After hearing nearly two hours of public comment opposing the measure, Aspen City Council in a meeting Monday decided to reexamine a proposed increase in housing fees that are charged as part of the development process.

The city typically requires developers to provide affordable housing for 60 percent of the employees generated by a project, either by paying a fee, providing it on site or providing it 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 Crested Butte-based Rees Consulting, in the meeting. 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 current fee is calculated by looking at the size of a project. But the new fees would use a more complex methodology that estimates 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 challenges, Rees argued.

Of the 14 people who spoke during the public comment period, 13 opposed the methodology due to the impact it would have on development. Nearly all of those opposed were local developers or free-market homeowners.

Jody Edwards, an attorney hired by opponents of the change, argued that expanding single-family properties does not mean the homeowners are generating new employees. Therefore they shouldn’t be required to mitigate by paying a fee, especially one that is higher, he said.

Contractor John Olson argued that by increasing the fee, there would be fewer development projects and less work for construction tradesmen, who would live in affordable housing that the city is trying to provide. Meanwhile, developer Bob Bowden said he understood the need for mitigation, but that there needs to be a balance in what is fair.

At least three speakers, including local Howie Mallory, commented on the lack of public outreach regarding the issue and suggested that the city make more of an effort to inform the community.

“This is a very complicated program being proposed,” Mallory said.  “It’s not easy to understand and probably full of unintended consequences. … This is a big deal.”

Affordable housing developer Peter Fornell was the only person to speak in favor of the proposal. He argued that the cash-in-lieu option should be seen as a last resort, because it places the burden of building affordable housing on the city instead of the developer.

Fornell noted that while the comments throughout the night sounded convincing, they were largely coming from the development community. There is a large segment of the Aspen community that wants to live in affordable housing but was not represented in the room, he said.

Increasing the housing fees may not be the answer, but at the end of the day affordable housing needs to be funded by something and developers are never going to like the cash-in-lieu price, he said.

“Housing requires a subsidy,” he said. “It requires a subsidy whether you do it or I do it.”

Council agreed that the current fee is too low.

It’s a scary thing that the cash-in-lieu fee is at $72 per square foot and the city is paying $800 to $900 per square foot to develop affordable housing, said Councilman Adam Frisch. Still, what the correct number should be isn’t clear based on the information, Frisch said.

Councilmen Torre and Derek Johnson favored looking into offering mitigation exemptions for small projects like small expansions to a single-family home. Councilman Steve Skadron agreed with Mallory’s comments that what was being proposed is complicated and needs further vetting and public outreach.

While Mayor Mick Ireland agreed that council needed more information, he affirmed the need and importance of providing affordable housing. The community is in a downward trend of losing population and one of the only sure-fire ways of fixing that is by providing affordable housing, Ireland said. Whether affordable housing should be paid for through the cash-in-lieu fee is something that council will determine in future discussions on the topic, Ireland said.

Council directed staff to come back with more information on the issue including how much affordable housing demand there is, how much the housing fee is expected to generate if its increased and how many single-family free-market homes would be at risk of paying the fee due to minor expansions. Staff will come back to council with those answers in a future meeting or work session at a date that was not determined by the end of Monday’s meeting.

dorothy@aspendailynews.com [1]