What happens when over 1,000 affordable housing units that were previous tax exempt suddenly have to pay property taxes? Evictions, rent increases, affordable housing gets sold and returns to market rate housing, defaults on loans, maintenance lags, etc. And it could happen right here in Madison!
How’d we get here? Don’t ask, its an ugly tale. I wasn’t involved with much of it, but to hear those who were talk about it, its pretty bad.
The issues of the tax exemption has been on various housing agendas for some time. It’s been labeled one of the top two city lobbying priorities, it was supposed to be fixed in the legislature, but recently letters went out from the assessors office as they start to determine if the organizations will remain tax exempt. The list I saw had only about 5% remaining tax exempt and the other 200 or so properties having to be taxed. And there doesn’t appear to be a fix in sight.
No one knows how much the properties will be assessed at, and I haven’t really heard a definitive answer on what methodology will be used to assess the properties. As the non-profits scramble to try to figure out what they are going to do, estimates are that they will need to raise rent at least $100 per unit per month to pay for the taxes. Problem is, they can’t just raise the rent with leases in place and many of the units have maximum rents that can be charged based on their various funding sources.
So, what’s the alternative? Yesterday people gave us examples of what they would do. Options included raising the rent $100 per month, stop putting money back into the buildings, give the keys back to the city and walk away, selling parts of projects to keep the rest going, stopping supporting other services and efforts, including some of our neighborhood centers, entire organizations just going out of business. In other words, this could single-handedly put affordable housing out of business in Madison. And hundreds of people back in institutions or out on the streets.
So, what are we going to do? Stay tuned!
