The problem, if you don't deed restrict, is the second sale. If you equity share, how do you determine what the state's equity is? Some of the increased price of the property is appreciation, but some is the difference between the market price and the sale price at the first sale. + - ThreadSky

annepaulson.bsky.social • 59 days ago

The problem, if you don't deed restrict, is the second sale. If you equity share, how do you determine what the state's equity is? Some of the increased price of the property is appreciation, but some is the difference between the market price and the sale price at the first sale. +

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annepaulson.bsky.social•59 days ago

So suppose we have a new house for sale, at the Moderate Price of $500K. But we subsidized this house with tax credits; the market price was $700K. The buyer buys it, and immediately flips it. The buyer shouldn't get a penny of that $200K increased price; that's not appreciation, it's arbitraging. +

annepaulson.bsky.social•59 days ago

Suppose the buyer instead waits to sell, and sells the house for $1M. Do you want to say the state owned 2/7ths of the house, and should get paid the initial $200K from the initial equity, plus 2/7ths of the $300K appreciation? Mathematically correct, but too complicated and a recipe for fraud.

rafamonsta.bsky.social•59 days ago

That’s probably right. Yes, it’s complicated, but the alternative is running the TC program as a pure cost w/ either a) homes being built but no benefits of market appreciation for either the homeowner or the state, (permanent deed restrictions) or b) where the homeowners eventually get a windfall

rafamonsta.bsky.social•59 days ago

The solution then is to require a holding period, and/or allow the state to be the beneficiary of the majority of the appreciation. The first buyer benefits from having affordable housing, but the state should get most of any windfall if it’s sold at a market price, not that first buyer.

annepaulson.bsky.social•59 days ago

One problem here is figuring out what the market price of the home *is* when it is first offered for sale. That looks to me like an area rife for corruption or incompetence. It's perfectly plausible that the market price and the Moderate price would be the same, in some cases.

rafamonsta.bsky.social•59 days ago

Independent appraisers could pull comps from recent sales. I think that part isn’t that difficult to sort out. The county assessor has to figure it out for tax purposes anyways. Wiener’s proposed SB 336 moderate income welfare tax exemption doesn’t apply to for-sale homes.

rafamonsta.bsky.social•59 days ago

If there were any kind of equity sharing, you’d probably want to accompany it with an updated AB 668 (2015)-like bill so that the assessed value for tax purposes was discounted by a reasonable amount to account for the equity sharing contract. AB 668 reduces tax burdens for Habitat homeowners.

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