NCW Real Estate Blog

I attended the Affordable Housing Symposium hosted by the City of Wenatchee yesterday afternoon.  As I suspected, the “Independent” recommendations were anything but.

I was actually pretty favorably impressed with the consultant, David Rosen, of DPR Associates.  They took census data from 2000 and Office of Financial Management data from as recently as 2006 and 2007 and did a thorough statistical analysis of the housing situation in Wenatchee.  They are also very knowledgeable of housing trusts, housing authorities and the taxes and regulation that can be used to support such ventures.  They are experts and have facilitated $7 billion of affordable housing.

However, the consultant was chosen by a group made of representatives from the Planning Department, Housing Authority and the NW Justice group.  These groups stand to gain from findings that money needs to be sent to them for “affordable” housing.  It would be as if I were the dealer in town for a given brand of truck and was asked to choose the consultant for the city to hire to specify the trucks they should buy for public works.  It is likely I would choose a consultant that would recommend my brand of truck.  That is similar to how this consultant was chosen.  Nobody from the local home builders’ association, the Master Builders’ Association of the Building Industry Association of Washington was included.  Nobody from private industry at all was invited.

I have asked for copies of the presentation and will post links to the consultant’s report when it is available online.  But, I did take some notes and can share some things now.  The statistical analysis looked at median home prices versus median income.  There is an $82k price difference between what a median income earner ($57k for a family of four) can afford and the median home price ($248k).  They also took today’s ratios of folks at various lower income levels, from the homeless to twenty and fifty percent of the median income and projected them forward to the growth levels expected over the next 25 years.  The conclusion was that about 1750 affordable homes need to be built and many more refurbished at citizen expense. 

That assumes that in the next 25 years, the distribution doesn’t shift on its own.  Do you think Wenatchee will continue to rely as heavily on farm workers in 25 years?  The city’s “High Performance Strategy” would suggest we will have a different mix of workers in the future.  We are also in the midst of a huge demographic shift with baby boomers moving into retirement.  They are a large part of the current real estate market and tend to be able to afford homes that are above the median. Delving a bit further into the statistics and background behind them could be very worthwhile.

Other things could purposely shift the pricing side of the distribution. For example, looking at changes in planning code and urban growth boundary strategy that might actually be able to reduce the price of the median home, or at least the appreciation rates of the median home over the next 25 years.  Impact fees, land availability, zoning, planning requirements and other policies impact the viability of market production of affordable homes.  We’re in the midst of a major market adjustment that is making housing prices move back to being more in line with incomes.  Nobody knows yet how much that will change the situation.  Shouldn’t all of those issues be looked before deciding to tax the public to buy homes for folks who might be able to make some different choices and afford a market rate home?  Could that money be more wisely spent on programs to help low income residents become higher income residents?  Is subsidizing homes for low income residents the most effective way to spend your money?

What type of incentive is created for folks when, because they keep their income low enough, they might be given a home or a reduced price on a home or rental?  If they earn too much, they may not qualify anymore.   Is that the type of incentive to create?

None of that was looked at.  It isn’t the consultant’s fault.  The consultant was selected by parties with an agenda.  They got exactly what they wanted, a report on several ways to get YOU to pay for low income homes.  Those include:

• Inclusionary housing programs – where developers have to create a % of low income homes in any development
• General Obligation Bonds or Property Taxes Levies – Bonds or property taxes paid by the residents and businesses of Wenatchee
• Local Infrastructure Financing Tool – From the link: The LIFT Competitive Program allows selected local governments to take advantage of tax revenue generated by private investment in a Revenue Development Area (RDA) to make payments on bonds used to finance public infrastructure improvements.  Incremental revenue increases in the RDA and revenue from other local public sources are used to match state money and must also be used to repay the same bonds.  The state revenue earned is distributed through a local sales and use tax that is credited against the state’s sales and use tax.
• State Housing Trust Funds Awards – State tax money and grants that give your state government a reason to raise your taxes.
• Subsidized rehab options to preserve existing, salvageble affordable housing.
• Hotel/Motel taxes
• Taxes, Fees & Assessments

Look for more on the blog in the next week regarding the specifics of the proposal and links to both the report and the presentation.  To me, the presentation looked more like a big government Seattle solution than a market focused Wenatchee style solution.  Question the assumptions when seeing a presentation like this because once the tax streams and affordable housing industry get even more established, it will be difficult to reign back in.  There are benefits to having clean, safe housing available for a variety of income levels in Wenatchee.  There are also a variety of methods to achieve that goal.  Wenatchee residents need to be prepared to ask themselves how many affordable homes they each want to pay for!  Let your local officials know…

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