Steamboat Springs City Council OKs housing measures

Council gives green light to down payment assistance

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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.”

New ordinance

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.

Comments

Steve Lewis 4 years, 5 months ago

"Our View: Housing policy changes offer promise." May 17, 2009 "Our View: The 'hows' of housing." August 30, 2009 "Affordable housing in cross hairs." January 22, 2010

All of which express the Pilot's presentation that meaningful things are being done. There are plenty more offering the same pretense.

But anyone doing the math has known for months that this new ordinance represented a 90% reduction in Steamboat's affordable housing program. Here at the end, with the conversation over, the embarrassing truth of the effort is written as one individual's opinion. Thanks, Brent. Thanks, Suzanne.

Steamboat's affordable housing effort is now meaningless.

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Alan Geye 4 years, 5 months ago

RE: Downpayment assistance program.

First, may I say my heart goes out to young families attempting to purchase their first home, especially in a high home cost area. However, the first thing that comes to my mind as I read about this heart filled plan is, haven't we learned anything in the last two years?

My genuine concern is (and recent history has proven this true), if folks do not have enough "skin in the game" (reasonable down payment) they are much more prone to walking from the mortgage when financial times get a little tough. I'm afraid my tough-love answer is, if one can not afford the down payment, maybe they should remain in the rental market until they have saved sufficient funds for such a down payment. Young families should be looking to family and friends for possible financial assistance and not the public trough. Home ownership should be encouraged, but it is not an entitlement.

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Fred Duckels 4 years, 5 months ago

Beancounter, Most of the people living here made it on their own and they have a feeling of pride and accomplishment. Many folks with less motivation migrate ;to less taxing environments and that is fine. Steamboat may be a challenge, and we are a desirable place to live, but those willing to have us pull the weight for others, do us all a disservice. When we compensate for others we rob them of their chance to develop and mature. It takes wisdom and self confidence to let others make their way.

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Scott Wedel 4 years, 5 months ago

This is such a joke. A program to help 12-15 families? Why bother? The administrative overhead at all levels is going to exceed the benefits.

And this is also the pendulum swinging too far the other way so whenever things recover then this issue will become hot again and the pendulum will probably swing too far the other direction.

And can someone tell me if this concept of a "voluntary" real estate transfer tax has been upheld by Colorado courts? Seems to me that it is awfully close to a Telluride case in which "voluntary" rent control as a condition of planning was rejected by the Colorado courts.

At the most basic level of definition of "voluntary", it is obnoxious to be required to do one of several things and then calling one of those things "voluntary".

It should also be obvious that not all available options are equal and so would be trivial for a government to offer a couple of really bad choices along with a "voluntary" real estate transfer tax. And so "voluntary" becomes, at best, coerced if not mandatory.

Seems to me that the City of SS has accepted a legal theory that they can coerce real estate transfer taxes from developers and if someone takes them to court and wins then SB has completely screwed itself.

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Steve Lewis 4 years, 5 months ago

The City attorney agrees with you Scott. I was there when he quoted the Telluride case to the previous council: "Colorado courts made it clear in the Telluride case that a transfer fee, even as an option in a list of options, is unconstitutional in Colorado".

It took a majority of that Council 5 minutes to dismiss his legal advice. The attorney has since had little option since but to cater to the clear direction of that council majority - we were going to do the VRTF, regardless of the hazards.

Think about it, the demise of this ordinance would make few on this council unhappy. The 10% shell that remains of Inclusionary Zoning is just for show, and the demise of IZ via lawsuit would suit this council just fine.

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