The Neighborhood Housing Service of Springfield Massachusetts has recently sponsored the building of low-income modular homes in their Old Hill neighborhood. The project is notable for at least two great reasons: First, the Springfield NHS built the homes on what had been ‘trash strewn vacant lots,’ so the entire community enjoys aesthetic and economic boosts. Second, the modular buildings used for the homes have inspired the NHS board to “work strictly in modular … we’re very pleased with the quality of the work.” Thus even low-cost housing will include bamboo-wood floors (bamboo being easily sustainable/replaceable) and central heating and air. A growing market in such modular housing could help keep prices down, even as further improvements are made.
Unfortunately, the nonprofit and community-service sectors of the Boston area received a chilling demand from the city government, who is ‘asking’ them to pay 25% toward the city and property taxes they would pay if they were for-profit. According to the article in the Boston Globe, larger landowning nonprofits (read: universities and hospitals) will be especially hit by the costs and will need to pass them on to students and patients. The city counters that they use the same services and put at least as much wear-and-tear on urban infrastructure and should help defray the costs of maintenance, especially during this recession.
Andrew Ryan’s report includes a discussion of the task force called to analyze the proposal and how their work showed the inequalities that had evolved over the years:
Historically, the city has used authorization of new building projects, which require permits and other approvals, as leverage.
As part of the work of the task force, the city reassessed the property value of two dozen tax-exempt hospitals and universities and determined how much the institutions would have to pay if taxable.
The figures underscored the disparities in the current system: Berklee College of Music’s payment last fiscal year, for example, was $361,000, an amount equal to more than 8 percent of the $4.3 million it would owe in property taxes. At the other end of the spectrum is Wentworth Institute of Technology, which paid $40,000, or less than 1 percent of the $5.6 million it would have to pay in taxes.
The financial strain on cities is acute, to be sure, as home prices have fallen and property-tax revenues with them. But the article interviews many who fear the chilling effect such quasi-taxes will have on other urban developments and services that make city living so attractive to a resurgent number of Americans.
The news in Springfield can perhaps be broadened to a slight improvement in the ‘pending sales’ of houses in February, thanks to a tax credit that expires 30 April. The Atlantic Monthly‘s Daniel Indiviglio posted a report about the generally weak housing numbers, that were nevertheless bolstered by these ‘pending sales’ of ‘future’ homes:
According to [The National Association of Realtors], the home buyer credit’s April 30th expiration is a big part of the cause. Pending home sales are forward-looking. These sales haven’t actually been completed yet but signal more buyers in the market deciding to make a purchase. That’s why February home sales were quite weak, but pending sales were much stronger. So what you’re likely seeing here is future demand being pulled forward by the credit, which is set to expire in November.
By the fourth fiscal quarter, then we will see if the uptick is a trend or merely a speculative dabble among home-seekers.