KUTradition wrote: ↑Sun Aug 18, 2024 1:12 pm
DeletedUser wrote: ↑Sun Aug 18, 2024 12:36 pm
This isn't that complicated.
it’s amazing how so many threads revert back to same general theme
He got sucked into a headline. Wanting to "stick it to the evil rich people" even if it wouldn't actually work all that well OR increase inventory of affordable housing. All that would do is increase tax base marginally or the (usually smart) rich people would find ways to get around it. The rich people wouldn't dump those properties and increase affordable housing inventory.
15min of research would have proved more effective for him.
It's not exactly the same, but it's similar. Some college towns have experienced similar affordable housing issues as enrollement has continued to grow, and thus increasing the radius around the universities considered student housing areas/footprints (ie they buy the crappy single family houses and turn them into 2-3 story apartments for students to rent. Time and time again, the way to increase affordable housing that is available in these areas has shown to be tax abatement programs. It creates incentives for builders to build affordable housing instead of just more student housing. The students are always going to live the closest to campus (which is best for students AND residents, as you don't want a town of mix due to the living habits of students). So opportunity zones are created around this area and in neighboring communities.
This is done in 2 main ways that I've seen personally:
1) the delay of increasing the assessed values of those parcels for a period of time after construction is completed. A property is taxed based off of its assessed fair market value. When you buy a vacant parcel or parcel with improvements that are to be demolished, it's taxed at that value initially. After something new has been built that assessment increases almost immediately. But these communities looking for more affordable housing have created an incentive for builders by allowing this increase in assessment to defer for (often times) 5-7 years. This is a BIG deal for developers. And I've personally seen it at work at University of Illinois. These opportunity zones are created, at no cost to tax payers, and development thrives. It lessens the risk and cost of the holding period (time after development to when a property is sold or rented).
2) the communities can also entice development by a sales tax abatement program on materials used for construction. Another HUGE incentive for builders. Often this requires the materials to be purchased in the state that the development is occurring. Which is a positive on multiple fronts (for the developer and the seller of the materials).
Those two methods don't cost any real life dollars to implement.
This is how these problems are solved in real life. But some politician threw out some catchy words and caught himself an Ousdahl fish with something that'll likely never be implemented and even if it is implemented doesn't appear to do ANYTHING to increase affordable housing. It only increases the tax revenue in these areas.
Opportunity zones. Tax abatement programs. Either property tax or sales tax on materials. It's not rocket science.