June 28, 2005 The Senate Committee on Housing, Sports, and Veteran's Affairs on Tuesday unanimously approved proposals from the V.I. Housing Finance Authority to allow for greater access to affordable housing.
The committee approved amendments to the Low and Moderate Income Affordable Housing Act of 1990. Those recommended changes now go to the Committee on Rules and Judiciary for further action.
The committee approved an exemption to recording fees on documents that must be filed when new affordable housing units are being built. This would save money for the low-income residents of those units, said Clifford Graham, the executive director of the VIHFA.
Graham won senators over by saying, "any cost saving will help reduce the overall cost of units being developed. Currently, fees [such as this] are ultimately passed on to clients purchasing the housing unit."
Sen. Ronald Russell initially expressed concerns relating to the loss of income from these fees to the government. In response, Graham reminded the legislators that the government is obligated under the act to provide affordable housing to the public.
Another amendment would pass on to subcontractors any tax benefits that go to the developer. Under current law, many types of building materials used for affordable housing are exempt from excise taxes and all but 1 percent of customs duties, Graham explained.
"The HFA wants to extend benefits to the subcontractor because it is easier to order materials through the subcontractors, and it simplifies the paperwork process for requests," he said.
Russell, who supported the measure, reminded Graham to make sure that subcontractors do not misuse the tax benefits or get credit for them for work on other jobs. Graham explained that before a tax exemption is granted, all requested materials have to be approved by the HFA. "One or two things may have fallen through the cracks, but otherwise, the system does not allow for this kind of misuse," Graham said.
Another amendment would eliminate some taxes on developers if and when they convert affordable-housing rental units to home ownership.
Finally, an amendment would exempt affordable-housing developments from paying property tax when the residents are considered low income. Graham noted that because the law demands that rents remain low, yet the costs of hazard insurance is rising, some affordable properties can fall into disrepair. Property tax relief could alleviate this problem, he said.
Russell expressed concern that this property tax relief would also benefit medium-income residents who should be able to afford the tax. "I think that people with moderate housing have to pay for something," Russell said.
But Graham assured him that it would be restricted to low-income residents.
Graham reminded senators that the HFA has provided funding for 18,000 to 30,000 residences of people with low and middle incomes. There are no homes available in the St. Thomas or St. John private real estate markets for less than $270,000, he said. Because it has become more difficult to buy homes, there's a greater call for the authority to construct them.
Sen. Celestino White also discussed concerns relating to the V.I. Housing Authority's rebuilding of the Warren E. Brown housing units on St. Thomas. "Some time ago, 35 acres of land were transferred to the VIHA in the Bordeaux/Fortuna area for the price of $1, for the express purpose of reconstructing the Warren E. Brown housing facilities," White told Graham. "It's been seven years, and nothing has happened yet. Because of that, the government wants back the land. I hope that doesn't continue to happen."
White added that land was also taken from the elderly at the Kirwan Terrace housing community and given to the University of the Virgin Islands. "The elderly need their facilities," White shouted.
Present at Tuesday's meeting were Sens. White, Russell, Pedro Encarnacion, Usie Richards and Liston Davis. Sens. Shawn-Michael Malone, Craig Barshinger and Adlah "Foncie" Donastorg were absent.
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