Transit route tax-break bill puts cart before the horse
A bill would give tax exemptions to developers of affordable housing and health clinics built along the city's transit line.
Concerned that the city's transit project could displace residents along its routes and possibly increase housing costs, state legislators are pushing to exempt developers of affordable housing, health clinics and facilities for the disadvantaged from the general excise tax.
Trouble is, the exact route of the transit system has yet to be established. Also, the measure doesn't determine how near the projects must be to qualify, how to square current affordable housing tax exemptions with a new one, what facilities affected communities might want or need, the definition of "mixed-use transit-oriented joint development projects" the bill intends to exempt and the effect the exemption would have on state revenues.
Moreover, the proposal interferes with the city's transit-related development program that is still in the works, stepping inside an arena for which the city is responsible.
The path of the transit system could pass through older neighborhoods, which would require houses and other structures to be removed, and lawmakers are appropriately worried that people, particularly the elderly and low-income residents, would be forced out. The concern is "gentrification," redevelopment that could, by cost, exclude long-time businesses and residents, a situation that often occurs in urban renewal and transit-related development.
Legislators see the transit-connected redevelopment as an opportunity to build up a needed supply of cheaper housing, either for purchase or rent, and to include accessible services, such as health care and recreational facilities. It is. However, the bill puts the cart before the horse.
The bill leaves too many issues unresolved. It gives undue -- and probably unwanted -- tax exemption authority to ill-suited agencies, for example, allowing the Health Department to decide if a community health-care facility should get a tax break, a judgment outside of its scope of expertise. While granting exemption from the state's 4 percent tax, the measure would impose the city's half-percent transit surcharge on affordable projects when currently such operations are exempt from both.
The state already allows for affordable housing exemptions, so a new tax break would be duplicative, unless the intent is to set aside certain requirements simply because an affordable project is within the route's proximity. In addition, in a mixed-use facility, separating for-profit businesses that don't qualify for an exemption from those that do would be difficult.
While the bill might be well-intended, there are a slew of matters to be clarified. It should not be approved.