You might think the lucky recipients of taxpayer-subsidized housing in Aspen would be careful to maintain those houses. But the law of unintended consequences is at work.
Here’s what happens: Houses are bought at prices set by the local government housing authority. Those prices are way less than market value — often an 80 to 90 percent discount. Aspen taxpayers make up the difference.
When the residents resell their houses, their resale price also is set by the housing authority. Once again, it is a small fraction of market value.
Since the government-set prices are so far below market value, there’s no doubt that the sellers will receive that price in full. Whether the houses are in tip-top shape or falling down, the selling prices will be the same so there’s no economic incentive to maintain them. Indeed, the homeowner association reserves established by the residents of the projects for ongoing maintenance are only 22 percent of what is necessary. The maintenance that the other 78 percent is supposed to pay for is simply left undone.
The current debate is whether local government should give the homeowners associations taxpayer money to make up that 78 percent.
But what then? Once the taxpayers make up the 78 percent shortfall in homeowners association reserves, the homeowners associations naturally will reduce their assessments even further so that the taxpayers have to cough up the other 22 percent. Why wouldn’t they?
Give the residents credit. They’re making rational economic decisions.
Notably, these rational economic decision-makers are not charity cases in other respects. The income cutoff to qualify for the projects is $186,000 a year. That figure doesn’t include unreported income such as tips, which often equal or exceed wages. It also doesn’t include the income of unreported partners living with them who blatantly don’t qualify.
And it doesn’t include unreported income from renting out their units. Do the math. The residents can easily realize a $10,000 windfall in fair-market rent for a week or two at Christmas — on units that are now mostly paid for, and may soon be mostly maintained by, the taxpayers.
Finally, the $186,000 income cutoff does not account for the residents’ other assets. Almost 60 percent of the residents are older than 50 (once people get on this gravy train, they don’t get off). Americans older than 50 are the wealthiest demographic in the history of the world, and I daresay that Aspenites over 50 are wealthier than most. Many are sitting on multimillion dollar nest eggs in stocks and bonds. They’re supposed to state to the housing authority that they aren’t, but there’s no attempt to verify that statement.
Let’s back up for some perspective. There are two variables in the housing-affordability formula: wages and housing costs. These variables are interdependent. To the extent that taxpayers subsidize workers’ housing, their employers can pay them artificially low wages — and notoriously do.
The net result is that the taxpayer housing subsidies for workers wind up in the pockets of their employers. That’s why big employers like Aspen Skiing Co. invariably support the scheme. It enables them to pay substandard wages. The workers who finagle their way into the projects do get less expensive housing to offset those lower wages. The ones who don’t finagle their way in, however, just get the lower wages.
Rather than focusing on the housing costs, maybe we should instead focus on the wages. Let’s stop enabling low wages by using taxpayer money to pay for worker housing. Employers can either raise worker wages to market rates that reflect the cost of living here or do business without workers. Don’t pay workers peanuts and then ask the taxpayers to make up the difference.
There also are other alternatives to consider, as well. The typical commute in America is about 25 minutes each way. Is it too much to ask workers here in Aspen to catch a taxpayer-subsidized Wi-Fi-equipped bus from nearby Basalt or Carbondale at one of the fancy heated bus stops we built for $250,000 each?
Here’s another thought: Maybe we shouldn’t use prime real estate for this. On the top of Mill, surrounded by $5 million to 25 million places with ski-in/ski-out access, there’s an affordable-housing building of four units collectively worth over $10 million. They are owned by old insiders who bought them for pennies on the dollar. The city could sell those four units and use the money for 30 units in a less expensive part of town.
Finally, if you seriously think it’s inhumane to ask people to commute on a nice bus, here’s another approach: Let’s redirect the housing money into gifts in the form of a reverse income tax or massive rebates on their grocery and utility bills. They could then use the money to buy — and sell — their housing at a price that reflects its worth.
I predict they would then start taking care of it.
(Published Mar. 6, 2016 in the Aspen Times at http://www.aspentimes.com/opinion/20964859-113/aspens-government-housing-projects-are-falling-down)