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Live/Work Changes Headed to Council

By Eric Richardson
Published: Friday, December 11, 2009, at 05:42PM
Rowan Auction Eric Richardson [Flickr]

A kitchen inside the Rowan Lofts, which developer Downtown Properties hopes will soon be eligible for FHA insured loans.

A change in the definition of live/work units that is designed to enable buyers to access cheaper loans goes to City Council next week, and its passage could offer a boost for Downtown's condo market.

Supporters say that redefining live/work as primarily residential will bring the ordinance more in line with how the units are actually being used, and will promote home ownership by allowing buyers to access highly-attractive federally insured loans.

At an August planning committee hearing, concerns were raised that the change would create a problem for artists, who use the live/work units for more of their original purpose. The Planning department attempted to address these concerns in the final ordinance, adding language that allows the Zoning Administrator to alter the live/work percentages on a project "to accommodate the requirements of artists and artisans." That change would be administrative, not a variance.

Existing developments would need to apply for re-classification if they wanted to take advantage of the new rules.

Tightness in the lending market has made it much harder for individuals to purchase Downtown units. Where condo buyers were previously expected to put only three or four percent down, private loans today typically require 10 - 20% down payments.

"If you're buying a unit for $300,000, kind of our lowest-priced one bedroom unit, you've got to come up with $60,000 down, plus closing costs and everything else," Bill Stephenson of Downtown Properties explained to blogdowntown after City Planning Commission approved the item in July. "All of a sudden you need roughly $70,000, then you've got to move in, so you probably need roughly $80,000 in cash."

In contrast, FHA insured loans allow just a 3% down payment on loans up to $625,000. That means just $10,000 cash, a much more accessible sum. But because live/work units were considered by the government to be commercial, they were ineligible.

The motion goes to Council on Tuesday, December 15.


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