The Brown Ranch promises to be affordable. How will the Housing Authority make that happen?
On Wednesday, Yampa Valley Housing Authority Executive Director Jason Peasley presented how they plan to deliver on the promise of affordability.
The number one goal of the Brown Ranch is to provide affordable and attainable housing for Routt County’s workforce, but some locals are somewhat skeptical that will actually happen.
On Wednesday, Yampa Valley Housing Authority Executive Director Jason Peasley shared how they intend to provide that affordability both initially and in the future.
The plan he presented talked about how the housing authority will utilize funding available to subsidize the construction of units at Brown Ranch and how they intend to put policies in place to ensure that those units stay affordable for the life of the development.
From a rental basis, this means putting income requirements in place that will maintain various income limits based on Routt County’s Area Median Income. On the for-sale side, Peasley said they intend to have a form of deed restriction that will limit who can purchase a unit based on their income and where they work. This will limit how much the home could be sold for initially and how much it could be resold for in the future based on an appreciation cap.
By having a wide range of units, targeting incomes that extend from 30% area median income to 250% area median income, the Brown Ranch hopes to meet the housing needs for people across the community, whether they are a lifty whose employment fluctuates through the year, a school teacher who is making $60,000 a year or a doctor who is making twice the area median income.
Across each of these housing levels people are struggling to find housing that is considered affordable to them, Peasley said. The varied level of housing planned for the Brown Ranch hopes to meet the housing need for people where they are now and where they hope to be in the future.
“(Housing affordability) is the reason the housing authority is in business, it’s 100% of our mission, it’s why we’re all sitting here doing this,” Peasley said during Wednesday’s annexation meeting. “If we’re not delivering on affordability, we’re not going to be building anything, because if we can’t meet that top priority, we stop right there.”
What is affordability?
There is a federal standard for affordability that says spending 30% or less of income on housing is considered affordable.
For renters that means rent, fees and utilities only take up 30% of one’s total income. For home ownership, that means the total mortgage payment, mortgage insurance and other home-owner association fees together only take up 30% of total income.
But everyone has different expenses that go into what is affordable for them. Student loans, credit card debts, personal life goals and even how long someone commutes to work can all factor into whether their housing situation is affordable to them.
“What is affordable? The kind of elevator pitch is, it’s personal,” Peasley said. “We don’t know what’s right for every individual, so we have to hit a target that’s going to be in and around what is affordable for the vast majority of folks.”
What is Area Median Income or AMI?
Area Median Income is the universal language of housing across the nation, with many of the programs the housing authority plans to utilize to build the Brown Ranch being based on this metric.
For the Brown Ranch, AMIs will be based on real incomes earned by people in Routt County. But as this is a median, that means 50% of all residents are above that number and 50% are below that number. The current area median income in Routt County is nearly $72,000 a year, and that number increases every year based on what locals are earning.
“This information is derived from our local tax returns,” Peasley said. “We’ve seen that information be relatively aligned with what local wage earners are making, and recently a bit detached from that because we’ve had a lot more people moving into town that are location neutral and those types of folks are actually skewing our AMI a little higher.”
When looking at someone who is at 60% AMI, this means for a single person, they make about $43,000 a year or for a household of three people they make about $55,200 a year. In the context of city of Steamboat Springs employee, this is someone who is working to take care of city parks. For a single person at 60% AMI, that 30% affordability standard would have them paying $1,075 or less for their housing costs each month.
At 120% AMI, this is a single person making just over $86,000 a year, and spending more than $2,100 a month on their housing. Peasley compared someone at that level to a sworn city police officer. At 140%, a single person is making just over $100,000 a year, with affordability for them being paying about $2,500 or less a month on their housing costs.
“All of these people, from our estimation, are struggling to find housing that’s affordable to them, and so when we talk about the areas that we’re going to be focusing on for housing, we’re going to be including the entire spectrum,” Peasley said.
Peasley said units at the Brown Ranch will be built so that anyone between 30% AMI ($27,600 a year for a single person) to 250% AMI ($179,250 a year for a single person) will have a unit that is priced so they are spending 30% or less of their total income on housing.
How can the Housing Authority get funding to build this broad section of housing levels?
Peasley said that the cost to build a single unit, whether someone at 30% AMI is going to live in it or someone who is 250% AMI is going to live in it, is relatively similar. To meet the lower end of the affordability metrics, they need to find some sort of subsidy.
“The two-by-fours cost the same,” Peasley said. “The way we can impact this is on the source side, meaning all the money that comes in.”
For rental units between 30% and 80% AMI, this is largely done by utilizing low-income housing tax credits from the federal government. Current housing authority projects that have done this include Alpenglow, The Reserves and the currently under-construction Anglers 400.
These tax credits subsidize construction anywhere from $100,000 to $200,000 per unit, which allows the cost to the eventual renter to be less.
“It is a smoking deal, we will go after it every time,” Peasley said. “Without that level of subsidy, it’s very difficult to hit somebody making 30% AMI.”
For rental units priced at 80% AMI and higher, the housing authority will use federal loan programs, which are low-interest loans that can subsidize the cost to build these units and lower rents below the market rate so they hit that 80% affordability metric. Sunlight Crossing, which was leased up last year, was built using these loan programs.
In addition to federal dollars, there are a lot of state housing dollars available right now that can be used to build units for rent or for sale from 30% AMI to 140% AMI, with the subsidy per unit decreasing as the person targeted to live there makes more money.
There are local funding opportunities as well including the property tax the housing authority collects (currently about $1 million a year) and Steamboat’s short-term rental tax. These dollars can be used to build rental and for-sale housing that targets incomes anywhere from 30% AMI to 250% AMI.
Other ways to make housing affordable are through the housing authority’s down payment assistance program and through rental assistance programs. The down payment assistance program can be used to lower the cost of a monthly mortgage by putting more down up front and rental assistance through various programs can lower monthly rents so it doesn’t exceed 30% of someone’s income.
The housing authority’s Hillside Village units utilize a federal rental assistance program that has rents based on what the person who lives there makes — rent is 30% of their income — and the government backfills the rest.
What mix of AMIs will be targeted by units at the Brown Ranch?
Peasley said that they intend to target median incomes ranging from 30% to as high as 250% Routt County’s median income. While housing is difficult to find for low-income residents, it is nearly as difficult to find for people that have higher incomes as well.
The goal of the Brown Ranch is to ensure there are units — for purchase and for rent — that are affordable based on that 30% of income standard for everyone in the community. The goal is also to have units that are available for people as their income changes through their life.
While someone may be making 60% the AMI now, they could get a promotion so they are making 120% AMI down the line. Or maybe someone is making 150% the AMI now, but then retire and has a much lower annual income to where they are at 80% the AMI. Peasley said the Brown Ranch will have units meeting all these income levels so people can move up and down as their life situation changes.
Will someone be kicked out of the house they rent or own if they start making more money?
For people who rent, Peasley said there are large windows within these federal and state programs to accommodate people getting a raise at their job. This means that if someone qualifies for and rents a unit that is 80% AMI and then gets a promotion so they are now making 100% the AMI, they do not get kicked out of their rental unit.
Housing Authority Board President Leah Wood said that is an often misconception with affordable housing projects. Wood said in her time working in affordable housing, she has only seen someone’s income increase enough that they had to move out of their housing twice, and each time they were able to buy their own home before they were forced out.
Peasley noted that AMI is generally increasing as local wages increase, so just because someone sees an increase in their income in terms of dollars they make a year, that doesn’t mean that their percentage AMI is going to change in the same way.
For people who purchase a unit at Brown Ranch, they will be able to stay in the unit they own for as long as they wish. Part of the goal of the project is to provide a variety of housing levels, so that if someone buys a studio apartment and down the line wants to grow their family or starts making more money, there will be a different unit they can move into that better meets their life situation.
“Right now, we have such a logjam in our housing market that there’s nowhere to move, there’s no next step. It is a quantum leap to the next juncture of housing” Peasley said. “That’s where this stratification (of housing levels) becomes really important in being able to create that ability for folks as their circumstances change, their income changes, their household size changes.”
What could the housing mix of the first neighborhood at Brown Ranch look like?
The first neighborhood at the Brown Ranch intends to have about 480 units in it, and Peasley said units will meet different levels of income.
About a third or 160 of those units will be a low-income housing tax credit project targeting people with 30% to 80% AMI. The remainder of the units will be for rent and for sale condos and townhomes that target the 80% AMI and higher income ranges.
Still, this is based on the current housing demand study, and getting these subsidies for the first units will likely require another demand study. That means the projected mix could change before the first units come are available at the end of 2026, Peasley said.
With how fast housing prices are rising in Routt County, how will units be affordable when they are sold in the future?
The housing authority has been working to craft a deed restriction system that they are referring to as a community affordability agreement. Peasley said this hopes to walk the fine line of maintaining affordability for decades to come and being able to build wealth for those who purchase Brown Ranch units.
This agreement is meant to be simpler than previous deed restrictions employed in Steamboat that often have not worked entirely as intended.
The agreement will include a sole residency requirement, meaning to purchase a home at Brown Ranch someone cannot own other property elsewhere. Brown Ranch units cannot be someone’s second home and someone cannot own a Brown Ranch unit and then have an investment property elsewhere.
The agreement will also include a local workforce requirement, meaning that someone who is part of the household needs to work an average of 30 hours per week or more for an employer who is physically based in Routt County.
AMIs will be incorporated into these units as well, so whether someone purchases it when it is first built or decades from now, the unit will be eligible to a new buyer based on the income they have. That income is measured at the time they purchase the home, so even if someone starts earning more than their initial AMI, they will not be forced to sell their home, Peasley said.
The agreement will also have some kind of appreciation cap, which will put a limit on how much it can be resold for. Peasley said the housing authority is still exploring how best to institute that cap — whether it be a function of AMIs or an appreciation rate each year. The community affordability agreement would also have provisions in it to account for capital improvements homeowners make to their house, Peasley said.
Another way the housing authority intends to keep the sale cost of housing down is by forming a non-profit real estate company, so transactions involving Brown Ranch units would not be paying commissions to realtors.
This has two functions, Peasley said. For the initial sale of the unit, it lowers what the buyer pays overall and for the second and third sale of a unit, it allows the seller to retain more of what the unit is purchased for.
“We would be the one signing off for the transaction of deed-restricted housing at Brown Ranch,” Peasley said. “We would be charging a below-market fee, something considerably less than the 6% fee that you would often see.”