This is great analysis. Thank you! Most folks will indeed go with the
attractiveness of such plans, since the plans, especially as framed by the
powers that be, clearly benefit the most visible players. As you show in your analysis, the
possibilities for making money are endless!
Add political benefits accruing from the expansion of power, and such
plans become unstoppable. However, here
is why I feel LPSF should stand in clear opposition:
1. We need to be
consistent in our macro aversion to expansion of government power and
interference with markets. Specifically,
the trend in novel reasons for seizing private property is troubling.
2. We have made our
opposition to Plan Bay Area public; and in my opinion, we should also oppose
the individual pieces of legislation that enable the Plan, related to financing
the Plan and easing the transfer of property from private into public
hands. The Housing Trust implemented
last November and Senate Bill SB1 are examples.
Expansion of eminent domain at the local level is a logical progression
in such legislation.
3. We should not
ignore the economic downside of the proposal – the more invisible players, as
well as the unintended consequences,
Investors in mortgage backed securities (public employees’
pension funds, Fannie Mae, Freddie Mac, bequests funding various institutions)
are likely to suffer losses as the securities get shuffled around.
States and municipalities, trying to find ways to overcome
the challenge of ever increasing pension costs will find themselves with one
more thing to worry about, the increased risk of MBS , rendered open to
modifications due to property seizure.
Ordinary wage earners will see a loss of job opportunities
as the more risk-averse lending institutions shy away from operating in localities
with heightened eminent domain powers.
Borrowers might see a loss of borrowing opportunities from
the more risk-averse institutions.
So, we have your analysis, Matt, which clearly shows the
money making opportunities of Supervisor Campos’ proposal. And we should definitely be deeply cognizant of
them. Do we now refrain from acting out
our usual role as the resident wet blanket, or we point out the downside of the proposal to the