Mt. CB Council still looking to stop loss of affordable housing

“We don’t see these types of deed restrictions work very well”

The discussion in Mt. Crested Butte about the future of uncapped, deed-restricted affordable housing units made little progress after a work session with Gunnison Valley Housing Authority director Karl Fulmer on Tuesday, June 18.

The town maintains deed restrictions on more than 70 homes around Mt. Crested Butte, holding potential buyers to residency requirements, income requirements and, sometimes, restrictions on the amount they can sell their property for.
But for a dozen of the town’s “uncapped” deed-restricted homes, only the market limits the resale price and that has left some owners owing more than their home is worth, resulting in four foreclosures to date. Foreclosures are first offered for sale to the town and if the council refuses, as they did earlier this year, the deed restriction is lost.
In hopes of finding a solution to the hemorrhaging of deed-restricted homes, for which the town spent more than a decade planning, they invited Fulmer, who has been in the valley less than a year, for some recommendations.
But Fulmer left the meeting with a clearer picture of just how much water his opinion would carry with the town, after the council urged him to find a way to work within the existing framework, instead of shaking things up and potentially exposing the town to legal challenges from unhappy homeowners.
To start the work session, Fulmer told the council he didn’t know of many housing professionals in resort communities who supported uncapped deed restrictions, saying, “I don’t know too many of us that are. I certainly am not. It’s just an arbitrary limitation of your buyer pool and I’ve never really understood it.”
Town manager Joe Fitzpatrick pointed out that of the 13 original uncapped deed-restricted units, one was lost in foreclosure and four others were almost lost, but eight of the owners of those units went away from the experience happy, earning anywhere from 6 percent to 221 percent on their original investment.
Fulmer reiterated his opposition to uncapped deed restrictions and Mayor William Buck asked if the arrangement could work if the town imposed price caps on all of its units and removed the income requirements that limit buyers to making anywhere from 80 percent to 120 percent or more of the average median income.
“It could function but it’s not following the mission statement of the Housing Authority,” Fulmer responded, explaining that removing the income restrictions could allow upper-income people to participate in the program. “We’re supposed to serve middle or lower income, so the capped unit that’s not income-restricted could be more affordable to more people, but you could have somebody from the upper-income bracket buying it.”
“Well, you don’t have a recommendation to offer us?” Buck asked.
Fulmer told the council he couldn’t make a recommendation because there wasn’t a quorum at the most recent meeting of the Housing Authority’s board of directors. “Technically it would be a recommendation from my board so I’m hesitant to give a recommendation, as the official spokesperson for the housing authority. However, I would recommend you strongly look at releasing these properties from their uncapped deed restrictions or place an income restriction on them,” he said.
The council had been warned by town attorney Kathleen Fogo about the legal complexities of approving the removal of some deed restrictions, but not others, and warned that doing so could expose the town to legal challenges, from one owner specifically who had to foreclose on her son to have the deed restrictions on her property lifted.
“So your proposal is that we just let them go free market?” councilman Tom Steuer asked. “Basically that’s what you’d have to do.”
Fulmer said, “That’s what I would suggest. I think it would be one solution and certainly the easiest solution. But as the Housing Authority director, I want to reiterate that I am in favor of capped and income-restricted deed restrictions … If you didn’t have a real plan in place when you did it, I don’t know what the plan might have been. But a lot of times we don’t see these types of deed restrictions work very well.”
“But it’s really difficult to see how we can change all of these units now that a couple have gone into foreclosure,” Fitzpatrick said. “I don’t know what backlash would be to a blanket removal of the deed restrictions.”
Buck said, “They could have grounds for legal action.”
“Very potentially,” Fitzpatrick said.
“Don’t get me wrong. I’m not in favor of releasing deed restrictions on capped units. Uncapped units are far more problematic to manage,” Fulmer said. “I’m just saying the Housing Authority has far less interest in managing and administering the sales for uncapped, non-income-restricted units. It doesn’t really flow with our mission.”
That apparent unwillingness to work with what the town had didn’t sit well with the council, and councilman Chris Morgan said, “Would you support us reducing our contribution to you?”
“It’s just, in managing the sales of uncapped units and non-income-restricted units, we would be serving those outside our mission statement who could potentially buy those properties,” Fulmer said. “So it would be a board decision, not mine to say what the Housing Authority would do in that situation. That sounds like a very diplomatic answer, but it’s the reality of having a board of directors.”
Buck followed up on Morgan’s comment, saying, “There were mixed feelings on this council about supporting a countywide housing authority at the level we are, or maybe even at all. So you and the board may be up against that next year.”
The message made it through and Fulmer said, “It is in conflict with our mission statement if we’re serving those at the upper income level. But perhaps we should revise our mission statement or our goals. But we are here to serve the communities that pay into our budget. I think my board would look at it and say we want to assist.”
But no solutions came out of the work session and Fulmer said he hoped the council would send him a list of issues to discuss with his board at their monthly meeting on July 3.