Holyoke's $34 Million Dollar Boondoggle

Why spending $34 million dollars to renovate the Lyman Terrace housing project is bad for Holyoke; bad for homeowners; and bad for businesses

 

The City of Holyoke is about to embark on a $34 million dollar, taxpayer-funded renovation of 156 apartments at Lyman Terrace – a subsidized, low-income housing project in the heart of Holyoke's downtown revitalization district.  This excessively lavish expenditure of taxpayer money is bad for Holyoke, bad for Holyoke's homeowners and bad for Holyoke's businesses.  Here's why:

1. It's Way Too Expensive 
$34 million dollars comes down to paying $218,000 to renovate (not build) each tiny, 800 square foot apartment.  To put that into perspective, that would be the equivalent of you spending over $650,000 to renovate your existing 2,400 square foot home.  Furthermore, $34 million dollars could buy 156 median-priced Holyoke homes outright, and still leave an additional $50,000 to renovate each one of them.  

BOTTOM LINE:  This is an extravagant use of taxpayer money which only government bureaucrats would celebrate.


2. It's the Wrong Location, and it Undermines Nearby Revitalization Efforts
Given Lyman Terrace's key location in the middle of nearby revitalization efforts, replacing the existing low-income housing project with a "newly improved" low-income housing project is damaging and counterproductive.  Not only does it concentrate poverty in the heart of Holyoke's revitalization district, but low income housing projects notoriously attract higher rates of crime making it incompatible with the significant improvements and investments which have already been made nearby.

Instead, establishing market rate housing at Lyman Terrace would be a far more compatible use for that location and would complement, rather than hinder, other recent investments. 

BOTTOM LINE:  Placing a low-income housing project in the heart of revitalization does more harm in the long-term and becomes one more obstacle toward the goal of successful downtown revitalization.


3. Holyoke's 31.7% Poverty Rate is Unsustainable and Significantly Reduces Property Values 
At nearly 3 times the State average, Holyoke's 31.7% poverty rate is not only the highest in Massachusetts, it's amongst the highest in the entire U.S.  And it is simply not sustainable.

This massive concentration of poverty in Holyoke places a disproportionate burden on every homeowner and business owner.  It has depressed our housing prices, costing Holyoke homeowners tens of thousands of dollars in their home's value.  It's resulted in higher crime rates.  It's overburdened our schools.  And it's kept businesses from coming here. 

Holyoke didn't create poverty and it's not Holyoke's sole responsibility to solve it for the region or the State.  After spending hundreds of millions of dollars, and after decades of trying, it should be clear that we can't "social service" our way out of poverty.  Fairness says this burden needs to be shared or equalized with other nearby communities.   

Though perhaps unpopular in some circles, we need to consider transitioning some of Holyoke's poverty-based housing into tax-contributing, market rate housing.  If we ever hope to see Holyoke revitalized we, as a community, must be willing to wean ourselves off our poverty industry.  And we need to begin now. 

BOTTOM LINE:  We must end Holyoke's addiction to its poverty economy before it ends us.


4. Holyoke's Highest-in-the-State Commercial Tax Rate Chokes off Business Development
At an eye-popping $39.93 per thousand, Holyoke has the highest commercial property tax rate in the entire State – more than double the State's median rate.  Needless to say, this exorbitant tax rate scares off all but the bravest developers and investors, the effects of which can be seen in the painfully slow rate of commercial development here.  But the underlying problem isn't just one of a high tax rate.  It's one of low property values.

It's been shown that concentrated areas of high poverty result in decreased property values.  That, in turn, raises property tax rates.  To illustrate the effect of property values on tax rates, consider this example: 

Let's say your home is currently appraised at $200,000 and the tax rate is $20 per thousand, meaning your share of property taxes is $4,000 a year (200 x $20).  Now, let's imagine that tomorrow your home is suddenly worth $400,000.  Same home.  Same city.  Higher value.  In order for the city to net the same $4,000 tax revenue, they only need to tax your (more valuable) home at a rate of $10 per thousand (400 x $10).  In this example, you can see how the doubling of your home VALUE (from $200,000 to $400,000) results in a halving of the tax RATE (from $20 to $10) while netting the city the exact same amount of revenue. 

The importance of this example is to show that, if Holyoke's property values weren't so depressed from the extreme poverty here, our homes and businesses would be worth more and our tax RATE would be lower – making Holyoke far more competitive and attractive to business investment.  Higher values help everyone, but Holyoke's high rate of poverty depresses property values making it virtually impossible to lower tax rates and attract new business. 

BOTTOM LINE:  As long as Holyoke keeps welcoming more and more poverty to the city, Holyoke property values will remain depressed and tax rates will remain too high to attract meaningful commercial investment.


5. Lyman Terrace's Owners Pay Few Taxes, Shifting the Burden onto Homeowners and Businesses
At current assessments, the Holyoke Housing Authority, owner of Lyman Terrace, has yearly tax liabilities of approximately $600,000, yet pays just $11,000 in taxes.  The remaining $589,000 gets shifted onto homeowners and businesses.

And it's not that HHA and its residents don't utilize and depend upon city services – they do.  But the costs of providing those services currently gets shifted onto other taxpayers.  This is despite the fact that areas of concentrated poverty, like Lyman Terrace, place a disproportionately heavy burden on city services such as police, fire, ambulance and our school system. 

BOTTOM LINE:  This shifting of tax responsibility isn't fair and the Holyoke Housing Authority needs to help the City by paying its fair share of taxes to support the services its tenants use, just like other landlords. 


CONCLUSION:  Holyoke's inability to attract significant commercial development is due, in part, to our astronomically high tax rates . . . which are the result of our low property values . . . which are caused by our extremely high poverty rates.  This is an interconnected problem and we will never be able to solve one, unless we are willing to solve the others, too.

So, the elephant in the room that no one wants to talk about is the fact that we have way more poverty than we can assimilate and policies that seem to revolve around retaining or attracting more of it.  Spending $34 million of taxpayer dollars on Lyman Terrace doesn't help solve Holyoke's poverty problem.  It perpetuates it.  And it does so at the expense of every Holyoke homeowner and business owner for decades to come.

While we have an absolute moral obligation to help others who are less fortunate, no city can absorb the extended costs associated with a 31.7% poverty rate and expect to make a recovery – not even Holyoke.  This burden needs to be shared with other local communities.  Holyoke must wean itself off its addiction to its poverty-based economy, and the Lyman Terrace property – for all the reasons mentioned – is the logical starting point for this transition to begin.  If we really want to be able to help Holyoke's poor, we must help Holyoke first.  There is no other way.


John Epstein

Good News -- Bad News

The good news is that President Obama is proposing to extend tax cuts for 98% of all Americans.

The bad news is that the Republicans are threatening to block President Obama’s proposed tax cuts for 98% of Americans -- unless he also agrees to extend an expensive tax break for America’s wealthiest 2%. This extra Republican demand is specifically targeted to benefit people who already earn over $250,000.00 a year.

And, if the Republicans get their way, it will add an extra $700 billion to our deficit.


Here’s the background:

In 2001 President Bush and the Republicans put through tax cuts with the biggest cuts going to the wealthiest Americans. While those tax cuts arguably helped all Americans, they added over $1.7 trillion dollars to the deficit and, by 2007, resulted in the top 1% of earners taking 23.5% of all income earned in the United States. By original plan, those cuts expire in 2011.

Due to the economic crisis, President Obama wants to extend those tax cuts – but only for Americans who earn less than $250,000 a year. The Republicans want to the cuts to include America’s wealthiest people (and the biggest donors to Republican causes) at a cost of an extra $700 billion dollars tacked onto the deficit.

The Republican's argument is that wealthy Americans own business and if we don't give them tax breaks, they won't create new jobs. That claim is absurd, disingenuous and absolutely false. There is only ONE reason business owners hire new employees: because of increased demand for the goods they manufacture or for the services they sell.

This Republican scare tactic is just another attempt to get hard-working middle-class Americans to voluntarily shift the tax burden from the wealthy onto themselves. The truth is that no business owner in their right mind is going to spend money to hire workers they don't need . . . simply because we lower their taxes.

But as you read this, Republicans are demanding that those breaks, which diverted so much money to the already-wealthy, be extended at a cost of another $700 billion dollars to the deficit. And they are holding YOUR tax break hostage unless President Obama gives into their demands.



If you think that’s right, then do nothing. If you believe that YOUR tax cut should be contingent upon extending more tax breaks to people who are already earning over $250,000.00 a year -- then just delete this e-mail.

But if you believe what the Republicans are doing is wrong, you need to speak up and you need to act QUICKLY – before it’s too late. Call your Republican Senators and Representatives today. Tell them that you don't make as much as they make or as much as their wealthy friends make. Tell them that every dollar you save on taxes gets spent into this economy, keeping people employed and helping to create new jobs. Tell them they need to start doing what’s best for you and not what’s best for their wealthy Republican friends. Tell them they need to stop blocking things that will help Americans recover from the recession they caused.



Here’s how to contact your U.S. Senator:
http://www.senate.gov/general/contact_information/senators_cfm.cfm


Here’s how to contact your U. S. Representative:
http://www.contactingthecongress.org/



In 2010 the Republicans voted to block Wall Street and bank reform. They voted to block aid to small U.S. businesses. They voted to block numerous jobs bills and unemployment extensions during this economic crisis. They even voted to protect BP from paying full damage claims from the Gulf oil spill. They say they are on your side as they sound the alarm about deficits from one side of their mouth, yet they want to give their wealthiest friends (and donors) a $700 billion dollar tax break from the other.


Whose side are they REALLY on?


It’s time to read between the lines.


Forward this to your friends who earn less than $250,000.00 a year. Urge them to get involved. If we don't do it, we have no one to blame but ourselves.




Related Reference and Research:

Here’s a PBS video explaining both sides of the issue:
http://www.youtube.com/watch?v=xxK75BcqEh8&feature=player_embedded

Here’s Stephen Colbert’s amusing take on it:
http://www.colbertnation.com/the-colbert-report-videos/341481/july-28-2010/the-word---ownership-society

More reading, including references to how the wealthiest 1% of Americans jumped from taking 9% of America’s income in the late 1970’s, to taking 23.5% of America’s income in 2007:
http://www.nytimes.com/2010/09/03/opinion/03reich.html?_r=1&src=me&ref=general

Truth or Satire? Tax cuts and American jobs

   
   
Dear America,

Please pay attention.  This is very important – at least to me.

I am a wealthy American – very wealthy.  My earnings are in the Top 2% of all Americans.  In fact, I earn anywhere from 10 to 10,000 times more than you do – every single year.  That means if you put 99 of us together in a room, I earn more than 98 of you.  I may even earn more than the 98 of you make, combined.  But that’s not a great example because it’s unlikely that you’d find us together in the same room – unless it’s on the factory floor of the company I own.  You know, the one you (used to) work for.

But never mind all that because I know math is complicated and that big numbers probably confuse you, so let me get to the point:  I think you should give me a tax break.  That’s right.  You see, according to my Republican friends, I’m more important to America than you are.  Sure, you toil and sweat and labor – probably at more than one job.  But I own the companies you toil at and, believe me, I’m entitled to keep every penny I make.

That’s because it costs a LOT of money to keep all my houses running and in tip-top shape.  And my private plane.  And my yacht.  It also costs a lot to host all the parties I throw every year.  You know – the ones where I invite the other 2% of America’s wealthiest people to attend.  Now, you might be saying that it’s not fair that people like you don’t get to attend.  But that’s not true because dozens of you do.  Some of you get to wait on our tables, manicure our gardens, comb our beaches, cook our meals, clean our homes – there’s a lot of opportunity to serve us and earn a living while tending to our chores.  That’s a pretty good deal – at least for lower-class, working Americans, like you.

But I’m not writing you to tell you what you already know.  I’m writing because it is very important that you do not allow the tax breaks that Republicans gave me and my wealthy friends 10 years ago, to expire this year as originally planned.  That would be just awful for me.  And, as my Republican friends have been telling you – if it’s awful for me, that means it will be awful for you.

Never mind the fact that lowering my taxes has absolutely zero impact on whether or not I hire new employees.  I mean, really!  Who comes up with this stuff?  Oh, yeah – I forgot.  It’s my Republican buddies.  C’mon, think about it for a minute.  If you owned my business instead of me, and the lower classes voted to pay more in taxes so you could keep more for yourself, would you really use all that extra money to hire new employees?

Duh!  Of course you wouldn’t.  The only reason you, as a business owner, would hire more employees is if there were MORE DEMAND for the products you manufacture or for the services you offer.  Talk about no-brainers!

So what creates more demand?  If you answered “more people who have the money to buy the goods and services business owners sell”, you get a gold star.

But my Republican friends have done a great job convincing you that the exact opposite is true.  They call it “trickle-down economics” or something ridiculous like that.  That’s so “official-sounding” that it must be true, huh?  Well, you didn’t hear this from me, but do you really think that America’s wealthiest 2% (like me) are going to spend $678 billion dollars ($678,000,000,000.00) into the economy simply because you give it to us as a gift?

Oh, I forgot.  You’re not as smart as the Republicans are.  Allow me to explain:  There’s 2 of me for every 98 of you.  I already have piles of money and I already own everything I could possibly want.  If you give me and my wealthy friends $678 billion dollars we might go out and buy a “few” more things, but we’d probably just put most of it in the bank or into tax-free investment shelters so our children and grandchildren can inherit it, tax-free, when we die.  At most, we might use it to buy another home or two.  (Come to think of it, that would create another dozen or so job opportunities for people like you, wouldn’t it?  Maybe my Republican friends are onto something.)

We sure as hell wouldn’t use it to hire a few million Americans at the businesses we own.  I mean, that’s laughable. Why would any business owner in their right mind spend their money to hire employees they don’t need?

However if you, and 98 out of every 100 Americans, had $678 billion dollars, you’d probably spend a significantly larger portion of it buying all sorts of things you really need – cars, homes, furniture, clothing, etc.  And if you were to spend all that money it would create a HUGE demand throughout the economy.  And do you know what that would do?  If you guessed that it would create the need for millions of new employees to manufacture, sell, deliver, install and service all those purchases you just made – you get another gold star.  The demand created by your significant spending would stimulate the economy and create more jobs than it would if you just gave the money to me and my wealthy friends.  It would probably even pull America out of this recession.  But, remember, you didn’t hear it from me.

You know, my good friend Sarah Palin would probably say:  “How’s that whole tax break thing workin’ out for ya, anyway?”  I don’t know about you, but it sure works great for me.  Thanks America.  You are definitely the land of opportunity – especially with the Republicans duping ordinary Americans into giving up more of their money so I can keep more of mine.

I don’t know how they do it, but I really admire how Sarah and her Republican friends can get you and other Americans to vote against your own best interests – and for theirs, instead.

That’s why I know I can trust you to do the right thing on November 2nd and vote for all the Republicans you can find – so I can keep my $678 billion dollar tax break right where it belongs – in my bank account.

Love you guys.  Keep up the good work.

Sincerely,
America’s Wealthiest 2%

P.S. – Did you also notice that my Republican friends have been blocking almost all of the Democrats’ jobs and stimulus bills?  Yeah, they’ve been saying it’s bad for America’s debt to have more of you working . . . and paying taxes . . . and buying stuff . . . and generating demand . . . which creates additional new jobs.  What a hoot!  Instead, what they’re doing is forcing wages down so when the economy does finally pick up, I can hire you to work at my company for less than you made at the last place you worked.  Absolutely brilliant!  As my good friend Sarah Palin might say,  “How’s that whole salary and wage thing workin’ out for ya, anyway?”  (Oh yeah, did I tell you that the Republicans also tried to block the extension of your unemployment insurance, too?  How ironic!  Sorry, I forgot you probably don’t know what that word means.  It means something that’s really “good for you”.)

P.P.S. – Did I mention that the Republicans’ just allowed the companies I own to spend millions of dollars running misleading ads designed to distort the issues and to slander their Democratic opponents – so you’ll vote for more Republicans in November?  And more Republicans in office means less regulation for business owners (like me) and lower taxes for all 2% of us wealthy Americans.  That’s so ironic (“good for you”) because you and I both know that the Republicans’ real goal is to keep the economy in tatters until November (and possibly until the next Presidential election) so they can “prove” to you that the recession which began in 2007 under President George W. Bush and VP Dick Cheney was “really” caused by President Obama and the rest of the Democrats who weren’t sworn into office until 2009.

That’s why I love Republicans.  Don’t you?