The Key West Citizen wrote an interesting editorial on the failure of the Peary Court referendum, “What’s Worse: Bad Decision or No Decision“. It’s a disjointed follow-up to the editorial written before the referendum, “Peary Court: A gift horse or white elephant“.
The premise of the newest editorial seems to be that the purchase of Peary Court should have gone through even if it turned out to be a bad decision. Hmmmm. I’m 100% sure I disagree with that. The editorial waves away questions about the steep price and the condition of the units. Strangely enough, the earlier editorial spotlighted these issues and urged caution.
At best the purchase of Peary Court, would have preserved 157 residential units. These units currently rent for about $2,400. They would rent for about $2,400 after being purchased by the city. In other words, there’s no net benefit to the tax payers. Peary Court was portrayed by proponents as a “panic-buy” urgently needed to preserve these housing units. Desperation is never a good negotiating posture. The city needs to develop multiple alternatives so it doesn’t find itself in the same situation down the road.
The $55 million price tag would eat up every bit of the $12 million or so of the Tourist Impact Tax (TIMP) available to the city for affordable housing. Plus it would have necessitated a $45 million loan. The voters were told the rental income from the property would cover those payments. There would be little left over to roll over into more affordable housing solutions. The city would have to start from scratch to supply additional units. Because of the payments required to cover that loan there would have been little flexibility to lower rents in response to softening demand or an increased need for housing among lower income brackets.
Add to that the unknowns regarding the condition of the units, and I think the voters made the right decision.
To be fair, I think the City of Key West actually has made some progress on the affordable housing issue. Here’s a link to a 2014 white paper. You’ll notice that at least one of the objectives has been achieved. Tourism Impact Tax (TIMP) money may now be used for affordable housing. The city now has $12 million from that source to use toward affordable housing. The trick is to use it wisely, and get the most bang for the buck.
There’s been a proposal to build more units at Poinciana Plaza and use revenue from those units to finance additional affordable housing. Purchasing Peary Court would have cost $55 million or $350,000 per unit.
Building new at Poinciana would cost around $100,000 per unit based on recent construction cost figures. Let’s say that $12 million is used to build 120 units. Renting those units for $1,500 would generate revenue of over $2 million per year. That could be combined with the $1.5 million or so generated by the TIMP annually.
If Key West is going to successfully tackle the affordable housing issue, the first step is cutting through the confusion. According to this story on KeysNet.com, the City of Marathon is making headway on clarifying the issues.
The affordable housing crunch doesn’t simply stop at the borders of Key West or the borders of Marathon. It is a Keys-wide issue. It would be helpful if Monroe County could make some sort of positive contribution to addressing the problem. An overall county-wide plan based on real numbers would be a good start. At the very least, the county could stop trying to add extra tax burdens to the households that the municipalities are trying to help.
I’m keeping a list of information sources on the issue. Here’s what I’ve got so far.
- 2011 KHWA plan, including wait list
- 2015 ALICE report
- 2012 Key West Comprehensive Plan Data Update
- 2014 Key West Affordable Housing White Paper
- 2013 Marathon Workforce/Affordable Housing Study
- Shimberg Center for Housing Studies, Monroe County profile.