The city of Aspen might not ask voters this November to approve a $16 million bond to repay last year’s land-banking purchases.
Considering the inevitable future need to borrow a much larger amount of money to fund the completion of Burlingame and other housing projects, some are wondering why the city doesn’t hold off on the repayment bond, as the repayment funds could be rolled into a larger future housing bond.
City Manager Steve Barwick said there are advantages and disadvantages to both strategies, and nothing is set in stone.
“[Council members] aren’t certain they are going to do any of this,” he said.
The council will likely make a final decision about what goes onto the ballot at Monday’s meeting, or at a work session on Tuesday. Ballot language must be finalized by Sept. 5. Barwick said all options are still on the table.
“There certainly are advantages to waiting,” he said.
If the city waits to bond and the real estate market improves, that might increase voter and lender confidence. The city would also save by not paying twice for the fixed costs, such as legal and administrative fees, associated with issuing a bond. There is also no rush, Barwick said, to repay an $8 million inter-fund loan borrowed from the Wheeler Endowment Fund, which was used to pay for some of the $31 million the city spent last year on buying land for potential future employee housing.
On the other hand, bonding now — should voters approve the debt — would leave the city with cash on hand to cover any incidental housing upkeep costs that might crop up, and would give the city funds to redesign a higher-density Burlingame.
The council backed off earlier this summer on a plan to issue up to $50 million in bonds in November to complete Burlingame while the city explores ways to make the massive affordable housing project more cost effective. It is evaluating whether to increase Burlingame’s density from the planned 236 units to 300 units. To date, 84 units have been built.
Voters will likely be asked in November whether they approve of increasing the density.
If the city does bond for $16 million, which would have a maximum repayment cost with interest of $31 million, the repayment cost would also be relatively low, Barwick said.
The city is also likely to place a question on the November ballot that would extend the sunset date of the housing Real Estate Transfer Tax from 2034 to 2041.
Although the bonds would be “general obligation,” meaning that all of the city’s funds would be at stake, the bond would be paid off with RETT revenue and proceeds from the 0.2025 percent housing sales tax, which voters are being asked to renew in November. The city would only have to tap its other funding sources to repay the bonds if the bottom fell out of RETT and housing sales tax revenue, causing them to fall short of repayment obligations.
curtis@aspendailynews.com
