Re: Long-term affordability | <– Date –> <– Thread –> |
From: David L. Mandel (75407.2361compuserve.com) | |
Date: Sat, 1 Apr 95 01:53 CST |
Another reply to Bill Paiss, who asked whether any groups that may have tried hard to keep initial costs under control also thought of keeping units affordable for future buyers. We did, and succeeded, partially. As I've said before, 11 of our 25 units went to low- and moderate-income buyers who were able to afford the purchase only because a silent second mortgage made up the gap between the first mortgage they could qualify for and the unit's value. From the start, in negotiating the terms for these loans, we and the local housing agency agreed that the buyers should not be able to reap a windfall by turning around shortly after purchase and selling their units at market price. We, the group members, would have been happy with a formula that would have kept the units affordable in perpetuity, but the housing agency said we couldn't for legal reasons. So we negotiated a solution consistent with the federal rules and a lot better than nothing from our point of view. Here's the short explanation. Contact me if you have more questions or want to receive copies of any of the legal documents. Low-income buyers (under 80 percent of median for the region; six of the 11) are restricted by a regulatory period of 30 years from date of purchase. For moderate-income buyers (80 percent to 120 percent), the period is 10 years, the rationale being they don't need as much help. Except for the time periods, the rules are identical: a member who sells within the regulatory period must repay the principal sum plus a share of appreciation, if any, upon sale. The new purchaser must be in the same income category or lower, and the sale price can be no more than the buyer's original purchase price, adjusted for inflation. Meanwhile, the sum repaid by the first buyer goes through a revolving door and is available to the subsequent buyer on similar terms. The 10- or 30-year regulatory period does not start over upon resale, however. Thus, an owner who is the first to resell a regulated unit after the restrictions are lifted may reap a windfall, if house prices have risen rapidly in the area, because he or she can sell it for full market value. A portion of the appreciation will go to the housing agency, but most will not. We settled for this less-than-perfect solution, but it is definitely more than nothing as long-term affordability goes. I would be very happy to hear how other groups managed to build in permanent affordability, if any did. Thanks. David Mandel, Southside Park Cohousing
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Re: Long-term affordability David L. Mandel, March 31 1995
- Long-term affordability Fred H Olson, July 10 2002
- Re: Long-term affordability Fred H Olson, July 11 2002
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