The Economic Development Strategic Plan covers a number of issues. One of the underlying ideas inherent in the plan is to increase the value of existing assets as an alternative to adding assets. In plain english, make what we have worth more rather than adding more to what we have.
Governments are well known for giving money away, often for a good public purpose. Governments, however, do not seem to be as good as investing money in its assets. For example, when the proposal to make loans to HOAs to encourage water conservation first arose, our staff was unable to find a similar program anywhere else in the state. They found programs where money was given away, but none where the money was invested in the form of a loan, providing a win-win to the property owner and the City without having to simply give the money away.
Fortunately a majority of our Council saw the wisdom of looking into making such investments and we are currently studying our first pilot program right now. My vision for these investments goes way beyond this and I see the value as increasing property values though upgrades and improvements such that additional revenue can be generated from our existing housing stock and so significant additional housing growth becomes unnecessary.
Before delving into this, I think it is important to say that I am not against growth. What I am against is growth for the sake of growth. I think that responsible growth can be good for our City but it must be done by taking into account alternatives to such growth, the limits and restraints of our infrastructure and the impact that growth brings to our existing residents and businesses.
That said, I think there is substantial opportunity for us to grow the value of our existing housing stock. One of the ways that the Economic Development Plan calls for doing this is in the type of investment discussed above. A majority of our population lives in multi-family developments and HOAs. Many of these are reaching and exceeding forty years of age. Historically, wood built structures, which most of these are, have significant deferred maintenance issues around the time they reach forty years of age. We have seen such issues at the Admiralty and more recently at Island J.
What we have seen from these projects is that after the deferred maintenance is completed, the property looks new and the units become worth more. What that means from the City’s perspective is that when these units sell, they sell at higher prices and thus the owners pay higher property taxes and the City generates greater revenue. Thus, by encouraging upgrades and completion of deferred maintenance we can increase the value of our existing housing stock without increasing housing.
My suggestion has been to develop a loan program to encourage other multi-family and HOA developments to undertake such upgrades and deal with deferred maintenance. We can encourage this by making loans at less than market value but much more than the City currently gets from its investment portfolio. In that way the City makes more than it would otherwise yet the property owner(s) pay less to do the work than they otherwise would.
To make this even more enticing, we can streamline and reduce the permitting cost, offer certain types of equipment at cost and develop programs that offer third party services and products at reduced costs. One example that we are working on now is the program to offer solar panel installation at a reduced price by grouping with other cities and use our collective purchase power to get the price reductions. We have also looked into programs to allow property owners to pay for solar installations though their property tax bill so that the cost follows the ownership and because the payments are made in installments, can, for some, become more affordable.
These types of programs just begin to scratch the surface of what we can accomplish by going forward with our Economic Development Plan, partner with our resident property owners and implement programs that increase the value of our existing housing stock. Increasing the value of what we currently have effectively reduces the need to have more. That, is, as you will see as I write on additional parts of the Economic Development Plan, the primary impetus of the Plan. As I said in my Council Corner, what we need to start doing today is to change our City’s economic model as that is the only way to reduce our need to grow incessently.
If you agree, share this with others and tell the other Council Members how you feel.