HomeMy WebLinkAboutLetter #31 John & Cindy Babcock1
Carmel Housing Task Force
First off, I'd like to thank the Mayor for putting this group together and thank each of the
members for their time and input over these last several months. While this is a somewhat
lengthy dissertation, I trust that everyone will have a takeaway from an outside view of the
last six months of the Carmel Housing Task Force. In recapping these meetings, I feel as
though I am back in school and recapping a semester of lectures.
February 23, 2024. The first meeting was—in my opinion—an abomination. I cannot believe
that we, as taxpayers, paid for the EcoNorthwest study, and paid the cost of travel for the
presenter. This may have been one of the worst presentations I've ever seen by a paid
professional. The return on that “investment” was negligible, at best. The information
provided by the presenter can be easily procured through a Google search, and was far
more West Coast-oriented rather than Midwest lifestyle.
March 21, 2024. The second presentation was quite illuminating. The information provided
by Andrea Miller of the Indianapolis Metropolitan Planning Organization should be of great
consideration to the Task Force. Andrea clearly presented the statistical information, and
did a great job explaining how increases in outside tax and interest rates affect the ability to
put a roof over one's head. This meeting was the most worthwhile time spent over the
course of the last six months; so much so, that I’ve viewed it more than once after
attending the session in-person.
April 25, 2024. I will come back to the builder's presentation with the three local building
companies later, as it was probably the most telling of these events.
May 23, 2024. The fourth meeting, comprised of, essentially, apartment developers, was
nothing more than a CRC cheerleading session on why multifamily rental is the only
answer to our national housing crisis. “There is more cooperation between government
entities and multi-family development across the country because they pay a higher
property tax.” That is the take-away from this session. “Stacked housing” should not be
the new American dream.
June 27, 2024. Great content in this meeting. Mike Thibideau, President/CEO of Invest
Hamilton County, had an excellent breakdown of labor and income statistics of the area
and how they relate to the ability to save for and purchase a home. Andrea Davis, HAND,
Inc. and like organizations in this country should get far more attention and be held in
much higher regard. I think that the City of Carmel should deed the five acres on Old
Meridian Street (what is now five acres of tree stumps) to an organization that could do
better with this resource than an out-of-state developer. I fully appreciate the time and
efforts that a company such as Marchelle Berry’s contributes to this affordable space, as it
is quite complex. Once again, I understand the business and a return on investment, but
outside of grant money, everything created in a financing stack is invested for the ROI of
the investor, not the need for the project. This is business 101, and I get it; but, until grace,
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dignity, civility, cooperation, common sense and rowing together for common goals return
to our society, we will continue to pile-on the issues that will further diminish the ability to
provide a roof of our own over our heads.
The "there's nothing we can do" mentality by government is crushing the people that pay
the government to work for US, and yet they continue to not roll up their sleeves and work
to find actual solutions that solve the problem. The government solution appears to be
“Throw more money at the problem:” Food and beverage taxes, gas taxes, property
taxes, school referendums, impact fees, TIF diversions, and inflation. Cities everywhere
are all about the next shiny new thing. By introducing a little 1/4% tax here and .05%
increase there to make their town the "cool kid" and liked by everyone, the assumption is
that people will move there and then said government can grab more of their money.
THESE are but a few of the issues stealing away homeownership.
How about a city that promotes quality of life in terms of a well-rounded education and life
skills, not building the next shiny attraction, sound system upgrade, roundabout art,
boulevards and brick pavers. Carmel is a great place to live. Quit "reimagining" the small
town. Additionally, “shop local” should apply to our city government contracts.
Returning to the third meeting with local building companies, one of the single / multifamily
builders said "We can't” … deliver a dwelling unit under $350K. We can't? To an extent, I
understand where this sentiment comes from, and it is a lack of education; not solely
aimed at builders, but society and the construction industry as a whole. Carmel Clay
Schools used to have a building trades department, as did many school systems across
the country. Trade schools and training have suffered in favor of STEM focused training.
Construction IS science: technology, engineering and math. Carmel needs to commit to
helping reestablish building trades and life skills in our schools. Perhaps some type of
incentives for builder intern programs might be something to pursue.
OK, so send kids off to college and get a construction management degree. NO. Put a
broom and a hammer in their hands first. Get a grass roots understanding of work ethic,
responsibility of working with others for a team goal and the expectations and needs to
construct a building. "Can't deliver" is because we are not teaching and educating. The
construction industry is viewed as an industry of "strong backs, weak minds." I could go on
and on, but the construction workforce is often viewed as a fall back, "temporary" gig for
many. Consequently, building contractors and suppliers everywhere are filling positions
with a body, not necessarily a warm one, and it is quite literally frying pan into the
fire. Costly mistakes from undertrained estimating, scheduling, understaffed,
undertrained, improperly supervised trades etc., are a significant root cause of the
builders’ "can't deliver" statement. Mistakes created in the aforementioned areas add cost
to the builders’ bottom line. “Empty days” caused by no one on site due to scheduling or
understaffing add to the builders bottom line by extending the completion time and adding
interest cost on the borrowed money to build the project.
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Cities and redevelopment commissions are destroying capitalism with the public private
partnership model. Cities have become developers by dangling the tax incentive carrot.
“Plant a seed” maybe, but not all projects need to happen. The City should focus on
infrastructure for streets and uphold development standards, rather than bending
standards to appease developers’ balance sheets. The city of Carmel has become the
largest developer in central Indiana. This is not just my opinion, but an observation from
the local builders association, one of the largest in the country. Carmel needs to promote
community and closely monitor private development. New Albany, Indiana has put a
moratorium on apartment construction until they can establish a better future vision for
their town. Carmel is rushing to development so fast it has allowed for the destruction of
nearly five acres of trees by a developer that wanted a bigger piece of the pie of the TIF
bond. Interesting development; more to follow.
We have been led to believe that TIF bonds don’t benefit the developer in a profit scenario.
It used to be that if a project didn’t pencil out, it would be redesigned to make it work. Now,
developers are squeezing tax dollars out of municipalities and the “give me more money”
method has permeated construction projects.
Other components of affordability come from bankers looking into financing qualification
reforms, down-payment assistance, savings education and other financial services
training, and mortgage/home-ownership understanding.
Money. Everyone chases it. But specifically Private Equity money. I believe the housing
industry has been compromised by investors betting on builders from single family,
multifamily and build to rent (BTR). But of course, you say, “That's business,” and I would
agree. However, the quick cash infusions of Private Equity investment are also pushing for
a Wall Street type "hot stock" return on their investment. This need for an investor ROI also
adds to the housing cost. Change in the housing industry is like turning a ship: it is very
slow to change, and the infusion of Private Equity money is propping up builders primarily
in the Build to Rent (BTR) space. Private equity money goes to a builder and that builder
strikes a deal to build 100 houses to be rented rather than purchased, even though the
investor likely doesn't understand property management.
There is some sense that needing to produce these profit returns for investment groups
compromises the builders’ processes and the ability to produce a home that will actually
have a 100 plus year life cycle, whereby the builder is proud to build it and the owners are
proud to call home. The obligation is now to the investor, not a homeowner.
I totally understand that one is in business to turn a profit, support their family and provide
a service. As housing is a need, it is also a sense of security and well-being. The top 100+
builders in the U. S. produced just under one million homes in 2023. That is one million
homes short of the need, and falling behind that need more every day. I have always felt
like having the ability to build and properly renovate homes is a joy and a privilege and one
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that many of my industry colleagues share. Many enter this industry with the “service to
others” mentality and we need to proliferate this mission.
Sadly, housing availability and affordability will continue to plague our country until we fix
the root cause: government and elected officials. Printing money, raising taxes and
creating fees to throw money at problems to fix them doesn't work. In this scenario, money
goes everywhere except the solution.
The Task Force has yet to address existing Carmel residents or Carmel neighborhood
preservation other than describing the NIMBys or the “vocal minority” as an obstacle to
providing attainable housing. While the upcoming session set for July 25 th is described as a
“Public Input” meeting, I would like to have seen a discussion from the perspective of
preserving existing neighborhoods and adhering to and supporting the existing
neighborhood character and development standards, which was a focal issue of Mayor
Finkham’s platform when she was running for Mayor. Certainly, the “tear-down the old and
affordable and build the big and expensive” trend has wiped a significant number of
affordable homes off the map of Carmel. Do what is right by the residents that made this
community a success dating back to the 1970's.
To conclude, we have all observed from the start of this task force that housing at all levels
in our country is a complex, multilayered problem. Government, regulation, taxes, property
taxes and fees lie at the core. Education, training, preservation and sharpening pencils
with the ability to build better will go a long way to address the growing need of attainable
home ownership.
Sincerely,
John Babcock
6 Shady Lane
Carmel, IN 46032