Could Fox Hill and Casagmo units be made 'affordable' in state's eyes?

Fox Hill has 287 condominium units.

Fox Hill has 287 condominium units.

Dagny Real Estate photo

Could condominiums in Casagmo and Fox Hill be recruited to help fight developers’ use of the state’s 8-30g affordable housing law to push more dense multifamily housing projects on a reluctant Ridgefield?

First Selectman Rudy Marconi has raised the idea, suggesting the town might look into offering tax credits for condo units that become deed restricted as affordable. And the selectmen seem to think the idea is worth looking into as part of a long-term strategy on affordable housing.

“We need to really understand what we have, what we need, and what we’ll need in 20 years,” Selectman Bob Hebert said after Marconi explained the idea at the Jan. 8 selectmen’s meeting.

With condominiums available in the $200,000 range at projects like the 307-unit Casagmo and the 287-unit Fox Hill, Ridgefield may have a larger stock of affordable housing than it generally gets credit for — particularly in the state’s accounting that determines whether the town is open to applications under the 8-30g affordable housing statute.

Under 8-30g, developers can ignore local zoning restrictions — density, height, setbacks — when proposing projects in which 30% of the units will meet state affordability requirements. But if over 10% of its housing stock qualifies as affordable under state guidelines, a town is exempt from 8-30g applications.

“We need to work outside the box to reach an affordable housing 10% goal,” Marconi told the Jan. 7 public meeting on the Planning and Zoning Commission’s revised Plan of Conservation and Development (POCD).

But to qualify as affordable for 8-30g purposes, the state requires that a housing unit not only be sold or rented at an “affordable” price, but that it be deed restricted to remain affordable for 40 years.

With the exception of government-run housing like Ballard Green or private apartments required to meet 8-30g guidelines because they were built under the law, many housing units that might be regarded as affordable from a price standpoint don’t quality as affordable under state guidelines because they may not remain affordable.

But if they were deed restricted, they could qualify as affordable, Marconi said at the POCD meeting, and again at the next night’s selectmen’s meeting.

“If we were to think about Casagmo and Fox Hill, all we need is the deed restrictions,” Marconi said.

“How do we get those units to deed restrict?” he said. “If you incentivize it with some kind of tax incentive…”

1,000 units?

There are 307 condominium units in Casagmo and 287 in Fox Hill — many in a price range that would generally qualify as “affordable.”

Ridgefield has a total of about 10,000 housing units, according to the Town Plan of Conservation and Development (POCD):

“According to the U.S. Census, Ridgefield had about 9,420 housing units in 2010. Housing growth has slowed from an average of about 235 units/year in the 1960s to 54 units/year in the 2000s (and perhaps even slower since 2010),” the plan says.

Although Ridgefield has “a diverse housing stock,” single-family detached homes make up “about 80% of all housing units,” according to the POCD.

With roughly 10,000 housing units in town, it would take 1,000 units that officially qualified as affordable to reach the 10% and make Ridgefield immune to development applications under 8-30g.

The town is roughly a third of the way there.

Working inventories done by the Planning and Zoning Department in late 2015 and early 2016 counted a total of 1,795 multifamily units that had been approved in town, with some 332 units of the units qualifying as officially “affordable.”

Of the 332 officially affordable units, about half — 152 — are in public housing projects: Ballard Green has 78 units, all affordable; and on Prospect Ridge, the Congregate Housing has 54 senior units, all affordable. There are also 20 affordable family units on Prospect Ridge that belong to the The Meadows property.

Changing counts

Some multifamily complexes in the inventories done by the P&Z department date back decades — Casagmo and Fox Hill are listed as from the 1970s, and a 10-unit Prospect Hill on Prospect Street has 1950 as its “estimated year of completion.” These projects predate 8-30g and the concept of the housing units officially qualifying as affordable.

But the planning and zoning department did count 18 projects approved under 8-30g, with a total of 569 units, of which 178 were officially qualified as affordable — as of February 2016.

The rules for affordability under 8-30g have changed over the years — including a lengthening of the time they’re required to be deed restricted in order to count as affordable under 8-30g.

So, a rough overview would be that there are about 1,800 multifamily units in town, of which of 330 officially qualify as affordable. A little under half of the affordable units (152) are in the public housing projects at Ballard Green and on Prospect Ridge, and a little over half (178) were approved as part of 8-30g projects.

The town would need roughly another 670 officially affordable units to reach 1,000 units and the 10% threshold that would make 8-30g void in town.

Prices, rents

The town is known for Main Street’s beautiful old houses, and there are plenty of subdivisions full of pricey ‘McMansions.’ But Ridgefield with its large condo complexes does have a substantial portion of its housing in more modest price ranges.

The Halstead Real Estate year-end market report for 2019 says that 55 condominiums or co-op units sold in Ridgefield during 2019. Among those 55 sales were 20 units that sold for under $200,000, and 24 that went for between $200,000 and $400,000. Eight units sold for between $400,000 and $600,000. Two units went between $600,000 and $800,000. One unit sold for more than $800,000, according to the Halstead report.

Marconi believes the condominiums, as well as lower-end houses on small lots in areas like the Ridgefield Lakes neighborhood, help Ridgefield’s real estate market remain active in comparison to some neighboring towns that have less housing diversity.

“We have 30% of our housing stock at or below $500,000,” Marconi told the selectmen.

Ridgefield’s market isn’t quite back to where it once was — when the economy was really cooking, the town had about $400 million a year in total real estate sales, according to Marconi.

“Right now we’re, on an annualized basis, $325 to $400 million —so we’re not back to where we were, but we’re making progress,” he said.

Some doubts

Selectman Hebert, who works in real estate and development, saw the logic of trying to get existing condos to qualify as affordable.

He did have some doubts about the idea’s workability.

“The concept is good,” he said. “If we could convert all those, or some of those, over to a deed restriction, we could probably add a few hundred units to our count.

“We have properties like Fox Hill, like Casagmo and possibly others, that the typical the market value of those properties — for the most part over the years, in a strong market they’ll sell for maybe the high twos ($200,000s) or low threes ($300,000s), and in a weak market they’ll sell in the high $100,000 range, and may the low twos ($200,000s),” Hebert said.

But he was skeptical that the owners of the units would want to deed restrict them — thereby reducing their future sales value.

“As an owner, do I really — for a tax credit of a couple of thousand dollars, three thousand dollars — want to cap myself out to a $230,000-to-$240,000 price point for the next 40 years?” Hebert said.

For rental units, as well, there’s a significant difference between market rate and what an officially affordable unit can produce.

Referencing some rental apartments recently built in the village area under 8-30g, Hebert said the “affordable” units were generally renting for about $1,450 to $1,475 a month, while the “market rate” units in the same buildings might rent in the vicinity of $3,000 to $4,000 a month.

Taxpayers’ burden

And, giving tax credits to some property owners leaves other taxpayers to pick up the slack.

“We can incentivize these people and give a tax credit of $3,000 or $4,000, or $2,000. What is that number? And can we afford giving those amounts of tax credits?” Hebert said. “I’m not saying we can’t do it, but it’s something we have to look at...

“Those are my concerns: Will there be enough people that would deed restrict? And what would be the cost of a program like that?”

Hebert advocates seeking a broad overview of housing needs.

“We have to really look at what our housing stock is. If you look at POCD, it very appropriately states that we have a growing need for the smaller, higher quality, higher end, 55-and-older,” he said.

Still, there are many people in town who regard more development — especially multifamily units, whether affordable or not — as detracting from Ridgefield’s illusion of a small-town feeling.

“It’s a hot topic because people are just anti-development — it doesn’t matter where it is,” Hebert said. “But obviously there’s a huge demand.”

Counter productive?

Commission attorney Thomas Beecher noted that while 8-30g applications, with their 30% affordable requirement, add to the town’s stock of affordable housing, the remaining 70% go at market rate and add even more to the overall total of housing units — pushing the 10% goal farther off.

“It’s hard to see how many towns would ever get to the 10% threshold, since every time you add nine units, you’ve just added nine to the total that needs to be divided by 10%, and you’ve only got three affordables. Your gross number keeps going up, and your affordables go up by a third.”

This makes the idea of converting existing units to affordable more attractive.

“If you take existing housing stock and are able to successfully convert that to registerable affordable housing, you haven’t increased your gross number of homes, but now you’ve taken whatever ones you can convert to affordable, and you’ve added to your affordable line,” Beecher said. “That’s why that’s a wonderful idea if that can happen.”

Affordable committee

Dave Goldenberg, chairman of the town’s Affordable Housing Committee (AHC), is supportive of the concept.

“This is something we have discussed for years in the AHC,” he told The Press. “The idea is, you are buying a deed restriction from the current owner.

“Such a deed restriction will reduce the market value of the property, as both the rental rate and the resale price will be limited by 8-30g. But since many of these units are ‘organically affordable’ — i.e., their price or rent is close to the deed-restricted number — it may not be a big issue for some owners, especially the elderly, who may be willing to accept a tax reduction or lump payment now in return for a reduced sales price when their estate is settled.”

Goldenberg observed that real estate prices — for purchase or rent — often outpace the economy in general.

“... Housing prices do not move in lockstep with incomes or inflation — they tend to rise more quickly. So something that is ‘organically affordable’ now might not be so in the next real-estate boom. This is why 8-30g does not recognize those units,” he said.

And this reinforces the notion that someone deed restricting a property — even if it falls within affordability guidelines today — could be limiting the future increase in its value.

“The question is, what kind of incentive would it take to entice someone to lower the market value of their property?” Goldenberg said. “I don’t know the answer, but it might be worth finding out...

“Another question is how we pay for these tax deductions or other incentives,” he added. “A tax incentive that is sufficient enough has to come from somewhere. Would the town be willing to pay, for example, $10,000 or more per unit for a 40-year reduction, or one in perpetuity? I don’t know. It’s worth finding out.”

Trust fund?

“On the AHC, we have talked about funding such an initiative with a housing trust fund. This is a fund set up to raise and disperse funds for a variety of affordable housing programs,” Goldenberg said.

A housing trust fund might be financed with money collected from builders under “inclusionary zoning laws” that are allowed by state statute, Goldenberg said.

A trust fund could also be financed by diverting money from the town’s share of the “transfer tax” or “conveyance tax” paid on real estate sales, he suggested. The amount collected by the town varies with the value and volume of real estate sales, but the conveyance tax has been recently been providing roughly $700,000 a year — which goes into the town’s general fund.

“Overall, I like the idea,” Goldenberg said. “Part of the challenge to our committee is to find ways to increase affordability without adding a lot of density or sprawl. This idea would help.”

The selectmen aren’t sold, but they’re interested in the idea of using tax incentives to encourage deed restrictions.

With demand for big houses no longer reliably rising, more affordable units could provide a refuge for seniors who want to get out from under the houses they raised their children in, without being priced out of town.

“Our population is aging,” Hebert said. “We’re not bringing in as much as we did years ago — the young families. People are not having as many kids, so they don’t want these 6,000-square-foot homes on a three-acre property. So what do we do with them?”

“You’d like to have a balance,” said Selectman Sean Connelly. “There’s a lot of people who live in these very big houses by themselves.”