No legal issues with housing
- Published: March 17, 2011
There are no legal obstacles to the Village pursuing its current affordable housing project, according to Village Law Director John Chambers in a report to Council at its March 7 meeting, as long as the Village choose a nonprofit as its development partner.
Chambers had researched the question in response to concerns raised by some villagers, including former Village Manager Kent Bristol, that a public/private housing project could be a misuse of public funds.
The item was discussion only. Council plans to vote on a Memorandum of Understanding, or MOU, to move the project forward, at its next meeting on March 21.
The use of public funds for affordable housing projects has “been upheld by the courts repeatedly,” Chambers said at the meeting. “There’s no question today.”
Courts also will not overrule a project defined by a municipal governing body as a public good, Chambers said.
“The courts have held that the primary body that decides the public good is the legislative body,” he said.
At issue is the proposed construction of four single-family affordable homes on Village-owned property on Cemetery Street, using a community land trust model that keeps the homes permanently affordable. While no developer for the project has been chosen, Council and the local nonprofit Home Inc., a community land trust organization, have worked together to develop the MOU, which sets out expectations for both the Village and the developer. According to the draft MOU recently considered by Council, the Village will agree to sell the land at half its appraised value, with the total value of the land appraised at $160,000.
The Village is also agreeing to pay for the appraisal, waive up to $500 of zoning and tap fees per unit and cover the installation of an upgraded water main and fire hydrant recommended by Fire Chief Colin Altman, at an estimated cost of between $60,000 to $80,000.
The homes will be between 1,200 and 1,500 square feet with at least three bedrooms.
Council has identified the creation of affordable housing as a public good due to the perceived negative effect of rising housing costs on village demographics. Specifically, Council members have linked high housing costs to the decline of young families in the village, along with the decline in racial diversity. Council members have emphasized that as well as attracting young people to the village, the new homes would benefit the village by increasing property taxes paid to both the Village government and the schools. The creation of affordable housing was also identified as a priority during the recent Village/Township visioning project.
Those opposed to the project have questioned the need for more affordable housing, and stated that more jobs, rather than more housing, should be Village government’s priority. Neighbors have also objected to the project, because it will eliminate the green space for those currently living on Cemetery Street. And several villagers have questioned the use of public funds for the housing project.
In question is a section of Article VIII, Section 6 of the Ohio Constitution that states, “No laws shall be passed authorizing any…town…by vote of its citizens, or otherwise, to become a stockholder in any joint stock company, corporation, or association whatsoever; or to raise money for, or to loan its credit to, or in aid of, any such company, corporation, or association…”, according to Chambers in a written memo.
This provision was added to the Constitution in 1851 after a “period of abuse” during which governments had become entangled with private business in infrastructure development. When some of the businesses failed, the governments owed large amounts of money, Chambers wrote.
Two factors need to be considered when deciding if a project is in violation of the provision, Chambers said. First, it needs to be determined if a government is lending money to an individual or corporation, and if so, if the project falls under the allowable exception to the provision. The Village would be considered to be lending money for the Cemetery Street project due to selling the land at a reduced price, Chambers said.
However, the project falls under the allowable exception as long as the Village government partners with a nonprofit, and the project is identified as for the public good, according to Chambers.
The Constitution states that “Exceptions have been recognized where the entity receiving the state assistance is either a public organization created for public purposes, or a private, non-profit engaged in an activity that advances a public purpose.”
Other items of March 7 Council business will be covered in the March 17 News.
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