The city of Aspen, in a work session on Tuesday, moved forward with plans that could double the fees developers have to pay if they choose not to build housing for the employees their projects generate.
The city typically requires developers to provide affordable housing for 60 percent of the employees generated by commercial projects, either by paying a fee, or providing it on site or elsewhere.
As it stands, cash-in-lieu fees range from $139,890 to $283,864 per employee housed, depending on the income category of affordable housing that the developer is funding.
Those numbers do not represent the actual cost of building affordable housing units in Aspen, because they are based on historical data of past housing projects that have many different variables, argued Melanie Rees of Denver-based Rees Consulting. Rees was hired by the city and county to do a study on the topic.
The actual cost to build those units is between $275,566 and $534,923 per employee, the study says.
The new higher numbers are based on an equation that incorporates the gap between the market price of units and the amount locals can afford to pay. It only uses two variables, which are property values from the Pitkin County assessor and income statistics from the U.S. Department of Housing and Urban Development.
The formula, dubbed the “market gap approach,” is used in at least 10 other resort towns and has stood the test of legal action, Rees argued.
Stan Clauson, owner of the local planning firm Stan Clauson and Associates, wrote in an email prior to the work session that the increase in fees would effectively shut down all development in Aspen resulting in no cash-in-lieu funding.
In response to Clauson’s criticism, Tom McCabe, director of the housing authority, told council that it has always been the point to deter developers from using the cash-in-lieu option instead of actually building or buying down units for affordable housing, because of the work that it creates for the city.
City planning director Chris Bendon noted that council could offset the price increase by allowing developers to pay less than the suggested cash-in-lieu amount. The point of the new formula is to figure out the actual price to build in the area, and that’s what it does, he said.
“You might look at these numbers and have sticker shock,” Bendon said. “... But this is the actual cost to build. You can determine what you want to charge to the developer.”
Councilman Adam Frisch was the only member to object to the new formula, not because of the increase in prices but due to the fact that the equation uses the value of free market property sales to figure out how much it costs the city to build affordable housing units.
A high priced single-family home in the West End that sold for millions, which can drive property values up, doesn’t say anything about how much it actually costs to build, he argued.
Mayor Mick Ireland countered that the property values are determined by all sales and because the city has to purchase land to build on, those values have an effect on how much it would cost, he said.
“The problem is that all of our construction is done on property that is at full market value,” Ireland said.
Council requested more information on the history of the cash-in-lieu fee used in the city and how the equation could be impacted by real estate up-swings. That information will be presented at a work session in the upcoming month and council will discuss language of a draft ordinance that would adopt the methodology during that time.
Rees will also go before the Pitkin County commissioners on Dec. 18. The city, county and housing board need to approve the ordinance in order for it to be effective.