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[Previous entry: "READERS RESPOND TO ORCA STORY"] [Next entry: "A Letter Of Thanks To The Entire Community Of San Juan Island."]


Olson & Wilson Arguments Are But Codswallop
To The Editor:

Do land use restrictions affect property value? For Messrs. Olson and Wilson, the answer is “no.” Also, according to Olson-omics, “There are factors other than supply, demand, and pricing that effect [sic] real estate sales.”


All markets are driven fundamentally by supply, demand, and pricing. Uncertainty affects pricing of the supply-demand equilibrium via a risk premium or discount.

Yes, of course, the global recession has been a major factor on the demand side of the equation, but it is not right to ignore the role that local factors (like land use restrictions or local economic vitality) may have on demand. In fact, land use restrictions, covenants, and zoning often are used as tools to preserve value for homeowners, so clearly there is a well-established link. Occasionally, however, poorly planned land use restrictions can erode value by affecting demand negatively, just as macroeconomic considerations may affect demand.

At times, even County employees have championed the link between land use restrictions and value, albeit in typically bizarre fashion and by using a supply-side argument. Shireene Hale, for example, has cheerily predicted that property values would increase for parcels not affected by the CAO and the SMP. She might be right, but she is unknowingly advancing the Depression-era economic philosophy known as “beggar-thy-neighbor,” where a few become rich, not by creating value, but by impoverishing their neighbors.

Ed Kilduff
Lopez Island
Sam Buck: Uncertainty Impacts Sales

Dear Editor:

Some people doubt that there is a true need for a vested “site plan approval” similar to a septic system permit that will stand the winds of change for 4 years.

In general, property values have dropped 20, to as much as 40, percent from peak values due to national trends that we are all familiar with and rule changes will not solve that problem.

The value of the property is partially based on how the property can be used. If it is wooded to the waters edge, the current code would call for a 50 foot setback and require that many of the trees between the shoreline and the building foot print be left in place to reduce the impact of how the house looks from a boat on the water. If the set back was changed to 200+ feet with the ability to clear 15% of the foliage, as an experienced agent, I can say with confidence that for most people such a restriction would greatly reduce the value they would be willing to pay for the property and completely ruin the point of ownership for those who bought with the concept of a 50 foot set back.

Similarly, for the same reason above, any improvements would become non-conforming prohibiting expansions which would also impact value.

The problem is, if the current fair market value of a waterfront parcel is $600,000 but one does not know what the set back will be, who would be willing to pay the fair market price? If the seller really needs to sell it, how much lower will the price need to go to compensate for the risk? How many people do any of us know that are willing to risk great sums of money even with the potential of a substantial gain?

How low will the price need to go to entice a speculator to accept the risk? How low would it need to go for you? If one must sell, the price will be brutally negotiated downward and that “artificially created” much lower number will become the basis for comparable sales of other properties.

Anyone can secure a “site plan approval” currently called a Residential Pre-Application Site Plan (RPA) right now as a part of the building process, but even after spending the money to do so, if the rules change the next month, it becomes invalid. We are simply asking that once the RPA is approved, that it be vested for 4 years to create some sense of certainty for a buyer who wants to build within the next few years. This will not be acceptable to someone that seeks a long term investment, so that part of the market is still eliminated and those are the people that have maintained so much of the undeveloped property that we enjoy now. Vesting will simply allow a property owner to achieve a sale at current fair market value.

Lastly, this same principle applies to all properties that are perceived to be close to what might be considered to be a “critical area”. When money turns over, commerce is stimulated and the trickle down effect takes place. How many more storefronts need to close before this helpful and simple fix towards improving our situation is implemented by our leaders?

Sam Buck
San Juan Island
Uncertainty Not Due To New Regulations

Dear Editor:

The reasons given for the “vesting” initiative sponsored by the Association of Realtors bother me. I can readily identify with their concerns about the survival of their businesses; after all, many Americans are finding themselves in financial difficulty in this “Great Recession”. However, the premise that uncertainty surrounding the pending update of our Critical Areas Ordinance is causing a “chilling effect” on the real estate market, fails to acknowledge the true market-driven reason for the steep decline in sales, particularly high-end waterfront property.

Waterfront property by its nature is expensive, finite, and with a limited number of qualified buyers equates to a very thin and price-sensitive market. According to a WSU College of Business Real Estate report issued September 2010, we had the highest median home price in the state ($402,000) and as a result, the lowest housing affordability. Reportedly, home re-sales dropped 29.4% in SJC; this was the greatest decrease of all counties with Puget Sound waterfront. If the number of homes and property presently on the market could be sold at the current sales tempo, it would take five years for the inventory to be liquidated, and that assumes no inventory additions. At present sales rates, SJC has a 14.6 year supply of homes worth more than $500,000; comparatively, the total statewide, all price, supply is 13.9 months.

There are factors other than supply, demand, and pricing that effect real estate sales. The most important, and likely the fundamental reasons for the distress among our realtors, is that we still have high unemployment, job insecurity, an unstable housing market, challenging loan accessibility, many states with unbalanced budgets, and a federal government that is borrowing enormous sums from China, all of which contribute to real uncertainty. To blame CAO uncertainty is disingenuous and self-serving.

San Olson
Lopez Island
Gordy Responds To Wilson

Dear Editor:

Thank you for reading my column. I agree with your point but I wasn’t intentionally disingenuous. Even though the economy is generally “in the crapper”, we’re trillions in debt, the housing market sucks, and the global recession has not hit bottom, there are still investors scooping up real estate at bargain basement prices. There are vacant parcels of island waterfront on the market today that have been significantly reduced in price. But who would invest in these properties when there is a serious question weather or not the parcel could ever be developed? The answer seems to be only preservation groups are willing to invest in them. If you talk to realtors, they have hard evidence of this.

The Council could do something to strengthen consumer confidence for a short time before the entire shoreline becomes a no-touch zone. I understand that turning the county into one big “buffer zone” would mean sheer bliss and celebration for the death-to-development crowd but it will create economic chaos as one of the many downside effects for the community at large.


Gordy Petersen
San Juan Island
Wilson Invited To CAPR Dinner

Dear Editor and Harold Wilson,

I appreciate your interest [see letter below -Ed] in our local economy. However, your view is only part of the story. Studies from Washington State University and news stories from many news organizations have reported that the largest costs to building a home are "regulations". People mostly buy real estate to build a home and for investment. The current regulatory environment makes it impossible to know what, how or when the next set of regulations will be implemented and that causes some of the jitteriness about real estate potential here in the San Juans and around the country. In addition, the current draft regulations will make a lot of homes that are already built "non conforming." I don't know about you, but when things get too expensive, or uncertainty is in the air, most people choose to wait and see what the costs are going to be.

I warmly invite you to attend Tuesday's Jan. 4th, CAPR San Juan meeting at the Grange Hall at 5:30 pm. Ted Clifton will be speaking about the costs of regulations.


Frank Penwell
San Juan Island
Disingenuous To Blame New Regulations

Dear Editor:

To the Editor:

I read the Guardian with great enjoyment and appreciate the columnists who contribute. It brings out a point of view shared by a large number of islanders. I appreciate you publishing letters, as well as their rebuttals.

I believe Gordy and Sam Buck are being a bit disingenuous when they blame government regulation for the downturn in the real estate market.

Gordy said in his most recent column (dated 1/3/11) "The threat of new regulations has made REALTORS break out in mini-initiatives and is forcing some of them out of business". and Mr. Buck stated recently speaking to the council, as quoted in the Guardian "Mr. Buck told the Council the uncertainty of what can, or cannot be done on a property has caused economic distress for property owners, and for the overall economy in San Juan County."

Gentleman, we are in an extended, severe, global recession with large financial institutions failing, entire countries going bust, in excess of 10% unemployment, and trillions of new deficit added by the current federal government. That is the problem. The real estate trends here merely reflect that.

I support your ideas and positions and take delight in reading your columns, but I would like to keep the debate level. To blame the real estate woes of our County on the speculative changes in local and state regulations is simply intellectually dishonest.

Thank you for listening.

Harold Wilson
Friday Harbor

Tom Bauschke
John Evans
Mary Kalbert
Ron Keeshan
Gordy Petersen
Janice Peterson
Bruce Sallan
Terra Tamai
Amy Wynn
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