Our View: Housing report a starting point for change

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Editorial Board, October 2009 through February 2010

  • Suzanne Schlicht, general manager
  • Brent Boyer, editor
  • Blythe Terrell, city editor
  • Tom Ross, reporter
  • Michelle Garner, community representative
  • Paula Cooper Black, community representative

Contact the editorial board at (970) 871-4221 or editor@steamboatpilot.com. Would you like to be a member of the board? Fill out a letter of interest now.

On Tuesday, a citizens committee formed this summer plans to present to the Steamboat Springs City Council a clear, concise analysis of some of the steps needed to finally achieve meaningful affordable housing policy. And although we’re optimistic the report will push the city onto the right track, by no means will the coming reform be simple or straightforward.

Put simply, the Affordable Housing Measurement Citizens Committee report makes clear what some in the community have said for some time: Steamboat Springs’ affordable housing policies are without a clearly defined purpose or intended beneficiary. And without such clarity, it’s impossible to measure the success — thus worth — of the policies.

In August, this Editorial Board posed a number of questions to the council as it prepared to approve revisions to the city’s Community Housing Ordinance. The ordinance, first adopted in 2007, establishes requirements for developers to build or help pay for the construction of affordable housing.

Among the questions:

■ How will money collected from developers be spent?

■ What is the long-term role of the Yampa Valley Housing Authority?

■ Is there a specific revenue goal for the city’s affordable housing fund?

■ How will the city measure the success of its community housing ordinance?

This last question essentially served as the mission statement for the citizens committee composed of Roger Good, Mark Andersen, Scott Ford, Steve Hofman, Doug Labor, Rich Lowe, Mark Scully and Chuck Williamson. City representatives were Lauren Mooney, Councilman Scott Myller and City Manager Jon Roberts.

The committee concluded that although existing Steamboat Springs affordable housing policy goals may be measurable, they fail to focus on who the city hopes to help through the creation of affordable housing. This lack of a specific intended beneficiary makes it nearly impossible for any policy to be successful throughout time. In other words, if we don’t know specifically who we’re trying to help, how can we help them? And further, how can we measure the success of the policy?

Defining who it is we want to assist should be the city’s first priority as it moves forward with affordable housing efforts. The citizens committee recommends defining specific upper and lower income limits for the intended beneficiaries. It also correctly recommends that all affordable housing initiatives must be focused specifically on that group of intended beneficiaries.

The committee’s report includes seven recommendations, with three of them focused on developing and using data-driven reports and studies to regularly analyze housing inventory and work force demographics.

Although we largely agree with the report, by no means does it provide all the answers or a clear path to improved policy.

Politics could be the biggest hurdle facing meaningful, lasting affordable housing policy reform. The council that first approved the Community Housing Ordinance demonstrated an unwillingness to share revenues with the Yampa Valley Housing Authority and, worse yet, engaged in a duplication of efforts with the organization created by the city and county leaders to address affordable housing in Routt County.

And so we remind our political leaders at the city and county levels that what’s most important is doing the right thing. And the right thing is helping Routt County remain a vibrant community where its low- and middle-income workers can afford to live. With that goal in mind, we expect that any political barriers eventually will fall.

Comments

Fred Duckels 4 years, 3 months ago

I have a very simple answer to all the wailing and grinding of teeth, let the market rule, let 700 and other developments proceed, and the market will provide affordability. Many special interests will protest, but this way we all share in the results, be it good or bad.

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Scott Wedel 4 years, 3 months ago

Fred, I agree with you except that government policies can make it far more profitable to build large expensive houses than lower cost housing. A most simple example is that Oak Creek has fixed water/sewer taps fees of like $10K. On something modest that is a big expense, but on a $500K house it is just one of many. Thus, what sort of houses were built in Sierra View? 1400 sq ft $300K possibly affordable or 2500 sq ft $500K homes?

Lot size and density is another place where government polices influence the size of homes. Density is typically measured in housing units, not sq ft of construction so a 1,200 sq ft house is considered to have the same impacts as a 3,500 sq ft mansion.

The less government gets involved with affordable housing the better. Far better to do it via economic incentive policies than specific requirements. Far better to have an open bidding process for the free market to provide a service than direct investment.

Think how much good have been done with the $4.x million spent on the Iron Horse if it had been used via competitive bids to bridge the difference (via down payment assistance or such) between free market and whatever they consider affordable.

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Steve Lewis 4 years, 3 months ago

As stated the Pilot, in August, raised four key questions to City Council. Apparently this one bears repeating: "■ Is there a specific revenue goal for the city’s affordable housing fund?"

In this report which is all about measuring what we are doing, how does such a critical and obvious metric get ignored? That one metric observed over the past two years would dominate the findings of this report. If recent revenue goals are examined, we will see they have fallen off a cliff.

Our affordable housing (AH) revenue flows directly from our Inclusionary Zoning and Linkage regulations, which require new development to assist us with affordable housing. The previous council removed Linkage regulation entirely and cut pro-rata proceeds from Inclusionary Zoning to less than 1/4 of its former level. In other words, in the past two years our AH revenue goals have probably fallen to 1/5 their former level.

Why pretend we are mounting a serious effort at affordable housing if our revenue goal recently fell to 1/5 of its 2007 level?

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Steve Lewis 4 years, 3 months ago

Scott, Let's consider the down payment assistance you support. I believe you favor this instead building AH units. Its probably fair to say you agree there is a need to assist workforce housing?

I will simply argue for tools that maximize long term effectiveness, so I also see room for down payment assistance. Where we may diverge is the amount of "gift" in that assistance. Equity Sharing is a concept where the beneficiary of down payment assistance has to give back when the property is sold. If he got a 20% of equity gift up front, he reimburses 20% of the sale price. (Roughly, there may be small variations therein.)

Would you support that? There are red tape costs here so while you avoid the "gift", you also lose some of the funds. One obvious drawback is you may be shoehorning folks into something they may not be able to afford longer term.

Deed restricted units are what most communities do to grow permanent AH stock. This stuff works well. During this foreclosures mess, deed restricted units have fared better than the free market. During the same time frame, sales of the new Steamboat developments carrying AH units saw greater proportional demand and contracts for their deed restricted units than their free market units.

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Steve Lewis 4 years, 3 months ago

I've attended the Steamboat affordable housing discussion through 4 previous city councils. The earlier of those councils had numerous hearings engaging professional consultants who work on these issues in Colorado. The 05-07 council focused more on meetings with the development community: the BARC group, Ski Corp, and others. I attended many of those as well.

All of which is to say this community had engaged a serious discussion on this issue. Every meeting I attended took benefit and rationale from the points taken and information introduced both yesterday, last year, or even 6 years prior.

And now this committee states: "... it is the position of this Committee that any and all quantified goals from this earlier period are largely meaningless in the economic realities of the 2009/10 real estate market..."

One should never dismiss new ideas and faces joining the conversation, but I have to say I find that statement to be both incredibly naive and incredibly arrogant.

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Scott Wedel 4 years, 3 months ago

Steve, Something like down payment assistance where the assisting agency basically takes a second lien at a minimal interest rate in which interest only payments are allowed is the best way I've seen for a government that decides it has to provide assisted home ownership to meet that objective.

Deed restrictions is probably the second worst way to do it. (Worst way is direct government ownership such as Iron Horse). The fundamental problem with deed restriction is that it intentionally tries to subvert free market forces. Obviously, it can do that to get someone into a house, but then the incentives for the homeowner also run counter to free market forces. If deed restriction limit appreciation then the homeowner has an incentive to NOT maintain the property because the homeowner will not recover that money. Instead there is an incentive to not maintain the property and let the next buyer spend the money on repairs.

Habitat for Humanity requires the homeowner stay in the house for some number of years before they gain full equity of the improvements. That has resulted in situations where people really need to move, but cannot afford to give up the equity they'd receive if they stayed another year or two. So someone that should be and would like to be in an assisted care facility is living alone so that grandchildren can have an inheritance to pay for college.

The most obvious unintended incentive is for someone in a deed restricted unit to stay in a deed restricted unit because there is a cost of leaving the lower cost AH unit and returning to free market pricing. So deed restrictions can become golden handcuffs.

You can try to write a more perfect set of deed restrictions, but you cannot simply negate economic forces. All that deed restriction do is create a different set of incentives, usually poorly understood because they are written differently and so each create an unique set of incentives.

I also dispute that deed restrictions necessarily grow AH stock. It often grows AH stock on paper, according to their own statistics which a deeper analysis can raise serious doubts. For instance, typically a person in a deed restricted unit is considered to be living in an AH unit and thus increasing AH stock. But the statistics do not check whether that person's income significantly increased and would qualify for free market housing, but is still in the AH unit because that is a better deal than free market. While the relevant housing agency would say that is an AH unit, an economist could argue that since the owner could own a free market house but stays because of the AH deed then is not an AH unit and, in fact, has taken a housing unit that free market would place in the ownership of a lower income person and put it in the ownership of a high income person. Thus, the deed restriction has REMOVED an AH unit from the market.

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Steve Lewis 4 years, 3 months ago

Hi Scott, Why should the government only take an interest only lien? Isn't this a larger "gift" with less return to the AH program? This seems like govt money out the window. Maybe I missed something.

I understand the free vs limited appreciation. It is why we saw so little 120% AMI demand and much better 80% AMI demand. There was plenty of 80% demand. The development community fought hard for those higher AMI's, and it made the units harder to sell. Going forward, the 3% appreciation of these AH units will look much better compared to the free market. I don't hear anyone projecting much real estate appreciation. Not for a long, long time. AH owner's will be more motivated to do upkeep because they stand a real chance of getting less than that 3% appreciation

You are right and I accept the owner's income will rise. These AH units to me are best used as stepping stones into the free market. Without that leg up they never get there, become Scott Ford's "hamburger" and leave to grow their family elsewhere. Our regs also allow people to retire and within 2 years? buy one of these. There are small elements to support your complaint that these are not all strictly low income workforce housing.

The return against these AH flaws is that unit is always returning, at every future sale, as an affordable unit. The scheme of down payment assistance to free market units, as this group suggests, means that seven years hence you start from scratch. Without Equity Sharing you are giving the money away. 7 years is apparently the average length of home ownership in Steamboat.

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sledneck 4 years, 3 months ago

Good God! You people would not recognize capitalism if it smacked you in your social engineering mouths. What business of yours' is it who builds what on their own property or for what price it sells? Everywhere it is implemented affordable housing regs make housing more expensive. Developers pay NO fees. They don't buy building permits, pay sewer or water tap fees or pay tax on building supplies, etc. They COLLECT all those from individual citizens and pass all of them along to our retarded big brother.

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Scott Wedel 4 years, 3 months ago

Steve, I accept that you read my post. It does not appear that you thought it. I'd have to agree that you missed "it".

The fundamental point that you miss is that AH homeowners respond to the AH limitations/restrictions and will adjust to that reality. So an AH homeowner that is limited to 3% appreciation when the free market is booming is simply not going to chose to sell. Instead they will wait to busts when the selling price could show as little as a 3% appreciation to sell.

The reason to avoid taking an equity interest as part of a down payment assistance program is because that results in further distorted economic incentives. An obvious distortion is that then homeowner is paying for home improvements and repairs while receiving only 80%(?) of the benefit. And if you have some system to account for that then you penalize the cost effective handyman and help the cost ineffective overpaying, accepting kickbacks owner. Accept that AH is a form of middle class welfare and quit making it a boondoggle by pretending it is some superior form of capitalism.

Yes, when the overall market is appreciating at less than 3% then the AH property owner has the incentive to maintain/improve so that their property appreciates 3%. But that proves my point that when overall market is appreciating more than 3% then the AH property owner still needs to do only enough maintenance to get the 3% appreciation, and not the good maintenance that would cause the property to appreciate as much as the overall market.

You seem to completely miss the point that someone in an AH unit that can now afford more might decide that it is smarter to stay in the AH unit and invest their money elsewhere. Thus, the property is not returning to market as often as it would under the free market. I note that starter housing should turn over far quicker than average because starter housing should be temporary as the family's income grows and they can then chose the house they want.

And your arguments contradict each other. If no one is predicting appreciation then what is the point of limiting appreciation to 3%? The only reason to limit appreciation to 3% is because someone expects property to appreciate more than that.

I am interested in why you say AH owners at 3% appreciation are better off than the general market. Is that 3% appreciation guaranteed regardless of the overall market?

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Steve Lewis 4 years, 3 months ago

Scott, I simply disagree with your fundamental point: that an AH owner will not sell while the market is out-prerforming his own unit's appreciation of 3%. If an owner has the means to get into a free market product, why stay invested in something performing worse?

If a fellow cannot manage the possibility of owning freemarket, as applies to those at 80-100% AMI, the lower cost of an AH unit can be a way to create equity. I understand equity can be created putting that money elsewhere, but home equity is fairly simple compared to bond or stock portfolios.

My opinion about future appreciation was that it will not greatly surpass the 3%. The recent appreciations of 15% gave you a better case. I was not trying to say 3% will outperform the market. just that when the two are close owners will be more motivated to do maintenance. Frankly, your complaint of likely poor maintenance seems small to me. HOA fees would attend to exteriors and roof. Either way the gain of workers living here outweighs your complaint of upkeep. You would simply trade that for wear on the commuted highway and energy used to commute.

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Steve Lewis 4 years, 3 months ago

At which point we are back at a commuting argument we'll never agree on.

Sled, Take that opinion to the next area plan update. I argue for what our community said it wanted. Do you give any credence to such plans, or Vision 2030? Too much social engineering when we plan growth?

Its undeniable in this case. Big brother is your neighbor. Change the plan to match your vision and you'll have no argument from me.

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