SIOUX FALLS, SD (Dakota News Now) – According to a councilman, the latest “accessible housing” neighborhood proposed for the northeast portion of Sioux Falls does not effectively address the city’s growing affordable housing problem.
Pat Starr, who represents the Northeast District, also told Dakota News Now on Monday that the city government is continuing to “dig a hole” by continuing to dig literal holes to build homes partly funded in part by the tax increment financing (TIF).
“We need to talk about the real causes of the housing problems in our city rather than trying to put on a band-aid and build 65 houses, which this program will do.” Starr said.
“It’s not the program that worries me so much as I want to know who we’re trying to help. And, it seems to me that we have more of a salary problem than housing. »
His remarks come a week after a city council meeting in which Starr pressed city officials for prices of $232,000 to $323,000 for the 65 proposed single-family homes in the East Ridge district, a 9.7 lot acres that is currently agricultural land. These prices are set between 60 and 100 percent of the purchase price of a first home from the South Dakota Housing Authority.
It’s a $20 million project, and city council will vote in early October on whether or not to help fund the development with $2.14 million in TIF.
TIFs are programs under which municipalities generally divert future increases in property tax revenue from a defined area or district to an economic development project or public improvement project in the community.
When Starr asked the city’s business development officials who were overseeing the project if there was a way to lower the prices so the homes could be bought by a wider range of families who needed them, he was told that these prices were as low as possible due to rising development costs set by the project developer, Nielson Construction.
Owner Kelly Nielson told advisers his staff had recently “started designing the cheapest house we could find”.
So Starr’s solution is to make sure fewer people qualify for affordable housing by wage-raising companies, or that the city discriminates more against the new companies it brings in.
“The problem isn’t with affordable housing, the problem is with wages and incomes,” Starr said. “We are asking taxpayers to subsidize housing for professionals and provide housing for people if they qualify,” Starr said, noting that a family of four — two parents and two children — who earn up to 70 $000 can work full-time, but still eligible.
Those earning 80% or less of the city’s median income are eligible — that is, $56,000 or less — are eligible for these “accessible homes.” That means there are law enforcement, firefighters and nurses who qualify, and Starr said that’s a red flag.
These are people, Starr said, who make $17 to $18 an hour. They are servants and some are educators. They shouldn’t have to apply for affordable housing, he said.
“What we need to do is we need to stop paying taxes to create jobs in town that don’t pay a living wage,” Starr said.
“It’s one thing if they want to come to our community because we’re a great place to live. We have a lot of cheap labor. But, at the same time, we need to be able to make our people pay for their own housing, to pay for their own education, to pay for their own necessities, and if we don’t, we’re just adding to the problem, and the problem continues to grow.
The president of the Sioux Metro Growth Alliance, which helps people pay for homes in rural and suburban communities surrounding Sioux Falls, disagrees.
“If you look at wage growth across the country and in the Sioux Falls market over the last three years, it’s been astronomical,” Jesse Fonkert said.
But Fonkert agrees with Starr’s assessment that continuing with these city-funded housing projects does not solve the affordable housing crisis.
“It’s a tough situation because if you spend too much money on government programs, you’ll have companies that will just raise their prices,” Fonkert said.
Fonkert said the problem is not going anywhere. That the extreme climate that forces more durable – and therefore more expensive – homes and the Sioux Falls area’s lack of proximity to an accessible lumber forest – which drives up lumber costs – will always drive up prices for building houses an uphill battle.
Another reason for the high prices is that new home development companies want to build homes with more space, as the average family size has increased over the past few decades, and more and more families now want more space. ‘space. This is what the market demands. Additionally, developers make more money by building more space for new homes.
“There’s really no good solution where you can just wave a wand and things will go away,” Fonkert said.
Meanwhile, Karl Fulmer, executive director of Affordable Housing Solutions in Sioux Falls, told DNN that these TIF-paid urban developments are an effective way to tackle affordable housing.
“The benefit of just building more homes in the $250,000 to $400,000 range still provides the unit, and you can see the transition to more affordable units from those who could earn enough to buy” homes in this price range, Fulmer said.
In other words, these new homes in new “accessible housing” developments are actually not for those who have the most difficulty finding affordable housing. These are by far the ones who have purchased smaller, older “basic homes” in town that cost less than $250,000 and are ready to move out.
The real affordable housing is in these starter homes. And the more new “accessible” homes funded by the city’s TIFs are built, the more those older, smaller homes become accessible to low-income people.
But to qualify, homebuyers must earn a certain level of income in order to obtain mortgage financing.
Before interest rates started to climb over the past year, plus inflation, that level was around 60% of the city’s median income, which again is around 70,000. $. Now, the minimum income level to obtain mortgage financing is at 65% of the median, or just over $45,000.
“And that’s just the sad reality of the dynamic right now,” Fulmer said.
As for how the dynamics of wages could be changed at a time when most employers are already feeling the burden of raising wages to compete in the marketplace, Starr said:
“Education. People are getting a good, solid education. And it’s not post-secondary. It’s about making sure that people are educated as soon as their children enter school – with a good preschool, with good quality primary, middle and secondary education We can never spend enough to train our workforce.
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