A few months back a grant came before Council with funds for the cities housing department. I made some strong statements stating that the City of Flagstaff should not be in the housing business. That grant was accepted by a vote of 6-1 so my thoughts were little could be done to get the City of Flagstaff out of the housing business.
Fast forward to the January 22 City Council Budget Discussion and I am hopeful that the City will be exiting this business. Many may not be aware that the City of Flagstaff has actually been building and selling spec homes as so called affordable housing. The affordable portion is supposed to be facilitated by the City owning the land that the house sits on. Someone buys the house and leases the land, commonly known as a ground lease. The theory is that the expensive part of the house is the land and by not selling the land you drive down the price of the house. A theory that may have made sense during the real estate bubble but clearly does not make sense in todays market or the foreseeable future.
And this is exactly what I pointed out Tuesday. While the Housing Department was presenting I pointed out that the City currently has two houses for sale at $169,900 and that there is an inventory of over 100 homes and town homes under $200,000 on the market right now. Why are we competing with a market with this kind of inventory? Why would someone want to buy a home with a tiny lot that they do not own when they have so many other choices with land they would own?
I’m pleased to report that the majority of Council agreed and once the current project near Coconino High School is complete, we will no longer be building spec houses and the city will be exiting this business.
As I’ve said before, we’ve got major financial issues to deal with. We need tens of millions just for our basic infrastructure needs. It’s time to change the way the City operates and the expectations of what the City provides. I’m proud to say progress is being made to streamline City operations and right the fiscal ship with much more work needed and much more to come.