Deed Restrictions and Year-Round Housing

Guest Opinion

By Yarrow Brown | July 6, 2024

In the peak of the summer, I keep thinking about the locals. We love our tourist economy and the fact that we have a desirable place for people to visit or relocate to. But how can we ensure there is enough housing for everyone in our region?

Housing for ALL is the new phrase I am using. It’s not just the workforce—to keep a vibrant community, we must ensure we have people here year-round to support everyone who lives here. The workforce, the volunteers, the retirees, the kids in our schools, the visitors, and more.

The town of Breckenridge, Colorado, has a “Housing Helps Program” to help locals gain access to housing. This includes a deed restriction acquisition program with the goal to incentivize current homeowners and real estate buyers to deed restrict their market-rate property to help maintain homes for the local workforce in the community.

A deed restriction is an agreement tied to the title of the property that restricts the use to year-round housing in the area or specific unit of government. The document is then recorded in the county records. The deed restriction will remain with the property in perpetuity, and future owners will be subject to the same restricted use.

In Breckenridge, there are two types of deed restriction: light deed restriction (15-19 percent of the purchase price) or a full deed restriction (20-30 percent of the purchase price). For both, the property must be occupied or long-term rented by someone working at least 30 hours per week in Summit County. (Not every community includes work requirements. And whoever is the holder of the deed restriction is obligated to monitor and enforce the terms.)

In addition to the Housing Helps Program, there is a fund called the Housing Helps Fund, which is an incentive for owners to make their homes deed restricted. Using the fund, the town will pay owners 15-30 percent of the value of their property in return for a deed restriction on homes that are currently unrestricted. The amount paid depends on the market and the request for either the light or full deed restriction. Recipients may use the funds for down payment, home repairs, special assessments, etc.

The goal of this program is to help locals stay in the community where they can live, work, play, and raise their families. Similar to northwestern Michigan, Breckenridge obtained a Housing Needs Assessment, which indicated there was a significant shortage of housing to serve the needs of local families and employees.

Breckenridge realized this impacts the ability of businesses to recruit and retain employees and provide the products and services needed. The lack of housing also impacts the character of a community when locals are unable to live in the community where they work. By agreeing to deed restrict a property, the residents understand they are helping Breckenridge retain a variety of housing options for locals.

Breckenridge also aims to purchase units through its buy-down program and add deed restrictions. This comes at a time when long-term rental properties are being converted to seasonal or short-term rentals (STRs). We are also experiencing this in our region of Michigan. While Housing North is not opposed to STRs, we encourage units of government to understand all of their housing stock—year-round, seasonal, short-term, commercial—so they can make informed decisions for their housing needs.

In Breckenridge, Vail, Cape Cod, and other tourist areas, deed restriction programs have become a way to encourage more local housing. Many of these local governments are also looking at buying property and reselling it to the interested buyer with a deed restriction in place, which would accomplish the goal of housing locals while preventing the buyer from reselling the unit as a STR. A deed restriction program is the best option to ensure the unit stays in the local pool and doesn’t convert to an STR.

We are working on a similar program in the City of Charlevoix, where the goal is to encourage more year-round residents. In Charlevoix, Housing North holds six deed restrictions for year-round housing. This program came about in 2020 when the City realized only 38 percent of their residents lived in the city year-round. Leaders learned about the Vail Indeed program and partnered with Housing North. They have a long-term goal to have at least 50 percent of their residents living in the city year-round.

In Michigan, the new housing tools require the units to be for year-round housing. But these tools are only for certain time periods (10, 15, or up to 30 years). Many think we still need assurance these will be available well into the future. However, without a funding or revenue source, it will be difficult to pay for deed restrictions in our region.

Yarrow Brown is the executive director of Housing North, a 10-county housing agency serving northwest Michigan.