Arguments over housing builds in South Burlington have circled around three points: southeast quadrant land use; appearance and size of housing; and frustrations of business owners who cannot hire because living costs in South Burlington are too expensive.
Yet there have been no actual numbers cited showing why costs, which drive prospective home buyers away, are so high.
While serving on the South Burlington Affordable Housing Committee in early 2020, one of the members commented to me that friends in South Burlington, who wanted out of a condo and into a house for their children, had bought a four-bedroom home in Fairfax for $200,000.
The same house in South Burlington would cost at least $430,000. In the new Dousevitcz development in Essex, houses of equivalent square footage start at $549,000. I want to unpack these numbers and discuss what’s behind this cost gap and how that gap relates to housing policies and prices in South Burlington.
National cost factors are beyond local control. Inflation cost for residential building has averaged over 5 percent for the past eight years and is projected to be 6 percent in 2021. Lumber cost is now three times the price as in March 2020.
Now add the two-tier development fees of South Burlington. Second tier up-front payments are: recreation impact fee, road impact fee, fire protection and police impact fees. Those paid, a developer gets to pay the zoning permit fee — total fees: $8,000 per housing unit. Before that, the first-tier costs and application fees for getting to the zoning permit must be paid — $25,000 to $40,000 per each house. Before a backhoe starts digging, the developer has paid $30,000 to $50,000 for a single unit.
Affordable housing policies adopted in South Burlington impact market prices. Since I was directly involved in supporting it through the development review board last year, I’ll use the South Village development of S.D. Ireland as my example.
S. D. Ireland bought South Village with half the project already built. They took on a contract requiring 34 affordable units. For these units, the Ireland project manager submitted three site plan options to the development review board. Then the arguments began — siting of units, size, and appearance. After further concessions to South Village residents on facade design and square footage, a fourth site plan was submitted and passed by the development review board.
No developer makes a profit on any affordable units — a fact of building in Chittenden County.
To keep mandated affordable units near the $250,000 price range, the final S. D. Ireland plan required a developer subsidy of $10,000 to $12,000 per unit, a matter of public record in development review board minutes. So the subsidy costs forced reduction in number of affordable units from 34 to 22.
The subsidy was a financial loss incurred to keep affordable units.
How would S. D. Ireland make up this loss? By raising prices on market rate houses. As of 2021, the national 6.2 percent increase in building costs has now pushed the Ireland subsidy to $30,000 per affordable unit. Question: how long can a for-profit business incur subsidies in these amounts and remain in business — without pricing itself out of the market?
The market works the same way for nonprofit Champlain Housing Trust and Cathedral Square, whose fees can be even higher. Allard Square apartments on Garden Street total cost was $19 million in 2019. That same year Cathedral Square Development Director, Cindy Reid, told me their next building of equivalent size would cost $29 million — a $10 million increase above Allard applications, estimated on materials costs staying level.
In 2015, South Burlington established a Housing Trust Fund similar to Burlington’s. Money is dispersed to developers to pay up front fees on affordable builds — and, as Sen. Kesha Ram has told me, major developments like City Place can incur a million dollars in fees alone.
Burlington’s Trust Fund is funded by a one cent tax, developer offset fees, General Fund infusions, and is invested. South Burlington’s Fund is $50,000 voted in the annual budget, 100 percent of it dispersed to one applicant. None is invested. In 2021 Burlington will disperse over $200,000 from its Trust Fund to multiple applicants. Burlington forgives many thousands in permitting fees on affordable units, South Burlington forgives a few hundred dollars in administrative fees only.
Will South Burlington residents demand that Council forgive 50 percent of all permitting fees, per affordable housing unit? And accept higher taxes to make up the difference? Will voters pass a two cent sales and meals tax for the Trust Fund? Are they willing to float a million-dollar bond for the Trust Fund, to be managed and invested, with the interest dispersed each year for affordable builds?
If residents want future home buyers to move to South Burlington, not to Fairfax, Bolton, St. Albans or Addison County, these are the structural changes they must demand for building affordable housing here.
Paula DeMichele, past member South Burlington affordable housing committee and past board president, Habitat for Humanity of Ashtabula County Ohio.