Tuesday Mar 08 2011
Our View: Quartz Ridge apartment project doesn’t pencil out
Sometimes, using simple math can be misleading. Sometimes, it can be enlightening, even provocative. In the case of the proposed Quartz Ridge Family Apartments — known formerly as the Miner’s Ridge project on Silver Bend Way — one has to wonder if Placer County government has removed pencil sharpeners in its ongoing effort to reduce expenses. Investing nearly $20 million on 64 government-subsidized apartments doesn’t appear to be a good deal for taxpayers or the Auburn community, says local activist Dale Smith. The fact that nearly 90 percent of the project cost will come from taxpayers in the form of $14.1 million in federal tax credits and $3.2 million in county redevelopment loans adds more credence to Smith’s claim. It should be noted that Smith has opposed the Silver Bend project for years on environmental grounds. But he makes a strong economic point, especially in a time of significant belt-tightening by government at all levels. Using simple math, construction of each affordable housing apartment at Quartz Ridge will average more than $300,000. Eligible tenants will be at or below 80 percent of the area’s median income. How does that pencil out? When the project was first proposed a decade ago, $300,000 per apartment unit would have been a ludicrous figure to move forward on. Then came the housing boom, and home values swelled by double digits annually. When Auburn average home prices peaked at more than $585,000 in August 2007, a $300,000 apartment even looked affordable. More than three years later, with home values at half their peak high, Quartz Ridge looks questionable economically. This is not a knock against affordable housing. There are times when it’s appropriate for government to step in and assist low-income residents with services, including housing. Nor are we critical of USA Properties and their ability to make a profit on its investment. We do question, however, the role government and taxpayers — in this case both federal taxpayers and county property owners who have seen their taxes feed redevelopment — have in making that investment pan out. The $14.1 million tax credit, if granted, provides the developer with financial security over the life of the project. The county loans, $1.2 million to buy the property and $2 million for project funding gaps, provides the developer with a hedge against rising land and construction costs. Jim LoBue, the county’s deputy director of redevelopment, told the Journal that Quartz Ridge “is a long-time investment. It’s not just to satisfy a snapshot in time for demand. Most people recognize the area is at the bottom of the housing market and expectations are it will go up and down but generally go up.” Another questionable assertion. Predictions of a rebound in real estate have been coming for nearly two years, yet short sales and foreclosures continue to dominate headlines as average home prices edge closer to their 2001 values. Quartz Ridge should give county leaders pause. Rather than rushing ahead with project approval, the county should look deeper into how it can help the low-income housing market. Would rent subsidies provide low-income residents with the opportunity to rent or lease existing homes or apartments, at a fraction of the cost? Could the county leverage its redevelopment funds into low-cost loans to assist first-time homebuyers? Simple math would say the county could offer $100,000 loans to 32 homebuyers — potentially providing half of the housing of Quartz Ridge while also filling vacant homes shuttered during the recession. With redevelopment funding on the state chopping block, it’s easy to see why Placer County wants to use its money before it loses it to Gov. Jerry Brown’s budget plan. But that would only make sense if there was no better way to use the money. Placer County seems intent on putting a low-income apartment complex on the edge of the American River Canyon, despite its environmental or economic costs. Something doesn’t add up.