| How do massive housing increases harm our city's fiscal health? |
As Mayor Sisk said on July 5, "I don't care what the statistics are—you lose money on building homes in this city." This is because the city provides more city services to each Louisville resident than each resident is able to pay for through the generation of retail sales tax dollars, which make up the large majority of the city's revenue. The result? Each house is a money-losing proposition for the city. This is a central problem with adding housing. It is a fallacy that if the city simply adds more and more housing—a few hundred or, what the Council envisions, more than 1,600—there will be a point at which the city will actually make money on houses. The city's own consultants' economic models showed that the more houses the city adds the greater the harm to the city's budget. If the financial loss from adding houses were a one-time event, the harm would not be as serious. But new homes and new residents are entitled to ongoing city services. Because it is the providing of city services that causes the housing deficit in Louisville, the deficit from adding new homes is permanent. And the daunting challenge will be finding new, permanent revenue to sustain the same level of services to new and existing homes and residents alike. Assuming we can find new, permanent revenue, there is another decision: What should we do with this new, permanent revenue: (A) build more deficit-causing homes; (B) save the money for a rainy day; or (C) increase the quality or quantity of city services going to existing residents? As this question suggests, even if new revenue is available, the pro-growthers' single-minded focus on massive housing increases improperly skews the debate into whether we can "afford" new housing when the real debate should be: What should we do with the new revenue? Financing massive housing increases are not the only choice. What fiscal factors should the city consider, and how should the city plan development so that it promotes and does not harm Louisville's fiscal health? Former Council member John Leary explained this in a July 20 email to the City Council. |
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