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Today and Monday at City Hall, the Mayor and City Council will continue a path they began down last year that places affordable housing on the high altar of worship that also requires the sacrifice of 30 years of tax revenue that could be used to provide for city services like schools roads, and public safety. Last year, the Mayor and Council approved four tax abatement grants to build affordable housing projects that offer 100% tax rebate to developers that will cost the city treasury $62 million over 30 years.
Today at the Finance Committee meeting, seven more projects will be considered in places like Bellevue and Highland Park and Manchester, even though the documentation is missing key information and no one knows exactly how much revenue will be deferred for 30 years because the ordinances to be considered are incomplete and because key information is missing — or being withheld.
While affordable housing is certainly a laudable goal (and more of it is needed), and grants or tax credits are often needed to help incentivize construction and to keep rents low throughout the life of the project, giving away the store for thirty years is at best a questionable strategy. But that’s the Mayor’s strategy. In return for affordable housing, the developer will receive a 100% rebate on the tax on the value of the structure(s) on the property for 30 years no matter what the value is when the project is or what the assessment rises to over the course of the next three decades (think about what the values of houses and buildings around here were worth in 1994).
So, for example, if the parcel of land where the project will be built in 2025 is paying $5,000 per year in taxes for just the land, the developer will pay $5,000 a year in taxes for 30 years. If they build 150 apartments and the assessed value of the building(s) is $5,000,000, instead of paying $60,000 (at $1.20 per $100 of assessed value), they pay $0 — for 30 years. If the property becomes more valuable over time and is valued at $10,000,000 after 15 years, instead of paying $120,000 annually in taxes, they pay $0.
The four projects approved last year with the same freebie grant conditions will collectively cost about $175 million to build and provide 779 units of housing. If those projects are assessed at $175 million when completed, that means the Mayor and Council are forgoing about $62 million over the next 30 years — or about $2.1 million per year, assuming the value of those four properties does not increase at all over the same amount of time. Instead, the city treasury will receive $36,502 in taxes on the
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