NewGeography.com blogs

The National Association of Realtors has just published its quarterly median house prices and the trend continues downward in Miami. At the end of the third quarter, the median condominium price had dropped to $82,900 in Miami, about the same as the list price for a BMW-7 sedan. This places condominium prices at 77 percent below the 2007 second quarter median of $367,000.

While Miami has experienced perhaps the most substantial condominium bust in the nation, other metropolitan areas, such as Atlanta, Seattle, Los Angeles, San Diego, Chicago and Portland (Oregon) have seen huge decreases and a spate of spate of distress auctions and conversion of units to rentals.

A recent article in The Wall Street Journal noted that condominiums have experienced an even greater market decline than detached housing. The over-building of condominiums may have been spurred by rose predictions from urban planners about the demand for central city housing being far greater than the supply. For example, the developer of City Center Las Vegas indicated that they built too many condominium units, at least in part in response to information received an urban planning symposium.

Photograph: Condominium Conversion to Rentals in Portland (by author).

According to many economists, including the well-respected Robert J. Samuelson, the federal government's effort to fund high-speed rail lines is like trying to fit a round peg into a square hole. If one really breaks down the numbers, the Obama administration's goals of reducing green house gas emissions, traffic congestion, and oil consumption with these rail lines are idealistic to say the least, and this idealism may cost states more than their budgets can handle right now.

The administration wants to build rail lines in 13 urban corridors throughout the nation, 12 of which span distances of less than 500 miles. High-speed rail in these areas would compete with car and air travel, but statistics indicate that this would not save a significant amount on energy costs. Assuming daily air passengers, about 52,934 people in the 12 corridors in 2007, switched to high-speed rail, the result would amount to only a 2.5% drop in air passenger totals. Driving is even less likely to decrease seeing as 85% of the 140 million Americans drive to work each day. If you take the example of the Northeast corridor with 45 million commuters, only 28,500 of which take Amtrak, high-speed rail will not divert enough drivers to cut the amount of energy costs that the administration claims it will.

However, they use high-speed rail models from Europe and Asia to justify spending upwards of $10.5 billion on this infrastructure of the future. The problem with this is that the successful high-speed rail lines, the most successful of which are the Paris-Lyon and the Tokyo-Osaka lines, are located in densely populated urban areas. The United States became heavily suburban in the past half century and the percentage of the metropolitan population living in central cities dropped to 32% in 2000. As a result, jobs spread out to the suburbs and more Americans are even working from home. Rail service to big core cities will be even less useful as this trend continues.

Washington will end up footing most of the bill for these high-speed rail projects, especially in states like California that have massive budget woes and few interested private investors. In fact, California is asking for $19 billion for its now $42.6 billion project. That’s almost twice as much as the administration has paid for all the high-speed rail projects in the nation combined (currently $10.5 billion). If this starts happening in every state waiting to get high-speed rail, even if it is on a smaller scale, the federal government will have little money to address the country’s more pressing needs, such as education.

Some state governments are starting to wise up. Not wanting to waste money on unfruitful high-speed rail lines, they are simply rejecting federal money for these projects because they would not be able to spend the funds on things they really want, like better roads. Obviously, the federal government won't be able to force high speed rail on Americans for long.

There is no doubt the Obama administration has good intentions for high-speed rail, but good intentions don't always translate to success. Rather than try to wedge its idealistic vision of a new transportation infrastructure into the realities of recession-ridden America, it should evaluate what the country truly needs.

New Jersey governor Chris Christie reaffirmed his decision to cancel the "access to the regional core" tunnel across the Hudson River from New Jersey to New York. Christie had suspended his previous decision pending discussion of alternatives with the US Department of Transportation.

In the final analysis, according to Christie, none of the alternatives would have capped New Jersey's liability at its present level, which assumed a project cost of $8.7 billion. Christie told the Moorestown Community House, "No more blank checks from the taxpayers of New Jersey, not on my watch."

Current estimates for the project have range from $9.8 billion to more than $12 billion, which would require New Jersey to pay an additional $1.1 billion to $3.3 billion, since under the funding agreement approved by former governor John Corzine, New Jersey was responsible for any cost overruns. In fact, based upon the experience with other projects (such as Boston's Big Dig), New Jersey could have seen its bill run to another $10 billion or more.

Christie's decision is unprecedented. This may be the first time in decades that a major infrastructure project already under construction has been cancelled because its costs had spiraled out of control. Such cost performance has been the rule, rather than the exception. Major research by Oxford University professor Bent Flyvbjerg, Nils Bruzelius (a Swedish transport consultant) and Werner Rottenberg (University of Karlsruhe and former president of the World Conference on Transport Research) covering 80 years of infrastructure projects found routine under-estimation of costs and over-estimation of ridership and revenue (Megaprojects and Risk: An Anatomy of Ambition ).

Saturday October 16 marked my third day in Accra, Ghana representing AdFarm and Praxis Strategy Group at the National Food and Agriculture (FAGRO) show. We began the day with a deep dive into grower issues as panelist guests on an agriculture-focused radio program hosted by 90.1 Rite FM.

The panel included John Dziwornu, National Secretary of the National Association of Farmers and Fishermen; Myself (Colin Clarke of AdFarm); Tony Mensah-Abrampah of Praxis Africa;  Jaques Magnee, commercial director for Raanan Fish Feed; and Andy, a farmer member of a Ghanaian Mango Cooperative.

As a panelist on the 2+hour radio program it served as a great opportunity to learn about the challenges faced by farmers. I was pleasantly surprised to find much common ground among North American and Ghanaian farmers. The similarities were stark:

When asked if farmers are difficult to work with, Andy of the Mango Cooperative answered, “Farming is a difficult job – we want to complain, so let us complain!” I loved Andy’s candor. He was brutally honest and very animated. Tremendous passion for his work as a farmer.

There was much discussion about lack of access to financing for Ghanaian farmers and the expense of finance options today. Farmers are commonly required to pay up to 22% interest on operating loans… if loans can be secured at all. Another farmer who joined the discussion stated the need for an insurance program that will protect farmers in case of crop loss so loans can be repaid. He stated instances where he has bore the entire expense of bringing a crop to harvest, then having NO market for his crop or losing his crop to a weather issue. There are many variables working against the farmer and very little assurances outside of some subsidies on crop inputs (fertilizer for example).

My observation is the entire agricultural structure in Ghana is in its infancy. There is need for farm safety nets (insurance programs), there is need for grower education programs on production, there is need for market access expansion, there is need for improved import laws, and there is incredible need for ag infrastructure that will allow farmers to expand production and deliver their crop to market.

An interview with Davies Korboe, Chairman of farmerdavies inc. and 2010 National Farmer of the Year reinforced many of these points. Davies is a highly diversified farmer raising a mix of crops and livestock. He would be considered a large farmer in Ghana, but even as a large farmer he is facing the same issues with financing, insurance, market access and infrastructure. He sees great opportunity for Ghanaian agriculture, but many issues to overcome.

Our final meeting of the day was with Philip Abayori, a farmer and President of a prominent Farm and Fisherman Association. A brilliant man, he has an amazing outlook for Ghanaian agriculture. He states there are 12 MILLION hectares of productive land in Ghana and less than 2% in active production today. He describes the different growing regions suitable for different ag industries: forestry, aquaculture, production agriculture and livestock. He envisons programs where farmers and industry professionals from each track can work together towards sustainable, well-managed production. He has great faith in the capabilities Ghanaian farmers.

My outlook towards agriculture in Ghana is one of opportunity. As we hear the “experts” tell us there is no more land available to feed the next 3 billion people I am encouraged to see places like Ghana with 12 million hectares waiting for production. Are these areas of the world forgotten? Places like Ghana can do their part to feed the world while strengthening the country’s agrarian economy at the same time. There is so much good to be done.

So where do you want to start?

Dr. Colin N. Clarke is a senior strategist for AdFarm. Follow him on Twitter @colinnclarke or on Facebook at Facebook.com/cnclarke

The New York Post editorialized (October 8) against what it called "Another TWU Fare Hike," blaming the union for the fares that will now rise to $2.50 for a ride. The editorial writer goes on to say of MTA chief Jay Walder, "It's not his fault that straphangers get whacked while the MTA's unionized workers -- whose blue collars come with fur trim -- don't have to make a single sacrifice to meet the MTA's shortfall."

In response, I posted the following comment to the New York Post site:

Not his fault? Well, perhaps not personally. But surely it is the responsibility of the MTA and those in Albany who have skewed law labor and regulation to create this untenable situation. It is about time that public officials, such as those who run the MTA, be held account for what they have given away to the unions. The unions could not have taken it without the agreement of the MTA and other local and state political officials.

The way the Post tells it, you might think that the Transport Workers Union (TWU) had engineered a coup and had forcibly taken control of the Metropolitan Transit Authority. It fact, it was all quite legal. Interests such as the TWU have used their political influence to obtain the expensive contracts that place the riders a distant second, after the employees and the taxpayers an even more distant third. The MTA was not compelled to sign overly expensive labor contracts. Albany was not compelled to insulate transit unions from the economic reality faced by everyone else, including private sector union members. Washington was not compelled to give transit labor unions job protections that would be the envy of European public sector unions. These protections are a considerable factor in driving expenditures up 100% (inflation adjusted) over the past 25 years, while ridership has risen only 40%. The appointed and elected representatives did so willingly, and to the detriment of the people, whom they were supposed to represent.

The Post rightly complains about this, but places the blame in the wrong place. If the MTA, state and federal officials who have so skewed transit economics in favor of unions, had instead served the riders and taxpayers first, then New York and the nation would have much more transit services, its fares would be lower and there would be much more ridership.

The Post also errs in saying "Only in New York could such a perverse equation come to be." In fact, the situation is no different in most metropolitan areas of the nation. Transit agencies have routinely avoided efficiency measures that would have increased transit ridership and reduced costs (such as competitive contracting or competitive tendering of services), raised fares and cut services.

As the process has unfolded over decades, the TWU and other local transit unions simply responded to the incentives that were established by the elected and appointed officials. This has contributed, along with extravagant and in rail transit expansions, to rendering transit financially unsustainable. The problem is that the public interest in transit has been hijacked by special interests.

A more appropriate headline for the editorial would have been "New York Political Leadership Forces Another Fare Hike."