Our View: Policy fixes needed for housing
November 16, 2008
Steamboat Springs — The Steamboat Springs City Council must quickly address the city’s broken affordable housing ordinances if the goal of creating attainable housing for our work force is to have any chance of success.
It’s not surprising the city’s inclusionary zoning and linkage ordinances are in the current predicament. Their early supporters, this Editorial Board among them, warned that flexibility would be needed. Their most ardent critics have insisted government-mandated housing doesn’t work. We hold out hope that there’s a successful formula somewhere between the former and the latter.
The experience of the developers of First Tracks provides the first and most concrete example of the policy shortcomings. The 47-unit affordable condominium project is scheduled to be completed in summer 2009, and, despite an aggressive and expensive marketing campaign, only 14 of the units are under contract. However, there’s no certainty those 14 units will ever close. The economic crisis gripping our nation is forcing lenders to think long and hard before they underwrite a mortgage of any kind. Signing off on a loan for a deed-restricted property is increasingly unappealing, as lenders worry they won’t be able to sell the units should they acquire them in a default.
Put simply, the city’s inclusionary zoning ordinance isn’t providing the type of housing desired by those who can qualify for the loans, nor is it helping those who are interested in the deed-restricted units but can’t meet loan qualifications. The demand certainly has been far short of expectations.
Meanwhile, developers are carrying the cost for projects such as First Tracks that show little promise of selling as long as the existing deed restrictions stay in place. The end result will be empty condo units that don’t help the developers, the city or residents in need of attainable housing, be it rental or ownership.
Resort Ventures West has proposed replacing the existing deed restrictions – 3 percent annual appreciation cap and an average buyer who earns 100 percent of the area median income – with one that limits sales only to buyers who are employed in Routt County. The Planning Commission rejected the proposal because of an existing exit strategy for developers already written into affordable housing ordinances. According to the exit strategy, developers must continue seeking buyers for 12 months after a certificate of occupancy on their units is issued. At that time, unsold units must be offered to the city and the Yampa Valley Housing Authority for purchase. If neither entity acts, the developer can sell the units on the free market and then compensate the city with a “payment in lieu” fee.
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City staff is floating several potential changes to the ordinances, including allowing area employers to buy units and rent them to their employees; implementing alternative deed restrictions such as mortgage-based and appraisal-based deed restrictions; and allowing First Tracks developers to sell a portion of the affordable units on the free market and use the difference in price to buy down the cost of the remaining deed-restricted units.
We don’t pretend to know the answers. But we know the existing policies aren’t working, and if the goal of helping provide attainable work force housing is to be achieved, change is in order. The city must listen to the development community, seek guidance from the recently completed housing demand analysis and keep in tune with the realities of the existing market.