Requirements change for affordable housing project
Josh Dempsey was looking for a house for about six months before he decided to buy a condominium at The Boulders on Deerfield Drive.
Dempsey, 25, who works for the developer of the project, decided to take advantage of a moderate-income buyer program that helps first-time homebuyers get a loan and get into housing.
“The truth is $300,000 is a lot of money,” he said. “I couldn’t find anything in the area in the price range that the moderate homes were priced at.”
“I was looking at fixer-upper houses and I really couldn’t find anything that I liked under $300,000,” Dempsey said.
The Boulders project was approved in 2001 and includes 32 moderate priced units specifically earmarked for Truckee residents that made a certain income. The initial conditions at the time of the project’s approval required a 30-year deed restriction on the moderate-priced units, placing a cap on the amount of appreciation a homeowner could receive if the unit was sold before the 30-years were up.
At the May 1 Truckee Town Council meeting, DMG Developments, the developer of the project, came to the council with a new idea – a complicated idea – that aims to keep the moderate-priced units affordable for the intended buyer, while also making the deal much more attractive to a first-time homebuyer.
With the 30-year deed restriction in place, only two moderate units were sold.
“They were essentially dead at arrival,” said Bob Tamietti, lawyer for the developer. Tamietti said most of the people interested in the moderate units were trying to beat the deed restrictions.
“What we’re asking you to do is fine tune that agreement we reached in March,” Tamietti said.
“As sometimes happens, an issue arose,” said Community Development Director Tony Lashbrook, who helped develop the new moderate-priced program. “It appears the stumbling block is the 30-year restriction on appreciation.”
To make the unit “affordable” with the new program, the developer sponsors a $30,000 loan to bring down the loan amount needed. Closing costs up to $6,000 would then also be paid by the developer once the buyer’s loan is approved.
But keeping the unit affordable for future buyers is where things get tricky.
If a homeowner decides to sell the unit, it is first offered to Nevada County Housing and Community Services, which would either buy the unit or find a moderate-income buyer. If it can’t be sold to a moderate-income buyer, the homeowner can sell it at market rate, but if the sale is before 10 years of ownership, the owner will not receive the full amount of the unit’s appreciation. The difference between what the owner receives in appreciation and the actual appreciation will be set aside in a type of trust fund for future housing programs.
“It really initiates a model of affordable housing that can be used at The Boulders and elsewhere,” Lashbrook said.
The appreciation caps give the seller an incentive to sell to another moderate-income buyer by making the return higher than if he sold the condominium at market rate.
Although the developer hopes the new program will fill the moderate units, they are optimistic about sales.
“I can’t say sales will unleash with the approval of this,” said Tim Galvin, head of sales and marketing for The Boulders. “Please don’t expect a flood of sales if this passes. We need not only an approval, but a change in mentality that this is good.”
He noted that creating units for moderate-income buyers was not a condition of the project’s approval, but an idea the developer, David Gardner, offered first.
“I thought we were going to come out with this program and (the moderate-priced units) were going to be gone,” Gardner said during a tour of a model unit at The Boulders. “Hopefully we can make this program work and get people in here who need this housing.”
The moderate-priced units, priced $40,000 to $50,000 less than the market-rate condominiums, have some slight differences, like different kitchen countertop materials, different doors and no fireplace. But Galvin noted that the units are above apartment standards.
“It’s a difficult niche because our perfect buyers want market (rate),” Galvin said. “One gal with her son; she was working in Squaw Valley and she’s going to move to Wyoming … where she can afford to purchase a house to raise her son.”
Jim Carney, director of Nevada County Housing and Community Services, said he hopes this program is a model for other projects in Truckee and western Nevada County.
“I really think this is one of the more creative approaches to providing moderate-income – or what some people call workforce – housing.”
Although the restrictions aren’t the perfect situation for moderate-income buyer Dempsey, he argued that there’s nothing like The Boulders out on the market today.
“If there was a product out there that was equivalent without those restrictions, I would certainly buy that product.”
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Friends of the Truckee Library gave a presentation at Tuesday’s Truckee Town Council meeting, providing an update on work to ensure a new library while asking for further support for the project.