This is Just So Short-Sighted

OK, here is the story to date:  Paradise Valley is a small, very wealthy town within the boundaries of Phoenix.  There is no commercial development allowed in the town except for a series of golf resorts, of which there are a number.  The town had one last large tract of unbuilt land, owned by the Wrigley heirs, I believe, that has for years been zoned for a resort.  There was an auction several years ago in which the land was sold for some figure north of $70 million to a group who wants to build a Ritz-Carlton resort, a hotel chain notorious for bringing riff-raff into communities ;=).  The Ritz group unanimously obtained all the town council and planning board approvals it needed to build.

Except now a ballot initiative will be voted on by the town residents in November as to whether to allow them to build a resort on their own land that is zoned for a resort (my previous report, complete with Zillow maps).  This action is consistent with the absolute resistence that every resident's attempt to do a major remodel of their house encounters from various community groups and zoning bodies.

One lesson, of course, is that local participative democracy can be just as much a threat to individual rights as the worst dictatorship  (though this is not a new lesson -- it was in fact learned in Athens when it was first tried).  But a second lesson is just how short-sighted this is.  I am sure residents convince themselves in each such individual effort that they are somehow protecting their property values.  But in sum, the effect of multiple such efforts is to make people reluctant to invest in property in the town, fearful that some citizens group or zoning body will take control of what they can do with their land. 

I live about 4 houses away from the Town of Paradise Valley in the city of Phoenix, though most of my neighbors and even the US Postal Service think I live in PV.  It used to be, about 10 years ago when I moved in, that living outside the PV boundary was considered a negative.  There was a big enormous value gradient between the nearest PV home and mine, based as much on snob appeal of the address as anything else.  Now, however, the gradient is reversing (hurray for my home equity!)  Real estate agents in my neighborhood who used to hide the fact that the homes are not actually in tony PV (shame on them) now use it as a selling point.  My remodel contractor breathed an enormous sigh of relief when he found out that I was, in fact, not in the town of PV.

Help me out, readers.  I seem to remember there was a name for an economic game where the profit maximizing strategy when playing once was different than if one were playing multiple times in sequence.

PS - If you are confused why a town would consider a Ritz to be bringing down the neighborhood, see here, complete with Zillow maps where not a single surrounding home is going for less than $1.8 million. 

  • Joe Antognini

    You might be thinking of the prisoner's dilemma. The optimal strategy in a single game is to defect but in repeat play the optimal strategy is generally some variant of tit-for-tat which usually works out to become long-term cooperation.

    Robert Axelrod did some interesting research on the subject which he presented in two fairly accessible books, _The Evolution of Cooperation_ and _The Complexity of Cooperation_. The first book presents the results of a competition Axelrod organized among political scientists to write the most successful prisoner's-dilemma-playing computer program. The computer programs all played each other multiple times and along with a few simple strategies like tit-for-tat (if the opponent defected in the previous turn, defect, otherwise cooperate), one which always defected, and one which always cooperated. Although every computer program beat tit-for-tat individually, tit-for-tat nevertheless did overall better than every other computer program.

    The second book presents the results of further research he did into the subject. He wrote a computer program which randomly generated prisoner's-dilemma-playing computer programs, each of which would use a different strategy. Over time, successful programs would reproduce (with slight mutations) and unsuccessful programs would die out. The strategy to evolve out of the primordial pool of prisoner's-dilemma-playing computer programs was, you guessed it, tit-for-tat.

  • Streaker

    Ah... Paradise Valley... they were the first to bring speeding cameras to the area.

  • Paradise Valley shows what rule by America's elites would be like.

    The residents brought in the speed camera to, IMHO, keep out the proles (Damn thing nailed me again the other day - they also lower the speed limits 5mph from surrounding Phoenix, on the same roads). They have zoning laws that are seriously obstructive, but basically are an environmentalist's dream (no coincidence that).

    They successfully fought a low power community FM station even though the antenna would be in a realistic fake Saguaro Cactus far up on Mummy Mountain (where the town's conventional, visible radio site exists). But that innocuous cactus was too much of a change to the badly scarred terrain.

    Neurotically afraid of microwaves, they fight any cell phone towers, until their service gets so bad that they forget their fears and demand better coverage.

    But... they are very self righteous and proud of what they have done. Read the Paradise Valley Independent (a bit oxymoronic name) and you see a combination of social stories about what the elite do best - make themselves feel self righteous - and local stories about the latest restrictions to be placed on parking, or building, or, well, anything that isn't just so so perfect in the faux riche world of PV.

    When I considered buying in PV, I discovered that the Hillside Ordinance required any remodel that exceeded $50,000 require that the house be "brought up to code" - which sounds innocent. But the code involves set-back requirements and percent of lot used based on slope and all sort of other meddling.

    Fortunately I found a home in a county island (unincorporated) surrounded by PV. PV has repeatedly tried to annex it, but the folks have steadfastly refused - exactly because of the remodel restrictions. Many homes in my (older) subdivision simply would not be remodelable under the code. I have to deal with an ever more restrictive Home Owners Association, but it mild compared to the fascists of PV.

    And yes, local government can be worse than national government, but at least one can move away.

    BTW, Warren, have you noticed neighboring Scottsdale's plans to use eminent domain to acquire Arizona American Water company, on the flimsy excuse that AAW let too much of the frightening (but relatively harmless) TCE into the water one day? Kelo strikes again, although frankly, it couldn't happen to a more deserving band of robber baron's operating a water monopoly than AAQ.

  • Jody

    The more general term that Joe is going for is a repeated game with a discounted infinite horizon.

    He's implicitly referring to the Folk theorem (of which there are technically many, but it's the one to which I most frequently see the appelation applied) which shows (essentially) that any state can be enforced as an equilibrium as long as players are willing to "punish" one another.

  • Miklos Hollender

    They used to have competitions of such software and the winning one is the one that always does what the opponent did in the previous turn, but if they are stuck in a negative spiral of keeping screwing each other then it offers a way out to the opponent by a cooperative decision. So it's like "don't let them screw you but do offer forgiveness sometimes". Makes sense.

  • Dan

    If a community doesn't want a huge development in their midst, with its attendant traffic congestion, it seems to me there's nothing wrong with people getting together to oppose it. Let Ritz Carlton build elsewhere. Seems to me there are plenty of resorts in Phoenix already - when is enough development enough?

  • tribal elder

    I suppose PV has been collecting its slice of property taxes based on the zoning class the resort was in. Did it annex this property just to get the tax stream ?

    Is thwarting resort use an inverse condemnation - a limitation that renders the property unusable ? (A recent Missouri Supreme Court case dealt with a blight declaration/building dept. harrassment/no-development-plan-ever-approved-by-city scenario and concluded that the affected landowner had stated a claim the trial court would at least have to hear (as opposed to the City's sought-after summary judgment.)

    How much are the PV residents ready to pay to buy back the development RIGHT on this property ?

  • Rocky Mountain

    Warren wrote: "One lesson, of course, is that local participative democracy can be just as much a threat to individual rights as the worst dictatorship"

    While local participative democracy may thwart an individual's desire to maximize his profitability, in this case we are talking about an undoubtedly well-heeled corporation and I do recognize that under the law a corporation is treated as a 'person'. Anyway, how many times has participatory democracy affirmed individual desires and rights?

    The claim that these kinds of actions are as bad as the worst dictatorship are just plain absurd. Worse then for a white farmer in Zimbabwe? Worse then for a political dissident in China, Burma, or Iran? Please Warren, reign in your hyperbole. The consequences for Ritz are that they will have to come up with a new plan; the consequences for people in the other circumstances are far less pleasant then sitting around a conference room table bitching about the NIMBYs in PV while sipping designer water.

  • Dan

    Nice post, Rocky Mountain. We need more voices like yours on this blog. Too many other posters worship at the altar of development for the sake of development.

    Development by itself isn't necessarily a good thing, and can be a bad thing. Maybe the town doesn't want the increased traffic and other problems (more garbage collection, water consumption etc.) that come along with a huge new project. And maybe, just maybe, people are entitled to appreciate a nice open space with no parking lots, hotels or shopping malls to mar the view. With all the development already in place (and I hear Phoenix has some of the worst sprawl in the U.S.), why bellyache when one business can't go ahead with yet another project? Find something more important to complain about.

  • BCross

    Dan, are you reading some other version of the blog that I'm not? I don't recall many posts supporting development for the sake of development. I do recall, however, a number of posts arguing against the use of public funds for private development, especially if the development is foolish.

    Should the residents decide to not allow the development, will the town be forced to buy the land since they decided the company would not be allowed to develop it as zoned? (Could there be a "breach of contract" in this action?) If I were in the Ritz's position, I'd also be asking for any taxes paid to be returned since the town seems to think it owns the land.

    Would this seemingly arbitrary approach also allow the town to prevent a minority family from building a house on a residential lot (that had already been purchased by the family) by putting it to a vote?

    Bias and bigotry are still bias and bigotry whether the target is an individual, an ethnic group, or a corporation or industry.

  • BCross

    Rocky,

    Warren mentioned "rights" not overall actions. How, exactly, is PV's determination that Ritz's private property rights don't exist (the vote gives control of the use of the property to people who didn't pay for it) much different from Mugabe's destruction of the property rights of white farmers in Zimbabwe? Either the individual has the right to control the use of their property (within the law, of course) or the goverment does (which would be like a "collective-right" interpretation of property rights). Then again, isn't a collective-right interpretation of property rights pretty much one aspect of Communism?

    The individual rights view still allows an individual to voluntarily surrender some of their control by contract (to an HOA, for example), but something tells me that Ritz would not have bought the land under that kind of contract.

  • Rocky Mountain

    BCross,

    Warren is the one that compared PV's actions to the worse kind of dictatorship in the sense that those "actions" violated the rights of Ritz in the same way that a dictatorship violates the rights - whatever those may be - of their citizenry through their actions. I think trying to distinguish between 'rights' and 'actions' is a bit of wordplay that doesn't mitigate the hyperbole of Warren's comparison.

    Since I'm not an expert on municipal zoning laws and procedures or municipal laws in general, I can only make a guess about what this whole thing is about and whether or not it compares to the worst dictatorships. However, having said that, when I re-read Warren's post it appears to that the city of PV hasn't done anything at all yet except to certify an application for an election which could invalidate Ritz's development permit. Now is it possible that under Arizona law, municipal or state - I live in Colorado, BTW - that this process;i.e. filing for an election to overturn specific permits is within the municipal codes and the Arizona state constitution? If yes, then, honestly what is there to complain about because whatever the outcome the rule of law has prevailed. If it doesn't go in Ritz's favor I would say that their legal counsel and their marketing department didn't serve them very well as they should've developed this scenario when they were sitting down at that beautiful conference room table sipping on whatever they sip at the Ritz!