Mayor Kenney, City Council find compromise on construction tax. At what cost? | Editorial

Thursday, City Council returned after a three-month summer break. First order of business was determining the fate of the controversial construction-tax proposal.  In June, Council narrowly passed, 9-8, a 1 percent tax on new construction to fund affordable housing, to the tune of $19 million a year. The mayor, who vocally opposed the tax, had until the end of Council's meeting to sign, veto, or have the bill recalled.

By Thursday afternoon, Council recalled the tax bill. We expect both sides to claim victory for the compromise.  We're not sure that taxpayers can do the same.

Council and Mayor Kenney have disagreed on a number of points over the tax; the administration claimed that it would cost the city up to $4 million to administer.  Obviously, unions and developers have fought hard against the tax.   (The Editorial Board had called on the mayor to sign the bill, with reservations.)

The construction-tax issue ping-ponged back and forth between Council and the mayor's office in the days leading up to Thursday's meeting.  On Wednesday, the mayor proposed the city deposit an amount equivalent of the total property tax from properties for which the 10-year abatement has expired, essentially diverting $53 million over five years from the general fund to the housing trust fund.   Council President Darrell Clarke along with Council members Maria Quiñones-Sánchez and Mark Squilla said it was not enough.

Thursday, negotiations continued well beyond the start time for the Council session.   By afternoon, Council recalled the construction tax. The administration promised to up its investment to $71 million over the next five years.

Is this a good outcome? Well, for one thing,  the mayor opposed the tax in part because of the $3 million to $4 million cost per year of administering it.  Except now the mayor is proposing spending $15 million to $20 million a year instead.  How does that math make sense?

Especially because this new proposal will tap the general fund to pay for affordable housing. If the city has the capacity to invest millions every year in affordable housing now, where was this money in the spring when the mayor and Council worked on the budget? What programs that were funded under that budget will now have to be gutted because of the new commitment – that will require $21 million next year? If that money was sitting  idly by, why do we continue to hear that we don't have enough money for schools or the city's pension fund?

This is not the first time that a big, complicated issue has been brought to the brink at the last possible minute, only to be resolved with the magical appearance of money that, until that moment, everyone said we didn't have.  It's also not the first time that we're asking why, facing the big and complicated issues of a city this size, does Council even need a summer break?

Affordable housing is a critical issue in a city with a high poverty rate.  But both Council and the mayor need to explain to taxpayers where every dollar that will now go into affordable housing is going to come from.