Archive for Thursday, January 25, 2007

Tax plan may help low-cost housing

Highberger wants bill drafted that would support push for affordable homes

January 25, 2007

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If Lawrence wants to create more affordable housing, a state tax increase would help, City Commissioner Boog Highberger said Wednesday.

Highberger recommends that the Legislature increase the state's mortgage registration tax and direct the new revenue to cities looking to fund affordable housing programs.

"It would provide us a guaranteed pool of income to support affordable housing efforts," Highberger said during a meeting of the city's Housing Needs Task Force. "It could lead to the creation of some permanent stock of affordable housing."

Highberger, who is running for re-election this spring, said he will ask city staff members to draft a bill that could be introduced by an area legislator next month.

The mortgage registration tax is paid - normally as part of the closing costs of a home - every time a buyer takes out a mortgage to buy a home or property. It also is charged in some cases when a person refinances a home.

The tax is now charged at a rate of 26 cents for every $100 worth of mortgage, or $260 for every $100,000 in mortgage. All but a penny of the tax goes to the county's general fund, while the remaining 1 cent goes toward a state historic preservation fund. The 26-cent rate is charged in every county in the state.

Highberger said he wanted a bill that would allow individual counties or cities to add onto that tax, if they agree to use the new tax revenue to fund a housing trust fund that would provide assistance to people in need of affordable housing.

How much of a tax increase the city will ask for hasn't been determined yet. But the Housing Needs Task Force said it wanted to establish a housing trust fund that would receive $500,000 per year in operating funds.

Based on the amount of mortgages filed in Douglas County in 2006, the tax would have to be raised to 32 cents per $100 - or an increase of about 22 percent - to raise the $500,000 to fund a housing trust fund. Highberger, though, stopped short of saying he would lobby for that large of an increase.

City officials site tax increases as a way to create more affordable housing

Members of Lawrence' Affordable Housing Task Force propose raising the mortgage registration tax in hopes of creating more affordable housing. Enlarge video

Not all housing trust members were keen on any type of mortgage registration tax increase. Bill Yanek, a representative of the Lawrence Board of Realtors and a member of the city task force, said he was sure the proposal would receive stiff opposition from statewide real estate and banking groups.

"The political reality is that it would be an uphill climb at best to get something passed," Yanek said. "You could argue that this goes at cross purposes. If you want to increase housing opportunities, why increase the cost of purchasing a home? That's what this would do."

Highberger, though, said the new tax revenue could be used to provide financing to developers or nonprofit organizations - such as Tenants to Homeowners - that would agree to build homes that would be required to sell for significantly less than most new homes in the community.

The task force hasn't set a specific price point at which it considers a home to be affordable. Instead, it has said that it wants anybody who works in Lawrence to be able to find a home or apartment that would not cost more than 30 percent of annual income.

The task force has agreed to send a draft report to the City Commission that outlines the need for the mortgage registration tax and the creation of a permanent housing trust fund. The report also calls for the use of an incentives-based inclusionary zoning system. That would be a system that would provide incentives to builders and developers to include a certain number of affordable homes in each development they create.

But the task force said more work remains to be done on that part of the report because no agreement has been reached on what type of incentives to offer. The main suggestion has been a waiver of certain permit fees or an expedited development review process.

Comments

just_another_bozo_on_this_bus 8 years, 4 months ago

"The pot smoker wants to raise taxes and he's trying to steal money from the taxpayers on the name of 'affordable housing'..."

Bowhunter99-- Hopelessly ignorant, and proud of it.

Sigmund 8 years, 4 months ago

Increasing the costs of home mortgages in an effort to lower home prices is easy, if not counterintuitive. But beyond simply raising fees and after the money is collected (the easy part if you're the collector) just how is this program going to work?

How does the Task Force intend to build and sell a house at below market rates? Is the landowner going to be forced to less for the property for less, the builder going to charge less for labor, Home Depot going to sell the materials for less, or the subcontractors work for less? Why would they, just because the Task Force asked them to? Nope.

How this program is likely to work is the fund is simply going to be used to subsidize homes for a small group of people, chosen by the Task Force, by taxing everyone else. How will these few people be chosen and when they do decide to move will they be forced to sell the home at below market rates? Will the Task Force set that price as well? Wouldn't these few people be better off just buying houses that were in their price ranges or moving to areas where a better combination of job and housing markets offer them more non-subsidized choices? No one is being forced to live in Lawrence, as far as I know.

UKept 8 years, 4 months ago

Hmmmm....a well-publicized appeal to lower income voters, mere months before the election, vowing to attempt to influence state lawmakers to enact a small tax increase to fund an impressive sounding yet vague Task Force. Smells like........GRANDSTANDING!!!

cowboy 8 years, 4 months ago

Isn't it funny how each taxing entity thinks that their tax is so small it doesn't matter ? Sales tax , property tax , license fees , income state and federal , excise tax , liquor tax , cigarette tax , gas tax , phone bill taxes , cable taxes , water fees , tire excise , on and on and on.

sit down and shut up Boog

oldgoof 8 years, 4 months ago

Bowhunter, a builder's cost of capital is always part of a home price. A commercial loan per se does not require a motgage tax. . I find the proposal a thoughtful and novel one to address a difficult idea. In times of booming values and escalating home sizes, there would be some revenue. And if the economy is not supporting home expansions/upgrades, there would not be revenue or presumably as much need. . Since a vast amount of personal wealth accumulation occurs through the device of "upgrading" ones house, I actually think this revenue stream is even better than income tax.

Stephen Roberts 8 years, 4 months ago

There are a few problems here.

  1. The Term Affordable Housing was coined after the Low Income Housing Tax Credit was enacted in the late 1980's. It was used because so many people have a negative conotation to HUD Voucher program called section 8.

  2. Is the housing task force looking to provide homeownership or rental? I do not know.

There are other federal and state programs designed for rental properties. The main poroblem is when some one wants to build "affordable" rental property that has tax credits for the owners, a lot of people do not want it in there area.

As for home ownership, there are programs aldready out there in place.

It is so easy to say let raise the tax a little and no one will feel it. I have a better idea, let's reduce the amount of compensation for city commissioners then we would have 40,000 to go to the trust fund.

Let's also change the way we vote. I would rather have a system where the city is divided up in districts and each district vote on a commissioner. Like the county.

I am so glad the election is coming up.

Stephen Roberts 8 years, 4 months ago

Before anyone asks, I used to work in the Low Income Housing Tax Credit industry and I am pretty knowledgable about the program.

Kat Christian 8 years, 4 months ago

No one is being forced to live in Lawrence, as far as I know. Sigmoud this is a crappy statement. Sometimes people don't want to move away from family and where they've lived all or most of there lives and have roots.

As for raising taxes for a program. My question is who gets a raise in salary out of this? Anytime taxes are raised someone gets a big salary boost. This is why it's crap. (seems to be my favorite word today).

bd 8 years, 4 months ago

Robin Hood tactics- steal from the rich and give it to the poor!

optimist 8 years, 4 months ago

I have a suggestion. Why don't we provide tax incentives to businesses that come to Lawrence or expand in Lawrence thus increasing the ratio of jobs to human resource resulting in a more competitive job market; an employees market if you will? The result will increase wages and benefits and allow people who live and work in Lawrence the ability to afford a new home.

This is more of an anti-growth proposition more than anything else. Some people do not deserve to be leaders. Leaders are thoughtful and creative in devising ways to help the whole community. This proposition is simply another income redistribution scheme. What government apparently does best anymore is create divisiveness between segments of our country by employing schemes that foster resentment. Forcing some families in this town to support the needs of another family is ridiculous.

What would most of us do if Boog himself showed up at your door and demanded money to fund his programs that cater to a demographic in the community that will get him re-elected? Most of us would boot his butt off the porch. The only difference in this case is he is using the power of his position and the guns of the government to force your hard earned money from your hands.

I suggest we all keep this in mind as the election season approaches.

Janet Lowther 8 years, 4 months ago

I'm afraid that Boog, like a lot of liberals, never met a tax he didn't like. . .

Godot 8 years, 4 months ago

Commuter, as i understand it, the housing trust provides ownership of homes - just the homes, not the land. The trust owns the land. Tenants-to-homeowners, however, gives ownership of the homes to the buyers.

Both situations are troublesome. The land trust gives low income people the "opportunity" to own a home, with all the responsibility that goes along with it, such as paying taxes and maintenance, but with a limit on how much the "house" can increase in value for resale. Tenants-to-homeowners, on the other hand, provides a low income family a taxpayer subsidy and help in financing so they can purchase a home at below market value , but, as I have seen happen recently, does not require the recipient to sell the home for a below-market price. So taxpayers can subsidize a person's potential short term capital gain of thousands of dollars, and the once-affordable home is back in the pool of market value homes.

Feel free to correct my facts if I am wrong. But allow me this opinion: Government, particularly Lawrence city government, does not belong in the housing market.

Moderateguy 8 years, 4 months ago

Can we please stop using the word "affordable." There are affordable places to live in Lawrence. What you folks really mean to say is "acceptable." What is affordable may not be as nice as the house you grew up in. It isn't "acceptable" to you. We all make choices in our lives. Sometimes those choices have consequences that the rest of society should not be held accountable for.

Jamesaust 8 years, 4 months ago

Until more detail is provided, I'll stand behind my comments made under the original article yesterday (as Bowhunter points out - identical).

preebo 8 years, 4 months ago

Does anyone see the irony here? I mean Highberger wants to raise the mortgage payments for some of the people in Lawrence in an effort to make other housing cheaper for other people. I normally support Boog on a multitude of issues, but on this one I have to disagree. Boog must be betting on the notion that people can claim their mortgage interest as a deduction on their income taxes, and maybe he thinks that will offset the tax increase. In any event, this is the wrong way to go about bringing in low income housing. Why don't they use HUD grants instead of taxing loyal Lawrence residents unnecessarily?

monkeyhawk 8 years, 4 months ago

"What would most of us do if Boog himself showed up at your door and demanded money to fund his programs that cater to a demographic in the community that will get him re-elected? Most of us would boot his butt off the porch. The only difference in this case is he is using the power of his position and the guns of the government to force your hard earned money from your hands."

optimist, you are so right, and thanks for breaking it down to the most elementary level.

There are basically three things a business looks at when deciding where to locate:

a. Regulation

b. Taxes

c. Wages

This is not too different from what an individual might look at when deciding where to live.

We can praise the PLC for accomplishing a big portion of their goals in working through those three. They have done a terrific job in stopping population growth, stopping any industrial/commercial/retail expansion or growth, and increasing the tax burden on the measly 48% of Lawrence dwellers who actually own property.

Some people who unfortunately feel empowered by their "important, appointed" positions, advocate potholes as traffic calming devices, and bike paths as the transportation of the future. They want those of us who do not agree with their vision to leave, and for Lawrence to implode so that they may have their utopian dream.

I, for one, will not cave to this ridiculous submission. I have the feeling I'm not alone.

Way back in the 60' and 70's the hippies were very leary of "big brother". Funny thing is, that is what they have become. Control, control, control.

trinity 8 years, 4 months ago

"Now almost anything that you can do to get folks out of public housing and into their own homes for wich they PAY can be good if done properly but this plan is slow flawed that it is nothing more than another pip dream from the PLC."

is gladys knight coming along in the pip dream?

sorry, i just could not pass that one by. :)

KsTwister 8 years, 4 months ago

...or $260 for every $100,000 in mortgage. All but a penny of the tax goes to the county's general fund."

Hmmm, let's change county to city and Voila! They still manage to get money from the people to the coffers and the low income still can't afford the price ticket. Try again.

KsTwister 8 years, 4 months ago

And how much are you paying for that task force? I want to elect people who can do their own problem solving.

KS 8 years, 4 months ago

Will the "affordable" houses also be taxed? Just where does this tax crap end?

samsnewplace 8 years, 4 months ago

The very first line of this article makes no sense. Why pay more to be able to afford to spend less? We are being taxed to death now~!

girly 8 years, 4 months ago

"Bowhunter, a builder's cost of capital is always part of a home price. A commercial loan per se does not require a motgage tax." -

oldgoof- the above is not correct. any real estate mortgage recorded with the county, whether by the builder the home buyer or anyone, has to pay the mortgage registration tax. So, it is true that a new home is being taxed on the builder and the buyer. Then it's taxed again every time it resales, unless the buyer pays cash.

Rationalanimal 8 years, 4 months ago

"If Lawrence wants to create more affordable housing, a state tax increase would help, City Commissioner Boog Highberger said"

And then what happens when every city in Kansas needs to find someone to subsidize their housing by taxing outside of their communities? Can we please show this socialist the door. No Boog, the answer is not to find a clever way around constitutional mandates that taxes be equally imposed and shift the economic cost onto someone else, it is to toss a defective economic ideology--namely, socialism. Housing in Lawrence would be perfectly affordable if the fab-5 lightened up their kung-fu death grip on the City's commerce and development. Lawrence needs less of the constipational planning gridlock, and more commercre and development friendly policies.

Godot 8 years, 4 months ago

There is plenty of "affordable housing" throughout Kansas. Pick up your stakes and move to one of the houses that is dying of old age, open a business, and live your dream. Do not expect other to do it for you. If you do not want to move because you have family here, then so be it. You are making a choice; you are trading owning a home for being near family.

Godot 8 years, 4 months ago

I wrote "houses dying of old age," should have been "towns dying of old age"

KS 8 years, 4 months ago

Right on, Godot! The American dream should not just be to own your home, but also to own your own business. It's funny how that sort of thing (business ownership) can turn one from being a liberal to a conservative.

JumporFall 8 years, 4 months ago

I don't think people should have to choose between owning a home or being close to family. If the average Lawrence resident can not afford to own a home here, that is a problem that should ba addressed. I don't think it is acceptable to tell family who have lived here for generations, "Pack it up and move, you don't make enough money to live here anymore."

But I don't think Boog's plan is the way to go.

Godot 8 years, 4 months ago

JumporFall, no one is telling people to leave; we are simply not willing to pay the price for the personal choices people make. I, for one, had to "settle" when i bought my first house, which I bought at age 21, with a spouse and baby, and no help from government or parents.

JumporFall 8 years, 4 months ago

I just bought my first home, with the help of my VA benefits. I have a college education, a full time job. But with out a VA loan I might have had to "settle" right out of town.

Godot 8 years, 4 months ago

JumporFall, you earned the VA loan. Good going.

MeeMa8 8 years, 4 months ago

1. Boog's plan stinks.

2. Why are we paying "city staffers" to draft a bill for congress that he has yet to find anyone who will introduce it? Doesn't he have the cart before the horse?

Centrist 8 years, 4 months ago

So if you're moving OUT of Lawrence and buying a home in another county, you still have to pay tax towards Lawrence homes ... wow, what an idea.

&&ing liberals!!

No way should someone in say, western Kansas or Wichita or Johnson County, have to pay for someone else to live in Lawrence when they buy their home.

How about cutting WASTE first!!!

Like those HUGE (percentage) raises the Commission got for their PART-TIME jobs ..

Is it any wonder that people hate government??

thelonious 8 years, 4 months ago

Listen, folks -

The local homebuilding community is taking care of this - no tax increase or social program required! They continue to build new homes, even as hundreds built over the past year sit empty (don't believe me - drive through the subdivisions along north Monterey and start counting them. And this is only two little subdivisions. Or talk to a realtor who will be candid with you - if you can find one. Nothing over $250k is selling, folks are having to drop their asking prices, there are LOTS of empty, unsold new homes all over town).

I don't have anything against the homebuilding industry - it's just that I see them acting stupidly, cutting off their nose to spite their face, continuing to build, build, build while sales have come to a screeching halt. I realize that they will have to lay off staff, etc., if they stop building, but that's the reality of the situation - the alternative is to create such an oversupply of homes that they crater the entire market, and that will be felt by EVERYONE, including city hall as the tax base shrinks, etc.

The homebuilders had a lot to do with the escalting prices (building larger and more expensive new homes, etc.), and now they will have much to do with the collapse in housing prices (by creating oversupply). Of course, they will make out OK, but people trying to buy a first house get priced out on the way up, and then existing homeowners lose their equity when the bust comes. But the builders have pocketed nice profits along the way and will be there to pick up the pieces after the collapse.

I think that this mortgage tax idea is just a sideshow compared to the real story (builders overbuild and crater local real estate market). Guess what comes from city hall when property values start to drop - that's right, higher mill levys to make up the loss.

budwhysir 8 years, 4 months ago

So if I understand this right, we would pay a tax that would create a fund that would allow an appointed group to find out what we need to do about affordable housing.

I can answer that one, this group would say we need to raise taxes. First to cover the increase in salary they want and second to cover the cost of promoting affordable housing

budwhysir 8 years, 4 months ago

Does the right hand know what the left hand is doing?? This may be important in the future after this little group is set up and making decisions concerning affordable housing. They couldnt even tell us how much affordable housing costs.

Sure, it makes sense, make people spend more money on housing in order to find out how to make housing more affordable. Thats like me paying a grocery store for information on where I can buy my groceries for less.

oldgoof 8 years, 4 months ago

TABOR .. Are Marion and Godot Libertarians?

budwhysir 8 years, 4 months ago

Politicaly speaking, I think Marion answered your question Oldgoof.

In my political experience, I have found it best to go to the source when asking questions about politics. Even when you dont think it will, a political view will be changed when relayed thru other parties.

Politicaly speaking

budwhysir 8 years, 4 months ago

Man, I can get anyone to debate my standpoint tonight I must be on top of my game, maybe next week Ill play at arrowhead

Godot 8 years, 4 months ago

I score as a very strong libertarian on that online test. But, I do not participate in the party, so, no, I am not a libertarian.

KansasKel 8 years, 4 months ago

Let's do some math:

5.15 per hour (federal minimum wage) x 40 hours per week = $206/wk

$206/wk x 52 weeks = $10,712/year

$10,712/year divided by 12 months = $892.67 gross income per month

30% of $892.67 = $267.80

It's gonna take a LOT of taxes to get "affordable" housing for someone who works full time making minimum wage.

I'm all for affordable housing but I don't think you can find much housing of any kind for $267.80/month.

Even making $10 an hour full time, 30% of gross income would still be $520/month...still not a lot of choices for this town.

Jamesaust 8 years, 4 months ago

Marion: "This tax would not generate enough money to cover more than half a dozen houses..."

That is interesting, and I agree that any program would have to demonstrate the economics.

But I wonder what you mean by "to cover" and whether that is the plan presented. Does "to cover" mean 'pay for 100%'?

I believe the plan - of which we know precious little, although that might be the LJW's fault - would be to supplement the poor's own resources.

For example, if a family's income is sufficient to buy a modest $75k house, but have difficulty raising, say, a $10k downpayment, a portion might be provided by the program at little or no interest. After all, the biggest hurdle for the poor (who can afford any house at all) is getting enough capital together to make a downpayment. I don't see this as a plan aiming at home ownership for the indigent.

Godot 8 years, 4 months ago

That is why minimum wage jobs are entry-level, and why most minimum wage jobs are held by kids living with their parents.

Jamesaust 8 years, 4 months ago

Perhaps they'll make a movie. Maybe with Jimmy Stewart as an underappreciated Building & Loan president.

'Do you know how long it takes a working man to save five thousand dollars? Just remember this, Mr. Potter, that this rabble you're talking about, they do most of the working and paying and living and dying in this community. Well, is it too much to have them work and pay and live and die in a couple of decent rooms and a bath?'

hmmmmm.....

Godot 8 years, 4 months ago

Didn't the savings and loans go bust in the 80's because they made loans to people who could not repay? Isn't that part of what caused the last 14% decline in real estate sales in the late 80's?

Godot 8 years, 4 months ago

Jamesaust, there are not any "modest $75,000 homes" in Lawrence, unless they were built by Habitat.

There are some really, really nice homes for less than $50,000 in small town Kansas. I know where, in Kansas, a family can get a nice 1400 sq ft rancher with a basement and a two car garage for around $30,000. Now, that is affordable housing. It would make Jimmy Stewart proud.

JumporFall 8 years, 4 months ago

And where exactly are these lucky people going to work? How far will they have to commute? Driving an hour each way, working nine hour days, all of a sudden they are only enjoying their lovely affordable home while asleep.

Godot 8 years, 4 months ago

Same way the pioneers did who originally settled the land: be creative, take a chance, work for yourself; eventually employ others. The young can do it! A house for $30,000 means a house payment of less than $275 per month, taxes and insurance, included. That is less than a car payment!

This would be a huge advantage for someone who wanted to take a chance on a new business. If I were young, I would jump at it. Actually, I did just that thing, 30 years ago, when I took a chance and moved my family to a sleepy little burg called Baldwin City and started my own businesses.

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