The most powerful way to maintain affordability…and community

On November 27, 2015, in Latest News, by The Somerville Times

beckman_webBy Joe Beckman

(The opinions and views expressed in the commentaries of The Somerville Times belong solely to the authors of those commentaries and do not reflect the views or opinions of The Somerville Times, its staff or publishers)

In recent weeks, ‘Villens have churned through many rich discussions about affordable housing, stabilizing Somerville, gentrification, and what we might get in redevelopment districts other than overpriced new buildings, inflated rents in old buildings, and displacement.

Runaway housing costs and their consequences were what concerned those us who served on Mayor Capuano’s Affordable Housing Task Force in 1998. Back then we thought the city was due for massive change.

I myself had moved to Somerville in 1995, squeezed out of Cambridge by escalating housing costs. I paid $85,000 for a two-family building and initially qualified for all kinds of first-time homeowner benefits – until the need in the city was so great that there weren’t enough to go around.

On that Task Force, we imagined a 1% real estate sales tax as a kind of admission fee to join Somerville in a market that was forcing out those who had built the city and made it so attractive. This “transfer tax” would produce enough cash to support rents and home prices affordable to long-time ‘Villens and city workers. It would preserve the kind of Somerville diversity we cherished.

At the time, the inflation was substantial but uneven. Some real estate brokers supported the transfer tax. Jackie Veri comes to mind. But others killed it shortly after Mike Capuano was elected to Congress.

Since then, every scary thing we anticipated turned out to be worse than what we had feared. Real Estate prices went insane. The valuation on my house, for example, went up 10% per year every year since 2000.

And since that year, nearly $8 billion of Somerville real estate has changed hands, even though we’re only 4.2 square miles with only 34,375 housing units. That 1% transfer tax would have produced almost $80 million, which, if used to guarantee mortgages and protect nonprofit and other investors, could have produced at least $750 million in new affordable options. A lot of people whom we love would still be living here.

That sales tax is exactly what we need today. In comparison, all the other “affordable housing” tactics, put together, look like chump change.

Housing inflation is so high that 1% is almost invisible to new buyers. Owners who live here permanently will never pay it. And it is a tiny price for those who realize an unearned windfall by selling out and moving on.

But the opportunity to invest that income in a wide range of affordability options can show the region, the state, and other great cities how to make gentrification work for everybody, not just gamblers, speculators, and out-of-town developers.

Last year that tax would have supported affordable mortgage investment at the rate of more than $5 million a month. It could have easily produced 400 permanently affordable units of shared or limited-equity housing.

It would easily support rental housing for families in old as well as new housing, and support maker spaces for 500 innovators creating new companies, new products, or just helping each other design and develop the next century.

Used every year, it could show how much change we all could accomplish through investment opportunities in our low- and moderate-income neighbors (families earning $90,000 per year and everything below that), and how much they might save by using the mortgage interest deduction on their income tax each year.

It could show how many teachers, public safety workers and seniors could live near where they work or shop or read or play. And how that might affect their own incomes, transportation costs, and family stability.

It could produce many different Artisan Asylums. It could support rents for innovators at Greentown Labs in return for a 5% share of their new enterprises, thereby investing in rather than just subsidizing productive ideas. Investment beats philanthropy.

In other words, harnessing gentrification to work for ‘Villens need not be as complex as most people imagine.

Getting state approval for this Somerville solution will be much easier if we can show other cities which of these options has the most impact and under what conditions. We can measure the impact of a 1% tax on sales, and show what, if any, real risk “the market” is taking in charging 1% more than Cambridge or other towns.

We can count how many teachers can stay in the city in which they work, and measure how that stay affects their salary and their family’s engagement in community life; how many makers produce how many new ideas that later become new employers or industries; and what kind of return, profit and nonprofit enterprises realize when they invest in our community.

We have a unique opportunity to make the simplicity of these ideas useful for our neighbors in Cambridge, Boston, and Medford, as well as for the “cities of tomorrow” which Somerville has joined – with Berlin, Mexico City, Seoul, and others – in the Audi City-of-the-Future Project.

The “state approval” that we require is a successful home-rule petition. Support from neighboring cities who could benefit from what we do and learn can help us achieve it. And if we do, we can demonstrate a means by which mayors, aldermen, the governor, and the legislature can address a complex and compelling problem with a tested, measured, and evaluated tool.

This is, in fact, an opportunity to create cities of the future that in important ways resemble the urban villages of the past. Somerville was such a place.

Neighbors had the necessities of life within walking distance, encountered acquaintances and shared a lunch or a drink, met and made friends who might be fifty years older or younger than them, ate foods from all over the world, and could enjoy reading a good book, during a peaceful afternoon, on a bench in Prospect Hill Park.

At one of the key meetings I attended last week, Somerville High School Principal John Oteri described how an AP science student worked with a vocational education student in the High School auto shop to measure the pressure of an auto brake, as a joint project in physics and car repair. That’s why we live in Somerville, and why it is critical to maintain that kind of collaboration. Affordability is not just a matter of money: it’s a matter of community.

 

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