Housing Restrictive Covenants/Deed Restrictions 8th Discussion
The special August 19 meeting is Frisco Town Council’s eighth work session regarding housing restrictive covenants/deed restrictions. The overall goal of these work sessions is for Town Council to determine if they want to create a new standard housing restrictive covenant, and if so, what should be included in this new covenant.
What is a Restrictive Covenant/Deed Restriction?
A restrictive covenant/deed restriction is a common tool used for placing limitations on the uses of a housing unit and are frequently utilized when a housing unit has been partially (or fully) funded by public funds, and subsequently, deed restrictions are recorded on applicable properties. The covenant is a written agreement that restricts or limits the activities that may take place on a property or in a development. When purchasing a property that has a covenant recorded on it, new property owners acknowledge a written statement affirming that they understand the restriction recorded on the property and that they will abide by it.
There are approximately 155 properties within the Town that have restrictive covenants/deed restrictions on them through various development measures, primarily stemming from development agreements or bonus density commitments. Approximately 40 of these units are employee units with no resale price cap (often referred to as “light” or “live/work” restrictions). The remaining have some type of limitation on household income and/or resale calculation, typically tied to area median incomes (AMI) between 80-120% with some units have a higher AMI, up to 160% AMI.
Council Discussion and Direction
July 8, 2025 Discussion Recap
During the July 8, 2025 Town Council meeting, Council revisited all of the topics previously discussed due to Councilmember Zach Ryan purchasing a deed restricted property, which subsequently required his recusal from these discussions. On July 8, Council provided the following direction:
- Asset Testing: Does Council want to require asset testing? Council revisited the topic and a majority agreed against asset testing. Council wants to encourage people to save and build wealth and felt that asset testing might discourage this. Council also felt that it would be difficult to enforce any rules around asset testing.
- Resale Method: Does the Council want a lottery process or waitlist system or to continue with the current method articulated in the 2019 covenant? Council stated again that they support moving forward with a lottery.
Council discussed providing mobility for current deed restricted owners who would like to purchase a larger deed restricted property or downsize to a smaller deed restricted property. Council discussed giving current deed restricted owners an additional ticket in the lottery to allow them an extra advantage.
- Council proposed the following for a lottery process:
- One additional ticket for working within Summit County for greater than 10 years, and
- One additional ticket for working in the Ten Mile Basin for more than two years, and
- One additional ticket for current owners of a deed restricted unit within the Town of Frisco.
- Resale Calculation How should the resale calculation be calculated? Council was split 2 to 2 on how the resale calculation should be calculated. A 2-2 vote negates any possible change to this topic. Council agreed that resale calculations should be discussed further in association with the capital improvements discussion.
- Capital Improvements: How should capital improvements be calculated? Council agreed to moving the depreciation schedule from five years to 10 years and keeping the 20-year deprecation schedule the same.
- Real Estate Commission: Does Council want to limit real estate commission within the Covenant? If yes, then to what percentage? Council supported moving forward with a maximum 2% real estate commission.
- Income Buffer: Does the Council want to allow an income buffer within the Covenant? If yes, then to what percentage? Council supported moving forward with no income buffer at initial sale but adding a 20% income buffer after 30 days. During the August 19 Town Council discussion, staff asked Town Council to reconsider the addition of a buffer after 30 days due to Council’s direction to move forward with a lottery, which is not compatible with the 30-day contingency. During the August 19 meeting, Council agreed to remove the 30-day contingency on the income buffer.
August 19, 2025 Discussion Recap
During the August 19, 2025 work session, Council revisited and recapped the discussion from July 8, and then Council discussed the following topics:
- Resale calculation and capital improvements: How should the resale calculation and capital improvements be calculated?
Council was divided 2-2 on the discussion of the resale calculation, and therefore, decided to take on this discussion of resale calculation first. Two Council members still voiced preference for homeowners reselling their property at 3% appreciation plus qualified capital improvements or the Summit Combine Housing Authority’s AMI maximum sale price, whichever is greater. Two Council members favor an annual 3%, not compounded, resale calculation. Council considered increasing resale percentage to 4% but still could not come to agreement with some on Council worrying about maximizing resale at the expense of affordability to the next buyer. Council gave staff direction to return with the data that illustrated the financial ramifications of increasing the resale calculation to 3.25%. 3.5%, 3.75%, or 4%.
Council agreed to discuss the cap on capital improvements during the next conversation about deed restrictions and expressed a willingness to look at expanding the cap on capital improvements beyond 10%.
- Ownership of other Properties: Council was asked to confirm if property ownership is permitted in a specified geographical area, such as outside of Summit County or in Summit County. Council agreed that a buyer could own one property outside of Colorado when purchasing a deed restricted home and that a current deed restricted homeowner should be able to own an unlimited amount of properties outside of Colorado to encourage investment for retirement.
- Employment Location Requirement: Does the Council support requiring employment verification at annual monitoring and ensuring that the covenant continue to require a resident earns his or her living from a business operating in Summit County, by working at such business an average of at least 30 hours per week on an annual basis? The majority of Council agreed that you should be working for a business operating in Summit County and that this requirement should be enforced.
- Right to Inspect: Does the Council want a right to inspect clause implemented in the Covenant? Council agreed that there should be a right to inspect.
Future Discussions
The next Town Council work session regarding housing restrictive covenants/deed restrictions hasn’t been scheduled yet but will focus on resale calculations and qualified capital improvements. Specifically, Council has indicated that they will discuss whether to increase the 3% increase cap, and staff was directed to bring data to the next discussion about the financial ramifications of increasing the resale calculation to 3.25%. 3.5%, 3.75%, or 4%, so that Council could discuss. Council will also discuss an increase on the cap on capital improvements beyond 10% and possibly to unlimited.
Frisco Town Council Meetings: Ways to Participate
Frisco Town Council meetings are available to view via Zoom and YouTube, and are also held in person to make Town Council meetings easier to access for everyone.
The public can provide comment during meetings via Zoom or in person (not YouTube), and a public comment period will be available at 7:00pm; during the consideration of ordinances; and at the discretion of Town Council during work session items, which are discussions that don’t require a formal vote by Town Council and do not require public comment. Again, this hybrid approach is intended to make Town Council meetings more accessible, and meeting recordings will typically also be made available the day after a meeting in the meeting archive with agenda topics bookmarked to the discussions in the video.