Monday, May 14, 2018

Of Interest

The Strategic Housing Action Plan, created by the mayor's Housing Task Force and accepted by the Hudson Community Development & Planning Agency last Thursday, is now available online at the HCDPA website. To access the document, click here.


  1. Part I: Where to start? How about Section 1.01-C, page 14, and 2.02-A, page 19 of 30 (Accessory Dwelling Units (ADUs): This document perpetuates and extends a fantasy, launched by “affordable Housing” advocates last year, that the City should facilitate the development of accessory buildings in Hudson’s alleys into habitable structures containing “affordable” apartments; and that doing same will be financially viable, benefit their owners, and pose no problems for fire safety in the alleys. This document (even while noting (see Summary of Housing Cost Burden- City of Hudson)that in the City of Hudson, 40.4% of owner households find their housing costs, including taxes, utilities, insurance, etc. “unaffordable or severely unaffordable” –see page 4 of 28) now extends that fantasy by asserting (page 19 of 30) that the City should “Establish a local policy to allow ADUs as a strategy for existing owners to age in place and a method to create a revenue stream for owners to maintain property….these units may be permitted as a conditional use or an as-of-right use in single family and two family residential districts” (page 19 of 30). On the same page, the program is envisioned as providing “low interest construction loans for development of ADUs at 80-130% AMI to ensure permanently affordable middle-income housing stock.” However, on page 14 of 30, the same document urges the provision of “low interest construction loans for development of ADUs at 60-120% AMI to ensure permanently affordable middle income housing stock.” Perhaps these apparently contradictory numbers simply haven’t been harmonized in the draft. But either way, the burden of loan repayment, along with additional property taxes and other associated costs, appear to create risk, rather than any meaningful income, for a senior (or any home owner) taking out such a loan.

    The ADU suggestion doesn’t pencil out because most accessory buildings in Hudson lack foundations, and would have to be demolished and replaced by a new building meeting current residential Code (typically a studio apartment over a garage). Let’s plug in some reasonable estimates. The cost of both demolition of the old accessory building and then construction of the new habitable one to current Code, including design, foundation, permitting, attorney’s fees, engineering, plumbing, wiring, etc., and building a twenty to thirty foot wide habitable two story structure with garage below and apartment above) could be reasonably estimated at $100,000. So if a mortgage-free senior homeowner qualifies for such a program and gets a 30-year no-down-payment fixed rate loan at 2.5% (which would be more like a home equity loan than typical shorter-term, higher-rate construction loans) with her house used as collateral, her monthly loan payments will be $395. But the new habitable structure on the property would trigger an immediate reassessment for property tax purposes, likely hiking the senior’s assessment by at least the cost of construction: around $100,000. By time it’s built, Hudson’s aggregate mil rate will be at least 40, so depending on whether she qualifies for exemptions, her property taxes will increase at least (40x100), or $4,000 for the first year after construction. BUT THAT PROPERTY TAX, ALONG WITH HER INSURANCE, WILL KEEP GOING UP. Plus she’ll be paying $4,740 a year in debt service, and the additional habitable structure will probably hike her insurance by at least $1,500 a year. So in this scenario, she’ll be incurring an additional ($4,000 plus $4,740 plus $1,500), or $10,240 in additional annual costs – and that’s only at the beginning.

    To be continued:

  2. Part II:
    Will the rental income offset this homeowner's costs? It doesn’t look like it. At 60% AMI for one person in Columbia County (remember, we’re talking about a studio apartment), per 2017 calculations, with an income of $31,380, 30% of their income in rent would total $9,414.00 annually. At 125% AMI, 30% of that person’s income in rent would be $15,690 annually…but the owner’s property taxes and insurance costs would keep rising, while the rent would not rise proportionately – remember, the proposal cites to “permanently affordable middle-income housing stock.” So the net result would be “affordable” housing for the tenant – but not for the homeowner.

    Correct me if I’m wrong. But it seems that unless the City stepped in with a subsidy to help guarantee the homeowner a reasonable annually-escalating income on the deal (thus hiking the property taxes of other homeowners in the process), the senior would most likely lose money, plus incur a new lien on her house (which could render her homeless if she misses payments on the loan). And who will ensure that contractors don’t defraud her in the construction process? Who will represent a vulnerable senior in search of additional income, and make sure that she understands the ultimate math and makes an informed decision? Who will explain to such a senior that the establishment of a “permanently affordable” unit in an accessory building on a one or two family property may devalue that property for resale purposes (but not, of course, for property tax purposes) – in which case, if she needs to sell at a later date in order to afford care, her home may be worth far less than she had originally imagined?

    It seems that this as-of-right development concept would principally benefit not for profits owning large numbers of properties with accessory buildings, potentially on the wholly exempt portion of the tax roll, that have access to grant funding - thus obviating any debt burden for such construction, and any risk of increasing property taxes. So by embracing this proposal, the City could potentially subsidize the as-of-right demolition and redevelopment of a large number of accessory buildings on the National Register of Historic Places - by forfeiting the ever-escalating property tax increases that the hapless individual senior would be compelled to pay.

    Not to mention that the City doesn’t have the staff to enforce its extant ban on alley parking, and is thus incapable of ensuring prompt emergency vehicle access therein (as demonstrated in a recent alley fire). Further, as-of-right (rather than case by case) development of “affordable” (or in fact, any) housing in the alleys might also be in violation of the NYS Fire Code (the 2015 Code mandates clear emergency access 26’ wide when new residential construction is involved), and could potentially jeopardize the lives of those inhabiting the “affordable” units.

    To be continued...

  3. Part III:
    Finally, making such development “as of right” (depending on the definition thereof) could potentially eliminate the requirement for review by the Historic Preservation Commission, facilitating serious damage to the historic fabric of the City - which is inextricably linked with its appeal to visitors who generate business.

    So before the City embraces any such proposal, possibly leading unsuspecting homeowners into risking their financial and housing stability, it might want to do some serious financial analysis, as well as discussing the matter with both Code Enforcement and the HPC.

    Just a thought.