ngaffney Worcester Co Workforce Housing obstacles

Workforce/affordable Housing Hurdles, Obstacles & Solutions: 

Workforce/affordable Housing Hurdles, Obstacles & Solutions Worcester County Workforce/Affordable Housing Panel September 15, 2005

Hurdles and Obstacles : 

Hurdles and Obstacles What is the biggest obstacle? COST! Cost of Land Availability of Land Cost of Construction Materials

Background Howard County: 

Background Howard County Average sales price for all single family detached and townhouses in Howard County as of January 2005 was $427,319 (New construction much higher) The median income for the Baltimore Metropolitan Statistical Area is $72,150 The median income for Howard County according to the Census is $82,065 based on 2004 data.

Home Purchase Affordability: 

Home Purchase Affordability The thumb rule used to determine the amount of house one can afford is 2.5 time your annual income Using the BMSA median of $72,150 they could afford to buy a house valued no more than $180,375 Using Howard County median of $88,065 the house value could not exceed $220,163 The family with a median income can not afford the average priced house

Developers and Builders: 

Developers and Builders Designing and building the product that appears in demand and that they can make the most profit They are building what is selling, what the market place is calling for

In Howard County : 

In Howard County Townhouse communities like Cherry Tree and Maple Lawn Farms are building Townhouses that appraise at $350,000 to $800,000.

Slide7: 

Cherry Tree Rendering

Solution Tool Box: 

Solution Tool Box Inclusionary Zoning Shared Equity Land Banking

Inclusionary Zoning : 

Inclusionary Zoning In Howard County we have adopted a program we call the Moderate Income Housing Program In various zoning districts, we have added a requirement to build varying percentages of moderate income housing

Zoning Districts : 

Zoning Districts The zoning districts which include a required moderate income housing component include: Mixed Use Development – 5-10% depending on density Residential Mobile Home – 15% if single family and 20% if apartments Planned Senior Community – 10% Corridor Activity Center 15%

Development Process: 

Development Process When a development is subject to this subtitle, the developer must submit to the Department of Planning and Zoning with the original final plat or original site development plan An agreement to provide number of moderate income housing units offered for sale or rental units plus a plan for construction; and Recordable covenants approved by the Department of Housing and the County Solicitor.

Prices : 

Prices The Howard County Housing Commission establishes the sales price semiannually based on interest rates, insurance, taxes and HOA or Condo Fees Price is based on affordability 65% of median income for townhouse 60% of median income for an apartment

Shared Equity : 

Shared Equity On homes that the Housing Commission has ownership we can sell to an eligible buyer the portion of the house they can afford. We then share in the equity gain or loss as co-owner. The buyer has at least 51% ownership.

Shared Equity Continued: 

Shared Equity Continued Sales price is always the appraised value to support the house prices for neighborhood Buyer has full use of the property Buyer pays all taxes and insurance At the end of five years, income re-assessed, if they can then afford the entire home by themselves, they buy us out or we buy them out Buyer always has the right to buy us out at any time

Shared Equity ExampleCherry Tree Early Phase: 

Shared Equity Example Cherry Tree Early Phase Base Value Market 240,000 First Mortgage 118,700 2ND Mortgage (HCHC) 21,300 Buyers Equity 58% = 140,000 HCHC Equity 42% = 100,000

Shared Equity ExampleCherry Tree Later Phase: 

Shared Equity Example Cherry Tree Later Phase Base Value Market 375,000 First Mortgage 135,800 2ND Mortgage (HCHC) 55,450 Buyers Equity 51% = 191,250 HCHC Equity 49% = 183,750

Some Additional Hurdles : 

Some Additional Hurdles As the home increases in value at these rates, property tax can become a burden although In Howard County there is a 5% cap increase on property tax year to year

A Solution to the Property Tax Issue: 

A Solution to the Property Tax Issue Modify the property tax assessment and charge according to the percent of ownership The buyer owns 51% and should pay 51% of the taxes Our Housing Commission pays 49% of the taxes, but….we are tax exempt Deferring taxes for selected groups like teachers and first responders

Land Banking: 

Land Banking Bank buildable land Our Adequate Public Facilities Ordinances dictate delays in construction Government and non profit agencies can afford the wait

Conclusions : 

Conclusions Howard County Builds 1500-1800 units per year A 10% MIHU program yields only 180 affordable units

And as that great housing guru Tim McGraw says about affordable housing: 

And as that great housing guru Tim McGraw says about affordable housing I like it! I love it! I want some more of it!