While at the November 23rd City Council meeting I noticed, buried in the back of the ordinances section of the docket, some details that show our government is not yet focused on Trenton’s economic recovery. 

Most budget-minded Trentonians bemoan the high proportion of tax-exempt property in Trenton due to our status as a state capital.  Not only do we house a large number of tax-exempt government buildings but we also house tax-exempt buildings owned by non-profits.  Non-profit organizations tend to cluster in state capitals and in urban areas.  We also know that Trenton’s heavy proportion of subsidized low income housing has added to our cost structure without a corresponding revenue benefit.  Trenton outpaces all other Mercer County towns in low income housing combined.  As a result, our population can’t afford to support the services we all want.

City leaders wonder how we can limit our exposure to uneconomic uses of our limited footprint.  It’s a problem; and the Fix Trenton’s Budget Committee will be exploring options on behalf of City Council and the Administration.

HOWEVER, one option sits right in front of us. 

Don’t allow anymore tax-exempt or low income development on city controlled property!

And yet the Administration and City Council are doing exactly that.

I noticed on that night’s docket, Ordinance # 10-60 authorizing the sale of city owned property to Trenton City Home Corporation, a non-profit. 

There are several questions City Council and the Administration should clear up for the public:

1)      Is Trenton City Home owned by the city as some have said?

2)      If Trenton City Home rehabs the homes, will they be owned by a non-profit?

3)      If the homes are sold as subsidized affordable housing, will they be restricted to low income?

4)      And most importantly, will the homes generate more in tax than they consume in services?

A previous ordinance (#10-50) went through 1^st reading on Oct. 5^th and authorized another sale to the same group.  The accompanying memo from Housing Director, Henrietta Owusu said the homes were to be converted into low income housing.  Typically, low income housing receives both subsidies and is restricted in who can buy them.  This is the opposite of market rate.

If the answer to question #1 is “Yes”, this ordinance is a non-starter as the city should not be in the home construction business.  It’s far too risky.

If the answer to question #2 is “Yes”, the ordinance is also a non-starter.  Trenton can’t afford to add to the amount property off of the tax rolls.  We can sanction only development of taxable property for the foreseeable future.

If the answer to #3 is “Yes”, we have to question the impact of this policy on Trenton’s past.  Income restricted property tends to stay low income and forces us to answer question #4.

Will these homes generate more in tax revenue than they consume in services?

Based on my analysis, low income housing costs more for Trenton taxpayers to support than it generates.

Given projections for the 2011 budget, US Census data on Trenton housing and some basic assumptions about the consumption of variable cost services (police, fire, courts, health and human services)  the following table paints a picture of the economics of Trenton’s residential housing.

This analysis includes both owner occupied and rental homes.  It does not include the full cost of education which, given the distribution of children between higher and lower income households, will likely accentuate the impact.

Percentile	Unit Value	Cost to Serve	Revenue	Economic Impact
Top 10%	$ 180,000	$  5,833	$  9,288	$  3,455
Middle 50%	$ 80,000	$  6,336	$  4,128	$ (2,208)
Bottom 40%	$ 40,000	$ 8,471	$ 2,064	$ (6,407)

This analysis points to a clear fact but one common to all cities.  Low income housing is costly for cities.  In our case, we lose over $6000 per year for every unit of low income housing.  In cities with a more normal distribution of income than Trenton the impact is lessened.  However Trenton, has more “COAH-defined” low income housing than the rest of Mercer County combined; by more than double.    Trenton has, through either federal or state programs or simply by virtue of its lower property value, most of the affordable housing in the county. 

This is a major contributor to Trenton’s economic problem.

The current Administration and City Council can’t afford to continue the policies of the past.  Trentonians have to understand that we simply can’t afford it.  Our resources (police, fire, schools etc.) will simply be drained to the point of not being able to adequately serve the population.  Some may argue we are already past that point.

Trenton residents of all incomes are ready for a new way of doing things and for bringing new disposable income to Trenton.  Our leadership needs to have the discipline and focus to create programs to do this.

In my 11 years in Trenton, I’ve seen city, state and federal programs fund housing for the poor in Trenton.  I have never seen an aggressive program to attract housing development for new residents with high disposable income (the Top 10% referred to above).  I humbly suggest that our programs to market the city and dispose of city owned property be redirected to that purpose.  This is a foundational policy for fixing our economy.

We can start our road to recovery by saying “No” to Ordinance #10-60 and all similar ordinances.

3 Responses to “Discipline and Focus – Learning to say “NO””