Shorelines

Dave,

Do these figures include commercial and industrial real estate too? If  not, than it seems you are making a lot of assumptions without looking at the total picture.  Residential real estate values do not necessarily affect commercial/industrial values:

Excerpt from Milwaukee Business Journal article:

Milwaukee's commercial and industrial real estate sectors don't appear to be showing similar downturns in activity.

Commercial real estate hasn't been affected much either way by the housing bubble, according to industrial real estate dealer Ned Purtell of RFP Commercial, a Milwaukee commercial real estate firm.

"I don't think there's much connection," Purtell said. "I haven't seen a drop-off in leasing at all. It's getting better, rather than worse."

Purtell said at the beginning of the year, he had 55,000 vacant square feet of commercial space in Pewaukee. By the end of the year, he expects that figure to drop to 18,000 vacant square feet.

Jim Barry III, president of industrial and commercial Milwaukee real estate company Colliers Barry, said industrial real estate is less prone to market fluctuations compared to residential real estate. Industrial companies don't look to expand until they really need extra space or see a prime neighborhood for a new site, he said, and those factors tend to override more fluid concerns like interest rates.

"I would say with regard to the industrial markets, they're improving," Barry said. "There is some concern on the coasts, where you are seeing this residential pop more so than here."

Mark Eppli, a professor of finance and the Bell real estate chair at Marquette University, said commercial and industrial real estate markets are less volatile than residential in part because of a recent influx of investor money.

"Commercial real estate is considered an investment alternative to stocks," he said. "A good amount of capital has been flowing into real estate in an effort to diversify portfolios. In fact, I would argue that real estate is the flavor of the day on Wall Street."

Ann

My premise is that if property values in the TID's do not increase, the  burden will shift to all other properties in Shorewood to pay off the TIF debt.

The information you have listed seems to lump together "commercial" property with "industrial" property --- and to make further distinctions, in the real estate world, what is sometimes lumped together as "commercial" property are manufacturing facilities, office buildings, multi family units, strip malls, free standing stores, storefronts,'mixed use", etc ........

In Shorewood, we have a little of most of those except for industrial or manufacturing.

The current real estate market is very dynamic and what was true at the end of 2007 is no longer true in 2008.

There had been a rush of "big ticket" commercial transactions by Overseas Buyers, who saw the Weak US Dollar as a good opportunity to get into the US real estate market as a long term investment.  I think most of that has played out now.

The Big 800 lb Gorilla in 2008 is CREDIT ------ Anyone looking to buy real estate is having a very hard time meeting the new credit requirements of gun shy lenders.  And those who can buy for cash, are looking for give-a-ways.

Unfortunately, the real estate game in 2008 is very heavy on Forclosures and Short Sales.  We don't hear much about Short Sales because it is not a Foreclosure --- but the bank bites the bullet and takes less than it is owed.

Residential rental rates were garbage during the housing boom, as anyone who could pay rent qualified for a mortgage.  Slowly the rates came up, but are still often too low for investment purposes.

As Sellers cannot get their price due to the big availability of foreclosures and short sales --- they are renting their properties out, and often at less than break even rates.  I think we will continue to see an erosion in rental rates throughout 2008.

As I noted before, housing, even here in Shorewood, is selling at a higher discount off the asking price.  Buyers who are not looking for possible short sales or foreclosures, can end up paying more than they have to in this market.

And this is the market that will ultimately determine whether the TID's can support their debt --- or it is spread out among all property owners in Shorewood -- including single family and duplexes.

I do understand your perspective and appreciate your elaboration; however, I still think you might be making blanket assumptions based on insufficient data.  Also, housing trends are short term compared to the life of TIF Districts, which are more than 20 years long.  It is possible that housing will pick up in the next five years and offset any losses incurred right now (IF there are any that affect the TIDs).  The simple fact is that we just don't know yet and to make assumptions right now is premature.

TIFs are such valuable tools for redevelopment - one of the only tools municipalities have at their disposal, actually.  Shorewood needs to be bullish on redevelopment in order to preserve and enhance its tax base.  We should be supportive of the village’s efforts.  I just don't think alarmist postings like this one are accurate or productive.

Ann

I think you hit the keywords with "insufficient" data --- and may I add, "incorrect" data --- as evidenced by the faulty assessment on the River Project --- and the questionable formulas the CDA has used in justifying their projections.

The main point is that the current Village Board is spending like drunken sailors --- and hoping for the best.

In addition, the actions they are taking will actually change the character of Shorewood as we know it, as they eliminate duplexes by paying to convert them to single families, and encourage development and housing that discourages Families with Children, in lieu of Seniors, Dinks and Sinks ...........