To spur the creation of housing, the Boise City Council established the Downtown Housing Incentive Program on March 3, 2015. In 2017, the first funding was approved for three housing developments in the downtown area: The Afton 1, The Watercooler, and The Fowler. The problem with this incentive program is: Many other subsidies already exist to incentivize development.
The Downtown Housing Incentive Program specifically offers a one-time payment to developers, of $1,000 per unit to build what they would normally build without the funds—housing. Plus, the developers receive another $1,000 per unit if the housing will be rented to residents who earn below a specific income threshold, which is revised every year.
This past November 27, four new projects were approved by city council: $35,000 for 35 units in The Afton 2, $81,000 for 81 units in The Gibson (at 5th and Idaho), $34,000 for 34 units in Ash Street, and $254,000 for 134 units in Adare Manor, which is the only development to receive both the development and affordability incentives.
Thus, city councilors have elected to provide developers with $404,000 to build housing. However, besides for Adare Manor, that housing does not have to be affordable.
The bulk of the city-approved funds will subsidize expensive housing. Apartments.com lists a one-bedroom apartment in The Gibson at $1,132 to $1,954 a month or a two bedroom at $2,000 to $2,822. For apartments in The Watercooler, the monthly rate is $1,339 for a one bedroom. For The Fowler apartments, the range is wider: $1,275 to $2,200 for a studio, $1,435 to $1,750 for a one bedroom, and $1,630 to $2,060 for a two bedroom. Plus, according to the Idaho Statesman and the Idaho Press, a 1,200 square foot condominium in The Afton 1 sells for around $635,000.
In addition to the incentive program, almost all of these high-rent developments, and even Adare Manor, receive other forms of subsidies.
The developer of Adare Manor, with 120 units of affordable apartments and 14 at market rate, receives a generous subsidy from city taxpayers through Boise’s land lease agreement. The agreement leases the city’s land to the developer for 40 years at $1 a year, with no rent increase.
The city’s urban renewal agency, the Capital City Development Corporation, offers land subsidies as well—to the high-rent developments. The Afton 1 condominiums, the Ash Street townhomes, and The Watercooler apartments have all received land conveyances from CCDC. The Gibson also received benefits from CCDC, including “up to $790,000 for construction and easement of an on-site park and under-grounding of overhead utilities” and up to $260,000 for general assistance. In addition, The Fowler development will receive up to $3.2 million from CCDC for public improvements, historic preservation, and public parking. So the city is further subsidizing developments that the city’s urban renewal agency is already subsidizing.
Boise Mayor Bieter wants to expand this incentive program beyond the downtown, as part of the city’s Grow Our Housing initiative, to build more housing to be rented to residents whose income is 80 percent or below the average median income in the city. To receive the money, these developments only have to continue renting to low-income residents for 15 years.
The city’s housing development incentive program clearly has two separate goals: to encourage housing development in the city in general, and to encourage affordable housing. However, the pursuit of housing development in general is not a good use of city resources as we see it leads to taxpayers subsidizing expensive apartments.
Even the goal of affordable housing appears problematic on a simplistic level. Subsidies are given to developers with the commitment to rent affordable housing units for only 15 years. That time period is far shorter than the 40 year, $1 a year lease that Adare Manor has with the city.
Thus, the incentive program should not be expanded: The program should actually be stopped. It is subsidizing expensive developments and has only had one developer so far take up the affordability incentive. And that developer is only committed to an affordable rental rate for 15 years, at the same time having a very low cost, 40 year lease with the city. So even the one affordable development is not completely ensured by these government subsidies.