Hello Everyone,

I am a newbie. Our city is proposing an Inclusionary Zoning Ordinance that includes some very rigid deed restrictions for low to moderate income buyers who purchase the set aside units at prices significantly below market. I have worn out Google trying to find data anywhere in the nation about what happens to these buyers when they try to sell their affordable units. There are lots of reports on the number of affordable units developed using IZ and deed restricted properties but nothing examining the impact on the people. In a nutshell the proposed restriction would limit the seller of a set aside unit to a sales price affordable to a buyer whose income was either between 51% and 80% of Area Median Income (Low Income) or between 81% and 120% AMI (Moderate income buyer) based on the AMI at the time the seller offered the property for sale. In our area that AMI usually does not increase much year over year and in fact can decrease. The bottom line could be that the original buyer of the affordable unit may accrue any equity at all and may in fact sell at a loss. Because of this the deed restriction clearly states that the owner cannot obtain a home equity loan, nor can the property be inherited or gifted or otherwise conveyed unless the heir or recipient meets the income guidelines. I and others in our Assn. of Realtors perceive that these restrictions are punitive and remove key incentives to become a home owner. Proponents say that the restrictions are offset by the fact the buyer purchases at a drastically reduced price; they get a stable home environment for their families; they enjoy the tax savings with the mortgage interest deduction. We think they may be overstating the positive impact on the buyer and the family, but neither the proponents nor we can find anything that talks about what happens to the people. I do not want to see buyers set up to fail. Does anyone out there have anything to share on this subject? Thank you. Beth