Trailhead Lodge at Wildhorse Meadows is among the new projects triggering the nearby First Tracks deed-restricted housing project.

Photo by Tom Ross

Trailhead Lodge at Wildhorse Meadows is among the new projects triggering the nearby First Tracks deed-restricted housing project.

Deed-restricted affordable housing project struggles to hit mandate target

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Despite appearances, developers confirm the First Tracks deed-restricted housing project is on schedule to be completed sooner than nearby Trailhead Lodge. Excavation work currently is under way and a spokesman for Resort Ventures West said the exterior of the building will be taking shape by late summer.

— The developers of First Tracks deed-restricted affordable housing say they may not be able to sell the condominiums to the target market without the city's cooperation in changes to the project's approved housing plan.

"We've done everything we could," Brent Pearson said. "It's just been difficult to get people to buy into it based on the facts of the deed restrictions."

Pearson is vice president of Resort Ventures West, developers of the larger Wildhorse Meadows project adjacent to Steamboat Ski and Resort Corp.'s Meadows parking lot. The first phase of First Tracks is under construction and being built to satisfy the city's affordable housing requirements for Trailhead Lodge within Wildhorse Meadows, as well as for an unrelated project, One Steamboat Place, at the base of the Steamboat Ski Area gondola.

Nancy Engelken, the city's community housing coordinator, already has presented the Steamboat Springs City Council with several options for amending the project's Community Housing Plan, to make the deed-restricted units more attractive to buyers. City Council might wait to take action until the results of a demand analysis study of the city's affordable needs are released later in the summer.

Pearson said his company's perception is that many potential buyers continue to be tempted by market-rate housing and are resistant to accepting the limited appreciation of a deed-restricted home.

"From our standpoint, the difficulty is due to the size of the gap" between the price of market-rate and open-market housing, Pearson said. "It's not as large as originally perceived. The inability to find these buyers is due to the deed restrictions. People who could stretch to market-rate housing tend to veer off."

The deed restrictions cap annual appreciation of the condominiums for resale purposes at 3 percent.

Resort Ventures West Development Manager Mariana Ishida said pricing of the deed-restricted units is complex and varies with household size and percentage of the area median income for those different households.

However, for purposes of comparison, she said, she uses an 1,140-square foot, two-bedroom unit, where she assumes three people will live.

At 80 percent AMI for a household of three - $51,475 - the two-bedroom units are priced at $213,000. For a similar-sized household making 100 percent of the AMI, or $64,350, the price is $266,000. At 120 percent AMI, or $77,200, the price jumps to $319,000.

Size versus market

And here's the rub. A family of three earning $77,200 could shop for a 920-square-foot Whistler Village townhome with a remodeled kitchen and hardwood living room floor currently listed at $322,000.

That home is more than 200 square feet smaller, but for $3,000 the buyers would know they could participate fully in equity growth in Steamboat's resort market.

There are other similarly priced condos for sale on the Steamboat Springs Multiple Listing Service.

Resort Ventures West needs buyers at 120 percent to achieve its average for the entire project of 100 percent AMI, but most of the buyers who are intent on buying at First Tracks make less money.

"We've been working since January to collect the names of interested buyers, educate them and work toward commitments," Ishida said. "But the average is coming out to be 80 percent" AMI.

In a memo to City Council, Ishida and Pearson said they initially collected the names of 300 interested households. Of those, 65 percent were below 80 percent AMI, 25 percent were between 80 and 120 percent of AMI and 10 percent were above 120 percent.

When Resort Ventures West moved to the education phase, only half of the 300 households remained in the mix. And when they began the nitty-gritty work of qualifying prospective buyers for deed-restricted housing, only 50 were in the hunt. The developers wound up with 36 qualified buyers for the 47 condominium homes and their certified average medium incomes in aggregate were 80 percent.

Resort Ventures West has formally asked City Council to consider amending its approved Community Housing Plan in an effort to hit the 100 percent average AMI target. Pearson stressed that his company is not seeking to be absolved from the requirement that it provide community housing.

The three changes Pearson is asking the city to consider include:

- Allowing employers or businesses to purchase the units to be able to rent them to employees. He suggests that an employment- and occupancy-based deed restriction would apply.

- Allow anyone to purchase the condos as long as the unit is occupied on a full-time basis by the purchaser. In that case, an occupancy-based deed restriction would be in force.

- Supplement the existing deed-restriction options with an appraisal-based deed restriction that would allow the owners to realize greater growth in equity once they became vested.

Equity over time

The options presented to City Council by Engelken are similar to Pearson's suggestions, but include more detail.

One option she described would change the way a developer's affordable housing obligations are calculated from a specific number of units to total square feet. That would allow them to adapt the size of units to meet current demand among homebuyers, for example.

Engelken's twist on allowing employers to purchase affordable units for rental to their employees would require the business owners to certify that their employees meet AMI requirements. At any point of sale, the owners would be required to market them under the limits of the original deed restriction.

Engelken also offered City Council the option of an appraisal-based deed restriction. She suggests it might allow a certain percentage equity gain based on the difference between the appraisal at the point of acquisition and the appraisal at a point of future sale.

"Several organizations and communities nationally have set that percentage equity gain based upon the numbers of years in the unit, i.e. a greater equity gain for households residing in a unit for 10 years versus two years," Engelken wrote.

Comments

ybul 5 years, 10 months ago

It appears that the seasonal and second home owners are not competing against you for a home in SS today, as there are 1900 properties for sale today, with more coming on the market.

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JustAsking 5 years, 10 months ago

Where are the people who thought this would work?

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ThreeJobs 5 years, 10 months ago

What a SURPRISE! Can't find enough of us stupid enough to buy into deed restricted housing. This is NOT the developers fault but obviously a very flawed city council mandated program.

What we have said from day one is IT DOESN'T MAKE SENSE!! And SURPRISE! It doesn't make sense. Why would anyone want to buy into a 1100 square foot socialist experiment with very limited resale prospects when they can buy significantly more square footage for less money out of town.

What the developer is suggesting makes some sense. That is what is needed is market rate rentals. SURPRISE! This is what we have been saying all along. It is only the misguided city council that thinks we should jump at the chance to tie ourselves to an "affordable" millstone.

Those who do buy into this deal will find themselves stuck with a property that they can't sell if they decide to move out of Steamboat to take a better, higher paying job elsewhere.

Kind of sounds like slavery or a life sentence doesn't it? The answer is for the city council to get off this socialist utopian idea that only enslaves the group they are claiming to want to help.

However well intentioned some of the city council may be they must admit that forcing us to "own" because they have prevented developers from building rental property is not helping at all.

If the city council really wants to "help" they should get out of the housing business and into what might actually provide some benefit. How about public transportation from the outlying areas? We seriously doubt we will be bidding against a seasonal or second home owner for a property in Craig or Hayden. All we really need is an "affordable" way to get to work.

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Steve Lewis 5 years, 10 months ago

Affordable housing is about housing workforce. It helps satisfy the employee needs of every business in town.

Every resort community in Colorado recognizes this and all are doing deed restricted housing. The local effort has been fully engaged by our biggest employers. Its a difficult proposition. But not a stupid one.

There are plenty of local deed restricted units occupied by people who are now able to put their rent payments into their own equity. Its far from a given that Hayden or Oak Creek would be markets they could afford.

Is the proposed alternative of commuting more cost effective over the next twenty years? Transportation costs are already being correlated with higher foreclosure rates . Fuel costs long term are a huge unknown that are being brushed aside in the remarks above. Not to mention the time lost to the commute.

Yes there are issues, particularly with the first units sold at this large scale. And adjustments to be made. Employee rentals are a good possibility. The adjustments must be careful to maintain permanent housing affordability, a mandatory piece in sustaining our long term economy.

Brent has done his part and deserves adjustments to get his units into new ownership. I'm supportive of ideas he and Nancy share for better matching the market. But the ordinance also has an "escape clause", effective a year after they go on the market. We are in the midst of a huge free market correction, and many months away from knowing these units can't be sold as currently proposed.

Keep in mind these units are aimed at Steamboat's economic health over the next twenty years, as well as at today's market.

-Steve Lewis

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Steve Lewis 5 years, 10 months ago

Correction, I believe the "escape clause" is effective a year after the units receive their Certfificate of Occupancy. -Steve

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elphaba 5 years, 10 months ago

Yet another example of the last City Council's bungling and ineptness. Deed restriction is not a viable method of supplying housing. Let them be rental units.

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Steve Lewis 5 years, 10 months ago

30 occupied deed restricted units at Fox Creek and 7 at Sunburst (in the past two years?) would be evidence that deed restriction is a viable method of supplying housing. -Steve

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ThreeJobs 5 years, 10 months ago

WOW! Average 15 units per year "evidence that deed restriction is a viable method?" Steve, you MUST BE JOKING!

With that rate of "success" this plan will work in what 100 years? That is if it doesn't come crashing down around the ears of the few who join in this experiment without considering the future ramifications.

Does this sound anything like the national mortgage fiasco currently gutting the housing market? Let's see. Encourage people to enter into contracts that have very limited up side benefits and hold them totally responsible for any shortage should they choose to move on. Restrict their resale prospects to others who can likewise be hoodwinked.

Again, where are the people who thought this was the answer. Indeed, the ONLY answer. Step forward please.

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ColoradoNative 5 years, 10 months ago

So what happens if the value of these deed restricted units fall?

Contrary to what some people think it does happen and prices are coming down in Steamboat.

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OnTheBusGus 5 years, 10 months ago

CN, I agree completely with you! Well stated! Bring on the "affordable rentals"!

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Steve Lewis 5 years, 10 months ago

Native, The idea was that these units appreciate less than free market (and stay affordable to the next owner), but a change contemplated for the ordinance is applying some factor of appraisal based equity. If the market falls to where free market drops below the deed restricted price, the owner would lose equity, like everyone else could.

Threejobs, Nobody ever thought this was the only answer. Nor did anyone claim it was flawless. Per above I agree it can be made better with Brent's input.

The mortgage fiasco is apples to these oranges, but whatever. Either way, here I am to say, yes, this ordinance is part of the answer for Steamboat.

And you do not agree. Do you have a better answer for workforce housing?

If you feel a regional bus (per your above) is a solution, it's worth mentioning that Oak Creek workers are having a hard time competing for housing with higher paid Steamboat workers living in Oak Creek. Oak Creek has now tagged housing as a problem too. -Steve

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ColoradoNative 5 years, 10 months ago

Lewi "And you do not agree. Do you have a better answer for workforce housing?"

I do Lewi. It's called working with developers to provide some apartment rentals. Increase the supply of rentals and the demand and price for ALL of them goes down. All I hear and read from the City Council is a push to subsidize home ownership but why not encourage rentals? Sure land is expensive but deals with developers get done everyday in this town. Work with them on zoning. Increase their densities or give them perks on other projects.

There are plenty of people who want to simply live and work in Steamboat and go back home wherever that is.

I have no idea where this sense of entitlement to home ownership came from in Steamboat but it's just not realistic.

People need a roof over their head to work in this town. They don't have to own the roof!

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another_local 5 years, 10 months ago

  1. Build rental property and zone it No Nightly Rental.
  2. Sunset the deed restrictions. If the owner stays in it continuously for 10 years, the restrictions go away and it becomes a market rate unit which the owner can sell at market and keep the gain.
  3. Use no short term rental zoning on lower end properties to take them out of the pool rented to visitors. This will make them available to local workers instead.

There is FAR too much emphasis on affordable ownership and not enough on affordable rentals.

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424now 5 years, 10 months ago

I have to agree with A_L. Rental costs in steamboat are too high for local workers to manage. It is frustrating when 3/4's of your net income goes to rent that leaves precious little to handle expenses. Saving anything becomes pennies in the bank. The years it should take to save a decent down payment on a new house turn into decades. We need affordable rentals that will allow the working class to save a few dollars toward that incredibly expensive down payment on a house.

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Steve Lewis 5 years, 10 months ago

Native, Bus, Local, I, and everyone on both sides of the table, agree with the need for rentals. My side of the table would seek affordable rentals.

Thanks for the level tone of your posts. Hey, I personally don't care to entitle people. I see this differently. The deed restriction is for a slice of our population I believe we need to oil our town's economy.

Either way the "entitlement" of deed restricted ownership is not much of a windfall. You probably agree, as it lacks the equity potential of the free market. But it is still smart for a buyer who shifts from paying rent to paying into his own mortgage and starts on the equity ladder. That buyer will have non-commuting time to spend with his family and volunteer local efforts.

The current IZ ordinance is focused on ownership. The Linkage ordinance is focused on "employee rentals"- you just have to work in the county. Some on council want to repeal the commercial part of Linkage. The IZ does the heavy lifting so far. We thought the second ordinance, Linkage, would be accomplishing more of the rental picture. But there was strong opposition to Linkage and it is greatly trimmed in scale.

The result is an imbalance toward ownership. Also at play is the greater challenge of financing rental units still affordable the lower end of the tenant income scale. The City is looking at using the IZ "escape clause" to allow selling of unsold ownership units to employers for employee rental housing.

So in effect the IZ ownership model may also create rental units. My concern is that the switch from ownership to rentals may mean windfalls acruing to buyers. Any spinoff windfalls from the heavy lifting being done by IZ should be returned back into the housing program.

Native, Frequently on planning commission we did allow zoning variances to allow affordable units. Variances traded for a public benefit.

Local, I agree with the policy decision of permanently affordable, so we disagree. If one believes the affordable housing is needed, it is a staggering concept to think of approaching the need ten years from now with zero affordable units left. Also, why ask a developer or the city to underwrite this windfall to tenants.

I don't think its legal to restrict free market rental to long term? Not if its vested with short-term rental rights.

Sorry to write so much on my point of view. -Steve Lewis

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Steve Lewis 5 years, 10 months ago

Native, (P.S.) You are right about working with developers to trade for this housing.

During the Base Area Plan re-write (2006) a planner suggested allowing increases over the allowed Floor-Area-Ratio (FAR, ratio of building area to Lot area), and half of that excess be free market, the other half be workforce housing.

Instead, as an incentive to redeveloping the Base Area, we did away with FAR's at the Base Area altogether. Now we use height and massing to limit projects. Now more buildings are coming, and they have gotten bigger. So the incentive worked. -Steve Lewis

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thecondoguy1 5 years, 10 months ago

I do tuffy but,,,,,,,, you called me a fool.............

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SilverSpoon 5 years, 10 months ago

How many of the 80-120% of the AMI are carpenters, plumbers, realtors, or electricians? Lets say the develpment ends, just like in denver and the rest of the country, and these people make 0% of the AMI. Unemployment here we come, I hope the city can buy foodstamps for the poor people who get into the deed restricted homes. The free market decides what amount of EQUITY people gain or lose on their home. Unfortunately steamboat has had 400% equity gain in 5 years. It doesn't take long to take it back to where it should be.

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