Politics and real estate are joined at the hip.
And, anyone who doesn't understand this fact is going to suffer for their ignorance.
Let me start by saying, this is not going to be some politically motivated tirade. That sort of thing has no place on this blog.
But, what very much does belong on this blog, are those topics that have an impact on the use and value of real estate. And, there is nothing that is more influential on the use and the value of real estate than government.
Government, from your local town to the highest federal levels, is run by politicians, all of whom (regardless of political party affiliation) are trying to impose their political agenda. Unfortunately, more times than not, the imposition of a "feel good" agenda has a significant and long lasting impact on those upon whom their agenda is imposed. And, more times than not, that impact is a costly one.
Let's take a look at 3 real-life events as examples of governmental impact upon the value and use of real estate.
EXAMPLE 1:
This is the case of the Bernardsville Quarry located in Bernardsville, New Jersey.
The property in question was a quarry mining site since 1931, prior to the existence of the municipal zoning ordinance which was originally created 14 years later in 1949. In 1963, the property was declared a non-conforming use by the Superior Court of New Jersey.
In the mid 1980's, the owner fell on hard times. And, in 1987 sold the property for $3,825,000 to another local quarry owner.
After the new owner cleaned and reorganized the property, as well as installing a modern crushing plant, the municipality denied the property owner a mining permit. Their excuse was, that the non-conforming use was abandoned because mining operations had ceased for more than 1 year.
To reinforce their position, the municipality also changed their zoning regulation to prohibit mining below a specific elevation level, which just so happened to be at the exact same level at which mining was currently taking place.
Although the property owner filed a lawsuit, the position of the municipality was held up all the way to the Supreme Court of the United States.
In the end, the property owner subsequently lost millions of dollars due to, what many people believe, was the intentional act of the municipal government to close this 50+ year old business operation.
EXAMPLE 2:
Imagine, that you've worked hard, saved your money, and finally bought a building lot where you were going to build the house of your dreams. Something modest, but it would be your own.
That's what Mike and Chantell Sackett were hoping to do when they bought a 0.62 acre lot on a hillside near Priest Lake, Idaho. But, then, the Environmental Protection Agency (EPA) issued a Compliance Order telling them their lot was subject to the Clean Water Act, and if they didn't comply by removing the gravel they placed on the lot, they'd be subject to a fine of $75,000 a day!
Because the lot is on a hillside about 1/2 mile from the lake and that there was another home and a public road that were between their lot and the lake, the Sacketts thought there may have been a mistake. But, when they tried to contact the EPA, the EPA refused to even discuss the situation.
Consequently, the Sacketts filed a lawsuit to challenge the EPA's position, but the state court threw out their suit, and the 9th Circuit Court of Appeals also gave them no relief.
It wasn't until the Sacketts took their case to the Supreme Court of the United States did they get relief - or, so they thought.
Although, the US Supreme Court said the Sacketts have a legal right to challenge the EPA, in court, they made no decision on the issue of whether or not the land could be developed.
Presently, after spending tens of thousands of dollars, the Sacketts still don't have a home. Worse, is the fact, they can't even sell their lot since the case against the EPA hasn't been resolved . . . and, it may be years before it is.
EXAMPLE 3:
This is a matter that, to my knowledge, hasn't found it's way into the legal system for reasons about which I can only speculate. I'm not going to use the real names or location of this circumstance so as not to cause any unnecessary harm to the property owner.
Nevertheless, it's instructive as an example of the influence and power of government.
This is the story of a man who owns a shipping company and bought a parcel of land in a major urban industrial location. The owner planned to eventually build a warehouse distribution facility to expand his existing business.
Keep in mind, this is about a 5 acre parcel in an urban industrial area. The land, as well as all of the other parcels around it, are flat and well above sea level. This is not a FEMA designated flood hazard area, and there are no lakes, ponds, or other water resources anywhere near this area.
That said, the subject parcel of land, which was once the site of an old industrial loft building that was razed some years before, had underground storm drainage to divert surface rain water off the site, as do most, if not all, of the other improved properties in this area.
However, since the site was vacant for several years before the current owner bought it, one of the sewer drain covers (those cast iron grates through which the water flows into the drains) became clogged with debris. So, when there were heavy rains, the water wouldn't drain and a small "pond" formed.
Subsequently, when the property owner applied for his building permit (which included development of the "ponding" area), he was denied because the state environmental agency had declared his "pond" a "protected wetland area."
As I said, I don't know the status of this matter. But, I do know, there's no building on that site and no building permit has yet been issued as of this writing.
IN THE END . . .
The point of this post, is that the best intentions of government tends not to be the best circumstance for those of us who have to live with their agenda.
Governments, at every level, control virtually everything that happens or doesn't happen in society. Their policies dictate how much we're required to pay in taxes to support their policies, and even how much rent we can charge our tenants (in the case of residential rent control or vacancy de-control).
When you own real estate, or if you wish to own real estate, you must become politically active in your local community, as well as in your state. You have to get out an meet the people who run for office and express your concerns in a well thought out manner. You must also get an understanding of their beliefs, and get a 'feel" for their level of dedication to what they're saying are their beliefs.
You must vote, and influence others to vote for those politicians whom you have personally met and that you believe best represent your interests as a real estate investor.
In considering your favorite candidates, you may want to reconsider political party allegiance, since the best person to support your best interests may actually be a member of a political party with which you have little knowledge or experience.
Keep an open mind. Ask questions about their perception of public policy regarding social spending, taxation, environmental regulation, rent controls, and any other topic that influences the use and value of real estate in your area.
But, most of all, DO SOMETHING. If you don't, you'll get what you deserve.
I'd love to hear your thoughts and comments. JOIN THE CONVERSATION!
