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Open House

Danville, Illinois, Has Fallen On Hard Times In Recent Decades; California And Others Put Eminent Domain On Ballot; Homeowners Insurance Costs In Florida Extremely High; Property Taxes Big Election Issue This Campaign Season

Aired November 04, 2006 - 09:30   ET


GERRI WILLIS, CNN ANCHOR: Home prices, property taxes, energy costs -- the issues you talk about around the kitchen table are front and center at the election polls this Tuesday.
A special edition of OPEN HOUSE starts right now.

Welcome to Minneapolis. Did you know the state of Minnesota has the highest rate of home ownership in the country? Unfortunately, Minneapolis is caught in the nationwide housing slide.

Of the 151 markets, it's near the bottom in terms of growth, with the average home going down. But no community has seen a drop like Danville, Illinois, down more than 11 percent in one quarter. Ad that's just one topic on the minds of Danville voters as they head to the polls this Tuesday.


WILLIS (voice-over): In coastal cities like Los Angeles and Miami, it's been boom times for real estate. But in the heartland of the country, places lie like Danville, Illinois, it's been anything but.

This city, once called Little Chicago, has fallen on hard times in recent decades. Population has drifted away, new employers when they do come to town rarely bring the fat payrolls that auto industry jobs offered in decades past. Income here is well below the national average.

What are Danville voters looking for?

TRACY TURNER, DANVILLE RESIDENT: It's jobs. Jobs, jobs, jobs. You know, we have lost a lot of our factories, so we are looking for the people who are making those promises. You know, Danville's unemployment rate is high, and that seems to be the most important thing with us right now.

WILLIS: New jobs just don't stack up.

THOMAS "TUCK" MEYER, DANVILLE RESIDENT: The big problem is, is, you know, you are trading $25 to $30-an-hour jobs for $7.50.

WILLIS: Meaning?

MEYER: Well, meaning we don't have -- we don't have all the big General Motors jobs any more.

WILLIS: A weak local economy has hurt the housing market. Danville experienced the biggest annual drop in median home prices of any metro area in the second quarter. No city has lower home prices.

The median home costs just $65,200, according to a trade group. Publicity surrounding those numbers have city fathers hoping mad. They say their market is so small that the numbers are misleading. As a result, they've decided to stop supplying their data to that trade group, the National Association of Realtors, which makes that information public.

SCOTT EISENHAUER, MAYOR, DANVILLE, ILLINOIS: You can make statistics be whatever you want statistics to be. One of the things that bothers me about the statistics that are out there is they talk a lot about median average sales prices. There's no doubt because we are an older community we have a section of our community where there's a lot of dilapidated homes that are selling anywhere from $5,000 to $20,000. That's going to bring down the median price.

WILLIS: It's that deep concern that we heard from everyone. In fact, our visit prompted two front-page stories in the local newspapers.

And the response isn't just emotional. City leaders court employers constantly, with their efforts netting 5,000 new jobs in the last 25 years. But they recently lost a bid to lure a $400 million Honda plant which could have served as the fodder for even more companies.

Of course, Danville isn't alone. Across the heart of the Midwest, in Indiana, Michigan, and other parts of Illinois, real estate markets are hurting. A factor impacting wallets and potentially votes.


WILLIS: For their part, Danville city fathers say the worst is behind them.

Across the rest of the country housing prices are down, energy costs are up. Folks are frustrated as Election Day draws closer.


UNIDENTIFIED MALE: The biggest issue for me is the economy, gas prices, healthcare, Medicare, Social Security.

WILLIS (voice-over): Not everybody agrees.

UNIDENTIFIED MALE: I don't think the economy is that major an issue. It should be, I guess. The stock market's up, but I don't think it's that major an issue. I mean, we've got American boys and men and women -- American men and women who are in harm's way.

WILLIS: With the election just day away, the health of the economy has taken second place to the war in Iraq.

On the surface some things look good. The stock market keeps climbing and hitting new highs. And gas prices have retreated from their highs a year ago. You might think that consumers would have more money in their pockets, but it's not working out that way.

Americans have twice as much equity tied up in the sinking housing market as they have invested in the stock market. Wages are growing slowly, healthcare costs going up, and disposable incomes isn't what it used to be.

GREG VALLIERE, STANFORD WASHINGTON RESEARCH GROUP: There's a big chunk of Americans who are happy to see the stock market doing well, they see interest rates coming down. They see a pretty solid economy.

There's another chunk of Americans who aren't that happy. They feel left out. They feel their wages aren't keeping up. They see people making huge salaries and they're not, and they worry about outsourcing.

WILLIS: And it's not just their own money that Americans need to worry about. After President Bush's plan to reform Social security failed to gain traction, no politician is willing to touch the fiscally challenged program. No one wants to offer a plan to fix the national debt. And hardly a word has been spoken about the rising cost of healthcare and education.

Simply put, folks just don't feel secure on the home front.

UNIDENTIFIED MALE: I don't think I'm any different than probably most Americans. I think what's happening is, as people are sitting down and they are looking at their expenses, they are cutting where they can. And they are looking at their income and saying, well, we just can't do what we've been able to do up to now.


WILLIS: Coming up on the special election edition of OPEN HOUSE, have you heard of Proposition 90? If you haven't, you'll want to know about it. It could impact the government's right to take your property. We'll check it out.

And folks in Florida are battling over an insurance issue, one that could have an impact on your homeowners policy.

That story when OPEN HOUSE in Minneapolis comes right back.


WILLIS: Welcome back to OPEN HOUSE in Minneapolis. We're here at their beautiful city hall.

A year ago, the Supreme Court ruled that the government can take your property for public development. Now states like California and others are putting eminent domain on the ballot. The results, well, they could have national implications. Peter Viles has the story.


PETER VILES, CNN CORRESPONDENT (voice-over): The home of Bernard Luggage in Hollywood is not much to look at, but to Bob Blue it is priceless, seriously. He refused to sell it.

(on camera): Was there a price you would have sold at?

BOB BLUE, OWNER, BERNARD LUGGAGE: No. That's true. There's a lot of family history here. We've been in Hollywood since '46. This business and this building means a lot to me.

VILES (voice-over): The city of Los Angeles had other ideas. It tried to use eminent domain to seize the building and destroy it to make way for a luxury hotel.

Not only did Bob Blue fight back and win, he's now campaigning for California Proposition 90, which would stop the use of eminent domain for private developments. The U.S. Supreme Court drew the battle lines in this war last year when it ruled in a Connecticut case that cities can take property to make way for commercial development.

Author Steven Greenhut says that's an abuse of power that needs to be corrected.

STEVEN GREENHUT, AUTHOR, "ABUSE OF POWER": The Fifth Amendment allows eminent domain for public uses after due process is given and after just compensation is paid. And what I've seen happening in my -- in my writing is, time and again, I've seen public use means giving it to a Costco or an auto mall, or a clearly private use.

VILES (on camera): If California voters pass Proposition 90, they would be giving a new set of rights to all property owners. Not just homeowners, but businesses, developers, even speculators. They would all have the right to fight back if the government does anything that changes the value of their property.

(voice-over): Specifically, they'd be entitled to seek compensation if any government action reduced the value of their property. Critics say that goes too far, giving too much power to developers and speculators and not enough to governments.

KEN WILLIS, LEAGUE OF CALIFORNIA HOMEOWNERS: The absolute undiluted right of a private property owner to do as they wish with -- with their property, exclusive to any consideration to the neighbors, the neighborhood or the community...

VILES: Ken Willis is a city councilman who says government often defends the value of homes by saying no to certain uses.

WILLIS: And the neighborhood doesn't want to have a porn shop on the corner. Just because the guy that owns the corner piece of real estate wants to have a porn shop doesn't mean that the whole neighborhood should have to put up with that. VILES: And Bob Blue is on the other side of the argument, fighting for those who can't afford to fight city hall themselves.

BLUE: Mainly it's needed because those that can least afford legal protection could never make this battle if they wanted to stay.

VILES: Peter Viles, CNN, Los Angeles.


WILLIS: The eminent domain debate is far from over. We'll continue to cover it.

Another issue we cover on OPEN HOUSE, the soaring cost of insurance. In fact, in Florida the costs are so high that they are a central focus of the governor's race.

John Zarella has the story.


JOHN ZARRELLA, CNN CORRESPONDENT (voice-over): Dave Malone (ph) was absolutely stunned.

UNIDENTIFIED MALE: Thank god I was sitting down. But it was definitely a shock.

ZARRELLA: Malone, who lives in Hollywood, Florida, had just gotten his homeowner insurance renewal notice. He expected an increase for hurricane coverage, but not this.

MALONE: It was 250 percent on the hurricane premium.

ZARRELLA: From $1300 a year, Malone's premium just for hurricane coverage was going up to more than $4,700. He is far from alone.

Homeowners across Florida are getting sticker shock renewal notices. Some are so incensed they have formed grassroots organizations and are taking their protests to the state capitol. Polls show insurance has become the number one issue for voters here and may determine who becomes the state's next governor.

Republican Charlie Crist...

CHARLIE CRIST (R), FLORIDA GUBERNATORIAL CANDIDATE: I want to lower your property taxes, and your homeowners insurance needs to go down.

ZARRELLA: ... or democrat Jim Davis.

JIM DAVIS (D), FLORIDA GUBERNATORIAL CANDIDATE: I will be a governor who stands up to this very powerful insurance lobby.

ZARRELLA: The problem for voters is this pocketbook issue is terribly complex. There's no single silver bullet, and neither candidate is offering any new ideas. Crist and Davis say they will push for a national catastrophe fund that taxpayers in every state contribute to and would benefit from. And they both want to end the insurance industry's practice of setting up subsidiary companies in Florida that shield the parent company from losses.

CRIST: These companies should not be able to set up these Florida subsidiaries when the reality is they have a national company making that's making billions after billions after billions.

DAVIS: These companies are making record profits and record prices. And the reason that I'm going to be elected governor of Florida is that homeowners and business owners have had it.

ZARRELLA: Insurance companies say it would be impossible to operate in Florida without this approach. And even with it, they claim to have lost $13 billion in the state since 1992.

(on camera): With Crist and Davis both on pretty much the same page, and neither promising a magic wand solution to the elections- defining issue, the voters may be left to choose not so much on what the candidates are saying, but how they are packaging their messages.

John Zarella, CNN, Miami.


WILLIS: Still to come, if you are a homeowner you know that property taxes are out of control. In some states, initiatives on the ballots might change that.

More to come on OPEN HOUSE from Minneapolis.


WILLIS: Welcome back. I'm at the Mall of America, where people like everywhere else pay property taxes. It is a big election issue this campaign season. Why? Well, if you are like most people you think you pay too much.


WILLIS (voice-over): Larry Corsi, a 30-year resident of New Providence, New Jersey, is more than a little frustrated with his property taxes.

LARRY CORSI, NEW JERSEY RESIDENT: My contention is, maybe we ought to start thinking of getting the incumbents out.

WILLIS: A retired engineer, he has created a mental spreadsheet of his tax burden.

CORSI: My property taxes are 21 percent of my disposable state income. And school taxes, specifically, out of that is 12 percent of my disposable state income. So you can see the magnitude of that. And we're finding it difficult. WILLIS: He's not the only one. The U.S. Census Bureau says property tax collections rose 35 percent in the last four years. And the anger over taxes is bubbling over not just in high-priced markets like California and New Jersey. At least 13 states have real estate tax initiatives on the ballot this November, many taxpayer initiatives seeking tax relief.

Proposals on state ballots range from giving voters approval over individual property tax increases, to exempting seniors from property taxes altogether. In New Jersey, where property taxes are the highest in the nation, the issue is particularly contentious.

Legislators there have yet to begin drafting a solution because they are bogged down in partisan politics. Meanwhile, Corsi and his wife have curtailed vacations and started shopping with coupons as they struggle to pay a tax bill that has jumped 80 percent, to $9,000 today, from $5,000 10 years ago.

CORSI: The quality of life has started to change. You know, I never thought in my golden years that I would have to equate to this.


WILLIS: Property taxes are just one of the issues on the minds of folks here. I spoke with D.J. Tice -- he's an editor at "The Star- Tribune" who has covered the area for two decades -- about the issues that are on the minds and in the hearts of voters here.


WILLIS: So, when Minnesotans go to the polls, what is the number one issue for them?

D.J. TICE, "STAR-TRIBUNE" EDITOR: I think the war, very clearly, is the dominant issue of the campaign. For some people it's the issue. It will determine how they vote. For others, it's kind of a background of anxiety and concern that colors how they feel about everything else.

WILLIS: What about the economy? Are people concerned about housing, gas prices? I would think energy prices would be a very big issue here.

TICE: Yes. You know, from the chilly weather here today that's heating your home through the winter in Minnesota is a significant cost. And so, yes, high energy prices are a worry. They have eased a little bit since the peak in the summer.

The housing market is very soft. We haven't seen real sharp declines in home values, but inventories are very high and homes just aren't moving.

WILLIS: Are people worried about that? Is that a real drumbeat of concern among consumers, among homeowners?

TICE: I think it is. I think people are only becoming aware of it. Of course, if you've got your home on the market you've very aware of it. Others, though, are -- as they realize the market is soft, they feel a little less prosperous than they did when home values were rising and everybody was getting multiple bids.

WILLIS: You know, I think this is an interesting market, because it's not one of those go, go markets like the coast, where you saw prices go to the sky. Right?

TICE: Right.

WILLIS: So there's been no real expectation, I would guess, that prices might fall, and yet that's exactly where you are headed here.

Is there a malaise? Is there a deep concern about what's going on in the economy? We see incomes sliding nationally. What do people feel right here?

TICE: I think people are uneasy, but, you know, the economy here is growing. And we had a crisis in state finance a few years ago which created some discomfort and a lot of political debate about, you know, who is responsible for rising property taxes and the like. But I think there's a feeling that -- that the worst is behind us. But you wrap into it the concern about the war and displeasure with things in Washington, and there's enough to keep people a little bit unhappy and feeling in the mood for change.


WILLIS: 2006 could be the year that politics goes green. We will have that story when this special edition of OPEN HOUSE continues.


WILLIS: I'm here at a polling station in Minneapolis where people are already casting their ballots. One issue important to Minnesotans and people across the country, the environment. A new initiative that claims to curb global warming is getting traction at the local level.


WILLIS (voice-over): Green issues may get voters' attention, but it's the green that comes out of their wallets that usually carries the vote on Election Day. One man would like to change all that.

Ed Maser says you can maximize your home value and keep your energy bills down by building green. But achieving that goal requires the help of the government, says the founder of a new energy conservation initiative.

ED MASER, FOUNDER, "2006 CHALLENGE": We looked to the federal government for -- you know, as a leader in this area, but apparently the federal government is not moving very aggressively. We then have to look to our local -- to our states and our cities. And there's great movement in that area. WILLIS: Santa FE, New Mexico, was the first city to sign onto the 2030 challenge which aims to cut fossil fuel dependency through greener and cleaner building design.

DAVID COOS, MAYOR, SANTA FE, NEW MEXICO: We look at issues of global warming. We also look at pocketbook issues like how much natural gas costs us every winter. And it just seemed like a very natural idea for Santa Fe.

WILLIS: Santa Fe isn't alone. Cities big and small have signed on to the challenge, which was unanimously adopted at the national mayors conference in June.

Leading the way along with Santa Fe, Chicago, Miami and Seattle.

COOS: We're working at the state level for tax breaks for people that install, you know, solar hot water or solar floor heating system is. We have created a revolving loan fund in the city for water conservation, and we think we can expand that pretty readily for energy conservation.

WILLIS: While some cities are moving faster than others to implement the goals of the 2030 challenge, critics remain skeptical about the political follow-through and whether voters are ready to go green.

RON ARNOLD, CENTER FOR THE DE. OF FREE ENTERPRISE: You have a bunch of mayors here in cities all over the country. They have their own problems, and I am sure all their constituencies are going to explain it to them at the polls, exactly what they have in mind as to whether they want new green architecture.

WILLIS: Another obstacle to implementing energy-saving guidelines, ironically enough, falling energy prices and the threat of history repeating itself.

MASER: We had an energy crisis in the '70s that you could -- if you remember, gas lines, and there was a whole solar movement started. There was a Department of Energy commercial building demonstration program where they showed reductions of 50 to 80 percent, just through design.

There were all these working models out there from the '70s and '80s, and then the price of oil went back down to $10 a barrel and people forgot about it. You know, and the programs evaporated. The government shut them down and we went back to business as usual.

WILLIS: It's the challenge of changing that "business as usual" attitude among voters, politicians and consumers that keeps Ed and like-minded colleagues working toward environmental reform.

But in Santa Fe, global climate change already is a local priority.

(END VIDEOTAPE) WILLIS: At that mayors conference in Atlanta last week, the focus was on funding the 2030 challenge. We'll keep you posted on the progress.

Stay with CNN, the best political team in television, as we count down to Election Day 2006, America Votes.

OPEN HOUSE will be back next week right here on CNN. And you can also catch us on "Headline News" every Saturday and Sunday at 5:30 p.m. Eastern Time.

Don't go anywhere. Your headlines are next on "CNN NEWSROOM".

Have a great weekend. And don't forget to vote on Tuesday.