If the greater Watertown area becomes a Metropolitan Statistical Area, as city and county officials expect will happen in the next year, housing development and availability could be adversely affected, according to Gary C. Beasley, executive director of Neighbors of Watertown.
The economics of buying, renovating and renting properties will undergo significant changes based on a shift in the formula used to determine how state and federal funds are distributed in the area.
Municipalities throughout Jefferson County, including the city of Watertown, receive funds based on the statewide median household income for non-metropolitan areas, which is $54,500. If the greater Watertown area becomes a metropolitan area, eligibility for funds will be based on the median income within the Watertown area, which will be significantly less: about $30,000, according to Mr. Beasley.
Its gonna hurt, he said.
The new benchmark could greatly reduce the number of people eligible for income-driven affordable housing programs.
People who have been on waiting lists all of a sudden will become ineligible, Mr. Beasley said.
Residents qualify for affordable housing on a sliding scale from 30 percent to 80 percent of the income standard.
Residents are eligible for one of the major affordable housing programs, the low income tax credit, at 60 percent of allowable income. Under the old formula, the income cap is $32,000; under the new standard, it would fall to $24,000.
The new formula will hurt developers, too.
Many developers take advantage of the tax-credit program to renovate buildings for use as rental properties. Under the requirements of the program, the landlord must rent to households that are at 60 percent of median income or less.
The program is designed both to provide affordable housing and to improve rental housing stock in the community, according to Mr. Beasley.
At the current standard of $54,500, the most a landlord can charge a tenant for rent is $817.50 per month. At the local median household income of about $30,000, the most a landlord could charge would be about $600 per month.
According to Mr. Beasley, the formula will greatly reduce the amount of money developers and landlords can put toward buying and renovating properties such as the proposed Woolworth project, which developers have said would offer affordable housing.
With 50 units, the building would generate $130,000 less each year if the income cap changes, representing a huge reduction in money that could be put toward maintenance and upkeep of the property.
On a positive note, the county and city recently received substantial grants from the Community Development Block Grant Program for housing: $750,000 and $400,000, respectively.
The $750,000 grant received by the county is the maximum allowed by law and is the largest award for the county in the last several years, Mr. Beasley said. The amount of money received is based upon the success the program has had in providing money for programs such as owner-occupied rehabilitation, which helps residents stay in their homes by making necessary upgrades.
As the principle city of the MSA, the money received by Watertown from the Community Development Block Grant Program is expected to increase if the designation comes through as expected.
According to city Planning and Community Development Coordinator Kenneth A. Mix, the designation likely will make the city an entitlement community under the jurisdiction of the U.S. Department of Housing and Urban Development.
Instead of requiring the city to reapply for grants annually, HUD would provide a set amount of funds each year determined by a formula based upon population and poverty levels.
For the city, that amount likely will be much greater than the $400,000 received in 2012.
At the end of the day, the area may benefit from the shift in formulas. However, that is something that remains to be seen.
There are some positive aspects and some negative aspects from our standpoint, Mr. Mix said. In some cases we will get more funding and in some cases it might cost us more money.
There are a lot of trade-offs, Mr. Beasley said.
The greater Watertown area was declared an urbanized area in 2012 based on data from the 2010 census, triggering a series of mandates that also affect transportation and environmental programs.
According to Watertown City Engineer Kurt W. Hauk, theres a significant amount of work involved in bringing the urbanized area into compliance with storm water regulations mandated by the state Department of Environmental Conservation.
All storm water sewers throughout the urbanized area will fall under the umbrella of a Municipal Separate Storm Water System, created to prevent contaminated runoff from precipitation from entering local water bodies untreated.
It is a matter that will have to be sorted out among the municipalities, which may have to front their own money to improve their systems.
Officials dont know at this point what state and federal funds will be available to bring the storm water sewer systems of individual municipalities up to standard with the MS4. Mr. Hauk said that information should become available in the coming months.