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.
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.