Nevada Rural Housing Authority will be sent a bill for $22,800 as a payment in lieu of property taxes for a low-income apartment complex it owns after supervisors denied a request Tuesday to lower the fee.
Instead of paying 10 percent of rent collected at Southgate Manor Senior Citizen Apartment Complex, which totaled $22,800 this year, the authority asked to pay only $7,500 as a flat rate.
The state authority which owns the complex entered into the payment agreement with the city in 1976 and has tried three times previously to reduce the amount.
Authority officials asked for the lower payment. claiming low-income senior citizen tenants are forced to foot the bill. However, information from the nonprofit agency that disperses federal Housing and Urban Development funds to the authority shows that federal dollars actually fund the majority of the city payment and not tenants.
Maureen Cole, contract administrator with the Washoe Affordable Housing Corp., explained when rent is increased, either by a tax increase or operating cost increases, the resident portion always remains at 30 percent of each resident's adjusted income.
"If rent goes up $50 a month, a resident's rent is going to stay the same, but assistance paid to the owner would go up to compensate them for the increase," Cole said. "Taxpayers feel the bite, but residents don't feel the bite."
By reducing a payment made to the city, the authority would absorb the difference between what it would have normally paid, which is $22,800 this year, and the $7,500 it wanted to pay.
State statute does not set a standard procedure for payment in lieu of property taxes in this type of situation, said Ernie Adler, an attorney hired by the state authority. The statutes "doesn't tell you how to pay or the amount," he said.
No other state agency pays the city in lieu of property taxes and the authority is not asked to make payments in any other rural city throughout the state, Adler said.
One resident who has lived in the complex for several years said most of the tenants at Southgate pay drastically reduced rents. For instance, a senior may only pay one-quarter of the $589 for a one-bedroom apartment or $689 for a two-bedroom.
Though some of the seniors are on a fixed income of $500 per month, they deduct expenses like medical costs, and are only required to pay 30 percent of what is left in rent. The federal government, which sets the rental price, pays the authority the difference between what the tenant pays and the cost of the actual rent.
"We don't think the rents are too high," said a tenant who asked to not be named. "(Rent) can be reduced by medical expenses and we all have a bunch of medical. There aren't very many people here who pay top rents."
City supervisors Tuesday were confused with state statutes regulating payments made by the authority. The issue arose when new Executive Director Gary Longaker asked for the matter to be resolved in July.
Mayor Ray Masayko and Supervisor Richard Staub voted to reduce the payment and begin talking with the authority about how to rework the agreement in the future, but supervisors Robin Williamson, Shelly Aldean and Pete Livermore voted against it.
"I don't think we have any choice but to go along with this," Staub said.
Compensating the city for services used by residents concerned some supervisors.
"I think 10 percent is fair and $7,500 is unacceptable," Livermore said. "If no one paid taxes, we wouldn't have municipal services.
Williamson agreed. "I'm very concerned about affordable housing in our community, but we also need to pay our bills," she said.
City Assessor Dave Dawley said he doesn't know what will happen if the authority decides not to pay the bill he will send out for $22,800. It is his first experience with the financial arrangement, he said.
"Unfortunately, I will have to send out the request for the payment in lieu of taxes. I hate to seem like the bad guy in this, I just have to do what was agreed upon," Dawley said.
In another twist to the unusual arrangement with the apartments, Dawley said he found that many of the seniors take advantage of the state's tax abatement program. Dawley estimates the senior residents may get as much as $19,000 of the payment back in refunds paid by the state for low-income seniors each year.