Our View: Another brick out the wall

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Editorial Board, January through May 8, 2011

  • Scott Stanford, general manager
  • Brent Boyer, editor
  • Tom Ross, reporter
  • Traci Day, community representative
  • Dean Vogelaar, community representative

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

— One of the last bricks that helped to form the foundation of Steamboat Springs’ affordable housing efforts during the past decade is about to come tumbling down.

Early next month, the Steamboat Springs City Council is scheduled to take action on a proposal that would allow West End Village homeowner Rebecca Roof to buy out of her deed restriction in an effort to help her sell her home.

Roof has a sympathetic story, and we think the City Council ought to support the proposal. We also recognize that allowing Roof out of some of the deed restrictions encumbering the sale of her home means similar requests will need to be granted to future property owners here. Ultimately, it will spell doom for income-based deed restrictions on Steamboat Springs homes and condominiums.

Roof is a U.S. Forest Service employee who recently was transferred to Arizona. The deed restrictions on her Penny Lane home include an income requirement and a net worth cap that make it difficult to attract qualifying buyers, especially in today’s tightened lending market.

There are a lot of stories like Roof’s these days. We’re three years into an economic slide that has crippled the local real estate and construction industries and seen home values drop 20 percent or more a year. Besides those buyers who are gobbling up short sales and foreclosed properties at bargain prices, there’s not a lot of real estate activity. Finding qualified buyers for properties like Roof’s with income-based deed restrictions is increasingly difficult.

So what’s the city to do?

The proposal before the council would allow Roof to get rid of the income restriction and net worth cap on her home’s deed if she pays $2,300 to compensate for the preferential, below-market financing she received when she bought the home for $405,000 in 2007. It recently was listed on the MLS for $360,000, and her Realtor has said a buyer is ready to close on the home if the income and net worth cap restrictions are removed.

However, two other deeds would remain in place: The buyer would have to work in Routt County and use the home as his or her primary residence.

We like the balance struck by the proposal facing the council. On one hand, it recognizes the challenges now facing residents who bought deed-restricted homes during a different era of financing and real estate activity. On the other, it keeps a couple of provisions in place that will help ensure that homes built for the working class remain occupied by full-time residents employed in Routt County.  

From a bigger-picture perspective, it would be unfair to not work with Roof — and, by extension, future property owners — on removing some of her deed restrictions when the city already has done so for many of the developers who were required to build affordable housing units as part of their projects but then couldn’t sell many of them after the economy went south.

Finally, we hope the city and affordable housing advocates — as this Editorial Board has been for many years — learn from the experiences of the past couple of years and use them to shape future housing policy.

Comments

Steve Lewis 3 years, 3 months ago

I disagree this change in deed restriction is warranted "across the board" as the editorial suggests.

Just to keep this in perspective, from what City staff told me a year ago, deed restricted product is seeing less foreclosure than the market in general. The extra scrutiny made better fits of owners to mortgage burdens.

And no one has said that Rebecca is "upside down" here, and I doubt that is the issue. She has the same issue as Howelsen Place and Wildhorse Meadows - caught between deed restrictions and a huge housing bust.

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Steve Lewis 3 years, 3 months ago

This is a new question amidst new circumstances, as Ed said, and should be considered carefully. Who knows when or if the need for MORE affordable OWNERSHIP product will reappear. That's a lot different than saying we will have ZERO need for affordable ownership. I don't see us needing to build more of it, but I expect there will be a future market for DR ownership of the existing units already created here.

Affordable RENTAL needs will continue to reappear down the road - its just a question of scale.

Rebecca has 2 combined problems. 1) She has to move for work, a hardship. And 2) her deed restrictions have further stranded her with less to sell while market prices have ebbed so low around her.

Which raise 2 questions: 1) How to navigate similar hardships in Steamboat's owned DR product to maximize the benefits accrued for future low income buyers. I would not reduce DR's across the board. But I would support Rebecca's particular hardship and her modified DR. And she will have to take a loss in this too. More than the amount published earlier of $3,000. I don't understand that number? The recommended new DR for Rebecca is very similar to what exists in Telluride. Their market should allow some scale in weighing this.

2) And the future need? I hesitate to guess, but seems reasonable to look at the forming principles of the DR program and see how they still apply. I would be looking at how wages are faring in comparison to the ownership market.

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Steve Lewis 3 years, 3 months ago

In effect the editorial board would let every DR owner "walk away" from their full obligations to a program that had helped each of them in their need.

That is not right, or necessary.

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Scott Ford 3 years, 3 months ago

Member of the Editorial Board your are smarter than this. Think it through.

Eliminating some of the deed restrictions (Net-worth and income) and yet keeping residency and working in Routt County requirements is a wee-bit silly. Sounds good in theory but it is essentially the same type of thinking that started us down this path in the first place. Who is going to police this specific deed restriction? How often is this going to be policed and what is going to happen when a "violation" is discovered?

For example, what if at the time the home was purchased the individual did live in Routt County and worked in Routt County. However, within a few months after the sale they move to Denver for a better paying job and subsequently rented the home to a friend of the family that lives in Fort Collins that wants a place for the weekend.

The on-going residency and work requirement provision associated with the deed restriction are unenforceable. Sound good but are unenforceable. Why continue to "dink" around with this issue? Put a "fork in it" its done!

Hopefully City Council will think it through and see the folly associated with enforcement and eliminate all the restrictions. Give the current property owners of deed restricted properties a formula of the cost to buy out of their deed restriction and be done with this experiment. Use the monies associated with the deed restriction buy-outs to help fund the YVHA down payment assistance program.

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Steve Lewis 3 years, 3 months ago

Scott Ford, We agree on so many things. Just not on affordable housing.

The Fox Creek deed restricted units do not allow subletting, and must be a primary residence. I don't know the policing mechanism, but its likely a combination of neighbor complaints or sporadic survey would expose issues, and any subletting would amount to defaulting on mortgage terms.

YVHA can answer on the level of your suspected problem and how they deal with it. The employment deed restrictions suggested for Rebecca's unit would be verifiable via a W2, or business receipts for the self-employed.

I don't think its unenforceable. But I'll turn to the other article where you've posted more.

Inclusionary Zoning regulations have been diluted to the point where we will be building no more deed restricted ownership units. But I do think the stock we have built to date should survive and will be needed. To me, Fox Creek town homes seem an example of something that works, rather than something that cannot work.

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Scott Wedel 3 years, 3 months ago

Well, talk about the definition of "unenforceable" - "I don't know the policing mechanism, but its likely a combination of neighbor complaints or sporadic survey would expose issues, and any subletting would amount to defaulting on mortgage terms."

So they are free to ignore the deed restrictions as long as they agree to not rat each other out. So everything is fine with no issues until a neighborhood dispute and then suddenly a whole bunch are found violating their deed restrictions.

A perfect argument on why deed restrictions that puts limits on the occupants are such a bad idea.

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Scott Ford 3 years, 3 months ago

Hi Scott W - Perhaps to increase the sense of community we value we could pay a reward to folks that "rat" on their neighbors. Neighbors spying on neighbors would be a wonderful community building activity.

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Fred Duckels 3 years, 3 months ago

I'm not sure if Scott knows what he is talking about.

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