FACT CHECK: How does the West Steamboat Neighborhoods deed restriction work?
STEAMBOAT SPRINGS — Of 450 total units in three proposed neighborhoods west of Steamboat Springs, about 158 will be deed restricted. About 50 of these are anticipated as part of a multifamily complex developed by the Yampa Valley Housing Authority. Brynn Grey Partners will develop 108 under a deed restriction administered by the Housing Authority. It will be enforced by the Housing Authority and the city of Steamboat Springs.
What income levels will deed-restricted homes target?
The annexation agreement between Brynn Grey and the city identifies household incomes for which these homes are intended.
These income levels are broken down by percentage of area median income, which is $86,700 for a household of four in Routt County.
That breakdown for deed-restricted housing units is as follows:
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- 10 mixed-use condo units, 28 small single-family homes, 11 two-bedroom townhomes and six two-bedroom duplex units targeted to four-person households earning less than $86,700 annually
- 14 single-family homes, 12 three-bedroom townhomes, six two-bedroom duplex units and 12 three-bedroom duplex units targeted to four-person households earning less than $104,040 annually
- Nine single-family homes targeted to four-person households earning less than $130,050 annually
- The Housing Authority also could develop about 50 units targeted to four-person households earning less than $69,360 annually
While these targets are written into the annexation agreement, income limits are not included in the deed restrictions.
Who is eligible to purchase the deed-restricted homes?
According to the deed restriction included in the annexation agreement, the restriction will require that the homes are owned and occupied by at least one person who is employed for at least 30 hours per week in Routt County. This includes people who travel regularly for work but have a tax return that indicates Routt County as their primary address as well as those who work remotely for employers outside of the county.
People who no longer work due to retirement or disability qualify for the deed-restricted units if they worked in the county for five of the past six years they were employed.
Can the deed-restricted units be rented?
As long as someone who meets the above criteria occupies the home, the owner can live elsewhere for one out of every five years, according to the deed restriction in the annexation agreement.
The deed restriction prohibits rental of the properties for fewer than six months. This clause prohibits nightly rentals, such as Airbnbs and VRBOs.
With approval from the city, the deed-restricted units can be leased for six months or longer as long as the person living there meets the above criteria. Individual bedrooms can be leased for any amount of time to roommates who meet the criteria as long as the owner lives in the home during the same term as the lease.
What happens when the original buyer sells the home?
The deed restriction contains an appreciation cap, which places a limit on how much the home can be sold for.
According to the deed restriction, whatever the owner purchases the home for is the base price. At second sale, the price is increased to reflect the cost of living. The cost of living increase will be based on a 3% annual increase in the value of the home or the increase in area median income, whichever is greater.
Improvements to the home are added to the sale price at cost. The restriction specifically mentions out-of-pocket costs for improvements to the property, such as renovations, adding garages and storage areas, finishing unfinished spaces, improving energy efficiency, landscaping and upgrading appliances. Homeowners will have to keep receipts for expenses associated with improvements to the property and submit them to the Housing Authority to receive a certificate verifying that amount.
Using the 3% annual increase, if a person purchases a deed-restricted, single-family home for $450,000 — which is within the range that Brynn Grey said it aims to price these homes at — and makes no improvements, the highest they would be able to sell it for after three years is $490,500. If area median income grows at a rate greater than 3%, this maximum sale price also would be greater.
The deed restriction is subordinate to mortgages on the property, meaning that if Brynn Grey or the eventual homeowner defaults on a mortgage and the property is foreclosed, whoever purchases the foreclosed property will not be subject to the deed restriction.
This story is part of the Steamboat Pilot & Today’s ongoing Fact Check series, which is intended to answer readers’ questions about the proposed West Steamboat Neighborhoods annexation. This series will be published with other annexation coverage at SteamboatPilot.com/news/annexation. If you have a question you’d like to see answered in Fact Check, email reporter Eleanor Hasenbeck at ehasenbeck@SteamboatPilot.com.
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