to the residential market has been the decline in the commercial industrial property sector. In the same reference period in 2002, the CIP sector had a total valuation of $1,473,890,731 and in 2006 it has dropped to $1,273,069,910. What has resulted is that in 2002 the CIP sector (with a 1.504 classification factor) was responsible for 64.69% of the overall tax burden. In fiscal 2006 even with a classification factor move to the full limits of 1.893 (max allowable by law), the CIP sector is paying 56.31% of the tax burden.
The reasons for this are numerous. Certainly the hotel market is an example of over building resulting in a point of diminishing returns. I have used the Four Points sale previously to illustrate this. In 2000 Four Points sold for 14 Million dollars. Last year that property sold for 6.4 million dollars. When a comparable sale is available in a market place this inevitably must be applied to other properties. A similar comparable was available when the first class Hewlett Packard building was sold at a significant reduced value and then donated to a non profit institution.
Other factors at play are a shift in the work at home market and the number of companies that have moved South as well as corporate mergers. Another has been commercial properties coming off of the tax rolls.
None of this would matter if the properties in both classes were moving in lockstep up or down. That has not happened over the past four years for one very important reason. That reason is interest rates. Interest rates and home mortgage rates fell to historic lows after two events that happened in 2000 and 2001. In the 2000, the Federal reserve was tightening interest rates to slow the economy. The financial markets had reached all time highs and the fed was concerned about a "bubble" in financial instrument values contributing to inflation.
The Fed continued to hike short term rates to slow the money supply and subsequently inverted the yield curve against long term interest rates. The Fed tightening peaked at 6.50%. This resulted in a rather quick slowing of the economy. Instead of the "soft landing" predicted, we instead fell into recession. The Fed switched policies and began aggressively reducing rates through 2001. Then came the events of 9/11/01 and the American economy came to a virtual standstill for a two week period following the attacks.
What followed was an even faster pace of reduction in rates culminating in a 60 year low in both short and long term rates which resulted in an unprecedented availability of capital for the residential home market. Many buyers in lower economic strata who had been shut out of the home market because of income to mortgage ratios now found themselves able to make that leap.
In a market like Burlington and other similar Massachusetts communities that have a desirable location and a long list of services but a short supply of homes, the favorable rate climate resulted in skyrocketing prices.
Both the good and bad news is that like any trend or bubble, we are likely to soon see a reversal of the trend. We can go back in history and examine a similar situation in home values in town. In fiscal year 1988, the average assessment in Burlington went from $86,700 to $178,600. Yet ten years later that same house in 1998 was valued at $176,180. We did not suffer a similar rise in tax rates because the CIP values doubled as well.
My over all point is that the current situation although severe is likely to be transitory. What goes up comes down, bubbles burst and trends reverse. I will use my own home as an example. I bought my house in 1977 for $53,000 and paid approximately $2200 in taxes the next year. My value this year is $413,000 and my taxes are $3600.
To put that in the proper context my taxes are up roughly 60% over a nearly 30 year period however my value is up over 800%. During this time I paid approximately $60,000 in property taxes and the town educated my two children. I wish I had a bank account or stock portfolio that performed as well.
This shift can be seen vividly, both graphically and numerically in illustrations provided by Russ Washburn, Burlington Town Assessor, in the January town meeting warrant package. I read an article in the Globe Thursday that said that residential values in Massachusetts had jumped 50% over the past four years and then consulted our own information to determine if that was true in Burlington. In fiscal year 2002 our total residential value was $1,953,995,084. At the completion of this year's revaluation our total value had jumped to $3,006,687,085. Some of this can be attributed to new growth in housing. There has been new units added to the town's inventory during this period but certainly not 1 billion dollars worth. In fact the largest addition is not even fully on the tax rolls as of yet.
The illustration of the average single family home bears out a similar result. In 2002 the average home in Burlington was valued at $266,450 and this year came in at $406,990. Now some have argued that these values are incorrect since their home cannot be sold in the market at these values. One factor to keep in mind is that valuation is done a year behind so the value is a reflection of last years market. Even with this in mind however the values still stand up today based on comparable sales that have been recorded.
Every single family home sale that is recorded at the registry of deeds is kept in running order by date at the assessor's office. Those numbers show two very important things. Out of the 70 homes from the 2005 home sales list at random only 15 were below the 2006 average valuation of 406 thousand. More importantly, the average assessed value was 85% of what the selling price was.
What has exacerbated this shift in value to the residential market has been the decline in the commercial industrial property sector. In the same reference period in 2002, the CIP sector had a total valuation of $1,473,890,731 and in 2006 it has dropped to $1,273,069,910. What has resulted is that in 2002 the CIP sector (with a 1.504 classification factor) was responsible for 64.69% of the overall tax burden. In fiscal 2006 even with a classification factor move to the full limits of 1.893 (max allowable by law), the CIP sector is paying 56.31% of the tax burden.
The reasons for this are numerous. Certainly the hotel market is an example of over building resulting in a point of diminishing returns. I have used the Four Points sale previously to illustrate this. In 2000 Four Points sold for 14 Million dollars. Last year that property sold for 6.4 million dollars. When a comparable sale is available in a market place this inevitably must be applied to other properties. A similar comparable was available when the first class Hewlett Packard building was sold at a significant reduced value and then donated to a non profit institution.
Other factors at play are a shift in the work at home market and the number of companies that have moved South as well as corporate mergers. Another has been commercial properties coming off of the tax rolls.
None of this would matter if the properties in both classes were moving in lockstep up or down. That has not happened over the past four years for one very important reason. That reason is interest rates. Interest rates and home mortgage rates fell to historic lows after two events that happened in 2000 and 2001. In the 2000, the Federal reserve was tightening interest rates to slow the economy. The financial markets had reached all time highs and the fed was concerned about a "bubble" in financial instrument values contributing to inflation.
The Fed continued to hike short term rates to slow the money supply and subsequently inverted the yield curve against long term interest rates. The Fed tightening peaked at 6.50%. This resulted in a rather quick slowing of the economy. Instead of the "soft landing" predicted, we instead fell into recession. The Fed switched policies and began aggressively reducing rates through 2001. Then came the events of 9/11/01 and the American economy came to a virtual standstill for a two week period following the attacks.
What followed was an even faster pace of reduction in rates culminating in a 60 year low in both short and long term rates which resulted in an unprecedented availability of capital for the residential home market. Many buyers in lower economic strata who had been shut out of the home market because of income to mortgage ratios now found themselves able to make that leap.
In a market like Burlington and other similar Massachusetts communities that have a desirable location and a long list of services but a short supply of homes, the favorable rate climate resulted in skyrocketing prices.
Both the good and bad news is that like any trend or bubble, we are likely to soon see a reversal of the trend. We can go back in history and examine a similar situation in home values in town. In fiscal year 1988, the average assessment in Burlington went from $86,700 to $178,600. Yet ten years later that same house in 1998 was valued at $176,180. We did not suffer a similar rise in tax rates because the CIP values doubled as well.
My over all point is that the current situation although severe is likely to be transitory. What goes up comes down, bubbles burst and trends reverse. I will use my own home as an example. I bought my house in 1977 for $53,000 and paid approximately $2200 in taxes the next year. My value this year is $413,000 and my taxes are $3600.
To put that in the proper context my taxes are up roughly 60% over a nearly 30 year period however my value is up over 800%. During this time I paid approximately $60,000 in property taxes and the town educated my two children. I wish I had a bank account or stock portfolio that performed as well.
Sunday, January 08, 2006
It doesn't seem possible
It doesn't seem possible that the New England Patriots could win a third consecutive Super Bowl. After all it has never been done before and the way the team has played this year it would seem that they have suffered in a way that a typical high performing NFL team does after an extended stay at the top. Football is a brutal physical game that eventually wears down even the most superbly conditioned athletes.
If you are the reigning champion in the NFL, the regular season is one of more intense competition game after game because football is a game of dominance and the team that can beat the champs is on its way to making a name for itself.
At the beginning of the season it appeared as though this heavy load had begun to decimate the champs by attrition. Player after player was knocked out by injury to the point where 45 different people had been starters at one position or another. Rodney Harrison, Matt Light, Dan Koppen, Randall Gay, and Tyrone Poole have all been lost for the season. Many other starters were lost for varying amounts of games.
It was against this backdrop that the team began the season at 4 and 4 and some thought that the dynasty might be in a bit of trouble. The fan base began to breathe a little easier as a play off spot became more of a possibility in the weak division the Patriots live in. That glimmer of hope turned into a little bit of enthusiasm as the Belichik boys finished December in typical Belichik fashion. They finished winning six of the last eight and would have been 7 of 8 if the last game of the season had not been a meaningless exhibition game played by second and third string players against the Miami first team.
Some would argue that it wasn't meaningless because the loss allowed the Patriot' s to open up against Jacksonville instead of Pittsburgh. I have to put some stock in this because if Belichik thought the game did have meaning he would have won it.
The road to the Super Bowl is still heavily defended but at this point the Patriots have sent a very strong message that they should not be overlooked in the mix. Last night's performance against Jacksonville should leave no doubt that the season ending resurgence of the defense and the now fully healed offense should not be taken lightly.
Jacksonville came in 12 and 4 and had some attributes that could sorely test the Pats. They are a big and very physical team with a bruising ground game. Unfortunately for the Jaguars they simply were not physical enough against the Patriots.
Belichik is a master strategist from play to play but his over all plan is generally the same. Take away the thing the opponent expects to beat you with and then make them one dimensional in the phase of the game they are not as good in. For the Jaguars that meant that the running game was completely shut down and if they were going to win they would have to do it on the arm of Byron Leftwich. Byron finished 18 for 31 with one interception and no touch downs. Most of the evening he had Willie McGinest draped over him as McGinest broke the career playoff sack record held by Bruce Smith and Reggie White. Willie ended with 4 1/2 sacks for a career total of 16, however it should be noted that Richard Seymour had a lot to do with the success of the defense.
After missing a number of games this season with a knee injury, Seymour appears to be rounding into shape. Seymour's numbers in the stat sheet look very modest with one tackle one assist, a half a sack and a fumble recovery however these numbers don't reflect the impact that he had on the game. Playing from any number of different positions on the defensive line, Seymour had to be accounted for on every play by two Jaguars. Seymour is plain and simple a certified stud. His speed and power was on display every single play.
The first half of the game finished at 7 to 3 and looked every bit that close. The Jaguars defensive tackles were stalwart and were after Brady with consistency hurrying the passing game and for the most part shutting down the run.
All of that changed on the Patriots first possession of the third quarter as they took the ball at the 13:55 mark and consumed 6:42 as they drove 81 yards in 12 plays, culminating in a three yard beautifully executed play action pass to David Givens. Many games can turn on a key play and for the Patriots this drive would have been stalled were it not for Andre Davis recovering a Ben Watson fumble on the Jaguars three yard line. Davis aquitted himself in one carry as well as some nice special teams work. He could be a factor later on in the season.
Later Watson would redeem himself by taking a routine 10 yard reception and banging his way through three tacklers to a scintillating 63 run into the end zone. Assante Samuel put an exclamation point on the defense's night with an interception of Leftwich that went 63 yards for a touchdown.
So what seemed improbable a month or two ago is not out of the question. The defense has been absolutely stifling over the past 6 weeks and Brady has all his offensive weapons available to him. It is still a very difficult road but after watching this crew for the past few years nothing would surprise me.
If you are the reigning champion in the NFL, the regular season is one of more intense competition game after game because football is a game of dominance and the team that can beat the champs is on its way to making a name for itself.
At the beginning of the season it appeared as though this heavy load had begun to decimate the champs by attrition. Player after player was knocked out by injury to the point where 45 different people had been starters at one position or another. Rodney Harrison, Matt Light, Dan Koppen, Randall Gay, and Tyrone Poole have all been lost for the season. Many other starters were lost for varying amounts of games.
It was against this backdrop that the team began the season at 4 and 4 and some thought that the dynasty might be in a bit of trouble. The fan base began to breathe a little easier as a play off spot became more of a possibility in the weak division the Patriots live in. That glimmer of hope turned into a little bit of enthusiasm as the Belichik boys finished December in typical Belichik fashion. They finished winning six of the last eight and would have been 7 of 8 if the last game of the season had not been a meaningless exhibition game played by second and third string players against the Miami first team.
Some would argue that it wasn't meaningless because the loss allowed the Patriot' s to open up against Jacksonville instead of Pittsburgh. I have to put some stock in this because if Belichik thought the game did have meaning he would have won it.
The road to the Super Bowl is still heavily defended but at this point the Patriots have sent a very strong message that they should not be overlooked in the mix. Last night's performance against Jacksonville should leave no doubt that the season ending resurgence of the defense and the now fully healed offense should not be taken lightly.
Jacksonville came in 12 and 4 and had some attributes that could sorely test the Pats. They are a big and very physical team with a bruising ground game. Unfortunately for the Jaguars they simply were not physical enough against the Patriots.
Belichik is a master strategist from play to play but his over all plan is generally the same. Take away the thing the opponent expects to beat you with and then make them one dimensional in the phase of the game they are not as good in. For the Jaguars that meant that the running game was completely shut down and if they were going to win they would have to do it on the arm of Byron Leftwich. Byron finished 18 for 31 with one interception and no touch downs. Most of the evening he had Willie McGinest draped over him as McGinest broke the career playoff sack record held by Bruce Smith and Reggie White. Willie ended with 4 1/2 sacks for a career total of 16, however it should be noted that Richard Seymour had a lot to do with the success of the defense.
After missing a number of games this season with a knee injury, Seymour appears to be rounding into shape. Seymour's numbers in the stat sheet look very modest with one tackle one assist, a half a sack and a fumble recovery however these numbers don't reflect the impact that he had on the game. Playing from any number of different positions on the defensive line, Seymour had to be accounted for on every play by two Jaguars. Seymour is plain and simple a certified stud. His speed and power was on display every single play.
The first half of the game finished at 7 to 3 and looked every bit that close. The Jaguars defensive tackles were stalwart and were after Brady with consistency hurrying the passing game and for the most part shutting down the run.
All of that changed on the Patriots first possession of the third quarter as they took the ball at the 13:55 mark and consumed 6:42 as they drove 81 yards in 12 plays, culminating in a three yard beautifully executed play action pass to David Givens. Many games can turn on a key play and for the Patriots this drive would have been stalled were it not for Andre Davis recovering a Ben Watson fumble on the Jaguars three yard line. Davis aquitted himself in one carry as well as some nice special teams work. He could be a factor later on in the season.
Later Watson would redeem himself by taking a routine 10 yard reception and banging his way through three tacklers to a scintillating 63 run into the end zone. Assante Samuel put an exclamation point on the defense's night with an interception of Leftwich that went 63 yards for a touchdown.
So what seemed improbable a month or two ago is not out of the question. The defense has been absolutely stifling over the past 6 weeks and Brady has all his offensive weapons available to him. It is still a very difficult road but after watching this crew for the past few years nothing would surprise me.
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