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Another unintended consequence of the internet

We were in Missoula, Montana, last weekend staying with friend in an older neighborhood of small, tidy homes. We learned that over the last several years our host’s former next door neighbor, had purchased, remodeled, and converted three of the other four houses on the same side of the street to short-term rental properties. Perhaps this example is a gross aberration in just that block of the Missoula housing market—but I doubt it. It speaks of a disruptive trend.

It may now seem like ancient history to recall when people looking for a place to stay first consulted listings of motels in the “yellow pages” of a paper reference called a “telephone book.” But that is not ancient history—and change has sneaked up on us. In fact, the rise of online short-term rental brokerage services like “VRBO” or “Airbnb” began in the late 2000s—roughly the same years in which Facebook gained traction. These rental brokerage services are now big business—and, in the manner of other disruptive technologies, they have spawned a massive conversion of housing stock into short-term rental units just like those on the block in Missoula. 

All disruptive technologies have consequences—often unintended ones. Let’s look at some local numbers. We start with the City of Spokane City Council agenda item around regulations and fees for marketing a short-term rental. Erin Sellers and Aaron Hedge of RangeMedia.co in their February 12 rundown of the agendas of local government meetings that week noted the following [see P.S.]: 

If the new ordinance is passed [so far it has not], the fee [for short-term rentals] will go down to $2 per [from $4] night, which the city estimates will offset the $173,000 cost of the program estimated in the 2024 Adopted Budget. In order to collect $173,000 from $2 nightly fees, short-term rentals would have to be used for 86,500 nights in one year, which would amount to about 237 units rented out every single night of the year. [Click here and go to pdf page 574 for the data source.]

Bravo for back-of-the-envelope calculations. Let’s take that a step further. Assuming that many of those 237 units could house two plus people each, around 500 folks might have a roof over their heads if those units were offered as long term rentals. Clearly, one cannot simply snap one’s fingers and make these units affordable long term rentals—but these 237 units are listed on account of demand by people of means facilitated by internet-based brokerages. During some parts of the year many of these units will likely sit empty. 

While we ought to have sympathy for the work and entrepreneurial spirit of those like our Missoula host’s neighbor, we must also ask at what point the rise of the short-term rental market threatens the integrity of the community. Long term rental unit shortages driven by units tied up in the short-term rental market are undoubtedly a factor in the rising number of people rendered homeless.

How often is your Airbnb or VRBO rental owned by an über-wealthy distant investor or investment company seeking profits—and in so doing distorting the local market and driving the housing shortage? One rarely knows if the contact person for the rental is the owner-operator or simply the employee of a management firm contracted by an investor consortium. We need data.

Frustratingly, most of the news coverage around the imposition of short-term rental (STR) fees and regulations is centered on the fees and regulations themselves and not on the reason for discussing them in the first place—the market disruption posed by STRs. On—line brokerages dealing in short-term rentals have changed the dynamics of the housing market. We cannot build our way out of the housing and homelessness crisis with an unregulated “free market” that in large measure serves only the well off.

Keep to the high ground,

Jerry

P.S. If you’re not already a subscriber to and reader of RangeMedia.co you should be. Erin and Aaron’s weekly Civics post is a valuable window into the workings of local government—and makes signing up well worthwhile. Paid subscription not required—but urged.

P.P.S. Thanks to M. Sellers, who graciously provided me with the reference to the primary documents (part if the agenda materials) that were to be considered that night at City of Spokane City Council from which they got their numbers. Click here and go to pdf page 574.

P.P.P.S. A $4/night tax on short-term rentals was passed by the City of Spokane City Council on July 10, 2023. Funds collected under Section 08.02.090 are designated for “Affordable and Supportive Housing,” an eminently logical application meant to ameliorate the harmful effect of internet-based short-term housing on the availability of affordable housing. (A secondary goal of the ordinance is to formalize the collection of data on the activity of the short-term rental market.) But, as is so often the case with taxation in Washington State (e.g. the state constitutional prohibition on an income tax), apparently there is a taxation tripwire somewhere in the State Constitution or the Revised Code of Washington that raises the risk of expensive litigation challenging the ordinance as an illegal tax. The current proposal to reduce the rate to $2/night (or eliminate it altogether) is an effort to avoid litigation. Of course, reducing or dropping the fee also negates a significant part of the intent of the original ordinance. 

Complexity, uncertainty, and fear

It is not hard to see why the wealthiest among us might be selfishly inclined to argue against almost any addition to the property tax rates—or why they might wish to make voters fear that any rise in property tax rates will drive us out of our homes and apartments. (Note that one of their arguments is that renters pay property taxes, too, because landlords pass the tax rise through to their renters.)

There is a reason Republican operatives like Rob Linebarger are fond of quoting large, scary numbers related to school bonds—while they avoid offering an estimate of the change in dollars in what the average property owner might owe once expirations and new levies and bonds are fully realized.

To be fair, the School Districts and the Spokesman articles didn’t do a very good job of this either. One must dig and read rather carefully to find—for Spokane Public Schools—any estimation of the actual dollar cost. At length, on the Explanatory Statement page for SPOKANE SCHOOL DISTRICT 81 – Proposition No. 2 in the Voter’s Pamphlet one finds:

If approved, the total tax rate for all district levies (Educational Programs & Operation and Bond) would increase by approximately $0.02 per $1,000 of assessed value, to $3.84, in 2025. Exemptions from taxes may be available, call Spokane County Assessor at (509) 477-3698.

They should have gone at least one step further and clearer, I think. Translated, this statement says that if both of the two District 81 levies (Proposition 1, the “Replacement of Expiring Educational Programs and Operation Levy” AND Proposition 2, the bond levy that failed because it didn’t reach 60%) had been passed by the voters then the overall change in the school part of your property taxes would be a rise of 2 pennies per thousand dollars of assessed value. The average home in our area has an assessed value of less than $400,000. The average homeowner would pay just EIGHT DOLLARS (400 X 0.02) more in 2025 than 2024 on their property tax bill for the support of public schools. That’s sixty-seven cents more a month per average homeowner to support public education. Eight dollars a year to support the common good. Eight dollars that doesn’t even cover intervening inflation.

When most of us look at a tax proposal what we really want to know is “What is it going to cost me??” not “What is the total budget of the local school system?” So why don’t they just tell us “About EIGHT DOLLARS for the average homeowner” instead of diving into budgets filled with large, scary numbers? School districts, I suppose, are reluctant to offer too firm a number because the cost that appears on any individual homeowner’s tax bill will vary. The number depends on changes in total assessed property value in the district (that could require a downward or upward recalculation of the levy rate) as well as changes in the assessed value of a given home. 

The wealthy, as represented by Republican operatives like Rob Linebarger, are better served by hinting that your taxes might go through the roof or arousing suspicion that schools aren’t managing your tax dollars prudently. Fear of being driven from your home by rising property taxes and engendered distrust in government are great negative motivators. 

Property tax, one of the oldest forms of taxation, is a form of wealth tax—it is leveled on what a taxpayer possesses rather on what one earns or spends. Paying eight dollars more in property taxes on a $400,000 average home is one thing. Having to pay taxes on investment property that is not currently producing any income is quite another. (Consider that, for the wealthy, paying tax on currently unproductive investment property would be equivalent to paying an annual tax on the value of owned stocks and bonds—whether they’re turning a profit or not.) Wealth taxes like the property tax are anathema to Republican trickle-down economic orthodoxy. Republican websites and text messages putting forward large, scary numbers and citing complicated formulas are a cynical tactic. Tell a friend.

We all need to do a better job of understanding the real world implications of defunding the public schools. 

Keep to the high ground,

Jerry

P.S. The primary mission of the public schools system is to produce a literate and numerate citizenry and work force that is capable of critical thinking, a benefit to all. Defunded, substandard public schools will, in the long term affect society overall, rich and poor alike, but the wealthiest among us are affected least in the short term. The wealthy are the most capable of investing in private education for their children. Consequently they are less directly dependent on the quality of public education in the short term.

P.P.S. Taxation of wealth is the most direct means of tackling the problem of widening wealth inequality. Taxing wealth as the best solution was raised to prominence by the French economist Thomas Piketty in his 2013 best-selling book Capital in the Twenty-First Century. Property tax, as noted above, is one form of wealth tax. 

P.P.P.S. Where property taxes get tricky, of course, is in the United States where much of middle class family equity is held in illiquid, mortgaged investments in large homes purchased in the conviction of ever-increasing value. Our love affair with this home ownership as investment part of the American Dream can leave us in perilous circumstances when cash flow is eaten into by an annual wealth tax on our biggest investment. Of course, when the growth of that wealth tax is shrouded in the complexity of its calculation it leaves the home owner vulnerable to the fear-mongering we saw in the February Special Election last week.

The Republican Party weighs in against the public good

The Thursday, February 15th Spokesman carried an article by Elena Perrywhich opened with this sentence:

Spokane-area school superintendents are scratching their heads after voters showed sinking disinterest [sic] in funding schools in Tuesday’s special election. 

In past years school districts in Spokane County tended to pass both levies and bonds with upwards of 65% of the votes (at least in the large districts). This year all five bond proposals put to the voters by five school districts, Spokane, Cheney, West Valley, Deer Park, and Riverside, fell short of the 60% of the votes necessary to pass. 

I fail to see why school superintendents were “scratching their heads.” The reason is plain. For decades (at least) public education has been considered a non-partisan public good. After all, having a well-educated, literate, and numerate citizenry and work force benefits everyone. Moreover, the population of Spokane County is increasing. The need to expand and maintain school facilities is clear. We elect public servants to the school boards to make sure the public schools are working well—and when those elected public servants study the needs of their district we used to take their requests seriously and vote accordingly. 

But not this year. This year for the first time opposition to the passage of school levies and bonds was taken on as a partisan issue by the extremists who are the leaders of the Republican Party. 

From Elena Perry and Nick Gibson’s Spokesman article the prior day, February 14th, the day after the election [the bold is mine]:

Citing increasing school budgets and “terrible” state test scores, the Spokane County Republican Party urged voters to vote down ballot items in Spokane, Central Valley and Mead school districts. Leading up to Election Day, the group sent out texts to over 30,000 “likely Republican” residents with outstanding ballots in these areas.

“We’re not against funding schools, we’re against the way schools are funded,” said Rob Linebarger, chair of the candidates and marketing committee with the party.

Schools’ budgets are top-heavy, Linebarger said, and direct too much funding toward administrator’s salaries rather than being spent to reduce class sizes and on materials for classrooms.

Really? Top heavy? Bull. Next paragraph from the same article:

In Spokane Public Schools, 4.8% of their general fund budget goes toward central administration. In Central Valley, it’s 4.6%.

Besides that, one must ask what makes Mr. Linebarger think that the solution to “terrible” state test scores is less financial support? And why, considering student enrollment and inflation, does he rail against “increasing school budgets?” Local Republican leaders are anxious to couch their opposition to the public good in terms like “fiscal responsibility.” MJ Bolt, chair of SpokaneGOP, suggests that it really isn’t the local Republican Party’s partisan meddling, but the “economic climate” that was responsible for the bond failures. Don’t believe her. 

Remember that Rob Linebarger made his name in local politics by disrupting meetings of the Central Valley School Board during the pandemic on an anti-mask, anti-vaccine-mandate, Covid conspiracy theorist agenda. He pressed on with a legally baseless attempt to recall moderate members of the Board, an attempt that cost the Central Valley School District $175,000 in attorney’s fees—and tied up part of Spokane County’s Superior Court for nearly a year. You can read more of the details and follow the links here. Mr. Linebarger is now the “9B District Leader”and, as noted above, serves as “chair of the candidates and marketing committee” for the Spokane County Republican Party (aka the “SpokaneGOP”). Apparently the Spokane GOP’s “marketing” under Mr. Linebarger includes politicizing and undermining the funding for public schools.

The total votes cast even in the largest district, Spokane Public Schools, is only around 45,000. With Mr. Linebarger injecting 30,000 partisan text messages pretending to fiscal authority, advocating against school funding, and stimulating negative turnout, no one should need to “scratch their head.” The leadership of the Republican Party has been pushing an anti-tax, anti-government agenda for decades even while it has advocated for public funding of private schools. Now Republican operatives are branching out with a partisan denial of the common good of public schools—a common good that has been the bedrock of American values since the Civil War (see P.S.).

It’s time to push back.

Keep to the high ground,

Jerry

P.S. Abraham Lincoln wouldn’t recognize the modern day Republican Party. It was Lincoln who supported the establishment of the great American land-grant universities, citing education as an essential public good for the betterment of the nation. The modern-day extremist Republican partisan agenda opposing public school funding would have Lincoln rolling over in his grave. 

There’s an action item here

Erin Sellers in a February 11 article in RANGEMedia.co titled “We both could have died” nails the article’s theme with a quote from Joni Mitchell:

You don’t know what you’ve got ‘til it’s gone

It is no secret that healthcare is becoming big business through mergers and buyouts. It is also no secret that healthcare doesn’t even resemble a “free market.” A free market requires a willing buyer. Many (or most) consumers of healthcare, especially reproductive healthcare, seek help to remedy a health issue, often an urgent one. They are not in a condition conducive to comparison shopping, nor are many patients equipped to thoroughly evaluate what is offered. As hospital systems consolidate and healthcare insurance becomes more restrictive choices are further constrained.

Access to some basic healthcare may be lost in this swirl of business. M. Seller’s article tells the story of an older woman who is pregnant with a fetus that has a undeniably lethal genetic abnormality. Carrying the fetus is a significant risk to the woman’s life—the more so with each passing month. But here’s the catch: Sacred Heart (Providence) refuses to allow the procedure (a dilation and curettage or D&C) unless the pregnancy is “immediately life threatening.” Her health insurance is through her husband’s job with a Catholic employer. It will not cover the cost of the procedure at Deaconess Multicare where a D&C would be allowed in a case like this. Cost at Deaconess? Quoted at around $8000—out of pocket. Instead, the patient has the outpatient procedure at Planned Parenthood in unfamiliar surroundings and without the attending OBGYN physician who had been taking care of her. 

It is a fair bet that this particular detail of insurance coverage was not at the top of the list of considerations when this patient’s husband acquired family health insurance through his employer—or, for that matter, when he took the job. What if, thanks to healthcare mergers and acquisitions, this couple lived in a region with only one hospital, that hospital were a Providence institution, and the nearest Planned Parenthood Clinic were a two or three hour drive away? 

It would be harder to turn back the clock and unwind concluded mergers and acquisitions—but we can prospectively scrutinize a proposed acquisition for evidence that it will result in a curtailment of medical services—and intervene to prevent that from happening. That’s what “Engrossed Senate Bill 5241—The Keep Our Care Act” would do. [“Engrossed” just means “as amended”, in this case, “as sent on to the House”.] Click the link. There you will see that ESB 5241 passed the Washington State Senate on February 8. It has moved to the House in the hope of passage before the end of this year’s “short” (60 day) legislative session. 

Here’s where we come in. On that main page on the upper right there is a green elongate button that says “Send a comment on this bill to your legislators.” You don’t need to write a thesis. Just let them know you’re watching, you’re invested, and you approve. If you have the time and inclination, explore the other links available on that main page. It is an education in how legislating actually happens—something most of us (including me until recently) are pretty clueless about. M. Seller’s article “We both could have died” is well worth reading to understand more of the background.

In Washington State a woman’s right to make her own medical decisions in consultation with her doctor is enshrined by a referendum passed in 1970—but what good is a right if, by virtue of healthcare mergers and acquisitions, one’s ability to exercise that right is inaccessible?

This is an important bill. Indeed, “You don’t know what you’ve got ‘til it’s gone.” Recognize what we have and protect it.

Keep to the high ground,
Jerry

A lot

For some in eastern Washington the top of a heap of news last week was U.S. Representative Cathy McMorris Rodgers’ (R-WA CD5) surprise announcement that, after 20 years in the U.S. House, she will not seek re-election this fall. Unsurprisingly, she declined to reveal any reasoning for leaving at what will be the age of 55. She wrote only that after “much prayer and reflection” she has decided not to run for re-election but to serve “the People of Eastern Washington…in new ways.” Speculation over what exactly might have tipped her over the edge was abundant—and, I submit, mostly pointless. She will most certainly will not write a book like Liz Cheney’s exposé. After all, McMorris Rodgers was the person who glowingly nominated Mike Johnson to serve as Speaker of the House (behind the closed doors of the Republican caucus). If, somehow, McMorris Rodgers were disillusioned by the MAGA Republican dysfunction in the U.S. House, it seems unlikely we would ever learn of it. 

There was some speculation that behind the scenes, she had anointed a Republican successor. After all, she was essentially offered the job by retiring Republican U.S. Rep. George Nethercutt in 2004. Perhaps she did anoint someone, but if she did it was kept very quiet. Emry Dinman’s article yesterday (February 11) on the front page of the Spokesman certainly suggested clammer and disorder. Dinman contacted no less than a dozen local Republicans and more than five Democrats. We knew that Carmela Conroy, Dr. Bernie Bank, and Ann Marie Danimus were already registered for the August Primary to challenge McMorris Rodgers—but the article offered little clarity on who else will throw in a hat. The filing deadline is May 10, 2024, for the August 6th top-two Primary Election. 

On February 5 Spokane County Commissioner Al French put to rest a contrary rumor by announcing on Facebook that he would run again for the District 5 (western part of Spokane County) seat he now occupies. I’m told there is a very promising but still undeclared challenger. French is arguably the most powerful elected official in Spokane County. He likes to exercise his power out of the limelight. He holds positions on a number of county and state boards and touts his expertise in advancing the interests of the business community. Apparently that includes trying to cover up and slow down efforts to research the extent of PFAS contamination from Spokane International Airport that has poisoned the well water of a good number of his constituents. Business über alles. An architect/developer by trade, French is also seen as pushing development in the Latah valley without supporting needed infrastructure. 

Depending where you put your focus last week, McMorris Rodgers’ and French’s news was either overshadowed or was overshadowed by a plethora of national stories: Speculation about Taylor Swift and the upcoming Super Bowl lit up right wing media. Tucker Carlson (a modern day Father Coughlin?) went to Moscow and was given an extended and faulty history lesson by Vladimir Putin. The U.S. Supreme Court heard arguments last Thursday over Colorado’s efforts to bar Trump from the ballot based on Section 3 of the Fourteenth Amendment (with “Justice” Clarence Thomas having the gall to start the questioning rather than recusing himself). President Biden was exonerated in the classified documents investigation by Republican Special Counsel Robert K. Hur in one sentence—followed by a couple of hundred pages in which he opined as if he were Comey 2.0. I recommend Heather Cox Richardson’s post on Hur’s political hit-job. 

Keep to the high ground,
Jerry