Another post commenting on a Fernandina Observer news article (click on image to view):
I think there is a real problem here that needs to be solved and I offer a specific solution.
I’d summarize the article as follows: Fernandina is going to pay it’s new city manager a fair amount of extra pay because he’s required to live in Fernandina and housing in Fernandina is now unreasonably expensive. Your interpretation may be different but this summary is what I’m going to explore.
This leads me to see and discuss three issue assumptions:
[1] Requiring the city manager to live in Fernandina is a ‘good thing’.
The Fernandina Beach city manager is required to live in Fernandina Beach. I generally support this idea. Having the city manager live in Fernandina means he’s close to everything everyday. He lives the same experience as the rest of us. We, the citizens of Fernandina Beach, get to interact with our city manager in non official informal situations.
[2] The city manager position is a late career position whose qualified candidates are very likely to me older and with families.
The history of Fernandina city managers and the candidate list for the current hiring round shows this to be true. It’s NOT reasonable to expect a city manager hire to live in a rental. Many or most candidates will be coming from owned housing and will expect the option here.
[3] Living in Fernandina Beach is more expensive than nearby alternatives.
As recently as 2020, housing in Fernandina Beach was still ‘reasonable’. Below is a Zillow price history:
A more than doubling from 2016. Nearby Yulee homes might easily be half the price and newer with better features. Fernandina is not a huge distance from Yulee and it can make sense to live in Yulee and work in Fernandina (as many do already).
And, frankly, this disparity is going to get worse. Less land for development on the island pushes up prices. More and more visitors mean more people are discovering the place they want to live in next. And macro trends like work from home and internet based self employment add to the increasing number of retirees coming here.
A decade ago, common to find Fernandina homes under $150 per foot. $200 per foot was around 2020. Today $300 to $400 is the new norm. And no one here would be surprised to see growth to $500 to $600 per foot in just a few short years. A ‘normal’ home at $600 per foot in Fernandina is still a bargain compared to Florida island homes in south Florida or west coast Florida.
The future is higher island home prices and an increasing spread between on island home prices versus Yulee prices. Everyone knows this.
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So we have the case of requiring a city manager coming from Tennessee or central Florida or middle of nowhere Georgia to live in a place that is 2x+ more expensive than a nearby town and maybe more than 4x expensive than the place they came from.
The only long term solutions are:
[1] Do away with the live here requirement despite its desirability.
[2] Only hire locals who live in Fernandina already or only hire people who are rich and can afford Fernandina.
[3] Increase city manager pay to cover the high cost of housing in Fernandina.
[4] Buy a house and make it the ‘official house’ for any new hire.
[5] Find another solution….
I’m going to ignore [1] and [2] for now. Just going to say that its not my preference.
Option [3] is basically what we are doing with our new hire. We rolled it into salary. Problem solved for now. But the optics of appearing to overpay the city manager isn’t good. Frankly, it would have been better to add to a more appropriate salary a taxable housing allowance. Still solves the problem but the optics are clearer. But this cost will grow as housing cost climb. Not my preference as a solution.
Option [4] is often the choice for large cities and other high cost of living areas. It’s a one size fits all solution that means it’s too small for a big family and too large for a couple or single. Which is why these homes are often referred to as ‘mansions’. And the city would likely have to maintain the home and keep it attractive and modern. It’s not reasonable to expect a city manager in such a home do this upkeep since it is basically a ‘rental’. Any rent collected is likely to be modest because the problem we are solving is the inability of a new city manager to pay the high cost of island housing without a big pay increase. Not my preference as a solution.
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I think [5] Find another solution…. is the way to go.
I suggest that Fernandina provide city managers with a second mortgage that covers the housing price premium of living in Fernandina Beach. This mortgage would be interest only (the lowest legal rate) during the term of employment. This interest payment could be additional taxable compensation. A $250,000 second at 5% interest only would be less than $15,000 per year for the city manager.
Lots of ‘fine print’ to make it work but simple and doable. Some of the fine print issues:
[a] Use average cost per foot difference between 32024 and 32097 to determine size of subsidized second mortgage.
[b] Cap the total square footage subsidized to avoid subsidizing a mansion purchase. I’d suggest a 2400 to 2800 sq ft cap.
[3] Once the city manager leaves his post, he has 1 year to pay off the second mortgage or replace it.
For the city, the cost is simple and well defined. No ongoing maintenance responsibility. The loan is fully secured by the property and the city manager downpayment for the home. And the city will be giving future raises out based on actual job pay and not on a housing allowance that was previously built into the pay.
For the city manager, the cost of living in the high cost Fernandina Beach is well addressed without constraining the type of home available. And the ‘ownership’ in the full home price increase in value over time makes this even more attractive.
For the city taxpayers, we get to see what we really are paying for the city manager and what the adjustment is for requiring the city manager to live in Fernandina.
Probably too late for this round but since the problem isn’t going away, lets take the time now to fix this for the future.