Housing Contribution: ‘Extortion’ Or Charity?

Council cuts link between town approval and affordable housing donation


On a split vote Thursday, the Payson Town Council eliminated a system that asked developers to make a “voluntary” contribution to an affordable housing fund at the same time they received their approvals to build.

Council critics of the system that has raised $550,000 in pledges to help provide “work force housing” called it a case of illegal extortion — since state law forbids towns from denying building permits to anyone who meets the zoning and building standards. As a result, even though the town required developers to indicate what they would do to provide affordable housing — the law would prevent the council from doing anything if the developer simply refused.

Supporters of the current system predicted developers would contribute nothing at all if they didn’t have the impression the council would look more favorably on their building plans if they made some sort of contribution.

On a 6-1 vote, the council decided to continue raising money from the whole community to help provide affordable housing, but to no longer link it to the approval process for new projects. That decision was perhaps the most controversial element in the town’s decision to adopt a new strategy for providing affordable housing, based on a just-completed consultant’s report.

The vote represented one more significant step away from the growth control approach of the previous council led by then-mayor Bob Edwards.

The almost complete absence of new housing projects in the past two years has already made the existing 250-units-per-year limit on new permits irrelevant. The growth limit allows unused permits to carry forward, so by the time housing construction resumes, builders could likely build 700 or 1,000 units in one year just to catch up.

Councilor Michael Hughes proposed the repeal of the existing policy concerning the affordable housing contributions, arguing that it amounted to “extortion.” Hughes, a Realtor, came under fire from the Edwards camp during the campaign for criticizing growth control limits.

“When you look at the statute, we can only look at approvals based on whether it conforms to code.”

Hughes said linking the voluntary contribution to the development approval process was a mistake.

Councilor Ed Blair disagreed. “I don’t think it was a mistake.”

He said it made sense to bring up the idea of a contribution in the course of the discussions about a new project. “Just let them consider the donation,” he said.

Bruce Hopkins, who heads the town’s Affordable Housing Committee and also serves as local president of Habitat for Humanity, predicted that change in policy would virtually eliminate funding for affordable housing in town.

So far, developers have pledged a total of $550,000 to help provide work force housing — including $9,000 in cash and about $150,000 in water credits — so that builders of affordable houses might not have to pay the town’s $7,500 per unit water impact fee. Developers have promised to contribute another $400,000 in cash and other benefits once they actually build their projects. Many of those projects have since died due to the housing slump.

“This vote will take away our funding source,” said Hopkins. “I’m not sure what it’s going to be, but to implement this plan, we need a sustainable funding source.”

The council members praised the housing plan, but mostly criticized continuing to require discussion of the “voluntary” contributions in the development approval process. The council said the planning staff should still urge developers to make contributions, but no longer include a description of those commitments on approvals.

“The chances of getting a voluntary contribution are just very low,” said Hopkins. “So I’m looking to you to help provide the funds. When you say the ‘community’ will provide the funds — that just isn’t going to happen.”

“What you’ve just said,” observed Mayor Kenny Evans, “is really an indictment of the old process. If we tie strings (to the contribution), then it’s no longer legal. This needs to be a broad-based approach, rather than foisting this on future developers.”

Editor’s note: For a complete report on the town’s affordable housing plan, see Friday’s Roundup.


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