A falling real estate market and a future $1.2 million payment to Ketchum's affordable housing in-lieu fund could soon translate into more workforce housing in the city.
At a special Ketchum City Council meeting on Friday, ARCH Community Housing Trust and the Ketchum Community Development Corp. presented the Open Door Program, which would help qualified buyers purchase existing housing at discounted rates.
Michael Carpenter, treasurer for ARCH and chairman of the CDC's Affordable Workforce Housing Team, explained that it's too expensive for the city to purchase and develop land for the use of affordable housing, and that using current vacant units would be cheaper.
To acquire this housing, the program would look for sellers willing to lower their offering prices in return for a tax deduction for the difference between the discounted price and the appraised value.
Next, money from Ketchum's in-lieu fund would be used to further "buy down" the purchase price to bring it in line with the income categories set out by the Blaine County Housing Authority, which would support the program by helping find qualified buyers.
Ketchum's in-lieu fund has a balance of $518,000, with $1.2 million expected to come through development of the Residences at Thunder Spring, scheduled for completion in about two years.
"The disparity between (the cost of) market-rate housing and community housing is much smaller now," Carpenter said. "We can get more square footage with this program than with the city's inclusionary housing ordinance."
For developers building above the density allowed by city zoning codes, Ketchum requires that part of the additional area be dedicated as deed-restricted community housing. Developers have the option of paying cash if they cannot build the affordable housing on-site.
City Council members unanimously expressed support for the program, but said they would like a successful pilot project done first before they commit all the city's in-lieu funds.
Carpenter said a condominium has already been identified for purchase for $250,000, more than $100,000 less than market price. He requested up to $125,000 from the city's fund to effect the purchase.
"The window of opportunity probably won't last more than 18 months," Councilman Larry Helzel said. "We will get the most bang for the buck early."
Once the real estate market turns around, Helzel said, the spread between the cost of market-rate housing and affordable housing will grow too large, making it too expensive for the city to help invest in individual units.
However, Helzel said that with the housing authority's existing list of qualified buyers, deals should happen quickly, as motivated sellers would possibly get a tax write-off and sell within 30 days, rather than having houses sit in the market for years in a down economy.
With its contribution, the city would retain a proportional interest in any unit purchased, so if one is sold at an increased market rate, the city's share would appreciate as well. That increase would then be used to once again help buy down the price for another qualified buyer, thus sustaining the program.
The council could vote on supporting the program with an initial contribution by the end of March.
Jon Duval: email@example.com