Losing millions in stamp tax revenue on real estate sales for the past several years "has dealt a blow to the development of moderate-income housing," V.I. Housing Finance Authority Executive Director Adrienne Williams said during budget hearings Friday.
A 2004 law, sponsored by former Sen. Emmet Hansen and passed over Gov. Charles Turnbull’s veto, earmarks 30 percent of stamp tax revenue to the affordable housing program for moderate income housing. But since then, budget woes have prompted senators to defer the payments.
"As of late, legislation deferring the stamp tax to the VIHFA has dealt a blow to the development of affordable housing," Williams said. A legislative act in 2010 suspended that year’s allocation, losing $2.36 million for affordable housing, she said. Again in 2012, legislation suspended the earmark, losing $2.4 million, and in 2014, deferring the earmark eliminated another $1.5 million, she said.
"A total of $6.2 million has been suspended," she said. Another $4.7 million in earmarked stamp tax revenue has not been paid out, Williams said.
"The stamp tax is critical in helping the residents of the Virgin Islands become homeowners," she said. "For example, on our Whispering Hills community, the sales price for the three bedroom two bath home is $279,000. An analysis of the first 30 priority clients … shows that each client would need an average subsidy of over $45,000, which totals $1.35 million," she said. "Without funding to provide these subsidies, many clients who have been waiting for homes for many years will have to be denied assistance."
Senators attending the hearing were supportive of the agency, the affordable housing program and Williams herself, but made no promises regarding future Stamp Tax revenues.
Rising construction costs is another growing difficulty for building affordable V.I. housing, she said. In March, the authority commissioned a housing demand study, which "frankly, presented a very sobering picture of the reality of affordable homeownership and rental development in the territory," Williams said.
"Each decade, the cost to construct affordable homes has risen exponentially. In the late 1990s, the authority was constructing and selling homes for an average price of $104,000,” she said. “Today, because of the rising construction labor and material costs, the territory has seen a tremendous upswing in development costs. The same home that was built for $104,000 now costs $176,000-$180,000 to construct.”
To address that, VIHFA has looked at alternative, low-cost building methods, including structural insulated panels, pre-cast concrete panels, insulated concrete forms and steel framed construction, and intends to provide opportunities to build model homes for approved systems, she said.
The poor economy and the Hovensa closure have also impacted affordable housing, making it harder for many to show the financial wherewithal to qualify, she said.
While funding is tight, the agency remains very busy. Over the last year, the agency helped 21 people become new homeowners and completed the first two homes in Bonne Esperance. Williams described an array of ongoing projects throughout the territory.
Williams was before the Senate Finance Committee to discuss her agency’s fiscal year 2016 budget request. The governor’s executive budget recommends a General Fund appropriation of $2 million to the authority for FY 2016 to supplement projected revenues of $2.1 million from land and home sales, leases and mortgages, and $894,000 from other miscellaneous sources.
No votes were taken at the information-gathering budget hearing. Present were Sens. Clifford Graham, Kurt Vialet, Sammuel Sanes Marvin Blyden and Tregenza Roach. Sens. Myron Jackson and Terrence "Positive" Nelson were absent.