Thursday, January 25, 2024

St. Petersburg is spending $500,000 a unit to subsidize affordable housing. Seriously? | Editorial (Tampa Bay Times)

I support the Fair Housing Act and affordable housing, but we must beware of corporate con artists.  From Tampa Bay Times:

St. Petersburg is spending $500,000 a unit to subsidize affordable housing. Seriously? | Editorial
How much is too much to help create affordable housing?
A sign is seen at the corner of Seventh Avenue South and 22nd Street South in St. Petersburg. The City Council recently approved funding for 24 townhomes to be built in that area, formerly known as Commerce Park.
A sign is seen at the corner of Seventh Avenue South and 22nd Street South in St. Petersburg. The City Council recently approved funding for 24 townhomes to be built in that area, formerly known as Commerce Park. [ CHRIS URSO | Times ]
This article represents the opinion of the Tampa Bay Times Editorial Board.
Published Earlier today

Is affordable housing actually affordable if taxpayers contribute $500,000 to build each home? This isn’t some sort of “if a tree falls in the forest” mind game. St. Petersburg City Council members contemplated a similar question earlier this month. The majority of them answered yes. They greenlit a project that will require more than $12 million in subsidies to build 24 townhomes.

Not 240. Just 24.

This financial free-for-all is the latest example of how good intentions mixed with sunk costs can lead to poor decisions.

Before getting into the details, let’s stipulate that St. Petersburg needs more housing that regular people can afford. A well-functioning city needs starter homes for firefighters, schoolteachers and restaurant workers as much as it needs high-rise condos for Wall Street retirees and corporate lawyers. But skyrocketing prices have elbowed aside many first-time home buyers. So it makes sense that a largely progressive-leaning City Council would favor using government funds to help out.

The 24 units would be built on city-owned property on either side of Fairfield Avenue along historic 22nd Street South known as The Deuces, just north of Interstate 275. The immediate area has had trouble generating much economic energy in recent years, despite being home to the Manhattan Casino. The townhome project has been in the works for years and the city has already spent about $4.5 million to get the property ready for construction, city officials told the City Council. The project once included commercial space, but the city set that part aside when — wait for it — the cost estimate came in shockingly high.

The project now calls for building two-bedroom and three-bedroom units of about 1,600 and 1,800 square feet. Half would go to families making 120% of the area’s median income, the other half to families making 80% of the median income. The city expects each home to sell from $223,000 to $317,000.

That all sounds normal for this kind of project. The math is where this one leaves the rails. The total cost of the project comes in at about $19.1 million. The city expects to raise about $6.3 million from selling the homes. The rest? You guessed it — government coffers. Some from COVID-19 relief funds. Some from city taxes. But none of the money agreed upon last week had to be spent on this project. It was up to the City Council. And in a 5-2 vote, the City Council thought this was a good idea. Sort of.

Even several of the members who voted “yes” expressed doubts or went through some Olympic-class mental gymnastics to justify their votes.

Yes, it’s a lot of money, but homeownership is vital.

Yes, it’s a massive subsidy, but the new micro community will help the area thrive.

Yes, we shouldn’t do this again, but we’ve already spent so much time and money.

Why so much hand wringing? Because it’s a bad deal. One of the most liberal members of the City Council, Richie Floyd, knew it. So did the most conservative, Ed Montanari. They saw through all of the hollow reasoning and courageously voted no. They both understood that the city could do so much more with the money. It’s not that 24 new townhomes wouldn’t help the 24 families who move in or that the project won’t give a (small) boost to the struggling area. But they knew — and their colleagues should have known — that the price was too high. Even if supporters argue that creating more density, that is, more homes in less space, is a good goal, it shouldn’t cost more to do it. In fact, since the city owns the land, it should cost less.

If it helps clarify the numbers, draw a circle with a 1-mile radius around the 22nd Street South property. Inside that circle on Wednesday were 27 homes selling for $500,000 or less, according to Zillow and A few were brand new. Others were 100-year-old bungalows that needed some work. Some were larger than the 22nd Street townhomes. Most were smaller. But they were all livable and ready for new owners, the listings said. The total asking price: $9.38 million. The city could have bought all of them and given them to 27 families entirely for free, and had millions of dollars left over to “activate” the 22nd Street South property.

Or think of it this way: The median sales price of a home in St. Petersburg in December was about $400,000. So City Council locked in a subsidy for the townhomes that is significantly higher than what it would cost to pay for that median priced home — 25% higher to be precise. Instead, the city could have used the $12 million in subsidies to give 150 families $80,000 each to put a 20% down payment on a $400,000 home. That would have created a whole lot more homeownership than building 24 highly subsidized townhomes.

This is not to say that the city should be giving away free homes or cash for down payments. But the examples show how little the city is getting in return for subsidizing the 22nd Street project. The flawed thinking also raises worrying questions as the council contemplates whether to support the multibillion-dollar plan to redevelop the Tropicana Field site where the Tampa Bay Rays play home games. It’s one thing to flub a $20 million deal. Get the Rays deal wrong and the city could be paying a heavy price for decades.

City Council members’ main job is to be solid stewards of our tax dollars. On this townhome project, they failed in that mission.

Editorials are the institutional voice of the Tampa Bay Times. The members of the Editorial Board are Editor of Editorials Graham Brink, Sherri Day, Sebastian Dortch, John Hill, Jim Verhulst and Chairman and CEO Conan Gallaty. Follow @TBTimes_Opinion on Twitter for more opinion news.

1 comment:

Charlie said...

Governments around the country could see to it that everyone is housed, but they don't because it's a market. They don't want to interfere with those who make money from human necessities. Money over people is the golden rule here in the USA. I'm surprised that hospitals are even required to treat people in the emergency room even if they aren't insured or have a fist full of money.