I read the bill. My comments are that workforce housing is an important issue, and if the Legislature thinks that two pilot projects will help solve the problem, then perhaps this is a start.
However, I think we need to think about what will be the likely result: two subsidized projects that provides some workforce housing. In other words, many of the underlying issues that drive the cost of developing housing are not likely to be addressed, except perhaps for the two pilot projects:
·Unwillingness or inability to build units with some economies of scale. Large projects are deemed to be either undesirable or the infrastructure or parcels don’t exist in areas where the housing is needed.
·Notwithstanding the relaxation of permitting, it remains costly and onerous.
·Given the time and resources to get started on these projects, competition is deterred, especially if community input limits the areas to be developed.
·Lack of predictability in the development of housing despite the need. For private, for profit housing developers, it’s risk versus reward, and if it takes years from planning to occupancy, risk is enhanced and reward diminished. This assumes, of course, that as a matter of public policy, Vermont wants to have private entities developing housing rather than relying regional, affordable housing developers doing it all.
The underlying premise of the bill is that housing projects that are built to meet the needs of the market must have set asides to create units that are affordable based on determinations of median income. This, as any developer will confirm, is known as “cost shifting,” which is how the State here and elsewhere are trying to create uniform coverage for health care, not really a good model in my view.
The population that we are clamoring to have: young professionals, usually single or couples who earn above the median income do not qualify for set aside units or don’t want to spend $1,000 to $1,300 for one BR unit, or $1,300 to $1,700 for 2 BR unit, which is what the market demands for energy efficient, new or renovated units. The cost shifting approach, without a significant subsidy, will not solve this problem. No doubt, there will be plenty of proposals from many communities for the pilot projects since the State is pledging the resources that make success more likely. It’s also safe to say that there will never have enough taxpayer dollars to solve the problem throughout the State. I would hope that when proposals are evaluated that some consideration will be given to 1) the market rents, and 2) the minimum net subsidy that is required for the project to be feasible.
If H702 has any traction, and it passes this year or next, maybe we will know the results 3 or 4 years from now, which in itself is indicative how serious we really are about creating reasonably priced housing.
Thank you, Sarah. One of my questions for developers would be whether the income eligibility requirements would still allow the projects to be financially feasible without any tax credit programs.
For instance, the project would require that 25% of the units be leased/sold to people with a household income less than 100% of median and 50% of the units leased/sold to people with a household income less than 150% of median, leaving 25% for market rate. And the income eligible units must not be more than 30% of the income of the renters/purchasers.
Thanks,
Katie
On Feb 24, 2016, at 11:57 AM, Sarah Cowan <SCOWAN@NBMVT.COM> wrote:
As a point of origin, the Addison County Economic Development Corp (Fred Baser’s district) has been exploring the cost of housing versus affordability specifically related to work force affordability for some time now. We see it as a major hurdle in attracting and keeping a strong work force in VT – whether it be single family homeownership or rental units. We proposed this concept after conversation with RE developers and others and asked Fred to sponsor it for us.
We hope that the RE developers see value in this bill and that you will support the concept. Yes, Fred is a good resource if you have questions, as is former legislator Paul Ralston. ACEDC board president and Country Home Products CFO, Christopher Knapp, also hopes to testify tomorrow, in favor of the bill.
-Sarah Cowan, board member, ACEDC
Sarah A. P. Cowan Senior Vice President National Bank of Middlebury P. O. Box 189 Middlebury VT 05753 Direct Phone: (802) 388-0888 Fax: (802) 388-6077 Email:scowan@nbmvt.com
We will be testifying in favor of the concept. As always, the details are important. The bill is quite short, and I would recommend taking a look at it.
Funding would be appropriated from the state for infrastructure improvements, and the exact location of the projects is not stated. Those interested would have to apply, and one must happen in a community of less than 10k and one in a community of more than 10k.
Are you testifying in favor or opposed? What is the gist of the testimony? Who is funding these endeavors? What is the expected expense? Will this require more staffing at the state?
Are these located in Chittenden County, or are they to be located in the rest of Vermont?
I will be testifying on this bill tomorrow afternoon on behalf of the Lake Champlain Chamber and GBIC - if there are issues you would like raised, please let me know.
The House Housing & Military Affairs Committee will be taking testimony tomorrow (Thurs) on H702 -- a bill promoting workforce housing.
"The bill would authorize planning grants, infrastructure funding, and regulatory benefits to support two workforce housing pilot projects to be sited in neighborhood development areas."
If you're interested in testifying, Fred Baser is the sponsor and would have more information.
Stephanie
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