Thursday, February 23, 2006

"4 BR, WD FLRS, FTTH"

Here's a little taste of something that never got talked about during the July election: the property value of having Fiber To The Home (FTTH). Here's the point:
...an oft-cited study by Render Vanderslice claims that homes with fiber connectivity sell for approximately $4000 to $6000 more than comparable homes with copper connections.
Sounds awfully good doesn't it? Add 5000 dollars to the value of each home in Lafayette. And it's good research--for new subdivisions; which is where this sort of research has had to be done. Fancy new subdivisions are the only places that have had FTTH until recently. And its awfully easy to compare two of the cookie cutter subdivision houses we're seeing all to much of these days. (This sort of research follows similar research done on buried utilities, which is why nicer subdivisions, especially those where the developer is also the builder, are eating the expense of buried utilities.) So the research wasn't done in situations that are very similar to bringing FTTH to a large existing stock of homes.

Less expensive urban homes in a city like Lafayette where everyone will have access are not likely to see such a large or clearly documentable bump. After all, the whole point of a public, municipal utility is prevent real broadband from turning into a rare, expensive privilege of the few. But even so you can expect it to enhance the value of Lafayette real estate.

Even a modest bump value multiplied across the entire city is a very large increase in real wealth. Wikipedia claims there are 46,865 housing units in Lafayette. At the unrealistic 5000 dollars home bump suggested by Render Vanderslice the increase in home value would be 234,325,000, in the neighborhood of twice what the fiber project would cost. But even if housing stock in Lafayette proper only had jump which is 10% of that established number (which seems low to me, given the research) the value of housing in Lafayette would increase by 2,343,250 dollars. Even a two million plus increase in local wealth is real money.

The builders association, the realtors association and not a few individual realty companies endorsed fiber during the referendum fight. These are the folks who'd have cause to keep track of the research on things like the added value of buried utilities and fiber-optic broadband. Seems like they might have thought this through more thoroughly than the rest of us. The increase in the attractiveness of city property would also help the city's aging housing stock compete against newer homes built outside the city, helping avert some of the common center-city flight that has plauged American cities and would help maintain a healty, "smart growth" core for the parish.

Add property values to your list of potential positive outcomes of Lafayette's fiber build.

Post Scriptum: We occasionally hear from people who don't particularly value democratic decision making and dismiss public works projects as some sort of circus for the masses. Typically they claim that only "voting with dollars" is really moral. Leaving aside the huge problems with this excuse for morality, such folks should be moved by the evidence that FTTH increases property values even if they do not value quality of life, self-determination, or equity. Somehow I don't expect to hear any concessions. My guess is that even in the bed-rock domain of property value ideology will matter more than evidence.

4 comments:

Anonymous said...

something you may have missed, but everyone involved was a private company, not the government. There was no mention of the municipality buiding fiber to the home. The cost of fiber to the home was being paid for by the homeonwers who elected to buy that home. Now that seems fair to me. But we voted for it, so I guess we have the right to make everyone pay for it, whether they want to or not, whether they will use it or not.

John said...

Anono,

Let's see. How many ways have you got it wrong? At least in two ways. One, that you probably really haven't heard about .... but also in one way that you really do, or should, already understand.

First the homeowners in question really had no choice--except to buy a house somewhere else. Somebody who had control made that decision for them. I know that some people don't recognize power unless they can explain it as governmental but this is a pretty clear case of economic power. Now you may want to ask why the developer would want to exercise such power. Well, beyond the simple value question you so neatly avoid (that it enhances the value of the home in excess of its cost) they are doing it because where they are developers they increasingly hope to sell a REAL "franchise" to either the Bells or the Cablecos and milk it for a percent for as long as the subdivision stands. I say it is a real franchise because in such situations, like McDonald's franchises, the people who live in the neighborhood HAVE NO SAY. This is turning into a huge issue in mega-developments in Arizona and New Mexico. So the "private" power center--people you have no right to vote out of office and whose relationship with you is purely one of profit will determine who has--and who does not have--a direct, wired connection to your home.

These citizens should, and probably would if they had a real choice, prefer a municipal solution they could influence.

But beyond that relatively new issue you are either profoundly mistaken or simply deliberately misleading when you infer that anyone who doesn't want the service in Lafayette will pay for the network. This is plain flat wrong. The network will be paid off by the USERS--if you don't buy in you won't pay a dime. (I suspect you know this, most Lafayette residents do.)

More than that though: You will be FREELOADING on those of us who are patronizing the local alternative. There is every reason to believe, and the plan that the bonds will be sold on is explicit about this, that LUS will turn substantial amounts of money back to the city-parish. It already does this on its other utility services. That money will also go to the general fund and it will displace real taxes with its voluntary fee-for-service fees. So you won't have to pay a dime to get cheaper taxes. (Freeloader!)

Really, you miss the crucial points and don't respond to the final question:

Doesn't the research, and the behavior of developers, prove that people value FTTH even if all you care about is property value? Admit it! The people voted for it because they cared about their community. But even folks like you had a good reason to vote for it since it will raise your property values and lower your taxes.

Anonymous said...

Let me see if I get this straight, I will be FREELOADING if I don't use the LUS fiber? What if the plan looses money and LUS has to raise utiltiy rates, who will be freeloading then?

John said...

You'll only be freeloading if you accept the lower taxes and increased property taxes that result from the success of a project to which you claim to have a principled objection.

If it is actually a case of moral high dudgeon you won't want to accept the positive consequences of a successful fiber plan. I know that persons of principle will write a yearly check to the LCG rebating their "profit" from a venture they do not support on high principle but which actually turns out to benefit them.

If it's not actually a moral issue but an issue of mere righteousness certainty and an attempt to impose an ideology not shared on your community you will logically (if not morally) feel free to keep whatever benefit you gain from your neighbors good judgment.

You ask a question. But without first answering questions I've asked above. I've been through this game too often to let a non-responsive "participant" change the name of the game without actually dealing with questions already asked. So I ask again: "Doesn't the research, and the behavior of developers, prove that people value FTTH even if all you care about is property value?" And the further implication: If it's fair to say that the people value FTTH both on the basis of a popular vote and on this strange economic basis as well isn't it time for people who've opposed the project to admit that the only basis for objection is purely anti-government and not even properly understood as really ideological?