There could be significant consequences to waiving income-based deed restrictions for re-sale of a duplex unit in Bayfield's Fox Farm Village affordable housing project, attorney Jeff Robbins told town trustees on June 21.
The project was created by the non-profit Community Development Corporation to provide workforce housing, with 50 multi-family lots to be developed by groups like Habitat for Humanity and the now defunct Colorado Housing Inc. The final plat was aproved in early 2006.
At issue now is one and possibly several of the CHI townhomes. Ashli Hammer wants to sell her unit without the deed restriction. She said some other owners in her group of townhomes on Tugwell Lane also want to sell in the next few years without the deed restriction.
In his written staff report, Town Manager Chris La May cited a plat note for the 50 lots saying they "are deemed 'affordable' lots and shall be plat restricted for 50 years meeting federal guidelines for income affordability. This restriction shall automatically be extended for an additional 50 year period to expire Nov. 30, 2105." The plat with deed restrictions was recorded in March 2006.
The intent was to preserve these homes as affordable for low and moderate income people "who would occupy lots as primary residence and not for unauthorized rental or speculation," La May said. The income limit on the CHI units is 120 percent of area median income (AMI). Habitat has considerably lower limits.
But Hammer told trustees that when she bought her unit, the Realtor said the deed restrictions had been waived for those CHI units. "CHI told me about the deed restrictions in 2006, and I opted out. In 2007 they called and said the deed restrictions were lifted. We went forward (with the purchase) and felt lucky that there were no restrictions. ... I asked neighbors, and they were told the same thing." She provided letters from some of them.
"This is a big deal for all of us, the impact on our ability to re-sell," Hammer said.
She said she had her unit under contract when the deed restriction came up. Her buyers' income was $500 over the limit, she said. "They were devastated." She said a unit is under contract in the other group of CHI duplexes in Fox Farm, "and that owner says there are no deed restrictions." She also said that unit now has a renter.
La May wrote in his staff report, "On July 17, 2007, the Board of Trustees was asked to consider removal of plat restrictions for USDA Rural Development financed properties. Colorado Housing Inc. was prepared to finance 10 units at Fox Farm, but USDA would not finance unless there was a waiver of deed restrictions in the event of foreclosure." The board approved the waiver in the event of foreclosure but not for re-sale, he said.
The Times kept a tally of local subdivision activity back then during the building boom before the housing bust. The Fox Farm entry for the July 17, 2007, meeting said the board waived the deed restriction for re-sale of homes in case of foreclosure to satisfy the USDA.
Town attorney Jeff Robbins told Hammer, "What you are asking is not an easy thing, to remove restrictions that are on the plat and the title. That's the full disclosure that those restrictions exist, no matter what anyone said to you."
The town received a grant from the State Department of Local Affairs, around $200,000, Robbins said, to buy down the cost of water and sewer tap fees. DOLA might want that money back if the deed restrictions are lifted, he advised.
La May asked, "If we lift (deed restrictions) for those units, what's to prevent the Habitat people from coming with the same request?"
In November 2013, trustees discussed reports of Fox Farm deed-restricted units being rented out instead of being occupied by the approved buyer.
Also that month, Housing Solutions for the Southwest reported they owned 14 lots at Fox Farm but were unable to build. Permanent income-based deed restrictions were the issue. They asked the town to change that to apply only to the initial buyer. The housing bust, foreclosures, and falling home prices changed the market, and financing had become unavailable for workforce housing, Housing Solutions director Elizabeth Salkind told trustees. The permanent deed restrictions meant the lots would sit there un-built, she said.
There also was a question at the town board meeting of which entity, if any, was monitoring the deed restrictions.
