Elizabeth Milias: A housing lifeline to build goodwill and boost inventory
The Red Ant
In these challenging times, with charitable grants being provided throughout the valley on a means-tested basis and rent relief being granted by the Aspen-Pitkin County Housing Authority to its tenants, it’s easy to overlook the large percentage of our subsidized housing inventory that is owned, not rented. These owners are on their own to negotiate with their lenders, and each lender has its own policies for mortgage forbearance and making up the delayed payments, some more favorable than others.
Aspen Housing Partners (AHP), developer of the new 10-unit subsidized housing project at Seventh and Main streets, estimated in May 2018 that each unit in its 45-unit rental portfolio would cost an average of $977,000 to build. With the city of Aspen as partner, I am going out on a limb and calling it $1 million per. From a cost standpoint, this is indeed astonishing, but in reality, the cost estimates are actually artificially low because our former mayor, Steve Skadron, refused to factor in the land cost “because we already own it.” But I digress.
For the same $1 million that a single AHP unit is going to cost, I can get you 40 units, and in the process relieve many distressed owners of their burden. Here’s how:
The city’s subsidized housing development fund has a current balance of $24 million. Call in the Brink’s truck with a delivery of exactly $1 million in cash. This isn’t a contest, nor a sweepstakes, but more of a participation trophy, which should make even the most triggered subsidized housing owner or seeker happy. Divide the 10,000 $100 bills into 40 stacks of 250, and place each $25,000 stack into one of 40 lunch-sized paper bags.
As we beat our heads against the wall trying to monitor compliance, downsize empty-nesters and otherwise right-size our housing occupancy through audits and rare, highly controversial evictions, simply put, there is very low turnover in our subsidized housing stock relative to our needs. And the costs of land and new construction are beyond prohibitive, if you can even find the land. Thus an incentive: during a specified time frame, for the first 40 subsidized housing units sold, through APCHA of course, here’s a $25,000 bonus, cash-and-carry to the seller, in a tidy take-away bag. First come, first served. Many subsidized-housing owners are currently in a severe pinch, given the current crisis and recent economic shutdown. And mortgage forbearance is only a short-term reprieve. Some folks are likely considering relocating to more fiscally favorable locales. When faced with the prospect of selling an old, deed-restricted condominium that has been capped at 3% appreciation, I am convinced that a $25,000 bonus to the seller will provide a compelling incentive for those “on the fence” to sell. And it can quickly rescue others who may be facing foreclosure or other serious financial issues.
This experiment is very low risk; we’ll spend $25,000 to free up a unit that would otherwise cost $1 million to replace. Needless to say, this kind of cash incentive is more likely than not to motivate a lot of folks, giving them a sensible “out” at a time when lifestyle decisions may be outweighed by more pragmatic ones. I’d like to think that with $25,000 there for the taking, there will additionally be a modicum of effort by sellers to fix up their units before listing them for sale. This may be overly optimistic, but given the near-deplorable conditions of some subsidized units that are sold as-is because of the preposterous demand for housing, a sudden influx of inventory onto the market would, for a short period, create some actual and much-needed competition. This is good for everyone.
In the end, for what it costs to build just one unit, the community can free up 40 move-in ready units in a very short time frame, while providing current owners in distress with a helpful option that prevents potentially disastrous long-term financial and credit-related outcomes.
The risks and responsibilities of home ownership are onerous, and The Red Ant has long advocated for rental-only subsidized housing for just this reason. However, until the idealist politicos see it my way, this idea seems to be a worthy experiment that’s particularly timely and long overdue. And we can certainly afford it. Notably, unlike other contests, giveaways and sweepstakes, in this case, when the money’s gone it isn’t necessarily gone. With all that money in the bank, we could just as easily fill another batch of lunch bags. Food for thought.
Publicly subsidized housing is a benefit, not a right. When it becomes a set of handcuffs, we need to think differently to protect those we’ve sold it to. Contact at TheRedAntEM@comcast.net.
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