As part of a homeschool civics class comprised of students in the 7th through 10th grade levels, students were asked to write opinion editorials on topics of their own choosing which reflect current themes in governance and policy-making. Over the course of the next few weeks the class will be tracking the views of and commentary on their op-eds with the goal of generating as much meaningful community engagement as possible. A prize will be awarded to the student who is most successful at generating meaningful community engagement with their op-ed. Thanks so much for partnering with us to create this experience for the children and teaching them to be actively involved in the governance of their community!
Rognstad’s Deed Restrictions = Bad Idea
by HSC03
On September 30, 2021, Mayor Shelby Rognstad wrote in the Bonner County Daily Bee an article titled, “Housing task force discusses immediate actions.” The article states that the purpose of the task force is to address the shortage of affordable housing for the work force of local businesses. He mentioned that the task force discussed ways of easing governmental requirements so that new housing could be built faster. Then Mayor Rognstad pitched his own idea of income-based deed restrictions to address the issue:
“Another powerful tool that could be implemented is a deed restriction. It can be placed, by the owner, on the deed of a property. It works by requiring buyers be qualified by meeting income standards not to exceed a proportion of the area median income as well as local employment status with exemptions for seniors and disabled.”
“Colorado has been using this tool with great success for 20 years, keeping young families and essential workers at home in towns like Breckenridge and Vail.”
There are many problems with this proposal. First, this doesn’t actually make housing more affordable to most lower income families. There are some that are fortunate enough to be able to buy these below market houses but the overall availability and affordability of housing in an area doesn’t significantly change. Consider Vail, Colorado – Rognstad’s example of a successful implementation of this strategy. In the housing section of the Town of Vail Year in Review for 2017, 2018, and 2019 (www.vailgov.com/community/community-engagement-recognition/year-in-review/2020-year-in-review), sales of the income-based deed restricted houses are listed for each year. In the three years combined, only six such houses were sold out of the 922 in the area. A few examples are a 1,581 sq. ft. house sold for $610,000 and a 580 sq. ft. condominium sold for $250,000; hardly affordable housing for the size.
They regularly have many interested buyers for these below-market priced homes, as you would expect, so they hold a lottery drawing to determine who gets to buy. In the 2020 Year in Review, it stated that there were 51 interested buyers in one of the properties. So, this would seem to indicate that a housing shortage still exists.
Vail’s control over this deed restricted system appears to be self-serving. The Town of Vail is the largest employer in the city who twice bought properties at market price in the three-year span, deed restricted them, and sold them to their own employees. Not only does this increase the number of houses they control, but it also serves as an employee benefit they can use to attract or retain lower-paid employees. Shouldn’t their employees have to use the lottery system like everyone else? Vail mentioned that they had 922 deed restricted properties at the end of 2020 and are seeking another 1,000 over the next 5 years. The government program continues to grow and gain control over more real estate in the city.
The Year in Reviews show that one year was funded by $2.5 million and another year $10.6 million from the Town Council. Each year they mention studies conducted to see if the people are open to increasing sales tax and/or property tax to help fund the program. “Vail’s housing zone district allows for free market development to help subsidize the cost of deed restricted development.” So, they ALLOW the free market to function at times as long as it supports their program, no doubt adding to the price of the free market properties. This shows that the cost of the program is ultimately paid by the residents of the area.
So, you can probably already see how this is a bad idea for Sandpoint – Housing affordability and availability hardly affected, all while increasing government control. But in addition to that, adding more people to the city of Sandpoint will certainly add stress to the existing infrastructure. The sewer is already running above capacity. Road congestion is already an issue. Other city services would need to be upgraded to handle more people as well. And that would likely lead to rate increases and tax increases to cover those costs.
Rognstad admitted at the Mayor’s Round Table on October 1st, 2021, that he doesn’t know the number of households that had to leave the area due to housing affordability (See above or listen here: audio link). Yet he’s eager to build additional housing with income restricted deeds, regardless of not fully understanding the number of households who may have been affected. There are other more impactful reasons for the labor shortage for local businesses. The state unemployment benefits that were drastically boosted by the federal government for over a year caused many people to earn more by staying at home rather than working. So many of these people are just now returning to the workforce.
Based on all the negative potential effects discussed above and the lack of good data on how much housing availability is affecting the workforce, we should reject Rognstad’s income-based deed restriction idea.
Related: Mayor Shelby Rognstad Stuck Between Ideologies
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Deed restricted housing is essentially government housing. Far from “allowing the free market to work,” it actively stifles the free market from working.
How might you compare this to a government taking? Most homeowners view their property not simply as a place to live, but as an investment. Would you invest in a stock that was capped so that it could not increase in value?
Keep also in mind the fact that value is not based on what some government official thinks a piece of property should be worth, it is based on actual supply and demand, which means that real value will continue to rise or fall, regardless of whether the government bans a homeowner from realizing those gains (or losses).
Good job on the article. It is very insightful and informative.
It always comes back to the same thing with Rodstad, let’s put more control in the hands of government. People are leaving Colorado enmasse as freedom is choked out and Rogstad wants the same thing here. This man wants to be the next Gov. God forbid!
Great research. I was unaware of the specifics of the deed restriction program in Vail. Thank you for bringing that to light. I agree; this is a bad idea for Sandpoint.
Great insight on the mayor’s vision for the future of Sandpoint!
This is an excellent article that explains the issue very well and provides information that demonstrates how it doesn’t work.
This is a very well-written report. Thank you for your transparency and clarity, in your writing! I was at this meeting, where Rognstadt suggested deed restrictions in Sandpoint, and can attest to the statements he made being ones that would have a negative effect on the constituency in our town.
Something is rotten in the state of Denmark…or in this case, with this idea of deed restriction. More control for one.