September 21, 2006 Issue

The town of Destin, Fla. is in dire straits. You won’t hear that from the chamber of commerce, the developers, the real estate companies, the bankers, or the city council. But I’ll give it to you straight. There will be people jumping off of buildings here in the near future.

The current situation in Destin did not come about due to hurricanes or beach erosion or shark attacks (or shark tournaments for that matter). Four dollar a gallon gasoline is not the culprit. We have almost no crime, lots of job opportunities, and A+ schools (if you believe the testers). The fishing can still be good and the beaches, though narrow in spots, are still beautiful. And there are few places in the world that have as cool a party as the floating beer bash on weekends at Crab Island.

So what’s up? Why such a gloomy depiction of the World’s Luckiest Fishing Village?
Baby boomers may be aging, but they are also inheriting the most money ever passed down in our country’s history. People still want to go to the beach and fish and party on the Emerald Coast don’t they?

No, they don’t. They wanted to come visit our area when it was affordable. And it won’t be affordable much longer to visit or live here. If the old adage about criminal intent always coming down to money or sex still applies (and it does); this debacle can be attributed to money and property and the greed that goes with the acquisition of it. Unfortunately, sex doesn’t have much of a role in this disaster.

We have a town with no real affordable housing and a huge demand for manual laborers.
The Hispanics, through thrift and sharing, seem to be the only ones capable of making our housing environment work. The labor supply is so weak that a cottage industry has evolved importing Eastern Europeans to take care of the service areas of our businesses.

The real problem we have has to do with land — the acquisition of it, the destruction of it, the development of it, the lack of it, and now the inability to sell it. The real estate game in Destin since 1996 (post Opal) has more closely resembled a Ponzi scheme or a pyramid scam than it has a legitimate business.

The frantic purchasing and selling of properties, the flipping of condominiums, and the battles to obtain pre-sale prices on new projects attracted almost everyone. If you weren’t involved in the whole real estate circus you were certainly aware of it. It dominated conversation at hair salons, kid’s soccer games and at lunches throughout town. Anyone fortunate to own property in Destin, particularly old-timers, began to hear stories of how much their property was worth, and unfortunately, in many cases, they believed it.

In the past 10 years Destin has acquired more real estate agents and brokers per capita than almost anywhere. People who spent their lifetime in the fishing industry become developers and manicurists became real estate investment experts. The defense of private property rights became the prime reason for our local governments to exist. The idea of controlled growth or, God forbid, a restriction on building, was made to seem a communist threat and every harebrained development that came along was approved.

All it took for this shabby pyramid to turn to rubble was a simple, if exorbitant, raise in property taxes, and a concurrent scam being carried out by the insurance companies. The bizarre increase in property taxes is based on an unrealistic appraisal of property values. The insurance companies, who specialize in collecting premiums and denying coverage, have had a record year, much like the oil industry. Now they routinely refuse to issue policies and when they do, it is at an exorbitant rate.

The wealthy people who invested in Destin will, for the most part, survive this bloodbath unscathed. They have access to good lawyers and understanding bankers. The regular folks, many of them true locals, who believed that they were becoming wealthy because the property around them was wildly escalating in value, are the ones who will be hurt. They can’t afford the taxes or the insurance costs foisted on them by events beyond their control.

The remaining local business owners who depend on tourism and a lively local economy will be hammered. There is no need to worry about the Wal-Marts and Home Depots and the large corporate restaurants and retailers. These businesses won’t even be a pimple on their collective ass.

When the dust does settle one thing will be clear. We won’t have killed the goose that laid the golden egg. We will have maimed it and tortured it and sent it on its way. Unfortunately we will have sent a lot of good people with it.

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