County considers moderately-priced housing

Sussex County Council took another baby step toward a moderately-priced housing program at a public workshop on July 26.

Council members took no official action, but reached majority agreement that they would be asking County Attorney James Griffin to draft the program elements into ordinance form, thus starting the legislative process.

Assuming a favorable vote culminates that process, council will form a pilot program, encouraging developers to build at a ratio of 85 percent fair-market-value housing to 15 percent moderately-priced housing.

Since the outset of the initiative, the majority has expressed reluctance to run a housing program that is even partially subsidized. This moderately-priced housing program would be entirely market supported.

It would be voluntary, offering enticements like bonus densities and expedited project permitting.

Banking institutions and mortgage lenders would determine ultimate eligibility, but from the county’s perspective, participants would have to meet certain criteria as well.

Eligible would-be home owners would have to be residents of Sussex County for at least three years, employed in the county for at least the previous year and currently employed. The program targets groups earning the county’s median income to 125 percent of median income.

Council Members George Cole and Lynn Rogers had suggested there were populations in greater need than those in that income bracket and questioned just who this moderately-priced housing would really help.

In response, Bill Lecates (county Community Development & Housing, and pilot program committee member) took residents making 80 percent of median income into consideration.

The program committee worked from a starting point of 30-year, 6-percent fixed-rate financing, with participants carrying an average 12 percent debt load.

In Sussex County, median income for one person is $38,600; for a two-person household, $44,100; for a three-person household, $49,600; and so on in that order.

With that range for residents earning 80 percent of median income, reasonable homebuyer aspirations would fall between $95,000 and $127,000. For median-income earners, $123,000 to $163,000 homes would be within reach. And for workers earning 125 percent of medium income, $158,000 to $207,000 homes would be reasonable.

According to the Delaware Housing Coalition, median home prices around Sussex County now stand at $239,900, beyond the reach of most median-income earners.

But that doesn’t depict the real problem for those workers seeking housing in the county.

According to the Moderately Priced Housing Program Committee, 86 percent of the Sussex County workforce earns less than 80 percent of median income. These households represent families where the primary earners work as teachers, nurses, accountants, police officers and paramedics, according to committee members.

Households with young professionals as breadwinners — dental hygienists, physical therapists, computer analysts — still come in under 125 percent of median income, and the committee wants to keep them around, too.

Council Member George Cole expressed considerable skepticism about the plan, returning to the issue of residents most at need.

However, Lecates noted other programs for low-income families (Housing and Urban Development’s Section 8, for instance). The difference: this would not be a taxpayer-subsidized program, he reiterated (although it could work complementarily with subsidized land trusts, etc.).

Cole called it a “feel-good program” that probably wouldn’t accomplish anything. New Castle County established a similar voluntary program four years ago, and to date not one developer had signed on, he pointed out.

However, Lecates defended the program they’d put together, and said he’d received interested calls from Baltimore-based planners.

Committee member Russell Huxtable (Milford Housing Development Corporation) detailed some of the incentives that might make it work.

If developers reached down to the highest tier (125 percent of median income), he said they’d receive 15 percent bonus in density allowances.

For reaching down into the median income range, they’d receive a 20 percent bonus; for reaching to 80 percent of median income, a 25 percent bonus.

For instance, if they came in with a project showing 90 fair-market-value homes, but agreed to build 15 percent within that range for 80 percent earners, they could come back with a 113-unit project instead. Nine of the additional homes could be of fair-market-value homes. The other 14 additional homes would be moderately priced.

The program would, in theory, maintain an inventory of moderately-priced homes by attaching resale values to the cost of living increases — for 15 years, at least.

Homeowners could build a modest equity with improvements, although there was some discussion regarding necessities versus luxuries.

The 15-year clock would reset every time the house sold, unless it remained in one family’s hands for that length of time – in which case, they could sell for fair market value.

Committee member and land planner Darin Lockwood (Meridian) noted another problem with the program: It costs just as much to build, whether it is at the beach or in the western county — but land prices are another matter.

Lecates agreed community land trusts (CLTs) would likely become part of the equation, and Cole said he’d rather attack the problem from that side.

Rogers agreed they needed to do more for the wage earners this program couldn’t reach, and said he hoped to “add another branch to the tree, as this program grows.” However, the majority suggested mixing apples with oranges at this early stage would merely stall the Moderately Priced Housing Program.