Roger Marolt: Roger This
October 22, 2010
OK. Let’s cut the crap. This town needs to pass Referendum 3A as urgently as the initiative’s opponents need a volume discount on prune juice. It will generate $1.35 million annually through a slight property tax increase to make up for cuts in state funding and will allow the Aspen School District to avoid or reduce teacher layoffs, continue attracting high quality teachers, and maintain excellence in education for our kids.
I’m not going to give you the usual song and dance about how important education is for children and that without it there is no hope for bettering this planet. Yes, of course that’s true, but we can afford to spend more time being ideological when the economy is good. Right now it stinks so let’s focus on money.
If I have said it once, I apologize. I should have said it a thousand times: Our economy is no longer primarily tourist based. It’s all about real estate! From brokers who pedal it, to builders who transform it, to bankers who finance it, to lawyers who sue over it, to shop and restaurant owners who outfit and feed the owners of it, to people depending on it for retirement, we all benefit from positive home equity. In short, if we don’t create and maintain value in our homes then we might as well plow up the golf course and plant potatoes to live off of.
Which brings me to Plan A: We can spend millions on a high-gloss, international marketing campaign to spread the word that the Aspen real estate market is sizzling, that bidding wars are back, that buyers are signing contracts sight unseen, that nobody has ever lost money on Aspen property, and that timeshares are hot, hot, hot … again!
The problems with this approach are, first, it’s not true and, second, I have a feeling everybody knows it’s not. So, obviously, there are some risks involved in spending gobs of money trying to create another speculative flipping frenzy to drive property prices up. Never mind that it worked perfectly well in the past.
The only other thing I can think of is Plan B.
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Oh, I’m sorry. You probably want to know what that is. Well, and I admit that I’m kind of old-school in this thinking; maybe we should spend our money actually building lasting value in Aspen. It works like this: We create real things instead of an image. Then, people want to buy houses here because they know they are getting their money’s worth and want to become part of the community. Just an idea.
And, here’s where it gets really good. A great school system may be the greatest asset that a community can build to increase property values. That’s right. It’s not just bourbon legend being circulated at Realtor cocktail parties anymore. The Federal Reserve Bank of St. Louis commissioned a recent study by Chiod, Hernandez-Murillo, and Owyang that proves it!
This is the part of the study that should get everyone excited: “…the standard linear specification for test scores overestimates the [home price] premium at low levels of school quality and underestimates the premium at high levels of school quality.” Blah, blah, blah. OK, please pardon the egg heads here. What they are trying to say is that property values rise at an increasingly faster rate as the quality of the local schools get better. Hallelujah!
What’s more, this test didn’t measure the quality of schools by their popular architectural design or the synthetic grass blade count per square inch on the football field. They measured it by student academic achievement. The underlying conclusion for our discussion being that, if you want to increase local property values, you better invest not only in nice school facilities, but more importantly in outstanding teachers. Voila! I present to you Referendum 3A! A taxing measure designed to do exactly that! No, it’s not magic. It’s common sense.
Then there are the skeptics. They wonder if this is the old chicken-and-egg scenario. Did desirable neighborhoods pop up first demanding better schools, or did great schools come first followed by people willing to pay more to live nearby? If we can’t solve this conundrum, we had better wait to approve Referendum 3A until we damn sure can. Right?
Wrong! Because, while it is true that in the olden days the chicken-and-egg paradox became iconic for many “which came first” dilemmas and brought all progressive thinking and intelligent argument to a grinding halt as a result, I am happy to report to you that modern-day statistical analysis performed on mega-computers that sit in refrigerated rooms so they don’t catch fire running billions of iterations of an econometric equation (and perhaps on your own laptop equipped with Microsoft Excel, too) can actually determine which causes what. And, the answer is conclusive in our case: Good schools come first and higher property values follow!
So, let’s talk numbers. For a school with average standardized test scores one standard deviation above the mean (statistically Aspen schools are there right now), property values in the community tend to be about 4.5 percent higher than otherwise. That’s $45,000 of additional equity per each million dollars of home value. Referendum 3A will cost approximately $37.12 per year for each million dollars in value of an Aspen home to help maintain or even increase the quality of our schools and preserve that extra value. Is it worth it? If you say “no,” I have to point out that $37.12 is less than what it costs to mow your lawn … one time … even if you do it yourself … with a push mower!
The great thing about this referendum is that everyone from the most altruistic kid-loving ideologue to the most selfish show-me-the-money miser wins. So, we should all vote “yes” on Referendum 3A!
Finally, I would be remiss if I did not end with the following disclosure: Without quality education for children, there really is no hope for bettering this planet.
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