To date, I have never encouraged anyone to subscribe to this blog, although the subscription option has been available almost from the inception of Madison Park Blogger. I've preferred that people come to the web site to read the blog, since event information and other details are available here. However, I am often told by people that they forget to check the blog regularly, or they have forgotten its internet address, or they don't know how to bookmark a website in their browser. For those people--and for those who do not like reading white type on a black background--I now recommend a subscription to Madison Park Blogger.

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It's easy to arrange. Just go to the convenient box in the right-hand column of this blog labelled "Subscribe via Email" and fill in your email address. Click "subscribe" and you're almost done. You will receive a confirming email from Google Feedburner regarding your subscription, and if you reply as instructed you will begin receiving emails of each Madison Park Blogger posting automatically. No more worries about missing information! (You can also subscribe by RSS feed, if you prefer).

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Just another option for keeping up on the news of the Park.

Reassessing the reassessments

Since I reported last month that Seattle’s tax rate is going up by 13.4% this year, I’ve been asked by readers to explain why such a huge increase is necessary. With inflation running at only 2.7% last year, how does local government justify a tax hike that’s almost five times higher? Also, how exactly does the 12.3% downward assessment of residential property in our area of Seattle impact what we end up paying in taxes to the City? And since Madison Park’s property values declined less than the property values in the rest of Seattle, does this mean that we will now have to pay a greater share of the City’s total property taxes this year?

Thanks to the assistance of the King County Assessor’s Office, I have the answers to all of these questions.

But first of all, a word about the relation between property taxes and property assessments. You probably received a King County property tax assessment last year stating that the value of your residence had declined by 12.3%. I warned everyone at the time (or at least everyone who was reading this blog) that they should not expect their tax bill for 2010 to decline by the same 12.3%. The reason for this is that the total property tax obligation of the citizens of Seattle is determined by the multiple taxing districts (e.g. city, library, sewer, school, state, county, EMS, ferry, flood) that have the legal right to tax Seattle property. In other words, the annual need for property tax revenue is determined totally independently of the process by which our property values are determined. Or as the Assessor effectively puts it: don’t hold me responsible for the taxes you have to pay; I’m only responsible for figuring out how the property-tax obligation is distributed.

The following chart shows how much Seattle’s property owners are expected to pay in total taxes this year as compared to last:

That actually amounts to only a 1.6% increase in the property tax obligation for all Seattle properties, both residential and commercial in 2010. Not too bad.

And here’s how our area of the City (Madison Park/Madrona/Leschi) fared in terms of overall property value decline, year over year:

That represents a 10.6% decline in the total value of properties (residential and commercial) in our three contiguous communities. Seattle’s total property value, meanwhile, was $131.7 billion in 2009, declining by 10.3% to $118.1 billion for 2010. So what this means is that Madison Park/Madrona/Leschi actually had a greater decline in overall value than the City did (10.6% versus 10.3%).

So how is it possible for both things to be true: our total property value declined more than the City’s, while at the same time individual residential property owners here, on average, had less of a decline in value of their homes than those in all other areas of the City? The answer is that the rest of the Seattle had a lot of new construction and redevelopment, and a significant level of new property value was created in the process. Without this added property available to tax, the City would have had to tax previously-existing property at an even higher rate to make up the difference. Even so, just to stay about even with last year's tax revenues, the tax rate this year had to go up by 13.4%.

For Madison Park, then, this is the outcome of the whole process of tax setting and property reassessment for this year: we lucked out. With our below-average decline in individual property values, we could have faced paying a bigger portion of the City’s total tax obligation in 2010. Instead, because a lot of new property was created in other areas of town that can be taxed this year, we are actually paying a smaller portion of the City’s total property taxes in 2010 than we did in 2009:

And that’s the rest of the story.

["Our share" in the above chart refers to the proportion of total City taxes paid by Area 14, which consists of Madison Park, Denny-Blaine, Madrona, and Leschi (as detailed on the map above).]

520: where to from here?

It’s been a pretty eventful week since the opponents of the State’s current SR 520 plan held their press conference in the Arboretum last Monday. For those who haven’t been paying close attention to the issue, here’s a summary of what’s been happening, as well as a brief look ahead:

As you may recall, the opponents--including all of our 43rd District legislators, the Mayor, two City Council members, and a coalition of the immediately affected Seattle neighborhoods—are opposed both to the Option A+ design for the Westside approaches and to the design of the high-and-wide floating bridge that the State is planning to build, beginning in 2012. Fran Conley, coordinator of the Coalition for a Sustainable 520, summed the opponents’ views by arguing that the State should not be designing a transportation system for the 21st Century while using the outmoded transportation concepts of the 1950s. Opponents want a delay to the process and a redesign of the project that allows for only high-density transit (buses and potentially light rail) in the two addition lanes which will be added to the 520 corridor. And they want the height of the new floating bridge (currently designed to rise 30 feet above the water line) lowered significantly.

The opponents got a fair amount of publicity for their position during the week--as well as an immediate reaction from Governor Gregoire, who issued a statement declaring that delay and redesign of 520 were unacceptable. "Changing the configuration now would require a new environmental process,” she wrote. “The office of the Attorney General tells us that revising these decisions from several years ago would set the project back at least 18 to 24 months. Our commitment to ensuring public safety does not allow that kind of delay."

Eastside legislative and city officials then piled on, telling the media that the issue of 520 has been studied for many years and that the six-lane concept advocated by the state’s Department of Transportation (WSDOT) must move forward without delay. At this point, leaders of the transportation committees in the state legislature added their voices to the no-delay chorus. Finally, as if to add insult to injury, five members of the Seattle City Council (who just days earlier had signed a letter to the Governor asking for delay), stood shoulder to shoulder with the Eastside public officials to voice their opposition to delay. Mayor McGinn, for one, found their about face confounding.

All of this might lead you to believe that the opponents would be packing it in and licking their wounds. But not so. I talked to Fran Conley today (that’s Fran in the photo below, taken at last Monday’s press conference), and she actually believes that the anti Coalition is gaining momentum.

“For one thing,” she said, “we are raising awareness.” She noted that the lack of leadership by Seattle's ex-mayor, Greg Nichols, was devastating to the process, which has been very influenced by those suburban politicians who have taken a leadership role. The citizens of Seattle have not been represented and have not been informed, she believes. This is changing.

Though she hopes for a quick resolution though the political process which will result in a new 520 design, she noted that there is another option which might prove necessary. “We are hoping to avoid legal action,” she told me, “but we have funding and we have hired a lawyer.” I asked her if she envisions a legal battle like the one that Mercer Island residents waged against I-90 in the last century. She’s hoping it doesn’t come to anything like that, she said, but she nevertheless sounded determined to do what's necessary to stop the State from building the six-lane 520 as currently proposed.

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Next up on the agenda is the Coalition's response to the supplemental draft environmental impact statement (EIS) for the project issued last month by WSDOT. Public comments are being accepted through March 8, and the Governor has stated her intent to approve the configuration for 520 by the end of April. It's anticipated that the EIS will be finalized by the end of the year. If it is accepted, if the Governor approves the design, and if the legislature funds the program, court action may be the only recourse for the opponents.

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But at least one thing is clear about the process: it ain't over.

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[Graphic above, taken from the supplemental draft EIS by WSDOT, shows the height of the new floating bridge relative to the old bridge.]

Mad Pizza gets some competition

Apparently you can never have too much pizza. And just to prove the point, we're about to get a new pizza place here in the Park. The construction crew has been working away this past week in the old Impromptu space (4227 E. Madison St.), knocking down an interior wall and installing new pizza ovens.

Word on the street is that it's a "gourmet" pizza parlor, which may be opening as early as a week from now. The name of the new place is unknown, at least to any of the local merchants I spoke to, however. The construction crew tells me that even the construction plans do not include the restaurant's name.

While there are many kinds of food that you cannot get in the neighborhood, pizza is certainly not one of them. In addition to Mad Pizza, the longtime stand-alone pizza parlor further up the street, there are quite a few other options, given that there's pizza on the regular menus of Bing's, The Red Onion, The Attic, and McGilvra's (have I left someone out?).

Of course "gourmet" is another niche. We shall see.

Home financing in a ‘pragmatic’ environment

[Pacific Publishing Co., the publisher of the Madison Park Times, asked me to write a piece about the current state of the local home-finance market for their City Living section, which is an insert into several of their Seattle community newspapers (not including the Madison Park Times). Since the article may be of interest to some Madison Park Blogger readers, I am reproducing it here.]

You may have seen the story in the local press recently about the supposed new “trend” in home buying: paying cash. Reading a little deeper into the story, however, it becomes clear that this approach is being pursued by a pretty tiny fraction of the population—and only at the very low (or very high) end of the market.

For most of us, figuring out how to pay for a home is the largest financial decision we will ever make in our lifetimes. And for perhaps 99% of us, that means deciding on how to finance the purchase. As we’re all aware, however, the collapse of the residential real estate bubble and the resulting tightening of lending standards have impacted the financing options available for home buyers. But in what way? Is it possible today for home buyers to get a loan approved on reasonable terms, at a good rate, and without undue delay?

“Yes,” says Tom Golon, a home mortgage consultant at Wells Fargo Home Mortgage in Seattle, “but people are realizing that times have changed.” What this means, he notes, is that most people who are now applying for loans are less likely than in the past to “stretch” to get into the biggest home they possibly can qualify for. Also, they are likely to have higher credit scores than was true a few years ago, and they probably are looking for a traditional 30-year, fixed-rate loan rather than an adjustable-rate mortgage or some exotic financing option. “We currently have a more pragmatic population of home buyers,” Golon reports. “People who have been sensible can certainly buy a house today.”

And the timing is certainly right for getting a good deal on the financing, according to local mortgage professionals. They point out that rates continue to be low relative to historic patterns, home prices have fallen to a level where there are some real values in the market, and there are special government programs still available to help support home buying.

The program having the most impact, especially on the lower end of the real estate market, is the $8,000 tax credit for first-time home buyers. The program was extended into this year and applies to qualified purchases that are entered into by April 30 and that close no later than June 30.

Additionally, however, there is a “long-time resident” tax credit of up to $6,500 available for buyers who have owned the same home for a least five consecutive years of the last eight and who purchase a new primary residence. Apparently few buyers are aware of this little perk. An advantage of the program is the fact that those who qualify this year for it (or for the first-time-buyer tax credit) can use it either on their 2009 or 2010 tax return.

Another way the federal government provides support for home buyers is through the Federal Housing Administration (FHA)’s insured-loan program. According to Trevor Bennett, a mortgage loan officer at Bank of America in Kirkland, FHA-backed loans offer several advantages for many home buyers. Unlike conventional mortgage loans which generally require a sizeable down payment, loans insured by FHA can be approved with only 3.5% down.

Additionally, says Bennett, there is greater underwriting flexibility with FHA. “You don’t have to have perfect credit,” he notes, “and settlement costs related to the closing can be paid by the seller.” Additionally, gift funds can be used by the borrower to support the down payment. This is quite different from the standards lenders use to underwrite conventional mortgages. The cost of this kind of loan is higher, since a monthly FHA mortgage insurance premium must be paid until the loan amount declines to no more than 78% of the house value. But the program allows for people who might not otherwise be able to buy a house to have an option. FHA-backed loans currently represent a very high percentage of overall mortgage lending in this market.

For those who qualify for conventional mortgages “it’s a promising scenario right now,” according to Wells Fargo’s Golon, “certainly better than it was a year ago.” A 20% down payment is pretty much the standard for this kind of loan, he says. For a down payment of less than that, mortgage insurance would probably be required. So-called “conforming” loans are those that meet the 20%-down standard and that are not for an amount in excess of $567,500 within the Seattle market, he says. Interest rates for this kind of loan still range in the high-4% to low-5% range for qualified buyers with reasonably good credit scores.

A typical borrower today has a score in the mid-to-high 700s, Golon says. Someone with a lower credit score--but one that’s still good--might have to pay a slightly higher interest rate. (If you are interested in knowing your current credit score you may obtain it without charge by going online to www.annualcreditreport.com).

According to Golon, the typical underwriting standards for “conforming” loans include a requirement that no more than roughly one third of the borrower’s monthly income can go to home-related expenses, and monthly debt payments cannot exceed 45% of income. “Non-conforming” loans (jumbo mortgages) typically have tougher standards and higher rates but are more readily available than they were at this time last year.

Certain loan programs that once proliferated, such as Option ARMs, Sub-Prime, and Interest-Only mortgages, are now out the window, however. “These loans were originated for sophisticated buyers but later were offered to very unsophisticated borrowers who had no idea what they were getting into,” says Golon. Things really got out of hand when these loans were coupled with low (or or no) underwriting standards—including, in some cases, no requirements for borrowers to document income. “Those days are over,” Golon reports, “and people should expect to be able to document their income in order to qualify.” He notes that self-employed borrowers will probably have to provide at least one year’s tax return to verify their income.

Bennett of Bank of America agrees that now is a good time to finance a home, but he notes that buyers should feel a certain sense of urgency. In addition to the fact that several of the government programs will be expiring soon, there’s the added probability that mortgage rates will be rising in the coming months. For one thing, says Bennett, the federal government will be ending its purchase program for mortgage-backed securities in a couple months. This will almost certainly drive rates up at least marginally, making home buying more expensive.

In addition, it is possible that as early as this Spring, the upfront mortgage-insurance premium will be rising from 1.75% to 2.25% for FHA-backed loans. That’s just another reason why it probably makes sense for some prospective home buyers to make their moves sooner rather than later, says Bennett.

Then there’s the issue of refinancing. The general rule has always been that it takes an interest rate decline of at least 1% for a refinance to make sense. There are closing costs and loan fees to take into consideration in addition to the rate decrease. A lot of refinancing has occurred in the past year as rates have remained low, but there’s still a fair number of people who are looking to refinance their existing mortgages, according to Bennett.

Those still seeking refinancing, says Bennett, should consider taking advantage of a government program called “Making Home Affordable.” In general, if you have been current on your mortgage payments for the past 12 months and you originally put 20% or more down as a payment on your residence, you may qualify for a lower interest rate with your existing lender, with little or no closing cost and no mortgage insurance requirement. This assumes, however, that your mortgage is currently no more than 125% of your house’s value. Refinancing this way can save a borrower hundreds of dollars in mortgage payments each month, says Bennett. “We’re processing thousands of these loans,” he adds. “That’s my world right now.” (To find out if you qualify for this program go to makinghomeaffordable.gov. Note that not all mortgage lenders are participating in this program).

So here’s the bottom line: the opportunity exists in the market for both mortgage financing and re-financing on very reasonable terms. Borrowers are more likely to qualify if they have realistic expectations and good credit history. But if you’re interested in taking advantage of today’s market you should probably get moving soon.

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[Mortgages rates, courtesty of BankRate.com, show average rates for mortgages in the 98112 zip code on the date specified. Assumptions: Conforming loans with no points and good credit scores for borrowers.]

The Japanese Garden celebrates 50 years

The Japanese Garden in the Arboretum is about to end its winter hiatus, reopening on Sunday, February 14, for its 50th Anniversary season. Rated by a garden journal as one of the ten most favorite Japanese gardens in the country, Seattle’s Japanese Garden was inaugurated in July 1960, after only four months of construction. It’s now ready to celebrate a half century of giving pleasure to visitors seeking sanctuary and a connection to nature.

The concept of adding a Japanese Garden to the Arboretum goes back to 1937, but it took another twenty years for the idea to gain enough popular support to enable fundraising to begin for the project (a war against Japan had intervened). In 1959, with funds in hand and the design completed, Juki Iida and Nobumasa Kitamura were hired to build the garden, which originally was scheduled to take up to three years to complete. Using heavy construction equipment, a somewhat scaled-back design, and a capable crew of mostly Japanese-American gardeners, the builders transformed an Arboretum ravine into a colorful and tranquil garden, offset by boulders, water features and formal elements. And they did it all in record time. (That’s Juki Iida in the photo below, standing on the site during the construction).

The original design of the Garden was by the Tokyo Metropolitan Park Department, and Iida carried out the scheme by installing in a combination of traditional Japanese plantings, such as maples, gingko and bamboo, and Pacific Northwest natives, such as rhododendrons, azaleas, and cedars. In 1959, a hand-built teahouse was added to the Japanese Garden, the gift of the people of Tokyo. A fire destroyed the teahouse in 1973, but it was rebuilt in 1981 with the help of the Arboretum Foundation and Urasenke Foundation of Kyoto. The Garden itself was significantly renovated earlier this century, after over forty years which saw little change. Koichi Kobayashi, who undertook the renovation, called the Arboretum gem “one of the finest Japanese gardens to be constructed outside Japan.”

You will get an opportunity to view the Japanese Garden for the first time this year when it reopens one week from this Sunday (on February 14), at 11:00 a.m. There will be formal tours of the Garden at both noon and 2:00 p.m. on opening day, as well as a Shinto/Buddhist Opening Blessing at 1 p.m. Information on the Japanese Garden, including hours and scheduled events, is available here. There is also a nice, short video about the Japanese Garden available from Lonely Planet TV . The narrator sums up the Garden as an example of one of the “few places left in which you can approach nature in a small area and have it serve as a kind of textbook on life and how to live.”

[Upper photo by jamec199 on Flickr. Lower photo of the Japanese Garden in Winter by Spiral Cage on Flickr. Middle photo of Juki Iida courtesy of the Seattle Municipal Archives. Information included in this posting was obtained from “Legacy of the Japanese Garden of Seattle” by Prof. Koichi Kobayashi of the University of Washington, available here.]

Stuck with ugly?

Though their cause may ultimately prove futile (a fact admitted by our own State Senator, Ed Murray), opponents of the State’s plans for re-engineering the 520 floating bridge were out in force this morning for a news conference in the Arboretum, during which they spelled out their objections to both the proposed 30-foot high floating bridge and Plan A+ for the bridge’s west approach. A significant number of elected public officials made their voices heard at the event, including all of the 43rd District’s legislators (Representatives Jamie Pedersen and Frank Chopp, in addition to Senator Murray), City Council members Nick Licata and Mike O’Brien, and Seattle’s new mayor, Mike McGinn (shown in the photo below).

They, and the rest of the Seattle City Council, are—at minimum—on board to delaying the 520 decision-making process for about 120 days in order to look carefully at alternatives that are more mass-transit intensive than Plan A+, the option that the Legislative Work Group has proposed to the Governor and Legislature.

The public officials who were present--along with the Coalition for a Sustainable 520 (made up of the Seattle community councils most impacted by 520 and the local boating community), the Arboretum Foundation, the Cascade Bicycle Club, and the Sierra Club--want more than just a delay in the process. In essence, they would like to see a scaled back plan for 520 that does not have as wide a footprint through Portage Bay and across Foster Island, allows for no cars in the HOV lanes (only buses and, potentially, light rail), and does not include new much-wider on and off ramps in the Arboretum. They’re also not too happy with that high and ugly floating bridge that is being planned.

But in spite of their best efforts, ugly (in both its figurative and literal senses) is still a likely outcome in the opinion of many observers, including some members of the Coalition. Publicola, a Seattle political blog, sums the situation with this headline: “Seattle’s Preferred 520 Alignment Unlikely to Find Support in Olympia.” The blog argues with some persuasion that the process is too far along and the Seattle City Council too divided for the opponents of Plan A+ to get anything more than changes around the edges of the proposed 520 design. The basic idea of six lanes with two of them dedicated to HOV (car pools included) was established as the basis for all design options years ago. And no plans currently exist to bring light rail across the Lake using the 520 corridor.

Several of the politicians present referred to themselves as being in favor of construction and not obstruction. The issue, as they see it, is whether or not the new 520 will be part of an integrated and well-thought-out transit plan for the region or whether it will simply represent a short-term fix for getting more cars across the Lake more quickly. “This is a decision that is going to have a profound effect on our environment,“ said Representative Pedersen. “This is not a decision that should be entered into lightly.”

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(For previous posts on the issue of 520, click here.)

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[Upper graphic, courtesy of the Coalition for a Sustainable 520, shows a view of 520 from the lawn at Canterbury Shores with an outline of the Plan A+ configuration for that location. Graphic by Legal Media Experts Group.]