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HomeMy WebLinkAbout1.12 Community Housing Program Community Housing Program Spring Valley Ranch PUD June 2005 Background Spring Valley Development, Inc. (Applicant) was asked to communicate to Garfield County how affordable housing will be provided by the Applicant. Although the Garfield County Land Use Regulations would not dictate that affordable housing be provided for Spring Valley Ranch PUD, the Applicant has chosen to offer a plan for some affordable housing within the project. Quoting from Resolution No. 2000-95, A Resolution Concerned with the Approval of a Planned Unit Development Amendment for Spring Valley Ranch, condition #21 of the approval stated: "How affordable housing will be provided must be clarified by the Applicant. In addition, the enforcement of any and all affordable housing will be the responsibility of the Applicant and not the County. This must be done in any Preliminary Plan submittal." The plan outlined in this memorandum will be managed and administered by either the Landis Creek Metropolitan District or the Spring Valley Ranch PUD Homeowners Association. The plan addresses the intent of Garfield County's affordable housing guidelines. Objectives ♦ Meet a broad income range in order to avoid a "monoculture" or institutional feel ♦ Respond to direct market demand identified during a presale/reservation period and insure that the housing created remains affordable for the community and the residents well into the future (considerations include sales price, mortgage market and retail market) ♦ Encourage occupancy by residents who work as close to Spring Valley Ranch PUD as possible in order to minimize road impacts and transportation costs for residents ♦ Integrate the architectural feel of the buildings into the Village Center architecture ♦ Despite the potentially large differences in income, attempt to socially integrate the development where possible Recommended Plan for Community Housing A. Affordable Housing Targets: Create 75 for sale units of housing which respond to the following income ranges: Unit Type Estimated Fair Market Value (2005) Preliminary Price (2005) Percentage of Area Median Income Range Targeted Initial Unit Allocation Small, 800 sq.ft., 2- Bedroom Flat $150,000 $125,000 80-100% 30 Larger, 1200 sq.ft., 2- Bedroom Condo or Townhome with Attic (2 Floors); [Upgrade option to 3BR/2BA may be offered.] $220,000 $195,000 100-120% 20 Townhomes 1500 sq.ft. 3-Bedroom Units plus Attic $270,000 $245,000 Single Family Residence with Basement (Average 2000 sq.ft.) $450,000 $425,000 Lots for Custom Homes for Employees of Spring Valley Ranch PUD or Landis Creek Metropolitan District $100,000 $75,000 Over 120% 25 Total Spring Valley Ranch PUD Community Housing Units 75 Subsidy The targeted preliminary prices are based upon costs of units that are being considered for the property MINUS the full cost of the land, impact fees for roads and wildlife, and amenities (golf courses, Clubhouse, trails, parks, trailhead and equestrian facilities will not be charged to the units). The Applicant will contribute these costs (subsidy) in order to make the units more affordable. The subsidy for the units will be substantial enough to create not only a more affordable home price, but also an adequate incentive for the home buyer to agree to the deed restriction on appreciation which is proposed within the new ordinance. Our current market analysis suggests that these units are approximately $25,000 below the market of the Glenwood-Basalt area, which amounts to a developer total subsidy to the affordable housing program of approximately $1.875 million. Market Responsiveness The Developer would like to retain the ability to shift the housing allocation highlighted above during pre-sales in order to respond to the actual demand from Garfield County households and employers. It is possible that the smaller two-bedroom may be more popular than the townhome due to its price; however, it may also be that the private yard available with the townhome will be more popular. We have enough land dedicated to the Community Housing Program that we can make alterations to the mix of units based upon demand. We are also still evaluating a small single family unit as part of the mix of housing; however, the price point for these units, based upon the subsidy assumption outlined, is less certain. B. Deed Restriction All units will be governed by a deed restriction which caps appreciation at the lesser of CPI or 3% per annum on a cumulative basis. C. Qualification Criteria 1. Income Guidelines: Resident households must qualify for their mortgages (30-40% of gross income), but must spend at least 22% of their household income on the housing costs. The Applicant would like to insure that Spring Valley Ranch PUD's Community Housing is sold (or rented - see Employer ownership below) only to families who need housing which is deed restricted. The Applicant is concerned, however, that fluctuating mortgage interest rates, a factor which is out of the control of the Applicant and Residents, could result in severe restrictions on the marketability of the units (i.e. if interest rates rise sharply, anyone who could qualify for a mortgage could not qualify under the HUD income guidelines). In order to insure the re-marketability of the Spring Valley Ranch PUD Community Housing now and in the future, the Applicant proposes that the units be offered to incomes which qualify for mortgage rates (i.e., 30% of income), but must spend at least 22% of income on housing costs. This approach not only will help the Spring Valley Ranch PUD Community Housing track market conditions over the long term, but also will be easier to explain to potential purchasers and mortgage lenders. Given the fact that the Roaring Fork Valley (outside of Aspen/Pitkin County) has very little deed restricted housing product, this is of particular concern. 2. Net Asset Test: Purchasers of Community Housing at Spring Valley Ranch PUD must have a current household net worth, minus qualified retirement assets, not in excess of $ 100,000. 3. Priority: Priority will be given to a person that works or resides in Garfield County. 4. "Fannie Mae Clause": The deed restriction will have language which allows mortgages to be qualified under Fannie Mae (and Freddie Mac and VA). The inclusion of this clause is important in order to qualify mortgages at the lowest possible rates in the market. The inclusion of this clause (all affordable housing deed restrictions in the valley have this clause) permits the deed restriction to be eliminated in the event that the unit mortgage is in default and cannot be resold within a predetermined period of time. Employer owned units as discussed below should also include this clause. D. Employer Sponsorship of Housing: The units also will be offered as 'for sale' housing to community employers. These Garfield County employers (including Spring Valley Homeowners Association) can rent units to households which qualify under Net Asset Guidelines stated above. The units will be deed restricted and have an appreciation cap in place. The employer will have the flexibility to rent the housing at the mortgage cost and expense; however, an employer may discount the rent further to make the unit more affordable. The employer can also sell the unit to a qualifying employee or community member. Note on Employer Sponsorship and the Telluride Case: The Applicant believes that since the employers are not being required to purchase the deed restricted housing and that it is offered and purchased "free will," that the employer/purchasers may voluntarily commit to the affordability guidelines of Spring Valley Ranch PUD. The employer will not have a rent cap imposed, but will be expected to rent the unit for lease rates that are affordable (e.g., no more than 40% of household income), a guideline which is consistent with an employers objective of keeping and retaining good employees. The fact that the appreciation is capped on employer sponsorship units will also insure that the rent will not be severely below the market value of the asset. Employer sponsorship of some of the units is probably the best way to insure that units are allocated to employees in the area. Various area employers have expressed interest in the employer ownership opportunities. Spring Valley Ranch PUD will provide an additional opportunity to help employers keep their key employees in greater proximity to work-an important benefit to the overall affordability of a home. E. Presale/Reservation and Resale Priorities: Priority will be granted in the first instance to employees of Garfield County employers, then to Garfield County residents, and then to the qualified buyers who do not fit the first two criteria. Should more reservations be made than are available in the first offering time period, a lottery will be held which selects buyers from within the priority categories until all units are sold. If fewer reservations are made, units will be sold on a first come, first served basis. Resales will be made by the owners themselves, who may avail themselves of a prioritized waiting list which is maintained by the Manager of the Spring Valley Ranch PUD Community Housing. A fee may be collected at resale in order to cover administration expenses. F. Community Access to Amenities: Amenities at Spring Valley Ranch PUD such as golf, trails, cross-country skiing, and the equestrian, center, will be available to Spring Valley Ranch PUD Community Housing residents. The club memberships presumably will be beyond the economic reach of the Spring Valley Ranch PUD Community Housing residents, however, the public tee times, the trails system and the "pay as you go" Equestrian Center will be significant amenities to the residents. These will be available on a fee-for-service basis. G. Design Objectives: The site plan will encompass the following: ♦ Three tiers of parking on a schedule which is separate from the unit purchase: ƒ Surface/Street Parking ƒ Carport Parking ƒ Garage Parking ♦ Housing built around a "village green" atmosphere The housing architecture will follow these guidelines: ♦ Building structures will provide the look and feel of a larger single family building. ♦ Porches, balconies and decks will be used to transition from private indoor space to outdoor spaces. ♦ The buildings will be two stories with possible third-story "dormer" and attic space. ♦ The program will be fully compliant with Fair Housing Laws and the buildings will provide ground floor ADA access. ♦ Multiple textures and colors will be used on natural finishes in order to provide a varied texture. Upgrade Options: ♦ Spring Valley Ranch PUD Community Housing will be designed to allow residents to upgrade and grow into their units. Attic and basement spaces may be unfinished. Extra bathrooms may also be available for installation. The buyer may elect to add these items at purchase or over time and have these reasonable upgrades included in the deed restricted house value. The upgrade options are not included in the housing price estimates. H. Quality Management Management of the Spring Valley Ranch PUD Community Housing will be administered by the Landis Creek Metropolitan District and/or the Spring Valley Ranch PUD Homeowners Association. Certain management functions (landscape, roads, etc.) will be administered by contract with the management company used by the entire development. Reserves and maintenance will be established which ensure the long term viability and quality of the housing. L. Consider seeking a further subsidy from the, Colorado Division of Housing in order to have 5-10 housing units which will reach levels of affordability below 80%.