WWJD?

Despite Rev. Iovine’s arguments to the contrary, we have always suspected that St. Matthew’s sought out this cell tower business because of a dire financial situation. I had a very interesting conversation today with a former congregation member which I feel is extremely significant. Apparently, ever since the arrival of their new Pastor several years ago, the number of churchgoers has dropped off substantially and former members have joined other Lutheran churches in the area instead. Though their reasons varied, the resounding explanation was that they did not like the direction in which the church was headed. There are very few children enrolled in St. Matthew’s Sunday School and they have been on the brink of having to close their doors for awhile now. There seems to be discord among the few remaining congregation members, most of who are seniors that have been part of the church for the greater part of their years in the area. Last Sunday morning as I stood in their parking lot before services in an attempt to reach out to the churchgoers, to introduce myself and let them know that I live here with my family and that this has a direct impact on my life, I had an opportunity to speak with some of them. One woman said that she was very upset about the whole thing but asked me “What can we do? There is a contract.” She appeared to be apologizing for the actions taken by their board and trying to let me know that this was happening despite their wishes, as well.

Being a Christian, I have been trying, unsuccessfully, to get my mind around how any religious institution could ever justify putting their community in harm’s way. If a church is as strong as its followers, and only a handful of members remain, what does this say about the state of affairs over at St. Matthew’s? If their current Board of Trustees is willing to tarnish the church’s long held reputation as a peaceful, loving, community oriented institution and create friction with neighbors, a general feeling of betrayal and disappointment, spread further discord amongst their own members, and completely obliterate the “Love thy neighbor as Thyself,” doctrine, well, then it will not matter how much money this tower generates, because the pews will be as barren as their consciences.

                                                                               -Danielle LoPorto

Thank You Assemblyman Schroeder!!

Today we received a call from one of our State Assemblymen, Robert Schroeder.  He confirmed that this issue is important to him.  Mr. Schroeder has been involved in similar battles in Woodcliff Lake and in his hometown of Washington Township.  He has agreed to contact our Mayor and our Town Council on our behalf and register his concern and desire to see the Bergen County Superior Court’s decision overturned.  We applaud Assemblyman Schroeder’s willingness to hear us on this issue and his recognition of the urgency of this matter. 

As we review the sequence of events that has lead us to this situation, it is clear to me that had more of this community been aware of Omnipoint’s application, a stronger message may have been conveyed at the Zoning Board.  State law requires notice to residents within 200 feet of the property where variances are being sought.  The impacted area of this application extends far beyond 200 feet of Saint Matthew’s.  We will today be asking Assemblyman Schroeder to sponsor a bill in Trenton to amend New Jersey Statute 40:55d-12 to provide for notice to residents within 2,000 feet of a property owner that is seeking variances for the installation of cellular communications towers.  Had the notice provision cast a bigger net, a more realistic group of affected property owners might have gotten involved sooner in the process and averted the current situation.  At this great time of need, our laws need to do more to protect our homes, neighborhoods and communities.

We also today will be again contacting our Congressmen in Washington to renew our plea for their help.  In addition, we will be asking them to review their positions on the current form of the Federal Telecommunications Act.  Our leaders have all publicly discussed the need to revitalize the US housing market.  Giving more and more freedom to cellular communications providers to override local zoning authorities and install these types of structures where ever they see fit is inconsistent with the pressing need to help struggling families who have lost so much wealth in lost home equity.  Now more than ever, we have to have a more balanced view on the need for communications infrastructure versus the health and economic impact of those advancements.

While changing the law will not help our own cause, it’s our civic duty to inform our leaders of the problem to prevent this from happening to other communities.

– Joe

Poll on Cell Towers – What do you think?

Letter to our Mayor and Town Council

Mayor and Council

Borough of New Milford

930 River Road

New Milford, New Jersey 07646

Re: Omnipoint

Dear Mr. Mayor and Council;

I moved to New Milford five years ago with my wife and children from Jersey City because I believed that this was good and honest community in which to raise my family.  In that time, my children have attended Gibbs Elementary School for several years.  My wife and I have been active in our new community, volunteering our time for the school, local recreation sports, town Little League, and our local Cub Scout Troop.  In the fall of 2009, I worked very closely with the Superintendent of New Milford’s School District to launch a 501(c)(3) nonprofit education foundation to help fund important long term projects for our schools.  I devoted a significant amount of my time in drafting by-laws, articles of incorporation, setting a financial budget and in general building a management structure for the foundation.  We have set an ambitious goal of investing $1 million over a ten year period in our school district, largely derived from local fundraising.  I am proud of the work that was done and prouder still to have the chance work with such energetic and dedicated parents, teachers and administrators.   

We are a group of people that care very much about our town and continually demonstrate, through actions more than words, our urgent sense of civic duty.  Our citizens, in addition to paying taxes, freely contribute from their discretionary dollars to local sports, school PTO’s, and the newly formed Ed Foundation.  Many of us are now in a desperate time and in need of the Town’s help.  I have assembled the following analysis as a plea for that assistance.

 

Summary

Significant headwinds will put pressure on home price appreciation in New Milford along with any general economic improvement for a sustained period.  Given the fragile nature of the local housing market and the local economy, it is imperative that the Town Council and the Mayor take any and all steps necessary to appeal the Bergen County Superior Court’s decision to reverse the New Milford Zoning Board of Adjustment’s decision to reject Omnipoint’s application for the construction of a 90 foot monopole cellular communications tower at Saint Matthews Evangelical Lutheran Church on Center Street. 

I have attempted to provide an analysis that is as objective as I can possibly be under the circumstances.  I am in part focusing on what could be described as a “worst case scenario.”  I have worked extensively in advising the insurance industry for most of my career.  What is immediately clear in my experience is that risk management can not be based on most likely outcomes. 

Analysis

 

According to the Case-Shiller Housing Price Index for the New York Metropolitan Area, which includes New York City, Northern New Jersey and Long Island, since its technical peak in November of 2006, home prices have declined by approximately 20% or at an annualized growth rate of -5.2%.  This includes a modest reversal in that trend in the latter half of 2009.  The massive federal stimulus package along with an accommodative monetary policy (target Fed Funds rate of effectively 0%) has been a key driver for much of the recovery in both the housing and financial markets.  Consensus economic forecasts for 4^th Quarter 2009 U.S. Gross Domestic Product (“GDP”) growth are approximately 4.5% (annualized) with many market watchers calling for a possible 5 handle on 4^th Quarter 2009 GDP (publishing on Friday January 29^th).  Consensus forecasts for long run nominal GDP growth are still between 2 and 3%.  While this would indicate a technical recovery in the US economy, two items are relevant.  First, a 2-3% growth rate in GDP would be sustainable without significant job creation or a significant improvement in existing and new home sales.  Second, the current forecast on implied forward inflation is approximately 2.5%, so the current overall economic forecast is calling for effectively a 0% long run real GDP growth rate.  In addition, the Obama administration is in the process of proposing a 3 year freeze on discretionary spending excluding security expenses.  Government discretionary spending ex defense can account for as much as 1.5 to 2% of total US GDP. 

The technical correction in home prices that occurred in the latter half of 2009 would therefore appear to be largely artificial (resulting from federal stimulus) with the long run forecast calling for sluggish to zero improvement in housing prices or overall economic conditions with an outlier probability of a double dip recession.

These economic headwinds will continue to put significant pressure on home values in New Jersey, including Bergen County and specifically in New Milford.  New Jersey’s unemployment rate was just revised upward to 10.1%, or marginally ahead of (worse than) the national average (a flat 10%), with significant job losses posted in the 4^th Quarter of 2009 for New Jersey residents in the manufacturing, construction and financial services sectors.  This is the first time since the start of the recession that New Jersey’s unemployment rate exceeded the national average.  While headline attention has been paid to the more dramatic real estate collapses around the country (e.g. Florida, Nevada, California) the sharp rise in foreclosures in New Jersey is beginning to take hold.  In Bergen County, there are currently 633 homes in forced sale by the Bergen County Sheriff’s Office.  The outstanding debt on those properties averages at $469,000 (with the highest valued property at $9,456,000).  This does NOT indicate the actual foreclosure rate, only the number of forced sales, which is an advanced stage in the foreclosure process.  As should be obvious in these numbers, the recent up tick in foreclosures is affecting both moderate and affluent areas in Bergen County (Upper Saddle River, Alpine, Closter, etc.) with five homes currently in forced sale in New Milford (the average outstanding debt on those five properties is $415,000).  Internet sources on foreclosure rates are difficult to assess in terms of accuracy and therefore are marginally reliable.  That notwithstanding, as per a popular search engine, as of January 25^th, more homes in New Milford were listed as in foreclosure than for sale (62 foreclosures versus 41 homes for sale).

In addition, a number of leading financial firms have just downgraded municipal credits across the entire State of New Jersey (effective January 26, 2010).  While this clearly reflects a broad view on New Jersey and an overall deterioration in statewide credit quality, the downgrade has focused on general obligation bonds, revenue bonds and tax anticipation notes issued by local authorities.  Included in the downgrade list are the Paramus School District, the Cresskill Boro School District, the Allendale Boro School District and the Westwood School District.  In addition to specific deterioration in those towns, several statewide issues have been included in that assessment, notably, 1) the 4% property tax revenue increase cap now being imposed statewide, and 2) specific issues with regards to New Jersey’s approach to local government funding, namely that the approach to local funding is similar to college financial aid offices where the amount of money a local school district, for example, can apply for is offset by the amount of money they have in the bank.  This leads to local authorities spending down all of their reserves in order to apply for more funding in the future.  This imprudent approach to financial management is one of the key drivers for this recent downgrade.  With limited capitalization, a declining tax base and a restriction on the ability to raise taxes, the credit quality of local authorities will continue to deteriorate. 

Throughout this entire event, from the dramatic collapse of major financial institutions like Bear Stearns and Lehman Brothers to headline coverage of depression level conditions in highly impacted areas like Florida and Nevada, we, in Northern New Jersey have not seen a real visible impact.  The chickens are just now coming home to roost in our area.  For all of the reasons set forth above, the timing of this decision by the Bergen County Superior Court to permit Omnipoint/T-Mobile to construct a cellular communications tower in a densely populated residential area makes this issue grave by all measures.  Not only will this have a significant economic impact on local residents but on New Milford’s ability to maintain or raise taxes to cover rising costs. 

To assess the economic impact, if we consider the five homes currently in forced sale in New Milford (assuming those homeowners began with a 20% down payment on their homes or reserved 20% of their equity after taking second mortgages), those residents realized an average loss of $82,918 or $414,592 in aggregate (this is a list of five residents of this town that actually are about to lose half of a million dollars by the end of next month, February 2010 by Sheriff’s auctions, and are now bankrupt).  There are hundreds of homes with a direct sight line to the proposed cell tower.  This could significantly curtail those residents ability to engage in an orderly sale of their homes.  If we assume that this is limited to 100 homes in New Milford, the potential value at risk can be conservatively estimated at $8,291,800.   That does not reflect the actual decrease in home values; it only reflects the loss to residents with the balance of any actual price deterioration passed on to the banks and lenders that own those mortgages (which subsumes that those property owners have been bankrupted).  This real or perceived decline in home values could lead to significant negative adjustments to assessed property values that can only be offset by a 4% increase in millage rates. It is in the town’s interest, along with every resident’s interest to oppose any threat to home values, at all cost. 

The underlying assumption in the above assessment is that the impacted area is limited to the homes immediately surrounding Center Street.  While bank lenders of Fannie Mae eligible mortgages will require standardized attestations as to the fairness of home appraisals, there is no standardized methodology for comparable home sales analysis.  A distressed sale on Center Street could be used as a comparable home sale for valuing any similar property in New Milford.  As per census data collected in 2000, there are 6,437 housing units in the Borough.  Assuming 15% of housing units in New Milford are apartment style units, and taking 85% of the remaining housing capacity of New Milford, we are left with an estimated 5,471 free-standing homes.  The theoretical value at risk from a town-wide perspective can therefore be conservatively estimated at (potentially) $454 million.  If we assume that there are sampling errors in any of the data collected here, a simple discounting of 75% of the estimated value would still leave a town-wide aggregate value at risk of approximately $113 million.

Conclusion

The residents living on or around Center Street would object to the proposed installation of a cellular communications tower regardless of market conditions and we did so during the Zoning Board of Adjustment’s review of the matter.  Local economic conditions have significantly worsened since that time and even the slight risk of a spillover effect from distressed sales could have enormous economic consequences for the Borough and its residents in terms of wealth destruction and lost tax revenues.  The consequences of this particular event are larger than any crisis ever faced by this town’s administration.  This holds true for other projects throughout the Borough that have potential negative HIGH impacts on surrounding home values, including the Gramercy Park project and the United Water property discussions.  We beseech you to appeal the Superior Court’s decision and exercise extreme caution with respect to all other development projects for the Borough.  No greater mandate has ever been placed on this town’s government.

It is relevant to note that in 1930-31 most experts believed that the worst was over.  The markets rebounded in that period and revisions to monetary policy were perceived as working.  I am a professional in the financial services industry.  It is not my intention to sound alarmist.  Further, it would be a great injustice to compare the current environment to the Great Depression, one of the worst periods in American history.  The point I would like to make is that confirmation bias and a combination of raw optimism or apathy can lead people to reach incorrect conclusions in a crisis.  In periods of severe volatility, the risk of extreme adverse unintended consequences is, unfortunately, very real.