By Len Suzio
As the toll debate continues to rage Democrats have criticized the alternative Republican transportation financing proposal called “Prioritize Progress”. The Democrats claim Prioritize Progress would pass on an enormous and unfair debt burden to future generations. That criticism overlooks the fact that the Republican proposal limits total borrowing to what it would be under the $2 billion bond cap. Republicans advocate taking about $700 million of annual borrowing in General Obligation bonds to supplement about $700 million of annual borrowing under the Special Transportation Fund and $700 million of annual federal grants.
Effectively, the Republican Plan forces the state to live within its means by limiting total borrowing to the $2 billion cap. This means over the next 30 years billions of dollars of borrowing for other state spending would be capped and rationed, and the state would be forced to prioritize projects for funding. Ironically, this would be compatible with Governor Lamont’s proposed “debt diet”.
The question is what would be the impact of reducing bonding for non-transportation purposes? Is it feasible? Is it realistic? Would it force a healthy reevaluation of state borrowing and spending?
My experience as a former member of the Finance, Revenue and Bonding Committee General Bonding Subcommittee suggests there may be plenty of opportunities to reevaluate what we are borrowing for. On March 21, 2017 I sat on a Bonding Subcommittee meeting to review proposed borrowing by different agency heads. I listened intently as Evonne Klein Commissioner of the Department of Housing made her pitch to the Committee.
To support her bonding request Commissioner Klein presented data on projects to be bonded. I couldn’t help but notice the costs of some of the “affordable housing” projects. I asked Commissioner Klein what the average cost of an apartment or family unit would be. Her answer was the target cost is $250,000 per “affordable” housing unit. I was shocked and surprised because we are talking about taxpayer subsidized housing and the majority of families in Connecticut do not live in houses that cost a quarter of a million dollars each. Yet here the Commissioner of Housing was testifying that a cost of a quarter of a million dollars was normal for taxpayer subsidized housing units.
The shocking testimony I heard from Department of Housing Commissioner Klein prompted me to further investigate how much “affordable housing” costs Connecticut taxpayers. Subsequently, I requested a schedule of all the projects financed by the Connecticut Department of Housing during the previous year (2016).
A review of the Department of Housing financed projects for 2016 showed 25 projects containing 937 housing units of which 14 projects with 516 apartments had housing unit costs exceeding $237,000 per apartment. The average cost per affordable housing unit was $261,852 each. A recap of “affordable” housing unit projects for that year follows:
■Three projects with 122 units costing more than $400,000 per apartment
■Four projects with 193 units costing between $308,205 and $376,997 per apartment
■Seven projects with 210 units costing between $237,452 and $296,867 per apartment
■Six projects with 250 units costing between $108,492 and $173,396 per apartment
■Five projects with 162 units costing between $16,053 and $83,333 per apartment
The most expensive taxpayer funded apartment project during 2016 was Liberty Gardens in Hartford, a 10-unit complex that cost $4,573,563 dollars to rehab. According to information provided by the Connecticut Department of Housing for Liberty Gardens there are four 2-bedroom units that rent for $116 per month and six 3-bedroom units that rent for $63 per month!
The foregoing information indicates that much “affordable” housing in Connecticut is not affordable for taxpayers. How do you justify taxpayers subsidizing housing that costs more than the housing occupied by the taxpayers themselves!
As I researched this potentially controversial topic, I learned from developers that the regulations pertaining to affordable housing are overwhelming and expensive. According to some developers, the regulations more than double the cost of taxpayer subsidized housing. But whatever the reason, it’s all but impossible to justify spending a quarter of a million dollars on the average unit of “affordable” housing in Connecticut. Moreover, it’s difficult to justify this expensive housing even to those would potentially benefit from it. After all, housing at these costs limits the number of affordable housing units that may be available to the population needing it.
The foregoing is evidence that there is plenty of opportunity to reduce General Fund borrowing and that the exercise may be healthy for Connecticut taxpayers. By forcing legislators to take a hard look at what our bonding buys, “Prioritize Progress” may be a very good idea.