Housing Restrictive Covenant/Deed Restriction Discussion
The housing restrictive covenant discussion was on the worksession agenda with the goal of providing in depth information about Frisco’s housing restrictive covenants (often referred to as deed restrictions), and the covenant was also on the later regular meeting agenda to provide an opportunity and time for robust public comment on this initial discussion.
During the work session, Town staff reviewed the housing restrictive covenants with Council and in the staff report to better understand what covenants are, why they exist, and what their impacts are. The staff report also included a resale calculations analysis.
A deed restriction is a common tool used for placing limitations on the uses of a housing unit and are frequently utilized when a housing unit has been partially (or fully) funded by taxpayer money, and subsequently, deed restrictions are recorded on applicable properties. Currently, there are approximately 155 properties within the Town that have some form of restrictive covenant/deed restriction that apply to them; covenants/deed restrictions can vary by property. Approximately 40 of these units have a “light restricted covenant” which do not have capped appreciation or area median income (AMI) requirements, and only have live/work (30+ hours worked a week in the area) requirements.
In 2019, Town Council adopted a new Residential Housing Restrictive Covenant and Notice of Lien document, which was to provide a resale calculation that allows owners to potentially sell their property for a value which is an increased value over the previous method and which provided a priority to buyers who work in Frisco for the first month that a property is listed. The purpose of the modifications was to allow an alternative method for calculating the allowable maximum resale price, and alternative methodology was established to create a new deed restriction option for affordable workforce housing developments moving forward. Additionally, any property has the option to terminate their existing covenant and opt-into the 2019 covenant/deed restriction. This has primarily been utilized when property owners sell or refinance their property, as the 2019 covenant typically allows a higher resale price than many of the older covenants recorded on properties. Since 2020, 24 deed restricted properties within the Town of Frisco have sold. Fourteen of these properties were sold under the 2019 covenant. Ten remained under the existing covenant recorded on the property. No matter which covenant/deed restriction is applied, there is a clause that protects against a property being priced at less than it was purchased due to pricing calculations; pricing could still be less but only if market conditions cannot support prices.
This worksession topic and the overall topic of modifying the 2019 Standard Covenant was first brought to the Town’s attention in early 2023. A worksession was held in August 2023, and Council directed staff to research resale calculations and return at a later date to discuss this research. Additionally, Summit Combined Housing Authority area median income (AMI) spreadsheet was updated in 2024, and some homeowners have expressed concern that this change has negatively affected their home resale calculations due to the current covenants/deed restrictions. These same owners have also noted concern over the future diversity of sale prices in covenant/deed restricted properties because of the way that appreciation is calculated in the Frisco 2019 Housing Restrictive Covenant.
The covenant/deed restriction discussion will continue at up to four additional worksessions, tentatively scheduled for in the upcoming months through the end of the year at which time staff will explain and seek direction from the Council on a variety of additional topics listed within a covenant including:
- Duration of time to opt into new covenant and should 2019 covenant be extinguished
- Eligible household income (allow a 20% increase between household income and AMI limit)
- Qualifying capital improvements
- Definition of resident (for the purpose of qualifying to purchase deed restricted housing)
- Initial purchase price
- Buyer selection
- Priority period for defined employment location
- Asset limit
Housing Restrictive Covenant Resale Calculations
The 2019 covenant/deed restriction’s maximum resale price utilizes a formula that is not to exceed the maximum sales price, as stated on the Summit County Area Median Income (AMI) spreadsheet for that property. A break-down of how you can get to the maximum resale price through the 2019 covenant is as follows:
- Purchase price
- Plus 3% a year (not compounded)
- Plus qualifying capital improvements (QCIs)
- Plus amount paid for real estate commission
- Equals a value no greater than the number on the 2024 AMI spreadsheet for that unit type
Frisco is the only town within Summit County to tie a maximum resale calculation to the AMI spreadsheet price. Community members expressed in August 2023 that they do not feel that utilizing the Summit County AMI allows for a spread of resale prices in restricted housing units since it creates more standard resale prices. Currently, there is no consistency throughout the County for resale calculations.
Staff presented several resale calculation options to Town Council during the regular meeting, as there was a time constraint during the worksession:
- Option 1: No changes: Keep the resale calculation the same as is represented in Frisco’s current standard Housing Restrictive Covenant adopted in 2019.
- Option 2: Standard increase: Utilize a standard increase in percentage rate, not compounded
- 2% is typical of other jurisdictions within the county
- 3% would revert back to be more similar to the original Frisco covenant languages of many properties
- Option 3: Per the January 13, 2023 property owner request, make a change to: the greater of either a standard non-compounded percentage increase or the maximum sales price represented on the Summit Combined Housing Authority (SCHA) Summit County AMI spreadsheet.
- Option 4: Adding qualifying capital improvements (QCI):
- QCIs can be capped as is typical in other jurisdictions within the County
- QCIs do not need to have a cap if the Town Council feels it needs to incentivize property owners to maintain their properties
- Option 5: Other: Through the discussion with Council and public input, additional options may be considered.
Council emphasized during the worksession that future discussions will include more conversations about the role of AMI when setting resale prices, and how any elimination of AMI for setting housing prices might be especially impactful for those seeking 80% AMI housing if AMI is no longer considered when setting a resale price. Council asked that staff bring back information regarding resale calculations in other Towns and jurisdictions. Council also emphasized that this subject is complex, which is why this first worksession was a comprehensive review of restrictive covenants/deed restrictions, and therefore, restrictive covenants/deed restrictions will be discussed over at least four additional meetings before any changes and decisions are made regarding restrictive covenants/deed restrictions.
The regular meeting facilitated public comment regarding restrictive covenants/deed restrictions from 18 residents. Council voiced their appreciation for public comment and that they look forward to continuing the discussion and tackling the topics around restrictive covenants/deed restrictions.
Energy Performance Contracting Program Update
The Town has been pursuing ways to reduce energy use and greenhouse gas emissions in its own buildings, which is why in June 2023, Town staff enrolled in the State of Colorado Energy Performance Contracting (EPC) program, which provides technical and contracting assistance to interested municipalities. Since 2023, the Town has gained access to resources to assist with request for proposals (RFPs) and the contracting process. This worksession was intended to provide an update on the progress to date and steps forward.
In November 2023, Council approved a contract with McKinstry to perform an Investment Grade Audit (IAG). McKinstry is a state-approved Energy Services Contractor (ESCO) and assisted Town staff in assessing and prioritizing energy efficiency upgrades in municipal facilities. Working with an ESCO gives more complete picture of the municipal building needs based on Town goals, building use, and occupant requirements. Now that the preliminary audits and rough order of magnitude (ROM) are complete, staff from McKinstry presented an update on the progress to date and initial results from the IAG, which included suggested projects. Council subsequently voted to approve Resolution 24-30 on the consent agenda to support the Town’s DOLA Energy Mineral Impact Fund grant application to support the Town’s efforts around municipal building energy efficiency upgrades.
Staff has applied to a DOLA Energy Impact Assistance Fund (EIAF) grant for $1,000,000 to fund implementation of the projects included in the ROM that will not pay for themselves quickly through energy savings. Staff plans to apply for additional grants including geothermal, public building electrification, and Charge Ahead Colorado grants. IRA Tax Credits (through the Elective Pay program) will also further reduce the total cost of implementation.
Comprehensive Plan & Housing Strategic Plan Joint Worksession with Planning Commission
Comprehensive Plan Update
In the State of Colorado, a comprehensive plan is necessary to guide growth and development. A well-crafted comprehensive plan should reflect the community’s vision and goals for the future and address various elements such as land use, transportation, recreation, economics, water, and the natural environment. The comprehensive plan can be used as a long-range tool to guide policy decisions throughout the Town. Updating the comprehensive plan is intended to support decision making and enable amendments to the Town’s Unified Development Code (Code) in line with the community’s vision.
The staff report included the draft comprehensive plan’s environmental assessment, transportation assessment, vision values and themes, and the community engagement summary.
Strategic Housing Plan Update
An important community priority identified in the 2023 Frisco Strategic Plan was the study of services needed to support existing and additional workforce housing development, and to offer a variety of housing types to support year-round residents. To responsibly invest future community resources, the Town recognized the need for a Frisco focused Strategic Housing Plan.
The goals of the Strategic Housing Plan for the Town of Frisco are:
- To build off the 2023 Summit County Housing Needs Assessment by specifically pulling data from this report as it applies to Frisco. Utilizing this data and gaining further insight specific to Frisco to identify housing needs and gaps within the Town, identifying needed product types for new construction or conversions, and propose strategies for addressing the identified needs.
- To evaluate the goal of having 50% of the housing units in Frisco occupied by year-round residents. This goal of 50% may need to be adjusted based on the findings of this study.
- To evaluate the impacts of housing production on Frisco’s economy.
- To provide a blueprint for the creation of effective policy and programs to support housing, maintain a healthy economy, provide effective community services, and maintain a high quality of life for our residents. To answer the question: “How do we plan and manage for residential growth in Frisco?” Through scenario planning, financial analysis, and an interactive buildout model supplied by the Strategic Housing Plan, the Town will have a focused road map on how to advance housing solutions based on current and future needs.
Planning Commission and Town Council met with the strategic housing plan project team to review tasks and timelines, and review project deliverables, including the draft plan, which preliminarily identified the need for an additional 329 workforce units (151 ownership and 178 rental) over the next 10 years. These 329 units are in addition to the workforce units already in the pipeline for or in construction. The draft plan identifies 18 sites to meet these goals, which would require partnerships and public and private efforts for an approximate investment of $188 million in the next 10 years. FriscoHousingPlan.com is the website for this planning process and provides more information and ways to provide input into the draft plan.
Extra-Territorial Water Service Request
In 2023, Ordinance 23-05 was approved, which modified Chapter 171 of the Town code by adding an application process for out-of-town boundaries water service/taps. This new process requires prospective water users outside the Town of Frisco to submit a written application, dedicate water rights or pay a fee in lieu of water rights, submit a written will-serve letter from Frisco Sanitation District, and other conditions per the ordinance. Town Council may then deny or grant the request with conditions based on the “best interest of Town residents”. In addition, the ordinance states that the Council will consider whether the request will result in detrimental secondary impacts to Town or its residents. If Council approves a request, the applicant is required to meet all conditions, dedicate water rights or pay an in-lieu fee, pay all fees and reimbursements, and execute the extra-territorial tap contract.
On July 25, 2024, the owner of 19 Vierling Way submitted an extra-territorial water application for the property. The application is for one EQR; an EQR is the typical amount of water resources used by a typical single-family residence. The new single-family home, near the intersection of 7th Avenue and Vierling Way, is located in unincorporated Summit County. There is an existing water main line in 7th Avenue, which currently dead ends at Vierling Way. The property owner would need to install a new service line, which would be approximately 100 feet in length, from the main line to the new home. All costs of construction and maintenance of the service line and any other required infrastructure will be the responsibility of the property owner. The property is not currently connected to sanitary sewer, but a will serve letter was received from the Frisco Sanitation District, and a condition is included in the agreement to connect to the Sanitation District prior to the Town providing water service. The applicant elected to pay in-lieu fees in place of dedicating water rights.
Town Council approved the extra-territorial water service agreement for the residence located at 19 Vierling Way.
Frisco Town Council Meetings: Ways to Participate
Frisco Town Council meetings are available to view via Zoom and YouTube, and are also held in person to make Town Council meetings easier to access for everyone.
The public can provide comment during meetings via Zoom or in person (not YouTube), and a public comment period will be available at 7:00pm; during the consideration of ordinances; and at the discretion of Town Council during work session items, which are discussions that don’t require a formal vote by Town Council and do not require public comment. Again, this hybrid approach is intended to make Town Council meetings more accessible, and meeting recordings will typically also be made available the day after a meeting in the meeting archive with agenda topics bookmarked to the discussions in the video.