Fraser, Winter Park eye deed restriction programs to deal with affordable housing
Towns seek to follow in Vail’s footsteps
What is deed-restricted housing?A deed restriction is an agreement to limit the use of real estate in someway and is listed on the deed. A deed-restricted unit means that there are certain requirements an occupant must meet in order to own or rent the property. In Vail’s InDEED program, the only requirement is that the property must be occupied as a primary residence by individuals who works 30 hours a week in the county.
In an effort to help tackle some of the affordable housing issue in Grand County, the towns of Fraser and Winter Park are looking into implementing deed restriction programs modeled after a successful program in Vail.
A deed restriction program would allow a town government to offer private property owners a monetary incentive to restrict the sale of the property in perpetuity to only people who work in the community.
It helps create a second market for community members, where the competition, and therefore the price range, is limited, which is especially useful for resort towns where the property is in higher demand, explained Fraser town manager Jeff Durbin.
“When you’re trying to compete with some multi-billionaire from Europe, it’s not even fair,” Durbin said. “So what this program tries to do is it tries to create another market that’s more like your typical, non-resort community real estate market where people that are working here are competing against each other.”
Both Fraser and Winter Park are considering deed restriction programs that don’t have an appreciation cap, meaning there’s no limit to how much a property owner can sell their property for, or an income cap, meaning anyone who works in town can buy the deed-restricted property.
Aside from creating a second market, a deed restriction program is a more cost-effective tool for towns to address the affordable housing issue, said Winter Park town manager Keith Riesberg.
“One of the things that got our attention is when you look at the cost per unit through the InDEED program versus their cost per unit to construct and have town built housing, the deed restricted program has a significantly lower cost per unit,” Riesberg said.
Lynne Campbell, housing coordinator for Vail, highlighted how the cost-effectiveness of the InDEED program, which was approved in 2016 and implemented in 2017, makes it successful in their community.
In 2018, Vail spent around $2.4 million to buy deed restrictions on 105 units. Campbell said that while Vail doesn’t have a set formula to use when it comes to deciding how much to spend for a deed, the average cost is about $63,000.
“We don’t have a set equation, but the criteria (…) indicates what we’re looking at, so obviously convenience for the employee with transportation, getting a variety of types of product, conditions of the property and the health of the HOA,” Campbell explained. “It’s a good deal for the town and it’s helped others out.”
Vail’s deed-restricted units range from apartments to condominiums to single-family homes. Campbell said the diversity of the units is another perk of the program.
Since there is still a lot of community interest in the program, Campbell said the town of Vail has budgeted $2.5 million for 2019. She said Vail hopes to get around the same number of units as it did this year to continue making a dent in the town’s goal to have 1,000 deed-restricted units by 2027.
Similarly, a 2015 housing assessment done by the town of Winter Park shows that the town needs to add 40 to 160 affordable housing units by 2020. Riesberg said a deed restriction program could be one tool the town uses to attain that goal.
“It’s another tool in the toolbox of addressing the housing issues within the community,” he said. “I think it will supplement some of the efforts the town already has in place and taken on.”
One concern with deed restriction programs is relying on property owners to participate, but Campbell said the monetary incentive has helped people get into the market by helping new community members afford down payments on their properties and the program has helped people stay in the community.
“How it’s helped is it’s gotten people who want to live in Vail to call Vail their home,” she said. “It’s allowed people to come in and purchase properties that they normally wouldn’t.”
She said Vail hasn’t needed to advertise the program, but instead it has built up a word-of-mouth reputation, as well as providing realtors and real estate agents with the necessary information.
While both Fraser and Winter Park have yet to work out the details of each program, they have already budgeted for it. Winter Park is planning on investing around $300,000 next year for a deed restriction program and Fraser budgeted $500,000 for it in 2019.
Winter Park has also already seen some interest from developers in participating in a deed restriction program.
Durbin said Fraser would likely follow this direction and speak with the real estate and finance community once they had the details of the program worked out.
“I think it’s a brilliant program and it’s working for (Vail) and it’s something where we can establish more local housing, more cost-effectively through this type of program,” he said.
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Grand County state representatives Judy Amabile and Bob Rankin are hosting a virtual town hall with local officials to answer questions from constituents.