Tuesday, February 3, 2009

Irresponsible Governing

The City of St Louis says you can live downtown on 27k a year. You can't.

I love living downtown, and I have a lot of neighbors who feel the same way. It’s one of the most expensive areas in St. Louis to rent, and frankly is a bit overpriced, but I’m young and don’t have much financial responsibility, so I’m allowing myself to do it for a few years. This is a fairly prevailing attitude among fellow Washingtonians (Washington Ave) that I’ve talked with. But it’s not for everybody – at least it shouldn’t be.

As part of the city’s quest to revitalize the neighborhood they have allowed for certain buildings to offer units at “Affordable Alternative” rates (and in return earn tax credits), which is a nice tag line for what it really is: low-income rent. To qualify for these special rates, a 1 person household must gross no more than $27,660 per year, which translates to $1681 per month after federal, state, and city taxes. Based on 50 work weeks, this is an $11/hour job. The rent for a 1 bedroom affordable alternative, for example at the Paul Brown Building (8th & Olive), is $615 per month. These numbers, though, when the logistics of living downtown are taken into consideration, do not add up to a recipe for financial stability.

Operating on $1712.54 per month while living downtown does not allow for much saving; let’s examine. For the kind of person who would want to live downtown and the lifestyle that accompanies it, here are the routine month expenses estimated conservatively:

$615 - rent
$200 – food/evening entertainment
$200 – car payment
$80 - gasoline
$75 – parking
$75 – car insurance
$50- cable television
$50 – mobile phone
$50 – internet
$40 - utilities
$1430 – total monthly expenses

$1712.54 - 1430 = $382.54 remaining from monthly budget

$382.54 * 12 = $4590.48 remaining for yearly budget

Plus you have the one-time expenses and unplanned expenses, estimated conservatively:

$300 – Paul Brown Building security deposit (refundable upon move-out)
$50 – Paul Brown Building application fee (non-refundable)
$500 – miscellaneous car maintenance
$200 – everyday household goods (toilet paper, cleaning products, etc)
$400 – miscellaneous other expenses (clothing, music, concerts, etc)
$51.25 – annual car registration
$250 – annual car taxes
$1751.25 – total

$4590.48 (yearly budget) -$1751.25 = $2839.23 remaining

So far we have not accounted for costs like travel, charitable donations, furniture (which I have assumed the renter already has), health insurance (assuming an $11/hour job does not provide it), etc. A good financial advisor will tell you that you should have, at all times, savings equaling at least 3 months of living expenses. Given the budget outlined above, 3 months living expenses would total $5170, $2331 more than the remaining budget. And furthermore, I’m basing my numbers off the maximum gross income, which works out to $11/hour. Any less an hourly rate and the numbers get really scary.

What’s more, this drives up the cost of rent on non-low income units. If the goal is to increase the downtown population, making an already expensive area more expensive is not the way to get there. It also hurts future commerce growth. By ensuring a quota of low-income living, the city is limiting the ability of those who have recreational spending budgets to support the local economy – someone who makes 50k is likely to spend more at local restaurants, bars, and shops than someone making 27k or less.

The point is this: it’s flatly irresponsible for the city of St. Louis to tell people who make 27k or less that they can afford to live downtown and the accompanying lifestyle, and it limits economic growth in the area.


Ariel said...

The holy grail of urban living is integration, diversity, and mixed neighborhoods. Without creating opportunity for a variety of socio-economic status in an area I believe the term is not revitalization but gentrification. The classic, "oh look, I'm rich and I want to take over this area driving out all the people who currently live and work here until I get bored and move on leaving behind a mess."

I'm not saying downtown St. Louis has achieved true urban paradise, but they get an A for effort. Don't blame the theory, just work to make it plausible.

Check out http://allaboutcities.ca/families-city-living-and-economic-diversity/

ps = Can the StLouJew write something about all the theatre going on in St. Louis right now? The Black Rep's "Tell Me Something Good" ends this weekend but the new Jewish Theatre has three more plays this semester and of course there is the Ovations series at WashU.

Sleep Now In The Fire said...

Downtown is more diverse now than it was 7 years ago when the city started the revitalization project. The woman in the unit on my right is Greek, the couple to my left African American. The building manager's boyfriend, whom she lives with down the hall, is Persian. The woman across the hall is African American. And none of these people pay low income rent because low income rent isn't available at my building. My sixth floor, as a microcosim, is at least as diverse as any neighborhood in the city.

But diversity aside, the point of the article is that the city is teaching financial irresponsibility to achieve its goal of enticing inhabitants to downtown. This is neither a sustainable solution nor the right thing to do. Our economy is in the tank because people were spending more than they had. How is this not the same thing?

Ariel said...

Cultural diversity is only one form of diversity. I'm glad your building has such a rainbow of inhabitants but if they are all professionals of some sort - it isn't really a diversity of experience.

As for financial irresponsibility, have you talked to any of the people who live in these subsidized units? DO you know what their background is? What they do with their lives? And for the record, I live on 27K a year (before taxes) and my rent is more then what you quoted in the article and I do just fine. So before you blame our failing economy on the financial irresponsibility of the poor, think about what is gained from your non-traditional neighbors rather then what you presume to be lost.