Massive Money Mess in Midtown!

The best word for the Midtown mess might be “Boondoggle”, which is defined by my dictionary as “work that is wasteful but gives the appearance of having value”.  And the second definition goes even further: “a public project of questionable merit that typically involves political patronage and graft”.  (How did they know?)

I attended the Midtown meeting last Thursday night, where the American Legion hall was full of neighborhood folks, most of the City Council, some city staff, several LCDC members, area business owners, concerned citizens and two representatives from the Boise-based “The Housing Company” (THC). The meeting was not organized by our local officials, it was called by the neighborhood because they are not happy.

Here’s a quick history of events on this issue, just to bring you up to speed:

–THC is a non-profit company specializing in low-income type housing. Way back in 2006, LCDC, our urban renewal agency, invited THC to come to Midtown and create a proposal.

–The original idea was to have a building with street level commercial areas plus two floors of owner-occupied condos above. This project actually had the support of the neighborhood through many meetings and discussions.  (artist rendering above, but they said it might not look anything like that)

–When economy tanked, the whole project was put on hold for several years.  The condo market in CdA is now “gone”, THC person said Thursday night, “and it is probably gone for a long time.”

–A few months ago, the power players decided to change the project in very important ways. THC and LCDC changed it from owner-occupied condos to lower-income rental apartments, which are totally different in how they impact the surrounding neighborhood.  Instead of bringing condo/home owners into the area for a long term, the lower-income rentals result in shorter term renters who will not have roots nor reason to become part of the community.

–The power players at THC and LCDC didn’t bother to tell the neighbors about the change. The only way the neighbors found out was that one of them happened to be watching an LCDC meeting on Channel 19, and heard about it.  They were upset and they called for a meeting.

Now you might be asking why the neighbors should even have a say in this situation, after all, it’s supposedly a free country and business should be able to proceed if they have followed all the rules.  But there’s one catch with this one.  And it’s a very big catch:  They’re getting Taxpayer Money…lots and lots of it!

This boondoggle is a crazy deal cooked up by LCDC and THC that will ultimately use close to $7 Million in taxpayer money, from both local and Federal sources, to put this apartment building smack dab in Midtown when the taxpayers there don’t want it.  And on the very first day it opens its doors, the value of the building will be an estimated $5 Million or less.  How’s that for a great use of tax dollars:  $7 Million to get a $5 Million dollar asset that the public won’t own anyway.

Oh, but it’s a good deal for THC.  They will own the building and the land.  They only have to spend about $2 Million of their own money to come out with $7 Million in tax funds and end up with a $5 Million dollar asset that they may only have to pay partial or no taxes on ever again!

This is a legal scam that involves Federal tax credits that are funneled through several big banks then handed out to certain projects.  Listen to this: These tax credits can be sold. The Federal government gives $6.3 Million to a big bank, which ends up as $5.3 Million in tax credits to THC, which sells them for 87 cents on the dollar.  It’s a highly complex deal, in a style that smells of graft and corruption, in my opinion.  No wonder our nation is bankrupt!

(Did CdA have any of this before we became a “HUD” city?  Now we have at least 3 or 4 of these Federal tax credit projects going on.)

By the way, please don’t feel sorry for the non-profit THC and it’s sister organization Idaho Housing Finance Assoc.  “Non-profit” only means they leave no money on the bottom line…no profit…they spend all the profits or give it to the employees. The man who is president of both THC and IHFA makes almost $300,000 a year.  His Executive Director, who was at the Midtown meeting, makes over $120,000 and their Treasurer makes $200,000.  No worries.

And, for all this huge tax money, what will Midtown end up with?  Apartments that cost $181,000 each to build. Read that price again.  Do you realize that the average purchase price of a single family house (3 bedroom, 2 bath, 1900 sq ft) in CdA last year was $169,000.

To add insult to injury, almost all of these apartments fall into a category of housing need that already has a glut of availability in our town. There is no need for more, according to a professional study of CdA’s housing done in 2011.

The renters of these proposed expensive apartments, built with a great amount of taxpayer money, will still have to pay a fair chunk of money to live there. That’s another weird twist: The taxpayer money goes to the developer, not to the rents.  There’s no subsidy for the renters, with rents averaging more than $600.  But renters have to qualify to live there by proving they make only 60% of the average income for CdA, which means they cannot make more than $34,800 per year.

And this heavily subsidized rental project will compete directly with other private rental apartments in the neighborhood, so several landlords were at the meeting to complain about their tax dollars being used to work against them.  It’s just not right.

All this information came from the meeting at Midtown, the neighbors, and the incredible research done by Mr. Frank Orzell, who is a godsend to this community’s efforts toward government accountability.  Thanks, Frank!