09/27/2005: "Delighted By Gordy's Criticism..sort of..."
To the editor:
I was delighted to read Gordy Peterson's criticism of the affordable housing initiative, because it gives us an opportunity to correct several misconceptions about the effort. Overall, it is a good example of why we ask island residents to be informed.
Gordy cites "the law of supply and demand" as a significant factor. We agree with that comment, but the supply and demand problem is primarily coming from the thousands of wealthy non-residents bidding up a limited resource, that is land and housing, on the islands. He is not correct in the assumption that taxes and regulations are the primary reasons that the cost of housing is now beyond the reach of working families. Although they are a minor influence, it is the equity build-up of potential buyers in major metropolitan areas that is really bidding up prices. As for taxes, we pay the lowest property taxes in the state of Washington while we have the highest rate of property appreciation in the state. This is really supply and demand at work. We live in a highly desirable place with relatively low taxes, and there is significant demand by people who want to move here.
We also question the argument that regulations fundamentally change for the worse the affordability and desirability of housing. This argument is contrary to experience in other communities where regulations are virtually non existent. For example, the people living in the Bitterroot Valley in Montana have very strong conservative and anti government values. The county has neither a county wide building code nor county-wide zoning. The result has been a degradation of the beautiful natural environment and quality of life that they sought to preserve. Instead, properties have been subdivided into increasingly smaller plats that are sold at inflated prices that preclude working families. The absence of appropriate regulations has ruined one of the most beautiful regions of the northwest, and the old-timers who fought government intrusion are now the ones being forced out of the valley.
Instead, we are working to minimize the cost and time constraints of government regulation by making government more responsive and cost efficient to real public needs. If you are concerned about the cost of government today, imagine the salaries of public employees with critical skills if they have to purchase $400,000 homes when they are recruited to the islands. Our best shot is to improve the capability of the county government to efficiently regulate by investing in modern tools and training in the use of these tools that would improve the efficiency of our local government.
There seems to be some confusion as to who will pay these taxes. We are asking for a half percent excise tax on the purchase of property. This is a tax that is borne primarily by wealthy non-residents who seek to purchase property and move here. This is supply and demand. Our supply of land is limited and it makes sense to tax the demand. The problem should pay for the solution.
Finally, Gordy is making the assumption that land purchased by the Housing Bank will be removed from the tax rolls. This is simply not true. Every affordable housing effort in the county including the community land trusts require that the homeowner pay taxes at the appraised market value of the home and land. We believe that this is fair since these homeowners benefit from the services provided by the State and County in the same way as any other homeowner.
We have looked carefully at approaches to financing by the private sector and have concluded that our residents with moderate incomes (80% to 95% of median) are priced out of the current market and are not eligible for public assistance. No matter how hard they work and no matter how frugal they are, they will never be able to purchase a home in San Juan County. These residents include many of our most critical skilled workers including teachers, firefighters, EMTs, medical staff, law enforcement officers, utility workers and other service providers.
Rather, if we do not act, our community will increasingly suffer from reduced service in these critical skills. Other destination communities waited until it was too late to act and have had to resort to increased sales and property taxes. We have a small window of opportunity to act before we will need to resort to much more painful solutions.
This is an issue of sound economic policy that all of us, right or left, Republican or Democrat should support. Let's solve the problem now rather than wait until it will be much more expensive. Be informed. Visit our website at http://sanjuanhousingbank.org/ for information about this important issue.
Orcas Research Group