Information released this week by the city of Aspen details how the costs of the Burlingame Ranch affordable housing project increased from an estimated $184,000 per-unit taxpayer subsidy in 2005 to a $373,343 per-unit subsidy, which could jump as high as $484,906 per unit once the costs of borrowing the money to finish the project are figured in.
As now projected, Burlingame will cost $138 million to complete, requiring an $85.5 million total subsidy.
The information also details the significant discrepancies between information distributed to voters in the run-up to the 2005 election that authorized the project and what the city thought the project would actually cost in the beginning. The voter information, distributed in a brochure from the city’s asset management department, did not include access and infrastructure costs, land costs, mitigation fees for intersection improvements and the purchase of a fleet of buses to serve the new housing development — a “language error” that left $25.3 million of Burlingame’s costs out of the estimate. City officials say they have no idea why the numbers in the brochure were so far off from what they knew at the time.
The information was distributed to the affordable housing finance subcommittee of the city’s Citizen Budget Task Force at its Tuesday meeting this week, prompting questions about the community’s capacity to absorb what is now projected to be an $85.5 million subsidy once the project is completed.
The city cautioned that many of the assumptions on which the numbers for the project’s costs going into the future are based “can and will change.”
“With almost every project, there is a sticker-shock moment. It’s the first time people see reality,” said local contractor John Olson, a member of the subcommittee. “You need to be as transparent and information-oriented as possible to get through that shock. Here we are for the first time in this project getting to that moment, and I think it’s important for everyone to keep that in mind.”
Burlingame is one the largest public projects in area history, encompassing 236 planned units of for-sale affordable housing on 32 acres on the western edge of town near the Buttermilk ski area. The land costs associated with the development also include 190 acres of protected open space surrounding the project.
The numbers released by the city include the real costs for phase one, now complete, consisting of 84 units and seven single-family home sites. Those numbers are then combined with the estimated costs to complete the second and third phases to arrive at the estimated total cost.
The city will be asking voters in November for permission to take out a bond to complete Burlingame phases two and three. The amount needed to finish the construction — and the total amount of the bond — is not yet known, but is projected to be at least $75 million.
Although the 2005 brochure calculated Burlingame’s total cost at $74,375,444, the city believed going into construction that phase one would cost $45,352,822. The total cost of phase one is now known to be $50,885,776.
A number of changes made to phase one along the way increased its costs, together with the project’s total costs. The city spent approximately $1 million to “green up” the development, installing solar panels and LED street lights, among other modifications. Additionally, millions of dollars of increases were incurred when, due to a delay in the project’s timeline, construction crews had to haul excavated materials off the phase one site that were supposed to be used in the grading process for phases two and three.
The council also decided to contribute an extra $1.3 million subsidy for the owners of the single-family lots, who found after purchasing the lots that they would not be able to build their homes for the amount of money they were able to spend under affordable housing rules. The subsidy was intended to take some of the pressure off the single-family lot owners’ tight construction budgets.
One of the most drastic financing changes resulted when the council lowered the category mix partway through the sale of phase one. After the first offering, fewer people were bidding on the higher-category units — which are designed for people with higher incomes and cost more — than the city had projected. Reducing the category mix led to a $6.7 million loss in sales revenue for phase one.
Because the council signed a fixed contract for $32.3 million for construction of this first phase in 2005, the city has so far avoided the inflation in local construction costs that have hit the valley in the last three years. But it will likely take a severe hit from inflation when it hires a contractor to complete phases two and three. The city’s current estimate of those costs is $74.9 million.
The costs disclosure led Mike Maple, a local citizen who has spoken out of late in opposition to higher taxes and historic preservation bureaucracy, to suggest at Tuesday’s meeting that the city needs to build more units in phases two and three, as the additional sales revenue would reduce the subsidy numbers.
“Is it reasonable to end up spending $575,000 per unit if we can change what we are doing and make that number $200,000 less per unit?” Maple asked, referencing the highest projected subsidy, based on an interest cost of $26 million to borrow $75 million. “Is that how we want to spend money as a community? I think there needs to be better utilization of this land.”
Steve Bossart, a project manager with the asset management department, cautioned that since the density and floor plans for the second and third phases have already been designed, any modification to those plans would lead, potentially, to years of delays and additional costs.
Burlingame’s total costs also include $2.3 million in “community benefits,” which is how the city refers to the trail connecting Burlingame to the Aspen Airport Business Center trail, and a park that will be completed to complement the site.
curtis@aspendailynews.com
