Saturday, November 15, 2008

Dogma or Pragmatism?

Before embarking on my last OpEd on workforce housing I had to consider the question of making use of taxpayer’s dollars to intervene in the private sector and reconciling that with my, “less government is better,” philosophy. In the end I wrote it and will work to achieve the goal outlined in the piece.

Like any business local governments have to face escalating costs. Like business local government should look at all options to address those costs beyond just the traditional solutions of cut spending or raise taxes with the only results being reduces services or just increases cost. Any business that operated under such constraints would not be open long.

Local government’s biggest expense is personnel and we are in a competitive market. And unlike private business we are subject to state/federal madates. Where a business can hire and fire based on market forces local goverments do not have as much flexibility.

In the case of our region we are not in a position to compete with the jurisdictions to the north when it comes to salaries. There is also the reality that the cost of living in this region continues to go up and to just say hold the line flies in the face of this dynamic. Such a position also comes with a cost in having to rehire, retrain, and disruption in services as people go north for higher pay. In either case, tax or not tax, there are costs.

The use of taxpayer’s dollars to intervene in the local housing market gives me pause but I am not prepared to dismiss the opportunity, or any opportunity, on purely philosophical grounds. Rather I am must, in my role as an elected official, look at the cost and benefits to the residents of Fredericksburg, and our region.

In this case, by way of federal legislation, funds have been made available to purchase foreclosed homes. While I may have issues with the decision the funds are now there and for me the question becomes can these dollars be used to achieve our shared goal of providing good services at a reasonable cost. In this case I believe we can.

By taking these funds and acquiring properties we have an opportunity to provide housing for our employees. Employees that live in the community they serve are less likely to leave. In providing this housing, we also obtain equity and, through charging a reduced rate of interest, can acquire funding to support other programs such as down payment assistance, rental assistance, etc. In the end, we have a self sustaining program that provides a benefit that most employees would like to have thereby reducing the upward pressure on local costs.

If you do not believe that this is the direction we should be going in I am prepared to listen to alternatives. Just saying no is not an alternative. Political dogmas such as cut spending or services are not enough. Comments that ignoring the realities that local governments face such as, reduced state and federal funding, more mandates, and increased demand for services do not help. I am not interest in hearing what we can’t do but rather what we can do to achieve our goal of providing services to our residents in a cost effective manner.


rodger provo said...

Matt -

We find it frustrating in the city
that given our tax burden and the
continue desire of the town to use
our tax money for "glamour" items,
certain basic needs in your own
neighborhood College Heights
are not attend to by the City Council
and our staff.

There is an illegal campaign bill-
board on the front lawn at 1100
Stafford Avenue that needs to be

Violations of city ordinances can
be found at number of properties in
the neighborhood.

We look forward to having these
matters resolved.

Larry G said...

With the caveat that I am from Spotsylvania and not the city... Matt is one politician/elected official I admire for a couple of reasons.

First, he is thoughtful... he thinks things through.

Second, and probably as important, he put himself and his opinion "out there" ... willing to meet with his constituents ... not at his convenience but 24/7...

I'm not sure where the line is on this particular issue but like Mr. Kelly, I don't think it reasonable to dismiss it out of hand but I do wonder where that proverbial slippery slope might be....

two thoughts:

1. - why.. if there is a tremendous market for workforce housing that the market does not provide it?

I mean if you don't make pots of money.. and can only afford 10K for a vehicle - the market will provide it - at that price.

2. - What role does Government play right now that INHIBITS the market and/or what things might government do - to..instead of using tax dollars... possibly removing some roadblocks ?

Why not convene a workforce housing summit and/or a standing... REGIONAL Ad Hoc group - WITH DEVELOPERs and others involved in PROVISIONING ... at least as much as ... advocates...?

and first... question... how much do we need and what would be the desired price?

MATT KELLY said...

Larry- Thank you for your kind remarks. Let me address some of your points:

1. Why market forces don’t provide workforce housing is because, until now, there was a bigger demand for larger and more expensive homes. As I noted in my OpEd people moving down from the north were the driving factor for our housing boom of 2000 to 2006.

We as local elected officials also contribute to the problem in that we focus on positive revenue flow, i.e., the more expensive the house the more it covers the corresponding cost for services. We need to look at the bigger picture in that at the same time we were encouraging expensive housing we were pricing others, like our own employees out of the market. The rising cost of living puts pressure on providing higher salaries as well as services.

Finally, if you talk to those in the building industry—developers, realtors, and bankers, they acknowledge that material and land costs, and other overhead limit what they can produce and still make a profit.

2. I am the current chairman of the GWRC Affordable Housing Task Force that includes developers, bankers, and realtors, as well as housing advocates. I agree that discussions on any issue must include ALL affected parties. Makes for real interesting discussions.

After I wrote my OpEd I gave all these interested parties an advanced copy for their review and comment. Some of their suggestions were incorporated into the OpEd.

MATT KELLY said...

Rodger--Some of those "glamour" items had community support. However, as we embarked on those projects it was made clear that we would need some "down time" from new projects. I agree that at this time we need to be focusing on the basics--public safety, services, and education.

As for signs please come around my block and see what I have to live with. I've been told that we will be addressing the sign issue.

Larry G said...

I'd like to see more elected officials do blogs.

They do need to be moderated because there are some folks that just won't behave.

I don't know that Government should be spending tax money on workforce housing ...

but the points that Matt made about commuters versions of "affordable" verses what is affordable to the REAL practitioners of SMART GROWTH - those folks who not only live locally -but actually work locally...

these folks ..with unintended, but real local government involvement are not being treated fairly IMHO.

I'd like to see some data.

What is the MEDIAN Local Income and what is the MEDIAN local workforce housing cost and availability?

Perhaps each locality could START with this data and then establish incentives (or removal of dis-incentives) for the TARGET number desired.

I suspect builders are a little like auto manufacturers in that big ticket products have much higher profit margins that basic models.

A possible win-win would be to identify areas that would benefit from redevelopment and to match them up with workforce housing needs.

TIFs would not be out of the question... for that specific purpose.. though perhaps others think differently.