Month: August 2022

This Tennessee Town Claims Restricting Protests Helps ‘Facilitate’ the First Amendment


A red marker draws an X over a group of protesters

In Franklin, Tennessee, the sun may be setting on residents’ ability to participate in public demonstrations free of government interference. As part of city guidance that is “intended to facilitate the safe exercise of First Amendment rights,” Franklin officials explain, they are significantly restricting when, where, and how residents may participate in any “public gathering and expression event.”

Per an ordinance passed unanimously by the Franklin Board of Mayor and Aldermen (BOMA) last week, the city will not grant permits for any public gathering and expression events taking place after dark, nor will any event that does not require a permit be allowed to take place in the city after dark. The ordinance also prohibits expression events from taking place in the Downtown District between 5 p.m. on Fridays and 7 a.m. on Saturdays, as well as between 5 p.m. on Saturdays and 7 a.m. on Sundays.

Franklin’s code defines public gathering and expression events as instances of “noncommercial public assembly” that take place on public property, are “likely to obstruct” vehicular or pedestrian traffic, or have over 20 participants. The ordinance also introduces restrictions targeting “events which require amplification or which occur more than once per month (regardless of size),” according to a background document prepared by city officials. Violations of the ordinance will carry a misdemeanor charge resulting in a citation.

“We as the city have the ability to navigate and to manage time, place and manner that those demonstrations happen,” City Administrator Eric Stuckey said in June when the rule changes were first being considered. The city’s background document claims that the ordinance will ensure Franklin “provides protection to all who wish to exercise” their First Amendment rights.

In 2019, BOMA adopted a structure to permit public gathering and expression events. That move followed white supremacist rallies in Charlottesville, Virginia, and nearby Shelbyville, Tennessee. “We saw it as a way to facilitate the exercise of First Amendment rights,” said Stuckey of the permitting structure.

Franklin officials first floated the new restrictions on expression events at a June 14 meeting. City Attorney Shauna Billingsley outlined the ban on demonstrations after dark, saying, “We really don’t think that’s a safe thing for really anyone.” The proposed restrictions originally included a ban on expression events from 5 p.m. on Fridays through 7 a.m. on Mondays in the downtown historic district, though this was ultimately scaled back.

“The reason for that” weekend ban, Billingsley explained, was that “it seems as though after work on Friday, our downtown turns into something different. It’s much more shopping and eating, more social events and those kinds of things. So we’re not sure that protests in the heart of downtown during the weekend should be permitted.” She also stressed that “safety is important,” noting that “police officers can’t really watch over people in the dark.”

As much as city officials stress this ordinance will protect First Amendment rights, it raises obvious concerns on that front. “Threatening misdemeanors for expressive activity after dark is going to put Franklin [on] a collision course with the First Amendment,” says Adam Steinbaugh, attorney at the Foundation for Individual Rights and Expression. “Municipalities can impose content-neutral limits on the time, place, or manner of expression, but those limits have to be reasonable and this isn’t.” For one, he explains, “not everyone can protest during the workday and a lot of expressive activity necessarily occurs in the evening.”

What’s more, the ordinance’s broad wording may come to target completely innocuous expression events. “You want to tell me the city of Franklin wants to issue misdemeanors for Christmas carolers or people holding a candlelight vigil?” asks Steinbaugh. The potential for uneven enforcement also lingers. Steinbaugh offers a hypothetical: Will Franklin police be more likely to write up 21 Christmas carolers or 21 people protesting the police if both groups are violating the ordinance?

“The sun doesn’t set on the First Amendment,” says Steinbaugh. “Franklin’s leaders should reconsider.”

The post This Tennessee Town Claims Restricting Protests Helps 'Facilitate' the First Amendment appeared first on Reason.com.

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Republicans Supported Abortion Bans for Decades. Now They’ve Gone Silent.


Arizona Senate candidate Blake Masters in front of abortion protest placards.

When the Supreme Court decided Dobbs v. Jackson Women’s Health Organization in June, overturning the right to abortion guaranteed by Roe v. Wade (1973) for nearly five decades, it came as little surprise: A draft copy of the majority opinion was leaked nearly two months earlier.

But Republicans have agitated for the end of Roe for generations. Ronald Reagan, the first Republican elected president after the case was decided, was the favored candidate of abortion opponents based on his support for a constitutional ban.

This remained the Republican platform for decades, even as public support for abortion with either few or no restrictions remained the majority position. Republicans appointed judges and Supreme Court justices based on the nominee’s likelihood to look askance at Roe. Now that the goal has been achieved, some Republicans seem to be expressing buyer’s remorse.

Blake Masters is the Republican Senate candidate in Arizona. Like Ohio’s J.D. Vance, Masters is a venture capitalist and an acolyte and former employee of Peter Thiel, who has given millions to each man’s campaign. Despite a longstanding reputation as a Silicon Valley libertarian, Thiel pivoted in recent years toward “national conservatism,” using state power to achieve his ideological ends.

A recent Politico profile characterized Masters as “king of the trolls,” combative and macho-posturing, dedicated to upsetting “the libs.” He supports a national ban on abortion, a practice he referred to as “demonic” and akin to “religious sacrifice.”

But last week, Masters tried to pivot to a position more aligned with mainstream polling. Masters released an ad saying that his opponent, Sen. Mark Kelly (D–Ariz.), supported “the most extreme abortion laws in the world,” Masters only opposed “very late-term and partial-birth abortion.” At the same time, Masters scrubbed restrictionist abortion proposals from his campaign website. CNN reported that another Republican, Michigan congressional candidate Tom Barrett, also removed language from his website that favored abortion restrictions with “no exceptions.”

And this week, the Los Angeles Times reported that three House Republicans from California had gone silent on the issue since the Dobbs decision in June, despite all having previously co-sponsored the Life at Conception Act, a nationwide abortion ban “including the moment of fertilization, cloning, or other moment at which an individual member of the human species comes into being.”

Notably, public opinion has not changed much in the five decades since Roe: Around three-quarters of Americans consistently support some level of abortion access. It has also long been official Republican policy to oppose the practice and support a ban.

But since the Dobbs decision effectively accomplished the first half of their goal, political trends have not broken in Republicans’ direction. Earlier this month, deep-red Kansas voted overwhelmingly against banning abortion in the state’s Constitution. While traditionally the president’s party fares poorly in midterm elections, Democrats have outperformed the historical trends in the special elections held since the Dobbs decision.

Perhaps Republicans are simply lying to get elected. Some may have actually had a change of heart. Either way, it is encouraging that politicians are adapting to the notion that on at least one issue, by and large, Americans simply wish to be left alone to make their own decisions.

The post Republicans Supported Abortion Bans for Decades. Now They've Gone Silent. appeared first on Reason.com.

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“Do University Diversity Statement Requirements Violate the Constitution?”

I very much enjoyed participating in this Federalist-Society-organized webinar, together with Prof. Brian Soucek (UC Davis). As is common for such Federalist Society programs, the panelists were chosen to present different views (though I think it’s fair to say that Prof. Soucek and I agree on some things as well as disagree on others), and were not chosen exclusively from within the Federalist Society: Prof. Soucek is generally not at all a Federalist, to my knowledge.

I hope you find it as interesting as I did! Here’s the blurb:

In recent years, universities have increasingly required ‘diversity statements’ from faculty seeking jobs, tenure, or promotion. But statements describing faculty’s contributions to diversity, equity, and inclusion are also increasingly under attack. Criticisms first made in tweets and blog posts have expanded into prominent opinion pieces and, more recently, law review articles. These attacks are having an effect. Within universities, faculty-wide resolutions for and against mandatory diversity statements have been called and academic freedom committees have been asked to intervene. Outside universities, lawyers are recruiting plaintiffs to challenge diversity statement requirements in court.

Watch our experts in a discussion on Professor Brian Soucek’s recent article in the UC Davis Law Review about these diversity statements fleshing out the criticisms and developing a framework to address if universities can require diversity statements without violating either the Constitution or academic freedom.

You can also read Prof. Soucek’s full article. As to my views, I was delighted to see a commenter write,

I came into this conversation thinking “what’s the big deal with DEI statements?” and generally on the same page as Prof Soucek. However, I think Prof Volokh’s thought experiment absolutely devastated DEI statements.

So let me quickly summarize that thought experiment, which I gave in my part of the conversation (which begins at 16:45):

We get involved in another war. Much of the country, including some university system (whether Prof. Soucek’s and my University California or, say, the University of Nebraska) very much supports the war effort. So the University decides to offer faculty members and prospective faculty members an opportunity to mention their work related to the subject for purposes of evaluation, promotion, and hiring.

If, for instance, some professors joined the National Guard, which takes extra time, that could be used in deciding whether they were being productive enough scholars (just as other faculty might get extra time for tenure evaluation if they took semesters off because of illness or for parental leave). If they put on programs that helped returning soldiers, that would be counted as a form of “service” (faculty generally being evaluated on scholarship, teaching, and service, roughly in that order), even if normally service would otherwise focus on other subjects (such as service on university committees, or writing op-eds or blogs educating the public on the faculty’s areas of expertise). If the History department decided that military history hadn’t been taught enough, then indicating that one is teaching military history or is about to do so might count for extra teaching credit. I don’t think this would violate the First Amendment or academic freedom principles. A university is entitled to set and recalibrate its priorities in these ways.

On the other hand, say the university said (following UC Davis) that “applicants seeking faculty positions … are required to submit a statement about their past, present, and future contributions to promoting [the war effort] in their professional careers,” and did the same for existing faculty as well. This doesn’t expressly forbid people from criticizing the war, or from just avoiding matters having to do with the war. Perhaps even behind closed doors the university might try to deal with this fairly, maybe even weighing scholarship or public commentary that comes to an anti-war conclusion equally with scholarship or public commentary that comes to a pro-war conclusion.

But wouldn’t the message be quite clear—if you want a job here, or if you want to keep your job (especially if you’re untenured), or if you want a promotion, you’d be wisest to express pro-war positions, or at least keep your anti-war positions to yourselves? And is that consistent with the First Amendment and academic freedom principles?

The post "Do University Diversity Statement Requirements Violate the Constitution?" appeared first on Reason.com.

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California Takes on the High Cost of Mandated Parking


high perspective shot of a parking lot with a single white car in it and a skyline in the background

When the La Valentina Station Project in Sacramento, California, was working its way through the approval process in 2009, it seemed like a perfect development for the city’s downtown. Domus Development and the city’s housing agency were together planning to turn a vacant, blighted lot into a mixed-use building with 81 below-market-rate units and commercial space on the ground floor.

One major snag was the city’s requirement that the project include over two spaces of parking for each new unit of housing it added.

“It would have required ridiculous amounts of underground parking, and it was already a tight site and contaminated, so you couldn’t actually build that parking,” says Meea Kang, president of Domus at the time. “We were also 30 seconds from the nearest light rail station.”

After multiple hearings and rounds of review before the planning commission and City Council, the La Valentina project was able to obtain 18 special permits and variances—including one giving it relief from the city’s parking requirements.

It was hardly the only project to have to contend with these rules.

California’s cities, like almost everywhere else in the country, require that new developments come with a certain amount of parking spaces. New apartment buildings must have a minimum number of spaces per unit. New stores must have a minimum number of spaces per square footage.

Meeting these parking minimums can impose a lot of costs on developers, as well as the end users of their buildings. The more land on a property that’s eaten up by parking spaces means less land that’s available for rent-generating homes, businesses, and office space. Meeting parking minimums often requires either the construction of an underground or above-ground parking garage—which is expensive.

A structured parking space can cost north of $75,000, says Kang. Those costs get passed on to the residents of new apartment buildings and the commercial tenants of new shopfronts. As with many government mandates, parking minimums often require developers to build more parking spaces than people will actually use.

“Two weeks of the year that parking lot is utilized to the full extent. 50 weeks of the year it’s not,” Eddie McCoven, a spokesperson for San Diego’s Clairemont Lutheran Church, told Reason back in 2020.

His congregation’s plans in 2015 to redevelop a portion of the church’s parking lot into an affordable housing complex were upended by the city’s regulations that fixed a ratio of required parking spaces to square inches of pew space.

For some cities, stopping new housing has become the whole point of parking minimums, says Matthew Lewis, communications director for housing advocacy group California YIMBY.

“The challenge is cities have used parking as a cudgel for their NIMBYism. It literally blocks housing,” Lewis tells Reason. He says the impact of these mandates falls particularly hard on developers of below-market-rate projects (which have to spend their fixed amount of subsidized funding on parking instead of more housing units) and smaller apartment projects that could fit on smaller lots but for parking requirements.

But change is in the air.

In recent years, some cities around the state have started to whittle down their parking requirements. In response to the Clairemont episode, San Diego abolished its parking space–pew space ratio and lowered parking minimums for churches overall as part of wider parking reforms. Sacramento committed to eliminating parking minimums citywide last year.

And yesterday, the California Senate passed A.B. 2097, a sweeping bill introduced by Assemblymember Laura Friedman (D–Glendale) that generally forbids cities from imposing parking minimums on any development, commercial or residential, within a half-mile of a public transit stop.

Cities would have to prove that an individual project would have a “substantially negative impact” on its parking needs before it could reimpose a parking minimum. But they couldn’t impose those parking minimums on a programmatic basis. Smaller apartment buildings and projects with a certain percentage of affordable units near transit would be completely exempt from parking minimums too.

Not having to ask city governments to waive parking requirements for individual projects would give developers a lot more certainty about what they’re allowed to build too, says Kang, who as a director of the Council of Infill Builders, has advocated for A.B. 2097.

“When we go in front of a discretionary body like a planning commission or a city council [to request an exemption from parking requirements], there is always the risk of being turned down. The developer plays a calculated risk,” she tells Reason. Cities would also lose their ability to extract costly community benefit payments from developers.

Having passed the state Senate, A.B. 2097 now goes back to the Assembly (where it’s already passed once) for final legislative approval. It will still need to be signed by Gov. Gavin Newsom to become law.

How impactful will the reform be?

Minneapolis is one test case. It eliminated parking minimums citywide as part of an update to its general plan in 2018. Crucially, the city also increased the maximum allowable size of apartments near transit and along commercial corridors at the same time. (The city also imposed some very unlibertarian parking maximums in some areas.)

The combination of those two reforms has kicked off a small boom in the construction of smaller apartment buildings, with most of those projects being built with less parking than had been typically required under the old rules.

The post California Takes on the High Cost of Mandated Parking appeared first on Reason.com.

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This Grandmother Didn’t Submit the Proper Banking Form. Now the IRS Wants $2.1 Million From Her.


Monica Toth

The IRS wants to seize more than $2 million from an elderly woman, whose family fled from Nazi Germany, for failing to report her father’s endowment to her. Now, she’s petitioning the Supreme Court to consider whether this is an unconstitutionally excessive fine.

The Institute for Justice, representing Monica Toth, an 82-year-old grandmother living in the Boston area, filed a petition with the Supreme Court on Friday asking them to determine whether federal “civil penalties” imposed by the federal government for violating regulations count as “fines.” While a reasonable person might assume “penalties” and “fines” are the same thing, the federal government’s position is that they are not, and, therefore, the IRS can demand millions in such penalties from people without triggering the Excessive Fines Clause of the Eighth Amendment.

Monica Toth’s family fled Germany in the 1930s to escape rising fascism and antisemitism. Her family landed in Argentina, where she was born in 1940. Toth immigrated to the U.S. when she was 22 and established a family. She became a U.S. citizen in the 1980s.

Her father, who had in the meantime become a successful businessman, gifted Toth several million dollars in a Swiss bank account shortly before dying in 1999. The federal Bank Secrecy Act, passed in 1970, requires citizens to report various banking records and information to the government. It also requires any citizen with more than $10,000 in foreign bank accounts to fill out a Report of Foreign Bank and Financial Accounts (FBAR) annually.

Toth had not been filing these FBARs until 2010, which is when she says she discovered the requirement. According to the Institute for Justice, she had previously been filing her taxes by hand using forms from the local library. Once she knew of the requirement, she disclosed the existence of the account to the IRS and told them she hoped her filings would put her back into compliance with the law.

Things didn’t go well for her. According to the Institute for Justice’s filing, the IRS launched an audit in 2011. The agency determined that she underpaid her taxes in some years and overpaid in others. She paid $40,000 in penalties for her tax mistakes. Everything was settled. Her taxes were up to date.

But then the IRS came for her again because of her failure to file her FBARs. Under federal law, the maximum penalty for failing to file this record is either $100,000 or half the balance of the reported account, whichever is greater. The IRS declared that her failure to file the FBAR documentation was “reckless” and filed for half the money of the account, a civil penalty of more than $2.1 million. It doesn’t matter whether Toth’s failure to file the form deprived the IRS of taxes it was owed or whether she was actively trying to deceive the government. All that mattered was that she didn’t file a proper record of the bank account that the IRS contends she should have known she needed to file.

The fight here is not over whether the federal government and the IRS have the power to penalize people for trying to conceal bank accounts from tax collectors. Rather, it’s about whether taking $2.1 million from a citizen for simply not annually completing a one-page form can be considered an excessive fine that violates the Eighth Amendment of the Constitution’s Bill of Rights.

The United States argues that it cannot because it does not believe that taking Toth’s money should count as a “fine” at all. It is, instead, a “civil penalty” that is immune to scrutiny under the Eighth Amendment. The U.S. Court of Appeals for the First Circuit has agreed with the federal government and refused to even consider whether taking $2.1 million from Toth was “excessive.” The Institute for Justice counters that this is clearly a type of fine.

“The Eighth Amendment’s Excessive Fines Clause is a key check on the government’s power to punish,” said Institute for Justice Attorney Sam Gedge in a prepared statement. “That is why the Excessive Fines Clause is part of the Bill of Rights, and that is why the federal courts need to take it seriously.”

The Institute for Justice has previously and successfully turned to the Supreme Court to set limits on the government’s ability to seize people’s assets and property. In Timbs v. Indiana (2019), the Court ruled unanimously that the Eighth Amendment applied to state-level asset forfeitures in a case where the state of Indiana seized an SUV from a man arrested for selling heroin and attempted to keep it. In that ruling, Justice Ruth Bader Ginsburg noted that one of the purposes of the Eighth Amendment is to prevent the government from using fines not as a punishment but “as a source of revenue.”

Toth has already made amends and paid fines for her mistakes with her IRS filings. In absence of evidence of deliberate fraud, it’s hard not to see this grasping as anything other than an attempt by the IRS and the Department of Treasury to bring in some money. The Institute for Justice notes that Toth is far from alone here. There’s been a recent escalation in the use of civil penalties by the federal government over FBAR filings: “Over the past decade, the government has expanded its FBAR enforcement relentlessly. Between 2012 and 2020, it assessed nearly $1.5 billion in FBAR penalties. This Term, it is asking the Court to ratify a still more aggressive regime.”

Whenever you read about how the IRS needs more and better enforcers and will only target wealthy people who are deliberately trying to conceal their money, think about Toth’s case. The IRS is looking for reasons to take huge sums of money from people without showing that these citizens have been engaging in actual misconduct. Worse still, this agency is also attempting to argue that seizing people’s money and assets doesn’t count as a fine and, therefore, the Eighth Amendment doesn’t protect citizens against it.

The post This Grandmother Didn't Submit the Proper Banking Form. Now the IRS Wants $2.1 Million From Her. appeared first on Reason.com.

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“Do University Diversity Statement Requirements Violate the Constitution?”

I very much enjoyed participating in this Federalist-Society-organized webinar, together with Prof. Brian Soucek (UC Davis). As is common for such Federalist Society programs, the panelists were chosen to present different views (though I think it’s fair to say that Prof. Soucek and I agree on some things as well as disagree on others), and were not chosen exclusively from within the Federalist Society: Prof. Soucek is generally not at all a Federalist, to my knowledge.

I hope you find it as interesting as I did! Here’s the blurb:

In recent years, universities have increasingly required ‘diversity statements’ from faculty seeking jobs, tenure, or promotion. But statements describing faculty’s contributions to diversity, equity, and inclusion are also increasingly under attack. Criticisms first made in tweets and blog posts have expanded into prominent opinion pieces and, more recently, law review articles. These attacks are having an effect. Within universities, faculty-wide resolutions for and against mandatory diversity statements have been called and academic freedom committees have been asked to intervene. Outside universities, lawyers are recruiting plaintiffs to challenge diversity statement requirements in court.

Watch our experts in a discussion on Professor Brian Soucek’s recent article in the UC Davis Law Review about these diversity statements fleshing out the criticisms and developing a framework to address if universities can require diversity statements without violating either the Constitution or academic freedom.

You can also read Prof. Soucek’s full article. As to my views, I was delighted to see a commenter write,

I came into this conversation thinking “what’s the big deal with DEI statements?” and generally on the same page as Prof Soucek. However, I think Prof Volokh’s thought experiment absolutely devastated DEI statements.

So let me quickly summarize that thought experiment, which I gave in my part of the conversation (which begins at 16:45):

We get involved in another war. Much of the country, including some university system (whether Prof. Soucek’s and my University California or, say, the University of Nebraska) very much supports the war effort. So the University decides to offer faculty members and prospective faculty members an opportunity to mention their work related to the subject for purposes of evaluation, promotion, and hiring.

If, for instance, some professors joined the National Guard, which takes extra time, that could be used in deciding whether they were being productive enough scholars (just as other faculty might get extra time for tenure evaluation if they took semesters off because of illness or for parental leave). If they put on programs that helped returning soldiers, that would be counted as a form of “service” (faculty generally being evaluated on scholarship, teaching, and service, roughly in that order), even if normally service would otherwise focus on other subjects (such as service on university committees, or writing op-eds or blogs educating the public on the faculty’s areas of expertise). If the History department decided that military history hadn’t been taught enough, then indicating that one is teaching military history or is about to do so might count for extra teaching credit. I don’t think this would violate the First Amendment or academic freedom principles. A university is entitled to set and recalibrate its priorities in these ways.

On the other hand, say the university said (following UC Davis) that “applicants seeking faculty positions … are required to submit a statement about their past, present, and future contributions to promoting [the war effort] in their professional careers,” and did the same for existing faculty as well. This doesn’t expressly forbid people from criticizing the war, or from just avoiding matters having to do with the war. Perhaps even behind closed doors the university might try to deal with this fairly, maybe even weighing scholarship or public commentary that comes to an anti-war conclusion equally with scholarship or public commentary that comes to a pro-war conclusion.

But wouldn’t the message be quite clear—if you want a job here, or if you want to keep your job (especially if you’re untenured), or if you want a promotion, you’d be wisest to express pro-war positions, or at least keep your anti-war positions to yourselves? And is that consistent with the First Amendment and academic freedom principles?

The post "Do University Diversity Statement Requirements Violate the Constitution?" appeared first on Reason.com.

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California Takes on the High Cost of Mandated Parking


high perspective shot of a parking lot with a single white car in it and a skyline in the background

When the La Valentina Station Project in Sacramento, California, was working its way through the approval process in 2009, it seemed like a perfect development for the city’s downtown. Domus Development and the city’s housing agency were together planning to turn a vacant, blighted lot into a mixed-use building with 81 below-market-rate units and commercial space on the ground floor.

One major snag was the city’s requirement that the project include over two spaces of parking for each new unit of housing it added.

“It would have required ridiculous amounts of underground parking, and it was already a tight site and contaminated, so you couldn’t actually build that parking,” says Meea Kang, president of Domus at the time. “We were also 30 seconds from the nearest light rail station.”

After multiple hearings and rounds of review before the planning commission and City Council, the La Valentina project was able to obtain 18 special permits and variances—including one giving it relief from the city’s parking requirements.

It was hardly the only project to have to contend with these rules.

California’s cities, like almost everywhere else in the country, require that new developments come with a certain amount of parking spaces. New apartment buildings must have a minimum number of spaces per unit. New stores must have a minimum number of spaces per square footage.

Meeting these parking minimums can impose a lot of costs on developers, as well as the end users of their buildings. The more land on a property that’s eaten up by parking spaces means less land that’s available for rent-generating homes, businesses, and office space. Meeting parking minimums often requires either the construction of an underground or above-ground parking garage—which is expensive.

A structured parking space can cost north of $75,000, says Kang. Those costs get passed on to the residents of new apartment buildings and the commercial tenants of new shopfronts. As with many government mandates, parking minimums often require developers to build more parking spaces than people will actually use.

“Two weeks of the year that parking lot is utilized to the full extent. 50 weeks of the year it’s not,” Eddie McCoven, a spokesperson for San Diego’s Clairemont Lutheran Church, told Reason back in 2020.

His congregation’s plans in 2015 to redevelop a portion of the church’s parking lot into an affordable housing complex were upended by the city’s regulations that fixed a ratio of required parking spaces to square inches of pew space.

For some cities, stopping new housing has become the whole point of parking minimums, says Matthew Lewis, communications director for housing advocacy group California YIMBY.

“The challenge is cities have used parking as a cudgel for their NIMBYism. It literally blocks housing,” Lewis tells Reason. He says the impact of these mandates falls particularly hard on developers of below-market-rate projects (which have to spend their fixed amount of subsidized funding on parking instead of more housing units) and smaller apartment projects that could fit on smaller lots but for parking requirements.

But change is in the air.

In recent years, some cities around the state have started to whittle down their parking requirements. In response to the Clairemont episode, San Diego abolished its parking space–pew space ratio and lowered parking minimums for churches overall as part of wider parking reforms. Sacramento committed to eliminating parking minimums citywide last year.

And yesterday, the California Senate passed A.B. 2097, a sweeping bill introduced by Assemblymember Laura Friedman (D–Glendale) that generally forbids cities from imposing parking minimums on any development, commercial or residential, within a half-mile of a public transit stop.

Cities would have to prove that an individual project would have a “substantially negative impact” on its parking needs before it could reimpose a parking minimum. But they couldn’t impose those parking minimums on a programmatic basis. Smaller apartment buildings and projects with a certain percentage of affordable units near transit would be completely exempt from parking minimums too.

Not having to ask city governments to waive parking requirements for individual projects would give developers a lot more certainty about what they’re allowed to build too, says Kang, who as a director of the Council of Infill Builders, has advocated for A.B. 2097.

“When we go in front of a discretionary body like a planning commission or a city council [to request an exemption from parking requirements], there is always the risk of being turned down. The developer plays a calculated risk,” she tells Reason. Cities would also lose their ability to extract costly community benefit payments from developers.

Having passed the state Senate, A.B. 2097 now goes back to the Assembly (where it’s already passed once) for final legislative approval. It will still need to be signed by Gov. Gavin Newsom to become law.

How impactful will the reform be?

Minneapolis is one test case. It eliminated parking minimums citywide as part of an update to its general plan in 2018. Crucially, the city also increased the maximum allowable size of apartments near transit and along commercial corridors at the same time. (The city also imposed some very unlibertarian parking maximums in some areas.)

The combination of those two reforms has kicked off a small boom in the construction of smaller apartment buildings, with most of those projects being built with less parking than had been typically required under the old rules.

The post California Takes on the High Cost of Mandated Parking appeared first on Reason.com.

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China Is Aggressively Reselling Russian Gas To Europe

China Is Aggressively Reselling Russian Gas To Europe

One month ago, we were surprised to read how, despite a suppressed appetite for energy amid its housing crash and economic downturn (for which “zero covid” has emerged as a convenient scapegoat for emperor Xi), China has been soaking up more Russian natural gas so far this year, while imports from most other sources declined.

In July, the SCMP reported that according to Chinese customs data, in the first six months of the year, China bought a total of 2.35 million tonnes of liquefied natural gas (LNG) – valued at US$2.16 billion. The import volume increased by 28.7% year on year, with the value surging by 182%. It meant Russia has surpassed Indonesia and the United States to become China’s fourth-largest supplier of LNG so far this year!

This, of course, is not to be confused with pipeline gas, where Russian producer Gazprom recently announced that its daily supplies to China via the Power of Siberia pipeline had reached a new all-time high (Russia is China’s second-largest pipeline natural gas supplier after Turkmenistan), and earlier revealed that the supply of Russian pipeline gas to China had increased by 63.4% in the first half of 2022.

What was behind this bizarre surge in Russian LNG imports, analysts speculated? After all, while China imports over half of the natural gas it consumes, with around two-thirds in the form of LNG, demand this year had fallen sharply amid economic headwinds and widespread shutdowns. In other words, why the surge in Russian LNG  when i) domestic demand is just not there and ii) at the expense of everyone else?

“The increase in Russian LNG could be a displacement of cargoes going to Japan or South Korea because of sanctions, or weaker demand there,” said Michal Meidan, director of the China Energy Programme at the Oxford Institute for Energy Studies.

One thing that was clear: China wanted to keep its arms-length gas dealing with Russia as unclear as possible, which is why the General Administration of Customs of China stopped publicizing the breakdown in trade volume for pipeline natural gas since the beginning of the year, with spokesman Li Kuiwen confirming that the move was to “protect the legitimate business rights and interests of the relevant importers and exporters”.

An LNG ship docked at a port in Chiba, Japan. China’s resales of LNG have added supply to the spot market

Well, we now know the answer: China has been quietly reselling that evil, tainted Russian LNG to the one place that desperately needs it more than anything. Europe… and of course, it is charging a kidney’s worth of markups in the process.

As the FT reported recently, “Europe’s fears of gas shortages heading into winter may have been circumvented, thanks to an unexpected white knight: China.” The Nikkei-owned publications further notes that “the world’s largest buyer of liquefied natural gas is reselling some of its surplus LNG cargoes due to weak energy demand at home. This has provided the spot market with an ample supply that Europe has tapped, despite the higher prices.”

What the FT ignores, perhaps intentionally, is that it’s not “surplus” – after all, if it was Chinese imports of Russian LNG would collapse. No – the correct word to describe the LNG that China sells to Europe is Russian.

Going back to the story, the details are intuitive: with Russian pipeline gas to Europe effectively shuttered…

… Europe’s imports of LNG have soared 60% year on year in the first six months of 2022, according to research firm Kpler.

Some more details:

China’s JOVO Group, a big LNG trader, recently disclosed that it had resold an LNG cargo to a European buyer.

A futures trader in Shanghai told Nikkei that the profit made from such a transaction could be in the tens of millions of dollars or even reach $100mn.

China’s biggest oil refiner Sinopec Group also acknowledged on an earnings call in April that it has been channelling excess LNG into the international market.

Local media have said that Sinopec alone has sold 45 cargoes of LNG, or about 3.15mn tonnes. The total amount of Chinese LNG that has been resold is probably more than 4mn tonnes, equivalent to 7 per cent of Europe’s gas imports in the half year to the end of June.

Make no mistake: all of this “excess” LNG was soured in part or in whole in Russia, but since it has been “tolled” in China, it is no longer Russian. It is instead – drumroll – Chinese LNG.

The good news is that the 53 million tonnes that the bloc purchased surpasses imports by China and Japan and has brought Europe’s gas-storage occupancy rate up to 77%.If this continues, Europe is likely to reach its stated goal of filling 80% of its gas storage facilities by November (at which point it will start draining the reserves at a breakneck pace to keep warm during the winter). But while China’s economic slump has brought much-needed relief to Europe, it comes with a major footnote. As soon as economic activity bounces back in China, the situation will quickly reverse, and Beijing will no longer re-export Russia LNG to keep Europe warm.

Hilariously, it also means that instead of being dependent on Russia for gas, Europe is now becoming dependent on Beijing instead for its energy – which is still Russian gas, only this time imported from China – which makes a mockery of US geopolitical ambitions to defend a liberal international order with its own energy exports.

Worse, while Europe could buy Russian LNG for price X, it instead has to pay 2X, 3X or more, just to virtue signal to the world that it won’t fund Putin’s regime, when in reality is is paying extra to both Xi and to Putin, who is collecting a premium price thanks to the overall market scarcity.

Amusingly, without expressly stating it, the FT does imply that Europe is buying Russian LNG by way of China:

If Russia ends up exporting more gas to China as a means to punish Europe, China will have more capacity to resell its surplus gas to the spot market — indirectly helping Europe.

Why not just admit the obvious – that China is helping Russia skirt sanctions as both countries get very rich in the process? Because then the FT’s own judgment – after all, the newspaper is a conduit of the neoliberal thinking that demanded a complete embargo on Russian energy, an embargo which even the WSJ now admits (see “Russia Confounds the West by Recapturing Its Oil Riches“) has backfired spectacularly – would be put into question.

FT’s flaws aside, the newspaper is correct that the longer this kind of circuitous bypass of Russian sanctions by a hypocritical Europe (which signals its virtue so loudly when the adversary is Russia but doesn’t dare say peep when it’s China) continues, the bigger China’s influence on Europe will be:

The more desperate Europe becomes about its energy supplies, the more China’s policy decisions will have the power to affect the bloc. As Europe attempts to wrestle out of its dependence on Russia for energy, the irony is that it is becoming more dependent on China.

In the end, all Europe has done is replace one energy master (as Trump warned in 2018) with another, even though both are joined at the hip and laughing at the stupidity of Brussels which, under the sage advice of a petulant Scandinavian teenager, made all of this possible just in time for China – which together with Putin now determines Europe’s daily energy intake – to invade Taiwan without a peep from Europe’s virtuous signalers.

Tyler Durden
Tue, 08/30/2022 – 14:00

via ZeroHedge News https://ift.tt/bJ9ne8Q Tyler Durden

Will This Housing Downturn Be Worse Than 2008?

Will This Housing Downturn Be Worse Than 2008?

Submitted by EPB Macro Research’s Eric Basmajian,

This is a map of home price growth at the housing bubble’s peak in 2005. 

And this is a map of home price growth at the peak of the housing bubble in 2021. 

See the difference?

When we look at home price growth at the peak of the last bubble in 2005, what we see is that home price growth was very concentrated in certain states and cities. Arizona, Nevada, California and Florida saw annual home price growth above 20%. 

National home price growth averaged about 11% at the peak in 2005. 

Today, national home price growth is higher than at the peak of the last housing bubble at almost 14% and when we look at the previous maps, we can see the price appreciation is much more broad based. The biggest bubble in 2005, which was Arizona, was crazier than the biggest bubble today, which is Idaho but today there are 38 states with annual home price growth over 10%. At the peak in 2005, only 26 states had annual home price growth above 10%. 

So will a housing crash today be worse than 2008 given how much more pervasive the rampant home price growth has been? For that we’ll have to look at the leading indicators of home price growth, debt levels, and Federal Reserve policy. 

There are several key leading indicators of real home price growth that I noted in my most recent post on home prices. 

We discussed the months supply of newly constructed homes, the mortgage spread or mortgage rates, and the growth rate of real M2. 

The months supply metric shows how many months it will take to clear the current pool of inventory at the current pace of sales. Months supply has exploded to 10.9 which means it will take almost 11 months to get rid of all the inventory of new homes in the pipeline at the current rate of sales. The months supply of newly constructed homes is a leading indicator of home price growth. Higher months supply today means lower home prices to follow. 

We’re more concerned about the inventory of new homes compared to existing homes because all the economic activity and jobs are attached to new construction rather than existing homes. 

In 2008, the months supply figure exploded to 12.2 so it’s not quite as bad yet, although it could get there. 

The pace of sales volume is completely collapsing today and there’s no signs of a slowdown in the pace of decline. The volume of new home sales is down 51% since August 2020. In 2008 and into 2009, new home sales fell by 70% so it’s not quite as bad yet, but we haven’t hit bottom yet. 

In terms of mortgage rates, we have a problem today that is WORSE than 2008. In 2006, mortgage rates jumped 1.3% on a year over year basis. So in 2006, when the housing bubble started to pop mortgage rates were 6.8% compared to 5.5% a year earlier. This spike in mortgage rates kills home prices because people just can’t afford rising home prices and rising mortgage rates. 

While mortgage rates today are 5.6%, lower than in 2006, the spike or the pace of increase is much worse. Mortgage rates today are more than 2.7% higher than just one year ago! 

So the pace of increase in mortgage rates is double the pace of the 2006 period that caused that housing bubble to pop. That’s an ominous sign that will cause buyer demand to stop dead in it’s tracks…something we are already starting to witness with new home sales crashing 51%. 

The next metric to consider is the rate of liquidity growth or money growth. 

In the lead up to the peak in the housing bubble in 2006, liquidity growth was NOT excessive. The bubble in 2006 and the crash in 2008 was more about a debt crisis and cheap credit.

Money growth in 2020 and 2021 was more than six times as high as it was in the mid 2000s which is why the housing bubble this time is more broad based rather than concentrated in select cities like it was in 2005 and 2006. Todays’ bubble is more about record liquidity growth that was channeled into financial assets. 

And when big institutions started to access the single family home market, housing became just another financial asset that was an easy recipient of this excess liquidity that historically stayed trapped in the stock market. This is a major difference to the 2008 bubble. The banks helped to facilitate a housing bubble by granting loans to households, but most of the housing activity was in the household sector itself. 

Today, we have financial innovation in which big institutions and private equity funds that can easily access the Fed’s new liquidity have moved into single family homes. We don’t know what a housing downturn will look like now that bigger players are involved. These are speculators vs. home owners. 

Money growth never contracted or slowed below 0% when the 2006 housing bubble popped, not until mid 2008. Today, money growth is falling sharply as the Federal Reserve pulls liquidity out of the system to correct an ongoing inflation problem. 

So just as easily as home prices went up because of liquidity, we may see the reverse.

So the inventory issue is not quite as bad as 2008 which is a good thing but the spike in mortgage rates is way worse and the contraction in liquidity growth is more intense. 

The debt bubble was worse in 2008 because the debt was concentrated in the banking sector and the household sector in the form of mortgages. Together, the household and financial sector had almost 220% debt to GDP compared to 150% today. So the 2008 crisis started as a housing problem but it morphed into a banking crisis. 

Today, we have a housing problem that by most metrics is on pace to be worse than 2008 but we don’t have the private sector debt toxicity to turn the housing downturn into a banking meltdown. 

Today we have a bigger debt problem in the Federal Government and the household debt is concentrated in what we call consumer debt, mainly student loans and auto loans, not so much mortgage debt.

Today we have a much broader bubble than we did in the peak of 2005 and 2006. The month’s supply of new homes is surging towards 2007-2008 levels but it’s not there yet. Mortgage rates are spiking way faster so the affordability crisis is worse, particularly when you add on food inflation, rent inflation and gas inflation. Also the rate of liquidity contraction is more intense to correct a big mistake the Fed made in 2020 and 2021. 

The 2022 housing crash certainly has the potential to be worse than 2008 if we’re talking about the housing market itself. There’s much less of a chance that this housing downturn morphs into a global banking crisis. The nonfinancial shadow banking sector? That’s a story for another day…

This video explains the impending troubles headed for the housing market.  

Tyler Durden
Tue, 08/30/2022 – 13:40

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Iran Closes Border With Iraq, Flights Paused From Gulf Carriers, On Fears Of New Civil War

Iran Closes Border With Iraq, Flights Paused From Gulf Carriers, On Fears Of New Civil War

Influential Shia leader Muqtada al-Sadr, whose followers largely drove the past 48 hours of protests and violence that rocked the central Green Zone area of Baghdad – resulting in at least 30 deaths and injuries to hundreds more – has called for his supporters to disperse while further apologizing to the Iraqi people for the overnight deadly mayhem.

Al Jazeera correspondent observed Tuesday that “Supporters of Muqtada al-Sadr have started to leave the Green Zone area after their leader told them to end the protests.” Further suggesting greatly calmed streets which were hours ago scenes of running armed street battles with security forces, the report notes that “The military also announced that a nationwide curfew, which went into effect on Monday at 7pm local time (20:00 GMT), has been lifted, further raising hopes that there might be an end to the street violence.”

File image via NDTV

Acting prime minister Mustafa Al-Kadhimi welcomed Sadr’s speech. The Sadrist movement head issued the following warning to those still occupying government buildings: “The party is disciplined and obedient, and I wash my hands of those who do not withdraw from parliament building within an hour.” The ultimatum to his supporters appears to have worked for now.

A United Nations statement said the following: “UNAMI welcomes the most recent moderate declaration by Sayed Muqtada al-Sadr. As stated yesterday: restraint and calm are necessary for reason to prevail,” according to a UN Mission tweet.

Yet fears that the ongoing political gridlock in parliament – and inability to form a government going all the way back to a parliamentary election in October 2021 – could slide the country into civil war remain.

It remains to be seen whether significant unrest will spread to other provinces, but Iraq’s southern city of Basra – a hotbed of pro-Sadr support, whose withdrawal from politics sparked these latest clashes (or as his supporters say… being forced out) – has this week seen angry protests and confrontations with security forces. 

Neighboring countries have been concerned enough over the potential that things could spiral further to take action regarding their citizens. First, Kuwait issued a public alert telling its nationals to depart the country, and on Tuesday Iran announced border closures with Iraq, citing fresh “unrests” and the curfew in Iraqi cities. This is significant given the huge numbers of Iranian religious pilgrims visiting Iraq on a regular basis.

Further, according to The Associated Press: 

Dubai’s long-haul carrier Emirates stopped flights to Baghdad on Tuesday over the ongoing unrest in Iraq. The carrier said that it was “monitoring the situation closely.”

Iraq’s military has confirmed that at least four rockets had been fired into the Green Zone, which according to widely circulating videos triggered the US Embassy’s C-RAM anti-air defense system. There still appears to be the threat ongoing random armed attacks outside the Green Zone perimeter into Tuesday…

Unlike many prior instances of the outbreak of violence in Baghdad since the US ended its large-scale occupation of the country, this particular conflict has pitted rival Shia factions against each other:

Al-Sadr’s exit from politics prompted his supporters to storm the government palace in Baghdad’s Green Zone on Monday, where clashes with rival pro-Iran Shia groups killed at least 30 people.

“I thank the security forces that took a neutral stance with all parties,” he said, adding that the pro-Iran Popular Mobilization Unit  (PMF) that have integrated with the Iraqi security forces have nothing to do with what is happening.

Some reports suggested casualties among police and security ranks, however. Al Jazeera on Tuesday updated its figures to say that over 700 have been injured. 

As we detailed earlier, Iraqi authorities are meanwhile seeking to reassure the world regarding unimpacted oil exports.

The White House has been relatively quiet over these last 24 hours of violence rocking the high-secured Green Zone, only stating that the events “disturbing” while calling for “dialogue” in the wake of al-Sadr quitting politics.

Tyler Durden
Tue, 08/30/2022 – 13:20

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