Read Part One
EDITOR’S NOTE: This article was updated on February 10 to correct some estimated tax data.
As I mentioned on Friday, the Archuleta Board of County Commissioners granted a 99-year lease on 2.5 acres of County-owned property on Hot Springs Boulevard, to allow the Archuleta County Housing Authority to obtain funding for a 34-unit “LIHTC” (Low Income Housing Tax Credit) housing project, aimed at households earning less than 60% of the Area Median Income. That project resulted from a team effort led by former Colorado Division of Housing advisor Bill Simpson — who acted as lead consultant for the project — and former County Commissioner Clifford Lucero, who heads up the Archuleta County Housing Authority (ACHA) along with his partner, Executive Director Sara Ward, and his daughter Anissa Lucero, who works as the agency’s “Fair Housing Specialist.”
Many of the folks in Pagosa who’ve been working on housing issues over the past decade, myself included, are excited about the Rose Mountain affordable housing project that Mr. Lucero and his team have planned for the community. It’s especially impressive that ACHA was awarded Colorado Housing and Finance Authority (CHFA) tax credits for this project on their first application attempt. The LIHTC funding process is highly competitive here in Colorado, and typically, a proposed project must re-apply two or three times before receiving approval from CHFA.
The 2018 survey conducted by Pagosa Housing Partners suggested that, while housing is in short supply for all working families in Archuleta County, the crisis is especially acute among families and individuals who earn less than 80% of the Area Median Income, as calculated by the US Department of Housing and Urban Development.
Technically, the ACHA Board is chaired by County Commissioner Steve Wadley, but we’ve consistently seen Mr. Lucero representing the LIHTC project at various public hearings. As many of our readers know, Mr. Wadley and Mr. Lucero served together on the BOCC and campaigned for one another during their respective re-election campaigns, even though Mr. Wadley is registered Republican and Mr. Lucero has run as a Democrat. In addition to the donation of (essentially free) public land, ACHA also benefited from $50,000 contributed in tax funding by County Commissioners Wadley and his fellow County commissioner, Ronnie Maez, in July, 2018.
We reported on that $50,000 contribution back in 2018, and on the fact that the BOCC had previously agreed to align their affordable housing funding with those of the Town Council, providing matching the contributions as recommended by the jointly appointed Strategic Priorities Committee. But while Commissioner Michael Whiting was taking a scheduled vacation, Commissioners Wadley and Maez rejected the advice of the Joint Strategic Priorities Committee and gave all of their budgeted funds to Mr. Lucero and ACHA.
You can read that story here.
We expect politicians to act that way: taking care of the friends who campaigned for them.
Fortunately for the people of Pagosa Springs, the Town Council takes a rather different attitude (as far as I can tell) and tries to make its funding decisions based on what’s really best for the community, rather than what’s really best for political buddies. But it’s so much more complicated to make reasonable decisions. The Town Council has been discussing their budgeted 2020 support for housing programs since last August, and still have not made any final decisions. It’s much easier to simply support your political friends.
I realize that many people have mixed feelings about the expenditure of taxpayer money on the provision of affordable housing, but considering the massive role played by federal, state and local governments in controlling and funding the housing market, we can easily argue that the current housing crisis has been caused, at least in part, by government policies.
Let’s begin with the federal government. The 16th Amendment was passed in 1913, legalizing a federal income tax. (The 1787 Constitutional Convention had specifically prohibited federal income taxes when they wrote the US Constitution.) One of the features of the new income tax laws was the allowance to deduct “interest paid” from gross income. In those days, however, the only taxpayers who paid typically interest were business owners and farmers. It was unusual, prior to the mid-1920s, for a homeowner to have a mortgage. Homes were typically cash purchases, for most of America’s history.
Then in the 1930s, the banking industry got a huge assist from the feds — not from the tax deduction, but from agencies like the Federal Housing Administration, which insured 30-year loans, and, starting in 1938, the Federal National Mortgage Association — Fannie Mae. Before 1938, the local bank would issue a mortgage and wait for the homeowner to pay them back… but now savings and loan associations could replenish their capital by selling their mortgages to Fannie Mae — meaning they could turn around and issue a new mortgage to someone else.
Soon, the vast majority of homeowners were taking out 20-year or 30-year loans and buying homes they could never have paid cash for. And they were deducting the interest paid from their federal (and state) income taxes.
That is to say… some homeowners were benefiting from the Mortgage Interest Deduction (MID). In 2015, the US government refunded $71 billion in tax revenues due to the MID, and about 90% of that amount went back into the pockets of families earning in excess of $100,000 per year. Due to the new income tax law passed in 2017, however, fewer middle class families will be taking the MID. 24% of the expected MID deduction in 2019 is expected to go to families earning in excess of $500,000 per year.
About 14 million taxpayers are expected to benefit from the MID when they file their 2019 tax returns, receiving a tax benefit of about $30 billion.
This MID tax giveaway to mostly wealthy families has been staunchly defended, since the 1950s, by America’s real estate industry as necessary to keep real estate prices headed upwards — and thus creating “wealth” for middle-class families. In fact, the MID — since it vanished for middle-class families in 2018 — has been shown to have zero effect on home prices. Since the new tax law took effect, middle-class home prices in the US have been increasing at about 3%-4% year over year.
Meanwhile, the $44 billion proposed by the Trump administration for HUD housing programs for 2020 was an 18% drop from the previous budgeted amount. Congress rejected the Trump budget proposal and increased the HUD budget by 5%.
Other than the research we have from Pagosa Housing Partners, we know relatively little about the economic situation among working families and individuals in Archuleta County.
Are we worse off than the rest of the country?
Bill Hudson began sharing his opinions in the Pagosa Daily Post in 2004 and can’t seem to break the habit. He claims that, in Pagosa Springs, opinions are like pickup trucks: everybody has one.