Workforce Market Deed Restriction

1
Workforce Market Deed Restriction

• Presented by Jim Fackrell
• Blaine County Housing Authority
• September 27, 2007

2
Income Based Deed Restriction

• Eligibility is limited to purchasers with annual
  incomes at or below the specific income category
  maximum.
• Currently there are ten (10) income categories
  ranging from 50 of the Blaine County Area Median
  Income (AMI) to 220 of the Blaine County AMI.

3
Income Based Deed Restriction (cont.)

• Applicants are selected from the Blaine County
  Housing Authority (BCHA) applicant waiting list
  when a Community Housing Unit comes available for
  purchase.
• Applicants with the highest number of priority
  points receive first opportunity to enter into a
  purchase agreement for the available unit.
• Applicant self certifies that they do not own
  any other real property within any of the
  surrounding counties.

4
Income Based Deed Restriction (cont.)

• When the owner of an income based deed restricted
  Community Housing Unit decides to sell, they must
  offer the unit to qualifying applicants from the
  BCHA applicant waitlist.
• Annual price appreciation is limited to the
  lesser of 4 or the increase in the Consumer
  Price Index during their term of ownership.

5
Workforce Market Deed Restriction

• Initial price of Community Housing Units is
  established by current market conditions and not
  by income categories.
• Eligible applicants must live and work in Blaine
  County, or be retired from employment in Blaine
  County, and may not own any other developed real
  property.
• When the owner of a Workforce Market Deed
  Restricted unit decides to sell, they are not
  required to offer the unit to applicants on the
  BCHA applicant waitlist.

6
Workforce Market Deed Restriction (cont.)

• No set limit on re-sale price however, the
  Workforce Market Deed Restricted Community
  Housing Unit may only be sold to someone who
  lives and works in Blaine County or, is retired
  from employment in Blaine County.
• A declining percentage flip tax attempts to
  discourage purchase of the Workforce Market Deed
  Restricted Community Housing Unit for investment
  purposes.

7
Concerns with Income Based Deed Restriction

• Purchasers are not permitted to enjoy all of the
  benefits of homeownership (price appreciation and
  the ability to transfer, sell, donate or
  otherwise convey title/ownership of the property
  to whomever they choose).
• At income categories 5 and above, the pool of
  applicants on the BCHA waitlist is quite limited
  and the ability to secure a qualified purchaser
  from the BCHA waitlist is of concern to sellers.

8
Concerns with Income Based Deed Restriction
(cont.)

• Applicants in the higher income categories (5 and
  above) have limited opportunities to purchase
  Community Housing Units (because most are priced
  at income category 4 and below) yet, these
  applicants still cannot afford to purchase a
  market rate residence.
• Public perception of Income Based Deed
  Restriction leads some potential applicants to
  disregard this a workable solution to their
  housing needs.

9
Concerns with Workforce Market Deed Restriction

• Workforce Market Deed Restricted units are
  unaffordable to future purchasers (after the
  initial purchase from the developer) because
  there are no set limits on price appreciation.
• Annual or semi-annual compliance monitoring of
  Workforce Market Deed Restricted units is
  critical to assure that these units continue to
  be occupied by the intended beneficiaries.

10
Concerns with Workforce Market Deed Restriction
(cont.)

• If the Workforce Market Deed Restriction is the
  only form of deed restriction used within a
  particular jurisdiction and/or development, few
  if any Community Housing Units will be produced
  that are affordable to purchasers at income
  categories 4 and below (assuming that the initial
  selling price is set by the market).

11
When is it appropriate to use the Income Based
Deed Restriction?

• Open for questions, comments and input from
  workshop participants.

12
When is it appropriate to use the Workforce
Market Deed Restriction?

• Open for questions, comments and input from
  workshop participants.

13
Are there more effective methods to insure long
term housing affordability?

• Community Land Trusts-improvements are owned by
  the purchaser but the underlying property is
  leased from a community land trust.
• Co-op ownership-purchaser buys/owns shares in the
  co-op allowing them to occupy the unit (subject
  to certain terms and conditions), shares may be
  resold to another qualifying purchaser.

14
Are there more effective methods to insure long
term housing affordability?

• Shared Equity/Appreciation-the local government
  or Housing Authority retains a lienholder
  interest in the Community Housing Unit and is
  entitled to receive a portion of the price
  appreciation upon re-sale.
• Long term Lease/Purchase Agreement- the Community
  Housing Unit is leased during the first 5-10
  years. After the lease period, the unit may be
  purchased at a previously determined price with a
  portion of the lease payments being credited
  towards the purchase price.

15
Discussion and Wrap-up