City Council issues moratorium on deed restriction releases
STEAMBOAT SPRINGS — Steamboat Springs City Council agreed to issue a moratorium on releasing any deed restrictions on housing units. The matter came up at Tuesday’s meeting, not as a vote, but as a request from city staff on guidance regarding a handful of recent requests for release.
Council members discussed at length whether to look at requests on a case-by-case basis or whether to categorically deny all such requests. They debated whether extreme financial hardship should be considered in releasing a deed restriction and how to define financial hardship.
The general consensus was that when people purchase a deed-restricted property, they know what they are buying into, and they accept the restrictions as part of the purchase contract.
A deed restriction, as defined by the Yampa Valley Housing Authority, “targets the sale of the unit to ‘qualified owners’ who meet specific income, asset and employment criteria. … Deed-restricted units are intended to help local families afford home ownership in an environment of high market rate housing. The deed restriction exists to ensure that the property remains affordable now and in the future.”
If the owner of a deed-restricted home wants to sell it, it would not be priced on free-market rates — the restriction contains an appreciation cap that reflects cost of living. The cost-of-living increase is based on a 3% annual increase in the value of the home or the increase in area median income, whichever is greater.
If economic hardship were taken into account and the restrictions lifted, council member Lisel Petis said the additional profit from the sale — beyond the 3% appreciation — could be required to return to the city and the Yampa Valley Housing Authority.
Much of the discussion revolved around the danger in setting a precedent and letting people think they have a shot at getting their restriction released after purchase.
“If we send a message that we are open, we will have a line of people,” council member Kathi Meyer said.
The idea isn’t for someone to benefit down the road by profiting off of a public process, Meyer said.
City Manager Gary Suiter drew on his 12 years of working in the Roaring Fork Valley. He said during that time, there were no releases.
Suiter said there were a lot of requests, and they heard a lot of sad stories, but the response was “not only a no, but a hard no.”
Real estate investment comes with risk, Suiter said, and the line of thinking was that it isn’t the government’s job to mitigate that risk.
Jason Peasley, executive director of the Yampa Valley Housing Authority, urged council to preserve the sanctity of the deed restrictions during public comment.
“We need a supply of housing,” he said. Anything that takes away housing designed to support the city’s workforce, Peasley said, “is counterintuitive to what we work really hard to do.”
The restrictions are designed to keep housing affordable in perpetuity, he said.
Peasley, along with several council members, also made the point that with current plans to build more deed-restricted housing in West Steamboat, it wouldn’t set a good precedent to let people think they may be able to get out of the restriction in the event of a resale.
Catherine Carson called deed-restricted housing “a community benefit and asset” and said it should remain so.
In the event of a recession and a foreclosure, argued Petis, the city would lose the property entirely. Petis said she supported an across-the-board denial for the most part but questioned whether that should be reconsidered in a different economy.
“I want to be forward looking,” she said in terms of setting policy.
As council members concluded their discussion, they agreed to revisit deed restrictions if appropriate within other discussions.
Council President Jason Lacy directed city staff to tell anyone who asks about deed restriction releases that “the council won’t consider it.”
To reach Kari Dequine Harden, call 970-871-4205, email kharden@SteamboatPilot.com or follow her on Twitter @kariharden.
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