Is inflation the right term here?

Inflation, as in a weakening dollar? Or hyper-inflated land values?

The original Kidd Valley restaurant, which opened in 1976, will be permanently closing, according to a Facebook post from Kidd Valley.

Located on Northeast 55th Street near Ravenna Park and originally opened in 1976, the 800-square-foot restaurant needed to be remodeled to bring it up to code for the Americans with Disabilities Act.

According to Kidd Valley, because of inflation, it became too expensive to remodel or build a new store.

Hmm, I wonder…what’s the value of the land under that burger joint?

Well, now. The burger joint itself has been a $1,000 teardown since the year I moved to Seattle. But look at the value of the land since then…

About 1/10 of an acre valued at one and a half million dollars. Why is it worth so much? And why did it rise so quickly?

  • It’s right near the University of Washington, within blocks of a very densely populated student quarter
  • It’s on an arterial with frequent bus service
  • It’s also near a very successful shopping destination

All this as Seattle’s population increased from around 600,000 to 750,000…about 25% more people with a steep rise in land values/prices.

Which of those items did the owners of Kidd Valley build? At best you could argue their taxes helped fund the transit service. But the rest of it? All built by the community around it. Sure, they own the value of the business, the loyalty to the brand, the reasons why people go there. But the land value? Not so much. A vacant lot would command a high price at that location.

In a way, they are right: if they were to tear down and rebuild that 1960 building, it would be assessed at far more than the $1000 it’s valued at now. So they would be paying that onerous 1% or so on the $1.5 million in land with perhaps another $1 million on the new building. Maybe that doesn’t pencil out for a fast food restaurant, no matter how good the location is. And that’s fine. Let the land be repurposed. We’re not talking about cutting down the redwoods here: this is land that has already been developed multiple times.

So they are sitting on land valued at $15 million per acre. One could extrapolate that value along that corridor for a few blocks in either direction: how would one assess a land value tax there? Probably more than $13,364.34 per year, I think (and paid to an address outside Seattle, so Seattle doesn’t even get the paltry tax anyway).

If you turned the property tax into a ground rent/and value tax — maybe raise it by a factor of ten as the value of the location increases — the decision to move on would have happened 10 or 15 years ago, freeing up that land to find it’s highest and best use. Perhaps as a multistory mixed-use building with a Kidd Valley at the street level and 3 stories of residential above it. Look just down the street and see the dense development across from the University Village mall. Assess the value of the land at it’s most remunerative use, manage the improvements at a lower rate with zoning and land use guidelines to let developers maximize that value, and stand back.

a better world is possible

Went out to the KEXP 50th birthday party at Seattle Center yesterday and enjoyed it, lots of good music and a chill crowd on a hot (for Seattle) day. But I asked myself why I don’t do more of that sort of thing… 1/

Well, for a start, getting there is a collection of poor options. I could ride a bike if I wanted to spend the better part of 8-10 miles on either a state highway masquerading as a local road or various other local streets, all in bicycle gutters. 2/

I could take public transport (the option I chose) which took about an hour each way to go 7 miles.
Or I could drive 8 miles and pay to park and deal with all the attendant hassles of that. 3/

Seattle Center has been referred to as Seattle’s living room or collective gathering space. But why is getting to it such an afterthought? Link Light Rail has plans to connect to it but the flow of city life Link is built for has bypassed the so-called Center. 4/

And credit where it’s due: there were a *lot* of bikes at the event…100s of them. But where did they come from? Ballard, Capitol Hill, SLU…I doubt many came from N of the Ship Canal where a lot of the annexed car-dependent suburbs are. 5/

But a quick look at Search Results for “ghost bike” – Seattle Bike Blog
will show you a couple of good reasons why it’s not safe to ride a bike in Seattle, no matter your age or experience level. I don’t want to be a ghost bike by the side of the road. 6/

So it’s a mix of factors…Seattle’s inability to integrate the annexed suburbs into any transportation network because it tore out that network before the annexation. Seattle like many cities had streetcar suburbs and a viable intercity rail line from Everett to Tacoma…7/

(Guess what Link Light Rail’s N/S plan is going to replicate, at considerable expense — the old Interurban rail line) 8/

And its inability to imagine what NotJustBikes refers to as “viable alternatives to driving.” I took someone to the airport on a Thursday at 5:30 AM: by the time I returned at 6, traffic was crawling to stopped in places. Link would have taken over an hour, if it was running 9/

How many of those people could be served by transit if development and transit were designed together? If you have the same daily patterns of rush hour to all day stop and go traffic, you have proven the need for alternatives. Why aren’t they available? 10/

If you have one or more “traffic reporters” calling out the usual slowdowns and backups every day, what are you doing? And the irony of Seattle as some nature-loving stronghold while local salmon stocks are being wiped out by tire dust running into streams…11/

…and the livid weeping scar that is I-5 emitting clouds of greenhouse gases 7 days a week isn’t lost on me. Why would anyone *want* to ride a bike alongside that? We shit the bed on a daily basis then just remake it and do it all again tomorrow. A better world is possible. 12/F



Investor? Or Rentier?

I quibble with the use of the word “investor” here as the real investors are the people who live and work in and around that building, adding value. The putative investor will be simply collecting accumulated rentier wealth, growing rich in his sleep, as JS Mill said.

Landlords grow rich in their sleep without working, risking or economizing. The increase in the value of land, arising as it does from the efforts of an entire community, should belong to the community and not to the individual who might hold title.

the missing middle, or how we need 6-10 story buildings more than skyscrapers, explained

Someone once said to me there was no way they could be convinced that density would lower housing costs…maybe this would do it. And this was from someone who has traveled to Paris and other cities in France, London, as well as NYC and other dense US cities.

Supertalls are, of course, not the answer to the housing crisis. As the NYU economist Arpit Gupta explained to me, gentle density is what’s most urgently needed to reduce pressure in the housing market. “The vast majority of people in Manhattan live below the 10th floor,” he told me. “Downtown Paris is about the same size and has the same population as Manhattan, with few people living above the sixth floor. So what that tells me is that ‘missing middle’ construction—in the form of townhomes, and apartments that don’t go above the sixth floor—can actually produce all the density you really need in a city.”

NB: Seattle is twice the size of Paris by area but Paris has 3 times the population or 6 times the density yet no one complains that Paris is a mass of impersonal skyscrapers and housing blocks.

This “missing middle” housing is cheaper to construct than skyscrapers, meaning that these shorter buildings can pencil out for middle- and lower-income Americans. By contrast, the per-unit cost for skyscrapers will likely always exceed the budget of average-income workers.

And of course, the only way to get these to pencil out is by lowering the cost to acquire land through ground rents. Lower the barrier to entry and let the city take in more revenue over time…if the city’s finance department is imaginative enough to see that. Or they could preside over budget shortfalls and austerity while speculators play their games.

The parts of Malthus’s theory on population no one mentions

Malthus understood land, as part of his theory on population, but no one talks about that…

But it must perhaps also be allowed, that, under a system of private property, cultivation is sometimes checked in a degree, and at a period, not required by the interest of society. And this is particularly liable to happen when the original divisions of land have been extremely unequal, and the laws have not given sufficient facility to a better distribution of them. Under a system of private property, the only effectual demand for produce must come from the owners of property; and though it be true that the effectual demand of the society, whatever it may be, is best supplied under the most perfect system of liberty, yet it is not true that the tastes and wants of the effective demanders are always, and necessarily, the most favourable to the progress of national wealth. A taste for hunting and the preservation of game among the owners of the soil will without fail, be sup­plied, if things be allowed to take their natural course; but such a supply, from the manner in which it must be effected, would inevitably be most unfavourable to the increase of produce and population. In the same manner, the want of an adequate taste for the consumption of manufactured commodities among the possessors of surplus produce, if not fully compensated by a great desire for personal attendance, which it never is, would infallibly occasion a premature slackness in the demand for labour and produce, a premature fall of profits, and a premature check to cultivation.

Malthus understood the fundamental inequality of land ownership. His other ideas, on overpopulation and food, were overcome by contraception and agricultural science, but the distribution of land is a political/economic problem.

something something “paved with good intentions…”

How it started…

This radical vision was the work of Victor Gruen, a Jewish refugee who had fled Nazi-occupied Austria in 1938. He set his sights on bringing a dose of Viennese urbanity to what he saw as the car-dominated “avenues of horror” of American commercial strips. He imagined Southdale as the centre of a new high-density, mixed-use district, surrounded by housing and offices, as well as a school and a medical centre, with an artificial lake wrapped by curved streets, all forming a utopian “blight-proof neighbourhood”.

How it’s going…

Southdale spawned thousands of imitators across the country, many designed by Gruen, leading him to be crowned Father of the Shopping Mall – a label he grew to despise when he saw what he had unleashed. In 1978, two years before his death, he renounced this legacy. “I would like to take this opportunity to disclaim paternity once and for all,” he said. “I refuse to pay alimony to those bastard developments. They destroyed our cities.”

A good idea — “a new high-density, mixed-use district, surrounded by housing and offices, as well as a school and a medical centre” — spoiled by the speculative games of land ownership. There is another way, as the world’s most livable city proves time and time again.

So many cities are being handed a great opportunity to remake themselves, as shopping malls are decommissioned across the country. Blame Amazon if you like, rue the loss of a vast air-conditioned respite from the weather as you need to, but let’s think more about what we can make from this. In Seattle, one of the first malls in the USA is being gradually remade — 55 acres of land next to a freeway and a transit hub serving light rail and busways, adjacent to a community college and surrounded by established housing, homes and apartments. So far, all we have seen is a hockey training arena because entertainment is more important than housing to those who have a home of their own (like the city’s leaders).

How much social housing or mixed-use development could be built on 55 acres and how popular would it be, given the access to everything that’s already there? 10-15 minutes to downtown by train and access to the whole Eastside — Redmond and Bellevue — by the end of the 2024 makes that area incredibly valuable. But who will cash in? Not the city or county that made the investment in that land. And who won’t be able to buy in? The people who work in the city but can’t afford to live there — exist, yes, but live, in the fullest sense of the word? No. A ground rent or land value tax that captures the value — let the owner hold the title — would go a long way to to undoing the most fundamental inequality — access to land.

the book that started it all

Progress and Poverty, first published in 1879, was American political economist Henry George’s most popular book. It explores why the economy of the mid-to-late 1800s had seen a simultaneous economic growth and growth in poverty. The book’s appeal was in its balance of moral and economic arguments, challenging the popular notion that the poor, through uncontrolled population growth, were responsible for their own woes. Inspired by his years living in San Francisco and his own experience with privation, George argues instead that poverty had grown due to the increasing speculation and monopolization of land, as landowners had captured the increases in growth, investment, and productivity through the rising cost of rent.
To solve this, George proposes the complete taxation of the unimproved value of land, thus returning the value of land, created through location, to the community. This solution would incentivize individuals to use the land they own productively and remove the tendency to speculate upon land’s increasing value. George’s argument was profoundly liberal, as individuals retain the right to own land and enjoy the profits generated from production upon it.
Progress and Poverty was hugely popular in the 1890s, being outsold only by the Bible. It inspired the Single Tax Movement, and influenced a wide range of intellectuals and policymakers in the early 1900s including Leo Tolstoy, Albert Einstein, and Winston Churchill.

And in keeping with the author’s principles, the book is free…no rent is extracted from it.

“History has taught you nothing if you think you can kill ideas.”

History has taught you nothing if you think you can kill ideas. Tyrants have tried to do that often before, and the ideas have risen up in their might and destroyed them.

Helen Keller was not only a socialist, but a Georgian socialist? Not Gregorian, as the onscreen correction makes clear. She understood the commonality of mankind, that what unites us is inherited while our divisions are learned.

It’s amazing how some of the greatest minds the USA or the world has produced are erased or suppressed while they could be most effective. Not that these ideas aren’t still valuable but what might have been built on them if society had engaged with them at the time?

“When you lose the biggest advocates for open space, it feels like you lost the plot”

This guy gets it…

Colin O’Keefe, who owns a town home in Crown Hill, said that when he was looking for a home in the neighborhood, there was no need to search for a place with a backyard with Golden Gardens just a few minutes away by bike.

In almost 10 years, the 35-year-old estimates he has visited Golden Gardens more than a hundred times.

Nothing beats watching the sun set late in summer, the colors changing and rays moving each minute behind the Olympic Mountains, he said.

O’Keefe, who is planning his wedding reception at Golden Gardens, said he is disappointed about the decision to limit park hours and thinks spending money for police enforcement is a waste.

“When you lose people like us, who love parks and are the biggest advocates in the world for open space, it kind of feels like you lost the plot,” he said.

Who are cities and parks for?

It seems like the drag racing issue could be managed by traffic enforcement. And the crowd size issue tells me we need more public spaces, not reduced access to the ones we have.

How can cities manage their most valuable physical resource — land — for the benefit of everyone who chooses to live on it? How is the value created, who reaps the value, and how is it remitted back to the real investors — the community?

he is so close to saying it here…the value is in the land, not what’s on it.

A 20% down payment on the standard Seattle home, which costs $800,000, will run you $160,000. Even with that down payment, you can expect to pay ~$3,400 on a 30-year mortgage. I must now remind people that I bought a home in the Central District for $70,000 in the not-too-distant year of 1998. (A 20-year adjustment to standard inflation places its value at around $120,000.) My down payment was $5,000. My mortgage, $600. I made less than $40,000 a year as a freelancer and adjunct lecturer. Those were the days for a young person in the arts. (Zillow presently places the value of that old house of mine at an unrealistic $800,000.)

We need to keep in mind that Seattle only had 563,374 people in 2000, not long after when he bought his little place, where today it’s at 753,675. That’s almost 200,000 — 34% — more people fighting over the same 84 square miles. If you don’t increase the density per square unit of area, every unit becomes more valuable. Charles Mudede knows that little house isn’t worth $800,000 but doesn’t expressly say why someone will pay that (and they will). It’s for the location, for the proximity to whatever the community has created there.

where are the sunlit uplands?

A reader made the observation that these missives don’t offer a lot of hope, don’t outline or explain the positives. Well, by chance, this came in today:

Today I took a walk in a beautiful neighborhood in Barcelona, where there is a famous palace/art museum called Palau Nacional de Montjuïc / Museu Nacional d’Art de Catalunya. As I walked toward it, coffee in hand before starting work, I remembered how while I was growing up in the suburbs in the U.S., I used to think that cities with places like this were somewhere you could only visit on vacation for a couple weeks a year. In my mind, beautiful countries were the stuff of luxury trips you could only afford if you were rich, or something you’d only see in movies or read about in books. I was shocked to realize, when I moved here for a research project several years ago, that people actually live in these places.

Sure, I theoretically understood this before, but to come face to face with this reality was moving and changed my worldview. I realized firsthand that normal people like you and me can and do live in beautiful, magical towns and cities year-round. And not because they are rich (I was a broke student for much of the time), but because in many places, it’s normal to strive to build beautiful, human-centered cities. It brings people joy and a sense of pride, it embodies values and culture in physical form, and it enhances our life experience in various ways. As I move forward with my work in the field of urbanism, my goal is not to encourage more people to move to these places (or to build castles), but rather to encourage people to make more places that are beautiful, interesting, exciting, fun to live in, unique and beloved. — emphasis added

What prevents us all from living in vibrant, interesting, people-centered places? Failure of imagination, fear of what we might lose…? For too many USAnian cities, the deeply-rooted car culture with the attendant waste of land on parking and roads, as well as the public health and environmental damage, will be hard to change. But a better future is out there and we could start working on it today.

As the saying goes, the best time to plant a tree is 100 years ago…the next best time is now. And the corollary that the wise plant trees in whose shade they will never sit. “An advanced city is not one where even the poor use cars, but rather one where even the rich use public transport,” argues Enrique Peñalosa. If your city’s traffic is so persistent as to warrant dedicated daily news coverage, you almost certainly have demand for a dedicated busway or train. What you don’t need are more lanes or bigger highways. Just because Elon Musk doesn’t understand induced demand doesn’t mean the rest of us don’t. We give up a lot for the freedom of driving which turns out not to be worth much in cities. For getting between cities, it makes some sense but not where land is valuable and where people need land for better uses.

So the sunlit uplands are there, if we want them. And if we can’t have what we want, what are we even doing? What is the value of choice if the choices are dumb and bad? We need to imagine better choices and make them reality.

More journalism and less boosterism, please

No mention of why this property fetched such a high price…we see phrases like

the offering “garnered significant investor interest globally … due in part to the trophy quality of the asset in a submarket where the fundamentals are clearly improving.”

But no discussion of those fundamentals…that Seattle, like every city, has all the land it will ever have and the price to occupy and access it rises with demand, forcing the cost of living up. Forget all that stuff about money supply or the Wiemar republic and hyperinflation…the cost of land and its impact on the cost of living are constant and ubiquitous. The rising cost of land reflects the value of location and forces wages to rise for the businesses that value that location. Those who don’t command those wages are forced out, as shelter costs track the rising wages, like a buoy on the tide.

I guess I can’t expect the Business Journal to concern itself with these deeper issues but these articles are what we used to call “bead stringing” or “rip and read.” You just take the “news” releases from whatever industry you cover and print them, with a little light massaging or none at all.

“We’re our own worst enemy when it comes to solving the housing crisis”

A lot to unpack here — why do we continue to conflate housing with houses? — and the reluctance to accept that other people also want a place of their own, even if it means density.

“As a 30-something-year-old who is fully employed, my family and I have spent 18 of the last 24 months living in my in-laws’ basement. Not because we wanted to, but because we couldn’t find a house to buy.”

If a house is out of reach, is there no other option? People do raise families in multi-family buildings, some in very desirable locations. Not that his neighbors will accept a multi-family development:

Eskic went on to read a letter from a concerned citizen to a local Utah city council, in which the resident opposed a proposed townhome development and said they didn’t want to “live next to the kind of low-income people who typically reside in high-density housing.”

“I do not want their delinquent children attending the schools that my children attend. I do not want to deal with the increase in crime and drug use that inevitably accompanies such high-density housing units,” Eskic read from the letter. “I do not want my home values to decrease.”

We’ve already seen that density drives values up, as one would expect. But racism, xenophobia, whatever afflicts people like that isn’t amenable to reason.

The subject of the piece is a researcher but I wonder how many housing options they have seen, let alone researched. Are there no benefits to density and reduced car use, shorter distances between services? How would cities have grown without the car, in an alternate timeline? I get it, people want their private park and distance from their neighbors. They want a place to park a couple of extra cars or plant a garden or build a play structure for their kids or whatever. But doing that within a city comes with a cost. Not just to buy the land itself, but the opportunity cost of a city that allows more people to access it, to invest in it. It becomes a club, in other words.

This is all depressingly familiar, just another example of failure of imagination. “I want a house with a decent fraction of an acre and mature trees and good neighbors who look like me and drive nice cars and keep their lawns mowed and go to bed early” is not an urban planning strategy.

What if you lived in a building with people, some of whom look like you but many of whom are similarly educated, perhaps also work as researchers or knowledge workers, who have also decided they have better things to do with their time than commute to work by car or cut their grass for the approval of their neighbors? Is there nothing to gain from that set of choices? The 1950s are long gone. But they seem to linger in people’s minds, as some kind of dream world no one really wants to return to, if they had to.

where I am reminded that advanced degrees do not confer advanced understanding.

Contrary to expectations, rates of homelessness tend to be lower where poverty rates are higher.

Contrary to whose expectations?

A quick comparison of income/GDP and homelessness suggests that higher incomes push up the rate of unhoused people…why, it’s almost as if housing (ie, land) prices chase wages, and those whose wages don’t rise so fast are forced out of whatever housing they could afford.



Is it a perfect correlation? No, there are other factors but the assertion that homelessness is tied to poverty rates, rather than inequality or a widening gulf between rich and poor, makes me wonder how much the authors want to understand the problem. But then I am reminded of Upton Sinclair’s dictum that “[I]t is difficult to get a man to understand something, when his salary depends on his not understanding it.”

Housing as a market good rewards speculation. Recapturing the value of land to fund and build social housing, through outright public ownership of land or a tax that recoups the dividends of public productivity, can curb it.

Homelessnessness isn’t a housing problem: it’s a land problem. There is no affordable housing without affordable land. Seems like it wouldn’t take a PhD to get that. Maybe having one makes it harder to see the obvious.

Upton Sinclair was right.

Yet another well-argued and sourced explanation of why land rents are not just the “least bad tax” but good actually. The fact this never seems to be part of the debate, as tax rates in high earners (and investors) fall and working people find themselves under more stress makes a person wonder, why not?

A real Populist would make hay with this, if such a person existed. What’s the old saying? “It is difficult to get a man to understand something, when his salary depends on his not understanding it.” Nor can you make someone understand something if their power depends on not understanding it…not that congressional salaries are unimportant (if the national minimum wage were $15, they would make about 12 times that, not counting staff and other expenses) but power is the real draw. Corporate boards and other sinecures await the obedient.

to believe in social housing, you have to believe in society

The Seattle Process is alive and well…just as a consortium to build social housing gets some traction, another then opposes it and who knows if anything will ever get built?

The land is there, the funding could be found, but as noted in this piece, the bust part of the cycle, where the fortunate few watch the rest of us struggle or leave, has cheerleaders. Seattle doesn’t want to be a fair and equitable city, One Seattle, or anything of the kind. I think the promise of that, as unveiled at the 1962 Century 21 Exposition, scared people. (What this writer seems to forget is that all the changes he and his mossback friend decry were all wrought by local people cashing out their local businesses or failing to keep up with the times.) The local voters were offered a future with transit and managed growth but opted out, cherry-picking pools and parks for themselves (and to keep other people in their own neighborhoods) and rejecting anything that connected people.

According to the City of Seattle, currently most surplus public land is sold to the highest bidder; however, a state level bill passed in 2018 (SB 2382) “grants authority to cities to sell surplus property for below fair-market value – all the way to $0 – as long as the land is used for permanently affordable housing.”

And as we already know, that just turns what could be productive land into a speculative investment.

No matter what the bloviators on right wing media claim, Seattle is far from “woke,” whatever they think that means. It’s still a propertarian city of private parks surrounding single family homes that are no longer housing but tradable commodities…Wall Street, not your street.

This encapsulates the current mood pretty well, reminding me that Seattle is a city that is willing to share, as long as it doesn’t have to give anything up.

he knows what we need but maybe not how to get it

Rebecca Parson, a Democratic Socialist running in Washington’s 6th Congressional District, tweeted that “$15 minimum wage is an antiquated demand. It should be $30 per hour.” According to her reading of the present economy, which is mostly correct, “1 adult supporting 1 kid needs $30 an hour across the country. Rural, urban, suburban: $30 is the floor.” But increasing wages will only return us to regular Keynesian economics when what we really need to do is move toward an economy that makes life much cheaper. Raising wages without considerable structural changes can will only add more fire to the belly of the beast we call capitalism.

The increases in the cost of living and resulting inflation are caused by the increasing cost to access land for development. Inflation is caused by too many dollars chasing a scarce good…what is more scarce/finite than land? We have all the land we will ever have, and as much as all the kingdoms and empires ever had. What we have that they didn’t is a lot more people trying to make living, build a life, on that land. Putting a rent on land the returns that rising value to the people who created it is what we need to do.

what if…inflation, like the cost of housing, is rooted in scarcity (and high cost) of land?

Could housing crack before inflation does?

Singling out housing makes sense. As we’ve discussed, house prices and rents are very high. Roaring demand, driven partly by demographics, is paired with meagre supply. The inventory of existing homes for sale hit an all-time low in January and has hardly recovered. Homebuilders are rushing to get fresh inventory on the market, but are constrained by shortages of labour and building materials.

Does it make sense though? Labor and building materials are just as available in suburbs as in cities but land is not.

The existence of cheaper housing in suburbs or small towns, either as new construction or existing stock, shows us that land and location drive housing costs. Scarce commodities rise in price, as any economist or business person will tell you, but for some reason, land is always left out of the conversation.

So why compare inflation and housing costs without discussing land and the scarcity of it as the factor driving both upwards? Rising prices and inflation are always linked to scarcity of something…after the Black Death, as scarce labor supply raised wages.

But all we hear about is inflation without any attention paid to what causes it. The underlying inflation we hear about constantly as well as the pressure to raise wages, higher rents or home prices, all of this ties back to scarcity and the rising cost of living. And land is the one commodity we all need, whether for farming, manufacturing or just to live on. We should perhaps act like it’s valuable, maybe even essential.

There is no affordable housing without affordable land

Developers say they can’t build affordable apartments the Boise area needs. This is why

Blame high land and construction costs, along with property taxes, developers say.

Don’t listen to me, listen to developers who want to build the housing we need but can’t…because speculators are holding land for gain.

And by property taxes, they mean low taxes on vacant unproductive land vs the taxes on improvements that discourage development, along with zoning and other outdated laws. Raise the tax on undeveloped land and lower it on improvements and stand back…the increased in economic activity will more than make up for any shortfall in passive property tax revenue.