Steamboat Springs The board of directors of the Yampa Valley Housing Authority may be asking the voters of its district to validate its existence in fall with a new property tax that would provide it with a stable funding source.
No decision to seek a property tax has been made, but the board is expected to receive a recommendation to that effect from its Strategic Planning Committee on Feb. 10. The board also has drafted a new strategic plan that includes an exit plan in the event that Steamboat Springs and Routt County ever dissolve the intergovernmental agreement that contains a cost-sharing arrangement for funding the 10-year-old authority. The presumption is that the city would take responsibility for the authority’s assets.
When the city and county created an intergovernmental agreement to fund the fledgling authority in 2003, it was expected it would learn to fly on its own and become fiscally self-supporting within three years. The implication was always a tax. But that has not happened.
Now, the Strategic Planning Committee is making plans to suggest to the board that it go to the voters in November and seek approval of a property tax, probably of less than one mill, to allow it to continue its management of affordable housing projects and a down payment assistance program, among other initiatives.
“What people will want to know is ‘what will it cost me?’ and ‘what will I get for it?’” committee and board member Catherine Carson said Wednesday.
The committee members don’t have the answers to those questions, but they will meet once more Feb. 2 to add more details to their proposal to the board.
Not everyone in the county would be affected by a YVHA property tax — just those who own property within the district’s boundary, roughly that of the Steamboat Springs Fire Protection District minus Milner. Similarly, only voters in the district would cast ballots on a tax question.
Change is coming
Writing the ballot language for a tax question would be much easier in June than it is now. Routt County is completing a two-year property valuation cycle and will send out new valuation notices to taxpayers May 1. Property valuations in the county are the basis for raising taxes. And county officials are bracing for the news that overall valuation could be down 35 percent. Retreating real estate values have generated hundreds of foreclosure filings here and put distressed properties on the market at reduced prices that are becoming affordable.
The authority has had its own issues with the real estate downturn. It is making interest-only payments of about $111,000 annually on $2 million in debt taken on to buy land at U.S. Highway 40 and Routt County Road 129 for a new affordable housing project. It was envisioned to become Elk River Village, but the authority found itself unable to build on the land in the past few years to turn the debt into housing.
Board President Rich Lowe said Wednesday that the Elk River Village debt raises strategic questions.
“Do we want to pay down that debt?” Lowe asked. “Do we want to bank the land for a future project? We could take a conservative approach and say we really need to pay that $2 million off and get that anvil off our backs.”
Retiring the debt might necessitate asking for a bigger tax.
Taxes and property owners
The authority’s contemplation of a new tax question comes four years after it polled its constituents on the question of a sales tax in 2007 during the height of the real estate run-up. That plan did not get a favorable response.
Strategic committee members are optimistic that a property tax will meet with a favorable response.
“It seems a property tax is the fair way to invest in housing,” Carson said. “People who have second homes here are the reason we have a skewed housing market.”
A preliminary spreadsheet prepared by Carson showed that a half-mill of tax applied to the district’s 2009 assessed valuation of $1.13 billion (due to be revised in spring) would generate a little more than $567,000 in revenue. That would result in about $20 of annual taxes on the typical $500,000 home and about $72.50 on $500,000 of commercial property.
Lowe said it’s important to calculate the effect on small businesses.
“If I’m trying to clear 5 percent profit, in order to pay ($72.50 in taxes, I need) $1,450 to make up for that. Depending on your business, it’s not so bad or not so good. But that’s a lot of hamburgers.”
Affordability on the market
The authority’s discussion comes as affordability is returning on its own.
A couple bought a three-bedroom home last week in Oak Creek’s Sierra View subdivision for $92.75 per square foot, at $160,000 for a 1,725-square-foot house. The house last sold in spring 2008 for $440,000.
However, the YVHA takes a variety of approaches to fulfilling its mission of providing work force housing.
YVHA owns and manages rental apartments, condos and more. The authority provides down payment assistance to eight to 12 families a year and, with more funding, would like to work with 20 to 25 buyers a year.
With more funding, it would hire a full-time employee to help clients with their qualification for housing assistance, bumping its families served from 50 a year to more than 200.
Routt County Commissioner Nancy Stahoviak, a member of YVHA’s board and the Strategic Planning Committee, said she is mindful that the business community may not support a property tax for YVHA, in part because the Gallagher Amendment to the Colorado Constitution shifts a disproportionate share of the property tax burden onto owners of commercial and industrial properties. Strategically, she said, the authority should focus its energies in an election campaign on the larger number of voters who own residential property.
“I understand the issues of businesspeople. Gallagher is unfair,” Stahoviak said. “But I don’t think it’s ever going to change because homeowners are the majority, and they won’t vote to change it.”
Carson said it would be important for the authority to establish a campaign committee early to promote the tax measure because state law prevents the authority from doing that itself.
All that remains is to persuade homeowners struggling through a down economy to increase the taxes on their own homes, albeit by a modest amount.