City and county officials cannot "fix" the affordable housing problem with the actions they are proposing. Here are some reasons why:
Property taxes are regressive … the more a property owner improves his or her property, the higher the taxes go. Until government "rewards" rental housing developers with lower property taxes as an incentive, builders will be reluctant to act. One-time incentives such as TIF funds are insufficient. It doesn't take a rocket scientist to understand a businessman in the real estate rental market will pass any and all costs on to the tenants in the form of higher rents. Property taxes and insurance costs are passed on automatically.
Government officials need to get serious about reviewing and reducing costly licensing and building regulation. They must evaluate their regulatory activities and building codes to clean them up and reduce building costs.
Government needs to review landlord-tenant law and make it fair for all. Most landlords will agree landlord-tenant law seems to favor the tenant over the landlord and make it difficult to manage unruly, unreliable, nuisance tenants … yes folks there are a lot of those types out there. Having to go to court to secure an eviction drives up the cost of doing business, and that translates into higher rents.
Government needs to take a look at its land appraisal mechanisms. Realtors tack on a 4-6% every time they sell a property. That goes into the appraisal value and automatically increases the "value" of the property. Government looks at the comparable values and the most recent area sales to help determine new appraisal values. It should consider dropping the real estate commission out of the sale price to slow the rate of housing cost inflation … or it should consider ways of regulating real estate commission rates.
Government needs to take a serious look at the high costs of health regulation. Missoula County government is currently pushing a central sewer system proposal here in Seeley Lake which will drive up rents by no less than $50 a month
Government could review and reduce its scope of services to lower the cost of government … but we all know only a taxpayer revolt will make that occur
Government, finally, should re-consider a general sales tax alternative tied directly to property tax relief.