Reporter's notebook: What does the word "affordable" mean in the phrase "affordable housing?"

(The following is an analysis by Paul Scott of decorahnews.com):

The Decorah City Council meets at 5:45 p.m. Monday and among the items on its agenda is setting a public hearing for 5:45 p.m. on Monday, December 18th, about the city's residential tax abatement program.

From an economic development standpoint, the city's 2015, 2016 and 2017 residential tax abatement programs were a huge success, leading to a total of $19.9 million dollars in construction activity.

In 2017, tax abatements were awarded for 16 new single family homes.  However, of those 16 homes, 12 were valued at $300,000 or more and just one of the 16 was valued at under $200,000.

In 2014, when the Decorah City Council was debating the proposed residential tax abatement program--and eventually approving it on a 4-3 vote--the program was promoted as a way to increase "affordable housing" in Decorah.  What does that term mean?

The U.S. Department of Housing and Urban Development (HUD) has a definition of the term.  "Affordable housing" is housing that people making below the median family income in an area can afford to buy.  In Winneshiek County, the median family income is $50,361 a year.  HUD says "housing costs" should amount to 30 percent of a median family income, but those costs include not just a mortgage payment, but property taxes, insurance, utilities and all other costs of owning a home.

So it turns out that a $200,000 home in Winneshiek County does not qualify as "affordable housing."  Several lenders have worked with me to determine just what selling price of a house would meet this standard--and we've come up with a figure of $140,000, or maybe $150,000. 

The just-completed housing survey of Winneshiek County done by Upper Exploreland Regional Planning is even more conservative in their figures about what qualifies as "affordable housing."  That survey says a family making $50,000 a year could afford a $100,000 home.

In short, whether you use a $100,000 home or a $150,000 home as the standard for "affordable housing" in Decorah and Winneshiek County, the $300,000 homes being built under Decorah's residential tax abatement program are nowhere close to meeting the standard.

The Decorah Planning & Zoning Commssion has recommended continuing the residential tax abatement program, but limiting the tax abatements to the first $200,000 of assessed valuation.  On the other hand, the city council's Economic Development Committee has recommended eliminating the cap entirely and is also discussing eliminating the sunset date on the program.

In a previous comment, I noted, "Has the tax abatement program been a success?  Yes--just not in the way it was intended.  If you'll remember, the program was sold as a way to create more affordable housing in Decorah.  The concept was that people would move out of $100,000 into $200,000 houses, opening the lower-priced homes to be bought by people who needed more affordable housing.

What has happened instead is that people have built $300,000 homes instead of buying existing $250,000 homes.  This has been a success--for Decorah's economy.  People continue to move here from out of town for their retirement.  Builders continue to make money building and selling the more expensive homes.  Realtors and bankers and advertising salespeople have made money working with the builders.

In three years, however, affordable housing has gotten more difficult to find, not less.  So does that mean the tax abatement program should be allowed to expire?  Or does it make sense to continue it--not as an affordable housing program, but as an economic development program?"

It seems those are still the questions facing the Decorah City Council.