Lexington's plan for $10 million surplus: affordable housing trust, homeless initiatives

bmusgrave@herald-leader.comMarch 18, 2014 

After more than seven years of debate, a committee of the Urban County Council voted Tuesday to set aside $3.5 million for affordable housing and homeless initiatives.

The 9-to-1 vote by the Budget and Finance Committee was part of a larger proposal to allocate $10 million of a current year projected surplus.

Councilman Steve Kay, who has pushed for the creation of an affordable housing trust fund, thanked the council after Tuesday's vote.

"I am very pleased that this council has taken the first step," Kay said. "It still needs to go to the full council, but I believe what has been done here today is extremely important for our community. It's something that we have been asking for. It's something that we have been waiting for. And I applaud my colleagues for their support."

The measure still has to be approved by the full council. A final vote isn't likely until mid-April.

Debra Hensley, who co-chaired a 1990 and a 2012 commission on housing and homeless, said Mayor Jim Gray and the council should be applauded for finally setting money aside to address Lexington's most vexing problem — escalating housing costs.

"It's a victory for extremely low-income people who cannot afford housing," Hensley said.

Over the past two decades, the city has lost 28,000 apartments affordable to minimum-wage workers, a recent report found. And the problem is getting worse. According to the report by czb consultants, Lexington is losing 400 rental units each year to higher rents. The report, issued last month, recommended spending at least $3 million to $4 million a year to address the problem.

Under the proposal, $3 million would be set aside for affordable housing and $500,000 would be allocated for homeless initiatives.

Planning Commissioner Derek Paulsen said the city will provide the council with a detailed plan on how the affordable housing program will work in coming months.

The city can't spend any of the $3.5 million until the council approves policies for how the affordable housing fund will be used.

Commissioner of Finance Bill O'Mara said the $10 million projected surplus was caused in part by $5 million in savings and $5 million in additional revenue.

In addition to affordable housing and homeless initiatives, the Budget and Finance Committee approved spending $2.9 million on body armor, Tasers and to replace 65 police cruisers. The city wants to use $2.9 million for fire equipment including thermal imaging devices, repairs to aging fire buildings and $2.5 million for three fire trucks and an ambulance. About $535,000 would go to community corrections or the jail. Much of that money would be used to replace an aging boiler and buy new radios so jail, police and fire can talk to one another.

O'Mara said the city decided to spend the projected surplus on one-time projects, not ongoing expenses. For example, council will have to decide how to fund the affordable housing trust fund annually, he said.

Various commissions had recommended an average increase of 1 percent of the current 5 percent tax on insurance premiums to fund affordable housing. But there were never enough votes to raise the tax. Kay tried in a February meeting to dedicate one percent of that 5 percent tax for housing, but the measure failed.

The Rev. Adam Jones is co-chair of Building a United Interfaith Lexington through Direct Action, or BUILD, a coalition of area churches that has pushed city officials for six years to establish an affordable housing trust fund.

"We are excited about this first step," Jones said. "We are looking forward to a greater commitment in terms of the creation of an affordable house trust fund with a dedicated revenue stream."

The city is eight months into its fiscal year, which began July 1. O'Mara said that if the Urban County Council approves spending the projected surplus now, he still expects a surplus at the end of the fiscal year on June 30.

O'Mara said the projected surplus will likely be $4 million or $5 million even after the council allocates the $10 million.

According to information provided to the council, the government has $13.4 million more than what was initially budgeted.

Councilman Julian Beard was the only member of the Budget and Finance Committee to vote against allocating the money to affordable housing. Beard said he felt uncomfortable approving the allocation without knowing the details of how the money was going to be spent.

However, Vice Mayor Linda Gorton said the city has been debating an affordable housing trust fund for years. It's time to act, she said.

"We have discussed affordable housing a long time," Gorton said. "I think this seed money gives us a jump start. If we wait, then we also wait for the plan."

Beth Musgrave: (859) 231-3205. Twitter: @HLCityhall.

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