New formula would affect large homes, commercial projects
Pitkin County commissioners directed county staff on Tuesday to prepare a resolution that, if approved, will increase affordable housing fees charged to builders of large homes or commercial projects.
Such projects can create new jobs that bring workers into the county, and developers are required to help cover the cost of building affordable housing for those workers.
Currently, the amount they have to pay is supposed to fluctuate with the cost of building new housing in the county, including land and construction expenses.
Yet Tom McCabe, the director of the Aspen-Pitkin County Housing Authority (APCHA), told the commissioners Tuesday that the current formula isn’t producing enough cash to build housing for new workers.
“That methodology, almost from the start, had problems with it,” he said. “The cost of building things changes all the time, and we have no ability to go to a developer and ask them what their real costs are.”
Under the current rules, McCabe said, some developers can “game the system” by under-reporting the amount that they expect to spend on a project, which reduces the associated fees.
McCabe recommended a change in the way that fees are calculated that would take the average price of free-market housing in Pitkin County and compare it with the amount that families in different income classes can afford to spend on housing.
The difference between those numbers, he said, is the subsidy that the county and the developer would have to pay to build new affordable housing units.
If approved, this so-called “market affordability gap” methodology would increase the cost of providing housing for one full time employee from $38,903 to $277,062, according to a report on the method prepared by the Boulder-based consulting firm RRC Associates.
However, the commissioners could elect to charge developers some percentage of that cost, rather than the full amount, and McCabe recommended that they do so.
“We are not recommending that you go to the 100 percent level,” he said. “That has a sticker shock associated with it.”
Local real estate attorney Jodi Edwards, who attended Tuesday’s meeting on the proposed rule change, agreed.
He criticized the “market affordability gap” formula for using the price of free market housing, rather than the price of affordable housing, to set fees for developers.
“The free market units in this town have Italian marble countertops and Persian rugs,” he said. “We don’t need to build that. It ought to be the gap between what this person can afford and the cost of building an affordable unit.”
Commissioner Rob Ittner also raised concerns that sky-high real estate prices in the upper valley could lead to artificially high mitigation fees in other parts of Pitkin County, like Basalt.
“At point do we take into consideration that we live in a community of workers in the Roaring Fork Valley?” he asked. “How do we justify the fact that this is skewed by high land prices?”
Pitkin County Attorney John Ely replied that the formula made sense because most of the APCHA-managed affordable housing stock is in and around the city of Aspen, meaning that it is expensive to build compared to housing in Basalt.
Commissioner Steve Child said after the meeting that while he supported adopting the new mitigation fee formula, he opposed charging developers anywhere near 100 percent of the cost of building replacement units.
“We will be nowhere near the 100 percent, I’m sure,” he said. “To jump it way up on the tail end of a recession would not be a good idea.”
The commissioners will consider finalizing the rule change at a future meeting, where they will also debate what percentage of replacement housing costs the county should charge developers. The city of Aspen must also approve the rule change and new methodology.
“That’s the figure that really counts, in terms of what a builder has to pay,” said Child.