The Steamboat Springs City Council gave its unanimous support Tuesday night to a pair of affordable housing measures, one that would help modest income homebuyers come up with a down payment, and a second that rewrites the city’s community housing ordinance to give developers more options in offsetting affordable housing needs created by their new projects.
The council voted, 6-0, (with Councilwoman Meg Bentley absent) to release $100,000 in fees already collected from developers under the old affordable housing ordinance to help the Yampa Valley Housing Authority create a down payment assistance plan. The intent is to help close the gap for families making less than 150 percent of the area median income and struggling to come up with the cash needed to get a home loan.
“We feel this is probably the right thing to be doing in this market,” YVHA President Ed MacArthur said. “We’ve left a lot of flexibility in the program — we didn’t create so many rules that people have to fit into little boxes.”
The AMI varies with the size of a family, but 100 percent of AMI for a family of four in 2010 is $80,600. That family, with 90 percent financing, could afford to purchase a home no more costly than $312,299.
YVHA Asset Program Manager Mary Alice Page-Allen told the council that her group has $53,000 now to match the dollars from the city’s community housing fund, but she is confident that number will grow to $80,000 or $90,000 by year’s end, including $50,000 from the Colorado Mountain Housing Coalition. If all of the funding sources she is pursuing come through, she said, the combined funds could reach $250,000.
With that amount, she hopes the housing authority can help 12 to 15 borrowers.
“I’m currently working with five buyers who are interested in down payment assistance,” Page-Allen told the council. “Most are first-time buyers and the families are no bigger than three people.”
One of the attractive aspects of the down payment program is that the funds eventually return to the housing authority so that they can be loaned again to facilitate future purchases.
City Manager Jon Roberts told the council he regards the down payment program as an important part of the city’s affordable housing portfolio because it provides ongoing help.
The terms of the program would loan down payment funds of as much as 5 percent of the purchase price of a new home with the loan repayable at the time the owners resell it. Depending on the buyers’ circumstances, the down payment loan would carry interest rates of 3 to 5 percent.
City Council President Cari Hermacinski urged the housing authority’s board to meet with the community’s largest employers to ensure that they know the assistance is available to their employees.
“It’s a breath of fresh air, and it makes so much sense to me,” Hermacinski said. “Let’s get these nurses and teachers who want to remain a part of the community using this program.”
The City Council’s vote to approve a new Community Housing Ordinance brought to a conclusion a nine-month process that began in May 2009.
That’s when a previous council, confronted with the reality that its existing inclusionary housing ordinance was struggling to put buyers in deed-restricted housing, asked city staff to draft a revised ordinance. The document was sent back for revisions in July and November and was tabled numerous times in between.
The new measure passed by the council Tuesday night gives developers a menu of ways to offset the affordable housing demand their projects create. In addition to building affordable housing units on their site, or paying a fee in lieu of doing so, they also may develop community housing at a separate site, dedicate lots on their project or at another site or dedicate land to the city.
The new ordinance also rewrites previous requirements that developers who choose to meet their community housing obligation off site be required to create more housing than they would have on their project site.
A final option dominated council discussion on the overall ordinance. It would allow developers to pay just 50 percent of the required fee in lieu up front, in exchange for imposing a voluntary real estate transfer fee on all future sales in perpetuity.
City Finance Director Deb Hinsvark showed the council financial projections that suggested a transfer fee of 0.2 percent imposed on a luxury condominium of 1,500 square feet might be sufficient to recover the second half of the fee in lieu by the third transaction. Further transactions would in theory generate greater monies for affordable housing coffers over time than would be generated by the straight fee in lieu.
However, Councilman Scott Myller worried that no developer would take that option because he would be paying 75 percent of the total up front and would have little incentive to impose the transfer fees on future sellers and buyers.
Councilman Jim Engelken said he continued to think that the fees in lieu, which are spelled out in the community housing guidelines and updated semiannually, are too low.
Catherine Carson, of the housing authority, speaking for herself, told council members that the fees being contemplated in the fee in lieu/transfer fee hybrid would collect an amount that represented only one-eighth of the cost differential between a market rate and a deed-restricted home.
“These numbers are so low that they’re going to buy so little housing it’s flirting with being meaningless,” Carson said.
Ultimately, Myller persuaded his colleagues to amend the provision in the ordinance to waive the transfer fee on the original developer sale of a new home, but impose a higher transfer fee of 0.5 percent on subsequent sales, and his motion to approve was passed.