Building equity |

Building equity

Dear Editor:

Since publication of a guest opinion piece and a letter on affordable housing (AH), I have received some great suggestions and questions. Most oft addressed: building equity for deed-restricted home buyers.

To date, local AH programs cap appreciation rates based on the cost-of-living index in order to maintain permanent affordability. However, most folks depend on home appreciation as a major retirement income source. Withholding this source denies commensurate compensation in the economic success of the region, creates an artificially tiered social structure, precludes participation in our most valuable asset (real estate) and erodes diversity: a woefully inadequate reward for the people who make the community work. The redress could be a voluntary real estate transfer tax, the subject of this letter.

In a previous piece, I suggested building AH on public properties, the public entity joint venturing (JV) with private developers based on pre-approved entitlements and a pre-apportioned AH/market housing mix. State law precludes a real estate transfer tax imposition except during the annexation process. However, a public/private JV would allow a self-imposed transfer tax, the objective being everybody wins.

Here’s how it might look. All JV residential units would be subject to a 10 percent real estate transfer tax in year one, diminishing to 2 percent in year five where it remains in perpetuity. This provision would discourage speculation and create a permanent revenue stream. The transfer tax revenues would be earmarked for future affordable-housing subsidies (not the general fund) and an AH owner’s equity pool: invested, income-producing and available to AH owners at the time of sale or retirement. This is not an original idea ” Alamosa and Ketchum, Idaho, have similarly oriented programs.

Instituting this, or some equally sustaining AH program, is public priority No. 1 for downvalley municipalities. Inertia is predictable because of voter anti-growth sentiment and the perception of private-sector collusion. However, allowing a vocal minority to derail an effective AH program is an abrogation of civic responsibility. We desperately need AH, with a program crafted to reward working residents. Absent a sustainable and rewarding AH program we are headed for an economic and lifestyle train wreck.

The public benefits of such a program would be an adequate supply of affordable housing, income-producing public property, low community services impacts (high density, existing infrastructure, transit and trails proximity, minimal traffic, support for existing businesses, etc.), maintaining community diversity and retaining “community characters.” Finally, private-sector engagement optimizes the public realm return on investment, land, time, money and skills/tools.

The economic benefits for AH owners is obvious. A perhaps equally important AH owner benefit is to enjoy retirement among lifelong friends in the environment that nurtures us. I have several friends who, upon retirement, had two choices: sell and move into a smaller AH unit or sell and move out of the valley, unable to afford anything here. Not happy choices.

Private-sector benefits are primarily risk reduction through pre-approved entitlements and reduced upfront land cost. A less tangible developer benefit is productive engagement with the community in solving a critical civic problem: Everybody wins.

Don Ensign


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