Stealing money in the name of affordable housing

An important issue throughout Oregon is affordable housing or the lack of it. What is truly driving the cost of housing? Cites around Oregon continue to dream up new “fees” (taxes) in order to pay for their “so called” infrastructure needs. This is just another back door tax that is hurting home buyers. Recently, a local city stopped a family from purchasing a home because of an unpaved road fee. This is a fee that requires those who do not live on a paved road to pay a fee that sometime in the future the city can pave the road for them. The other option is for the homeowner to pave the road. When the home owners pay into the fee they have no idea or time line in which the city will pave their street.

Elected officals truly don’t care at all about affordable housing they prefer to campaign about to get elected. Here is one another fee adopted in Central Oregon. It is called the affordable housing fee (tax). For every building permit that gets pulled in the city the permit buyer needs to pay .33% of additional fee to help pay for affordable housing. So the city is increasing the cost of housing while trying to pay for affordable housing.

So do governments truly care about affordable housing?

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Posted by at 06:30 | Posted in Measure 37 | 22 Comments |Email This Post Email This Post |Print This Post Print This Post
  • Sybella

    No they don’t care. If government would stay out of things, nothing would be as expensive as it is. Supply and demand should be the only thing driving prices. Why does everybody think they are entitled to own a home? Nice if they can, but not entitled.

  • Steve Plunk

    You don’t create affordable housing through higher taxes and fees. You create affordable housing by increasing the supply of land and allowing developers to meet market demand.

    SDC’s also drive up housing costs. Not only do you have to pay the fee but since they are based upon the number of bedrooms a 1200 square foot house with three bedrooms pays the same as a 2500 square foot house with three bedrooms. Contractors know with high lot prices and SDC’s being the same it makes sense to build the bigger, more expensive, house.

    Previous generations did not pay SDC’s. Municipalities collected taxes after homes were built and provided real value for the taxes paid. Now cities force young people to “buy in” to an already bankrupt and institutionally corrupt system. What a deal.

    The issue of fees is getting out of control. In a panic search for revenue post measure 5 cities are levying fees without voter approval. Fees in Medford are now higher than city property taxes on business property. That’s certainly nice for the city but I doubt any economic development will be taking place in such a high tax atmosphere. Making an end run around the voter’s will is wrong. Measure 5 was about runaway spending and the taxes that supported it. Changing to fees (disguised taxes) allows that unwise spending to continue.

    Governments just don’t get it. For supposedly smart people they either don’t understand us or perhaps they just hold us in contempt.

  • Philo

    I can only speculate on how much of the affordable housing fee is lost to administration costs.

    Furthermore, we have a national housing bubble burst going on, and peple are not buying new homes as much. Why pile fees and taxes on an injured patient. Here, let me help you by hurting you.

    I feel the housng blues in my own neighborhood.

  • Captain_Anon

    Let’s be clear. standards are important. there has to be a bar that is set. that is why there are building codes… health and safety. anytime you set a standard, there will be one in a million circumstances that don’t make sense. that’s what happens when you set a standard. if income tax starts at 20k, then those who make 20,500 have incentive to not work so they get under the tax and aren’t penalized. the person who makes 19,500 doesn’t work anymore because they get such a diminishing return. it is what it is.

    required paved roads, is a health and safety issue. emergency access is a must. and just because one person is ok having a really crappy or steep hill doesn’t mean the standard to pave should necessarily be lifted. they will eventuall move, sell, or die and someone else will take the home. road standards are there for uniformity and for safety. *I HIGHLY DOUBT THE STORY ABOVE IS COMPLETE* cities and counties do not regulate who buys or doesn’t buy property. that is the sole discretion of the property owner. my guess is the full story probably includes a family who wants to buy property and replace a house, but the new standards in place will require the new development to meet current standards (shock). so what? a family who bought a 1950’s house on a 5000 sf lot still on septic should be required to hook up to the sewer or not be allowed toreplace the home. it’s a pure safety issue. just because in the 1950’s governments had lax standards doesn’t mean a new house should be able to be built under those same standards.

    It’s common practice for governments to require those who build new homes in substandard areas to require them to sign an agreement to participate in future road improvements. or, require them to form thier own improvement district if they don’t want the gov to do it for them.

    development these days is SO subsidized its not even funny. requiring new homes to pay into an SDC is reasonable. that new home will add additional traffic (trips) to the existing road system. it will also add sewage and demand additional water. they never paid for the system already in place but will be using it. so its fair for them to pay for thier increased burden, which with enough homes, will require replacement or enlargening those infrastructures. the government (tax payers) shouldn’t be subsidizing this. if you want to build, pay for your impact. its unfortunate that in pleasant valley the city of gresham caved in and is paying 26million in subsidies for developers to build roads, sewer and water infrastructure. those builders should be paying ALL of it. same in bethany. the developers shoul dbe paying for all the roads, sewers and water extensions.

    and to think governments don’t care about affordable housing is assinine. they want affordable housing to be available. they spend a lot of time trying to figure out ways to make it available so people of all income levels can rent and buy in communities. but the market is very difficult to try and manipulate appropriately.

  • captain_anon

    actually, i’d love it if the author would put in the details… what city, what case number etc so we could actually look into it.

  • Bad Man

    Captain_anon has proven that he’st another closet socialist and most likely a public employee or bureaucrat at that. Go stick a streetcar where the sun doesn’t shine captain!

    • Captain_Anon

      wanting the complete story and facts is SOOO socialist. so is ensuring public safety and making development pay for itself! how awful!

      rather than complain, why don’t you post your opinion and reasons why your correct and i’m incorrect. that actually helps debate, not reduce it to 10th grade antics

    • Steve Plunk

      The Captain is right about such a tone. Facts, reason, logic, they are all welcome. Insults are not productive in any way. Now the Captain may have socialist tendacies and may even be a public employee, I don’t know and don’t care if his logic and argument hold up. Before I go too far I should say I think he is wrong, but I will defend his right to speak his mind and his right to be treated with civility.

      Raise the level of discourse and show the liberals facts, reason, and logic.

      • Captain_Anon

        I’m curious on which portions you think i’m wrong and why?

        • Steve Plunk

          First and foremost I disagree with your assessment of SDC’s.

          Until recently SDC’s were not used in the state of Oregon. Municipalities planned ahead and if needed borrowed money through revenue bonds to pay for infrastructure improvements. The new housing paid that back through the user fees and continued paying after the bonds were paid off.

          Two things created the need for additional money which SDC’s provide. One, cities and counties moved into what I would call untraditional spending. Everything from art programs to senior citizen programs have taken a bite out of city general funds. These over time become expected mandates and cutting the programs is likely never to happen.

          Second, personal cost have skyrocketed for the public sector. PERS is one cause but there is also what I call the keeping up with the Joneses effect. Every time a position is filled cities look to see what the average pay is for that position and then just a bit more driving the average up for the next city and the next and the next. Pretty soon pay is much higher than need be. Imagine buying a house and paying what the average price is plus $5,000. Stupid. We pay what we have to pay and look for the best bargain around. Cities and counties don’t look for bargains or even a fair price. PERS we all know about.

          Voters can control taxes through voting. Voters don’t really give a darn about SDC’s since they think Californians will be paying those. Too bad they realize it’s our children who will be paying them as well. Unfortunately both the people moving here and the young people don’t have a say in the charges they will be levied in the future. And don’t forget the advent of SDC’s drove up the prices of existing homes making those people very happy.

          So for many years we didn’t need SDC’s. Lack of fiscal responsibility has led us to needing SDC money to operate our local governments the way they were operated in the past. The sad thing is requiring the next generation, who we have saddled with a huge national debt, pay into this system merely to become part of society. They build that fee into their own mortgages and find themselves in deeper debt. All thanks to a generation preceding them that can’t muster the strength for spending discipline.

          I also disagree on the issue of government caring about affordable housing. I believe they give it lip service and nothing else. The cures are available but elected leaders and staffs don’t care to allow the free market to work. Why? Because they will lose control they now exercise in land use regulation. I don’t call it planning because planning entails foresight, land use regulation and control is all about utopian visions coupled with nostalgia. They forget most of the things they are nostalgic about came from the free market.

          Ashland is a good example of the clueless nature of affordable housing officials. Rather than open up more land for homes they continue to force others to simply subsidize the housing costs. Pumping more money into the system through taxes doesn’t solve the problem. Open up that urban growth boundary and watch the prices fall.

          • David from Eugene

            Steve Plunk

            So you think current residents should pay for providing sewer, water, roads and parks for new arrivals. What else should we pay for? Should we also pay for part of their house or the landscaping?

            New development places new demands on the capacity of necessary infrastructure. What SDCs do is to cause new development to pay for the cost of providing that capacity. The use of Revenue Bonds that you proposed has all of the users (existing and new) paying for that new capacity.

            By state law SDCs can only be spent to either construct new capacity in the system the fee was collected for or to reimburse the provider for previously constructing the capacity that the new development is placing a demand on. And in the latter case the agency charging this Reimbursement Fee must show that the capacity exists before it can establish such a fee.

            Collecting SDCs is government acting in a fiscally responsible way. There is no such thing as a free lunch, it does not matter who is eating it, our kids or someone moving here from California, it has to be paid for. SDCs are a way to have those that will be using a system to pay for the system. In short SDCs cause new development to pay its fair share.

          • Steve Plunk

            I do not think current residents should pay for part of a new house or landscaping of a new house. Let’s try not to muddy the waters, we are talking indrastructure impacts and the proper way to pay for them. I don’t believe SDC’s are the proper way to do it.

            The question I pose and no one answers is why are we doing it now when we didn’t have to do it twenty years ago? Back then fiscal restraint and forward thinking allowed government to plan ahead and build capacity expecting future revenues to pay for it. We don’t pay SDC’s for electrical, gas or telephone infrastructure because of the proper management of these systems.

            Read my post more carefully and look at why governments charge these fees now. It all relates to poor management.

            The people getting the free lunch are the current homeowners who saw an increase in values when SDC’s were tacked onto new homes. That is an undeserved windfall.

          • David in Eugene

            Steve Plunk

            I am not muddying the water, I am attempting to determine where you draw the line on the question of how much of a free ride new development should be given. Transportation, Water, Sewer and Parks systems yes; house and landscaping no, OK. I would have thought you would be opposed to government subsidies, but you are entitled to your opinion.

            To answer your question as to why we didn’t have SDCs twenty years ago, my belief is that it was because eat the time they did not fully realize the negative impact providing a free ride for new development was having on the community. Tax money that went into to subsidizing growth was money that was not available to provide other services or tax cuts. Or if nothing was done to expand infrastructure in response to growth, the current resident sees a decline in the level of service he receives particularly in regards to Transportation and Park Systems. The estimates I have read in regards to the capital costs associated with providing services for a single family house (including schools, police, fire as well as the water, storm water, sewer, transportation and parks systems that SDCs are currently charged for) was between $25-30,000 (in 1995 dollars).

            SDCs are an indicator of good management, those that are creating the need pay for meeting that need. And the fees are charged so that government can pay for the construction of the infrastructure need to meet the capacity requirements of new development.

            You are right we do not pay SDCs for gas or telephone infrastructure. That infrastructure was paid for by stockholders who are getting a share of the profits in return for that investment. One that continues long after the cost of the initial infrastructure was recovered. With SDCs they infrastructure costs are only paid once, and only for the cost of providing the capacity.

            Every time there is a significant change in the manner SDCs are calculated or new SDCs are established there is an increase in new housing costs which because the new and existing housing markets are linked causes an increase in the value of existing housing. This in many ways is unfortunate, but it does reflect an increase in the value of their share of the infrastructure capacity. And as the increases in SDCs are linked to increases in the costs of constructing the infrastructure it more accurately reflects normal inflation and not a windfall. Consider a house purchased for $15,000 in the 1960s is its current $150,000 to $300,000 price tag a windfall or normal appreciation. In my experience, gained from eight years serving on a Department Advisory Committee carefully examining each of the City’s SDC methodologies, the “big windfalls” are either the result of not keeping the SDC methodology and cost data up to date or imposing SDCs on systems where they were not collected in the past. Overtime, assuming timely periodic updates, there is no windfall because existing users have also paid SDCs.

          • Jim Labbe

            Steve,

            I think you overstating things by saying “back then fiscal restraint” allowed infrastructure to be built without SDCs.

            Back then the federal funds helped pay for local sewer and roads for new communities much more than they do now. Many residents in post-WWII neighborhoods did not pay for their public infrastructure either.

            You’re argument would be more persuasive if you argued that, in the same way residents in existing neighborhoods did not pay for much of the infrastructure serving their neighborhoods, it is unfair to expect future residents to pay for all the infrastructure in their neighborhoods.

            Ofcourse SDCs are not always passed on to new residents… a portion is probably paid by land speculators and/or by developers as a cost of doing business.

            Jim Labbe

          • Captain_Anon

            Another important thing to remember is that originally, homes were not built in large numbers all at once and demanding instant service. homes were built individually – not my Pacific Lifestyle homes. sewers wont’ always required either. the vast majority of the mid county area (east portland) was all on septic system until the mid 80’s and 90’s when they were required to hook up. it’s a lot cheaper to build an individual house with a septic system than it is to put in brand new roads, sewers and water lines all at once. governments didn’t provide as many services in the ‘old days’ and those that they did were SO MUCH Cheaper than today. the construction insdustry is very expensive anymore to run. sewers are one of the greatest costs to a municipal government.

  • Jerry

    Right on Steve. Many call me names, too, just because I am not a left-wing, wacko crazy.
    Let’s just remember one thing…nothing government does is going to make any housing any more affordable. Just leave it alone and let the market take care of things.
    No government intervention.
    People who think the government can help them are just hapless. Help yourself. That is the American way.
    How many trillions have been spent on the “war against poverty” without anything to show?
    Do gooders and nanny-staters – leave us alone! Just leave us be. We can figure it out all by ourselves.

  • DMF

    Actually I’m in full agreement with Jerry. Even with the best of intentions the government has made a mess of things. True we need the government to do the job they are hired to do. I see over the last 30 years their actions have deteriorated. It always sounds good to help the poor. And we should when we can. What the government is doing is creating more poor. They have become lazy, don’t do anything for themselves. Now the government is just running our lives. I can do a better job of running my own. So could the poor, the misbegotten, those who live off society, they just need to be given the tools to do so. Actually they are given the tools, they just don’t pick them and policies today encourage them to not pick them up. After all if they did, whose lives would the government run. Imagine the unemployment among government officials

    • David from Eugene

      DMF

      Government is doing the job they were hired to do. Everything Government does is the result of the action by our elected representatives acting on our behalf. It sounds like you believe that Government is doing some things that it should not be doing. So do I, for that matter, most people also believe that government is doing things it should not or need not do. But in many respects that unanimity is illusory, as while they all agree that government is doing things it shouldn’t, they do not agree on what those things are.

      If you do not like something government is doing you have two choices, find enough people that agree with you and together make a good enough argument to get the support of 48 people in Salem, in which case the government will stop doing it. Or you can do nothing and complain.

      As to “living off of society”, we all do! That is why society exists. The farmer grows food, and the factory worker makes tractors, each needs the other to survive. Long past is the time when an individual and his family could directly provide for all their needs, if that time ever really existed at all.

      In many respects we do not have a problem with government doing too much; we have a problem with community not doing enough.

  • E.P.

    I agree with Captain Anon. Where are the links TO BACK THIS UP? Examples or instances would be great. A parallel article would be good too. I also love cold, hard data. If you can’t produce ANY of that, then where’s your authority to speak on such a sensitive issue?

  • dartagnan

    “Previous generations did not pay SDC’s. Municipalities collected taxes after homes were built and provided real value for the taxes paid.”

    Yeah, that’s a helluva good deal. The developers pocket the money and the taxpayers get stuck with the bill for the additional roads, sewers, etc. made necessary by their developments.

    How can you people be so damn naive?

    • Anonymous

      That you could call someone else naive after the second paragraph of your comment is beyond hilarious. You don’t even get that you don’t get it.

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