The Downtown Development: Lakewood Gets The Short End Of The Stick - Again

As a small Lakewood landlord, certified public accountant and spouse of a local business owner, I have grown to appreciate Lakewood where locally owned businesses thrive, there is a strong sense of community and people are not judged by the thickness of their wallet. The city’s funding of the downtown development is contrary to these values. It will benefit the well-off while emptying the wallets of existing homeowners through the illusion that it will create affordable housing.

For the non-accountants who would prefer a root canal over an accounting lesson, please bear with me as the fleecing of existing homeowners is in the details.

Lakewood will provide funding for constructing the downtown development through Tax Increment Financing (TIF). To do this, Lakewood will sell municipal bonds. These bonds are typically purchased by wealthy individuals (bondholders) as the interest paid on the bonds are exempt from taxes. After Wall Street takes its fees for underwriting and marketing, the remaining proceeds are loaned to the developer to pay for construction costs. To repay the bondholders, part of the real estate taxes on the downtown development will go to the bondholders instead of Lakewood schools for the next 15 years. In exchange for the taxpayer provided funding, the developer will rent about 80 apartments to those with lower incomes, creating “affordable housing.”

To summarize this convoluted process, the developer gets a loan that is paid back by diverting real estate taxes, while homeowners must pay their mortgages out of their own pocket and their real estate taxes in full.

In theory, the community benefits from the “affordable housing” created. In reality, the “affordable housing” is just a temporary illusion – after 15 years the developer is no longer required to keep rents low. Rents will be raised to the full market value, forcing tenants out on the street. No services such as job training or childcare are provided to help these tenants increase their income to purchase a home before the 15 years is up. Even if these services were provided, a TIF does nothing to address the root causes of unaffordable housing such as high material costs, tariffs, a shortage of tradespeople and increasing regulatory costs. This will keep homes out of reach for those with lower income. If we measure a TIF by its ability to create affordable permanent housing, a TIF is a complete failure.

A TIF also makes existing homeowners and businesses vulnerable to property tax increases as schools will not get their full share of taxes from the downtown development. The city is already working on a compensation agreement to give the schools some of the city income taxes generated by the downtown development’s residents. As the school board believes this will not be sufficient, they are planning on asking voters for an increase in real estate taxes in 2026. Even if voters reject this levy, the 13 remaining years on the TIF leaves plenty of opportunities for future levy attempts. Many of our Lakewood neighbors are already struggling to afford their homes. To subject these residents to a tax increase while granting breaks to a developer with over 6,200 residential units and more than 26 million square feet of commercial space is the antithesis of Lakewood’s values.

As a small landlord, my tenants are already facing increasing rents before ground is broken for the downtown development. Like homeowners, they are vulnerable to property tax increases when the schools do not get their full share of taxes. Over the last several years, tenants have been staying longer as homes have become unaffordable. While most of my tenants would not qualify for low-income housing, they should also have a fair opportunity to own their own home. If the city were to work on resolving the root causes of unaffordable housing instead of providing false help to those with lower incomes, the city could help citizens across all income levels.

The city administration is pushing city council to approve the downtown development before the end of the year. I strongly encourage citizens to tell their councilperson they oppose getting the short end of the stick.

Attend the city council meeting on Monday, December 16th at 7:30 pm at city hall or e-mail your council representatives to share your concerns.

Micah Zakem is a small landlord and certified public accountant with 15 years of experience in commercial real estate. He enjoys working on homes and woodworking.