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Sales tax could mean housing improvements

BY LILY ABROMEIT | OCTOBER 30, 2014 5:00 AM

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The passing of a local-option sales tax on the ballot Nov. 4 could mean additional affordable housing units or down-payment assistance for Iowa City residents.

The local-option sales tax referendum, a 1-cent increase in sales tax, would allocate 10 percent of its revenue to affordable housing assistance in Iowa City.

“Johnson County has such a significant need for more affordable housing,” said Tracey Achenbach, the executive director of the Housing Trust Fund of Johnson County. “We’ve become a place in which the market cannot keep up with the demand, so affordable housing is something that is hard to provide.”

The tax, if approved by the voters next week, would potentially provide an estimated $900,00 to $1.2 million a year to housing funds. For fiscal 2015, $630,000 of funds was allotted to affordable housing from the city of Iowa City.

City Housing administrator Steven Rackis said the key is that 75 percent of this 10 percent is set aside for households set at or below 80 percent of median income.

This means, 80 percent of the people at or below the median income would receive aid from the funds.

Achenbach said this is something that has sparked a lot of discussion in the area.

“There’s been a lot of talk of there is not a definition of affordable housing but really for those of us working with it, it is housing that is affordable for a person in low to moderate income,” she said.

Housing should not exceed 30 percent of a person’s income, Achenbach said.

“The way that I see the local-option sales tax could be used … is the money could be used to incentivize developers to provide affordable housing,” she said.

Simon Andrew, the administrative analyst in the City Manager’s Office, said the funds would be distributed to local affordable-housing agencies that administer housing programs, as opposed to going to a single program.

This is something that would greatly aid these programs.

“We’re not aware of any dedicated stream of revenue for affordable housing,” he said. “It would be significant for affordable-housing programs in the city, as well as the fact that they can be used as leverage for other grants.”

Achenbach said this 10 percent is huge, because it would enable the Housing Trust Fund alone to supplement for state funding on existing projects.

“The city portion through the tax could mean almost double the amount for affordable housing activities,” she said. According to the Iowa City government website, federally funded programs are not affected by state property-tax reform and would therefore not receive revenue from this tax.

Rackis said while the details are yet to be ironed out, the Iowa City City Council would have control over where these funds go.

It could be for anything from down-payment programs, acquisition of affordable housing, or owner-occupied rehabilitation.

“The federal money we are receiving continues to shrink, and these funds can be used,” Rackis said. “It gives the opportunity to develop additional housing units, down-payment assistance [we’ve used] in the past, it could go into owner-occupied rehab; basically, it could be used for a lot of the programs the city has going and other local agencies can certainly participate.”

Achenbach said she is hopeful the tax will pass so the city can see these improvements come to fruition.

“I think it would be a great start toward it … but I think it’s never ending [because] it’s such a significant need in Johnson County,” she said.


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