Frisco buying condos at market value, renovating them and selling them at a reduced cost to workforce
June 20, 2018
The town of Frisco is moving forward with efforts to help alleviate affordable housing concerns in town with a new "buy-down" program meant to provide renovated townhomes to town employees and residents, at a fraction of the cost.
"The buy down concept is to purchase units at market price and make them available to the workforce at a reduced price," said Randy Ready, Frisco's town manager. "It's a model that works well around the country in housing authorities, towns and cities involved in it. They're just nice little units that we're pleased to be able to offer."
The town just closed on four townhomes in Coyote Village, on the corner of Eighth Avenue and Pitkin Street, for $425,000 a piece. Once renovations on the properties are complete, they'll be sold back to residents for just $332,000.
Two of the four homes are reserved for town employees, while the other two will be sold to winners of a lottery administered through the Summit Combined Housing Authority. The lottery for the units will begin in July, and will be open to individuals and families who work in the greater Frisco area, and make less than 140 percent of area median income.
"We can't afford to put hundreds of thousands of dollars into each unit," said Ready. "But something in the neighborhood of $60,000 to $100,000 is within reach as something we can do to provide immediate housing. With this program we don't have to construct new homes, but we can still preserve affordable housing and keep homes from becoming second homes or short-term rentals."
Buyers of the townhomes must also agree to a deed restriction that includes a 2 percent per year simple appreciation. This means that if the houses are resold, the owners could only sell them for the original purchase price, plus 2 percent for each year they've lived there.
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"The intent there is to keep these affordable," Ready noted. "So people aren't going to make a huge amount of money off this, but it guarantees they won't lose any either."
Funding for town employee housing will come out of the town's general fund, while the units made available for the workforce will be paid for through the 5A Fund, a .6 percent sales tax rate increase passed by county voters in 2016 to support affordable housing efforts. Frisco receives about $1 million a year from the tax, according to Ready.
While these are the first units the town has purchased with intent to flip back to residents, Ready said town officials are keeping their eyes out for more properties to purchase, and potential partnerships with developers to build more affordable units similar to the Peak One public-private partnership completed in 2016.
The Coyote Village townhomes will be filled this summer.
"There aren't dozens of those units available," said Ready. "But as they come on the market we're interested in taking a look at them and seeing what we can do to maintain that housing stock and its availability for the workforce. It's a model that's not going to cure the housing problem, but it helps."