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.