Thread by @BRADLEYWTHOMAS

It's unfortunate that the authors of the Affordable Housing Trust Fund Amendment chose to underfund the proposal. Failing to provide a fund source means we aren't going to have a real debate about affordable housing and this vote likely isn't going to change anything. 1/many.

The Amendment calls for spending $50m a year on affordable housing, which would be great, but doesn't provide any realistic funding mechanism to do so. The full text of the amendment is here. Funding sources are in Section 2- cincinnatusassoc.org/wp-content/upl…

Section 2.A calls for funding from the lease of the Cincinnati Southern Railroad. This lease brings in $22.5m a year, but all of this revenue is currently being used to service our existing debt. If we switch this revenue stream to affordable housing we have the choice of either

Defaulting on our bonds, which would be disastrous and ruin our ability to borrow in the future or we'd have to raise property taxes by about 3.1 mills to make up for the lost revenue

[Note: there's a 6.1 mill cap in the City Charter for operating fund revenues, I'm not aware of a cap on property taxes for debt service, but there may be a statutory limit. For reference, current City tax rates at 4 mills for operating, 7.5 mills for capital]

There's no new revenue available in the CSR lease to offset $50m in new spending. If we sold the CSR, we might generate $500,000,000 and all of that would be placed into the trust fund.

There's one huge problem if we sell the CSR. Section 1.c of the Amendment states "Any assets remaining in the Fund at the end of any fiscal year shall be carried into the next fiscal/year,... These funds shall not count toward the new minimum appropriation."

That means the fund will have a $500m balance and we'll still be required to place an additional $50m in the fund every year.

Section 2.B calls for "A fee to be assessed to developers of residential projects that include four or more residential units and all commercial or non‐residential projects."

This might generate $1m a year ($5,000 per unit at 200 units per year), but it will also incentivize building single family homes or rowhouses as they aren't subject to the fee. The higher the fee on multifamily housing, the more likely developers are to build single family homes

Section 2.C calls for a tax on stock options. In 2004, the Enquirer estimated a stock option tax would bring in $3m a year. Adjusted for inflation, that's $4.15m in 2021. This tax & the developer fee are the only new funding sources. Together they would bring in $5-6m a year.

Section 2.D just states that existing funds could be used, but the City doesn't run a surplus. All of the existing funds are currently being used. No new money here.

Section 2.E explicitly states that this will not raise the earnings tax. This is where the drafters of this amendment had a clear opportunity to identify an adequate funding source and chose not to.

From 1973 until 2020, the City of Cincinnati imposed a 0.3% earnings tax to fund SORTA. After the passage of Issue 7, this 0.3% earning tax, which brought in about $50m a year, was repealed.

If the drafters wanted to raise $50m a year, the most obvious solution would have been to re-impose the 0.3% tax. It would have returned rates to historical levels and provided funding to affordable housing. But for some reason that I do not understand, they did not include this

Section 2.F just says federal and state funds don't count towards the $50m requirement. All told they're proposing $5-6m of new revenue and $50m of new spending. This amendment makes the spending mandatory but doesn't provide any way to come up with the money for the spending.

Imagine if you went to a school and you offered the students the opportunity to vote on an extra hour of recess. I'm sure that would pass with 100% of the vote.

But then after the vote, you tell the students that they have to come in an hour earlier, or stay an hour later, or because of extra recess lunch isn’t being served or sports have been discontinued.

And the students may or may not get to decide what they're going to have to give up because maybe the school board will decide it for them or maybe it will be put to another vote, and they don't know and won’t know what they have to give up until after the vote

Cincinnati has the ability to pay $50m a year for affordable housing. But there has to be a trade-off. It could be a new 0.3% earnings tax. It could be a 6.2 mill property tax. It could be an 11% cut to all general fund departments. It could be massive police and/or cuts.

But this amendment is promising only benefits without explaining what the consequences will be. Some people might vote for it hoping it will defund other city departments, others thinking new taxes will pay for it. There will be no consensus on how to pay for it.

Council will likely kick the can and just claim that they can't appropriate the money, which will cause the backers of the amendment to sue. While litigation is pending, Council will probably put a new amendment on the ballot to water down or repeal the AHTFA

If the Affordable Housing Trust Fund Amendment passes, it will cause a tremendous amount of controversy and litigation but it isn't clear that it would actually provide any new funding for Affordable Housing.

What could we do instead to provide funding? Repeal the Property Tax Rollback (which incentivizes granting developers abatements) and dedicate those funds to affordable housing. Tax stock options. Have a dedicated property tax levy or dedicated earnings tax.

Passing the Affordable Housing Trust Fund Amendment in its current form sets up a massive conflict on City Council with no clear path to actually providing the promised $50m a year for affordable housing.