Vail Daily letter: Change policies to create housing
September 19, 2016
Before 1998, infrastructure was largely paid for from the general fund, which raised money from inflation-protected sales taxes and low property taxes. This method kept the cost housing affordable.
After 1998, a paradigm shift in revenue collection methods resulted in government significantly increasing the cost of housing with targeted taxes. This has greatly contributed toward making housing unaffordable for most citizens. Government can make housing more affordable to all by first eliminating targeted taxes.
A targeted tax is a tax that only a few people pay once in awhile. Since only a few people pay the tax, the tax has to be huge to generate a significant amount of revenue.
A $35,000 sewer and water connection fee builders pay during new home construction is a targeted tax that can increased the sale price about $45,000. Eliminating the connection fees should decrease the sale price by $45,000.
Instead of charging $35,000 for connection fees, the Eagle River Sewer & Water department could raise the same amount of revenue by charging about $10.30 more per month to all customers. However, a better solution is to use newly proposed .3 percent sales tax that will be on the November ballot to help pay for sewer and water plant infrastructure.
A terrible targeted tax is real estate transfer tax that is used by local towns to fund infrastructure that is also used by tourists. These taxes significantly increase closing costs. Closing costs cannot be borrowed and this significantly reduces a low-income worker's ability to purchase a home.
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Eagle County could greatly reduce the cost of housing by using the .3 percent sales tax to build water/sewer plants or fire stations and lease the infrastructure to the districts for $1. Now tourists help pay for the oversized infrastructure needed for peak tourist loads. Many police and fire calls are from tourists, but tourists pay little for these services.
The current government's proposed method that is on the November ballot to increase the sales tax to by .3 percent to provide low-income housing for a select few low-income workers greatly benefits employers and suppresses workers' income. If specific low-cost housing is available, employers can continue to pay low wages.
Conclusion: A paradigm shift in revenue collection methods needs to take place to shift revenue collection away from targeted taxes and back to the old system of using sales taxes that collect revenue from a much larger number of taxpayers to fund infrastructure. This shift will help prevent another housing crisis that may could again devastate real estate values when interest rates rise.
Local government should use the .3 percent tax increase to reduce the cost of housing for all by reducing local sewer/water tap fees, real estate transfer taxes and other targeted taxes on property.
Vote "no" on the 0.3 percent sales tax increase unless the commissioners guarantee the tax will be applied to reduce targeted taxes on local real estate. This simple change can immediately and significantly reduce the cost of all housing for many, not just a select few low-income workers.
Your children and grandchildren will not be able to buy real estate unless the targeted taxes, that have significantly increased the cost of housing every few years, are eliminated.
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