Lawrence’s population has nearly doubled in the past 20 years. New neighborhoods have sprung up along the western fringes of the city, expanding the tax base and fueling the city’s 1990s economic boom.

But when Ed Tato looks out on those neighborhoods, he sees high-end houses filled with high-income people. People with lower incomes have been forced by skyrocketing land values to settle near the city core.

“When you start to geographically segregate people, I think it makes running the city a little more difficult,” said Tato, the chairman of the city’s Housing Trust Fund.

The fund’s board first met in 2001 and has funded six projects aimed at expanding the city’s affordable housing base. The fund’s original endowment was $500,000. Tato said that was not enough to make a dent in the city’s shortage of low- and medium-income housing.

“If we’re going to make an impact,” Tato said, “we’re going to need to find the mechanism to have the funds to do that.”

The fund’s board gave city commissioners four alternatives during a joint meeting Wednesday:

• increasing property taxes;
• increasing and reallocating development impact fees;
• redirecting funds from building permits; or
• raising real estate transfer fees to provide the “steady stream of revenue” the board said the fund needed to stay in business.

But all four options pose problems.

Assistant City Manager Dave Corliss said money gained from building permit and impact fees carried strict guidelines for use.

“You’d have a very significant problem doing that,” Corliss said, referring to the reallocation of funds.

Impact fees can only be used for projects directly related to the fees’ original purpose, he said. For example, a wastewater impact fee can only be used for wastewater improvements. And the courts have yet to decide a reasonable use for building permit fees. Homebuilders say the fees can only be used to run administrative offices responsible for issuing the permits.

“I think it would really depend on the advocacy and the argument,” Corliss said.

Increasing mortgage fees is even more complicated. Those fees are collected and allocated by state and county government. Altering the way such funds are distributed would probably require a bill being passed in the Kansas Legislature, Corliss said.

“It’s something we could talk to our delegation about,” he said. “Now’s the time to do it.”

Another property tax increase after 2004’s double-digit increase is probably a political nonstarter. Still, commissioners said they were hopeful some solution could be found to provide the necessary funds.

“There has to be some sort of message from the community saying these are things about which we feel strongly and we need to address,” Commissioner Sue Hack said.