Wednesday, October 27, 2021

City’s housing program shifts burden to builders and public

| September 29, 2021 1:00 AM

Looking at the principal features of the City Council’s effort to provide affordable workforce housing, we offer an alternative perspective. The City Council has ventured into an open-ended realm of social and economic engineering that impacts ownership rights by shifting responsibilities for “workforce” housing from employers to builders or to the public. In addition to its technical and practical challenges, this venture raises fundamental questions about the role of government in a society that traditionally values free-market economic decisions.

The city’s 2017 strategic housing plan seeks to limit the operation of a free-market housing economy with a policy of “deed-restricted housing.” The plan envisions government-imposed occupancy limits as well as price controls on rents and sales of housing units. It then introduces the concept of “workforce housing,” meaning units which are deed-restricted for occupancy “by households that include at least one local employee.” Homes which are not similarly restricted are described as “part of the free market.”

To implement the plan, the city’s 2019 inclusionary zoning ordinance applied permanent affordability requirements to a range of major and minor subdivisions and planned unit developments. Under the ordinance, 20% of all new dwelling units in such developments were required to be deed-restricted. For rental units, the annual rental could not cost more than 30% of the annual income of households earning 60% to 80% of area median income published by the US Department of Housing and Urban Development. Depending on the renter’s “income range” the maximum rent was limited under a formula to be determined by the Legacy Homes administrative procedures. “Ownership units” were required to be similarly deed-restricted such that they would be affordable to households earning 80% to 120% of AMI, and the initial sale price could not exceed an amount calculated under the procedures. Further, a builder was required to disperse affordable ownership units throughout the income range such that the “average” of units were affordable for rental by households earning 70% of AMI and for purchase by households earning 100% of AMI.

The IZ ordinance is burdened by substantial technical defects. A glaring example is the arbitrary nature of its definition of affordability which relies on HUD income statistics. In 2019 HUD reported Flathead County median family income as $69,900, a figure nearly 31% greater than the $53,400 AMI reported on the Whitefish Housing Authority website for 2019 (presumably also derived from HUD data). A second example is the IZ ordinance’s use of “income” as the only eligibility criterion for affordable housing by prospective tenants or purchasers. The ordinance does not define income and does not consider savings, investments, property ownership, debt, gifts, or non-taxable trust or estate distributions. As a result, the legislated meaning of “affordable” was, and remains, a remarkably arbitrary and imprecise measure of a person’s or household’s ability to pay rent or to purchase a home in Whitefish.

Giuseppe “GMan” Caltabiano, candidate for Whitefish City Council, and Jim Ramlow