"Do not count your chickens before they are hatched." -- Aesop
MORE MITIGATION MAYHEM
The Red Ant has long been concerned with (more like "appalled by") the arbitrary nature of the City's laws concerning subsidized housing mitigation. (For a detailed background, re-visit Issue #88 and Issue #89.) Like a phoenix rising from the ashes, the mitigation issue was raised again recently before the (relatively) new council - staff's hope was the new make-up of the board would yield substantial changes to the existing regulations despite the same ideas being shot down exactly one year ago.
Here's what's going on. It has LONG been believed by local bureaucrats that the development and re-development of residential and commercial property in Aspen impacts the community in such a way (through jobs generated) that owners of said properties MUST be required to offset the subsidized housing needs created by these new jobs. One of several subsidized housing mitigation options for property owners is to pay a "fee-in-lieu (FIL)" for such housing that would be built somewhere in the community, just not on the site of the development at hand.
Last year's issue, reconstituted this year, pertains to the City's belief that the current FIL rate is thought to be "unrealistically low." According to a 1/3/14 memo from APCHA and the city's housing manager states, The FIL does not "generate a realistic amount of revenue to help offset the costs incurred to produce the additional employee housing needed as a result of the additional employees that are generated by most development." And a theme that was repeated several times in staff's presentation was that "the city is currently taking in far less than it should and/or could" with the current model.
The critical question unanswered by city staff's proposal is how to determine the number of "full-time equivalent (FTE)" employees generated by residential and commercial development. City staff seems to think this number is VERY high, but they cannot quantify it. They like a counting methodology called the "market affordability gap (MAG)" that would charge a FIL that is based on the difference between the cost of luxury free-market housing and what a category 3 worker can afford. APCHA calculates this "affordability gap" number to be $708 for every additional square foot of free market housing built in town. (The current FIL is just under $77/sf.) This implies that every free market property owner should pay the difference between the value of their house and what local workers can afford. Simply preposterous!
According to a 1/24/13 guest column by former councilman Tim Semrau, "This policy also implies that there is NO LIMIT to the affordable housing needed, NO LIMIT to the amount of money the local government will collect, and NO LIMIT on the number of units the government intends to build. This is a complete change from the current policy based on one employee needing to be housed per 3000 sf of new free market housing and the actual cost to house them."
Semrau goes on to point out that the 2010 Aspen Area Community Plan (AACP), an advisory document, states a goal of housing a "critical mass" of workers through "reasonable mitigation." However, there is "no definition of exactly how many employees constitute a critical mass, no analysis of the direct impacts of home expansion requiring specific mitigation to meet specific community goals, no statement of how charging a fee to make up the difference between what an employee can afford and what a free-market home is worth. None."
Just imagine, under the proposed plan, a 1000 sf expansion will cost $708,000 in subsidized housing mitigation - likely twice the cost of the actual expansion itself! THIS is how these people think!
The good news occurred when councilman Dwayne Romero asked city staff, "What has changed with this proposal since it was presented last January?" The answer was "Nothing." Council went on to direct staff to look into other FTE determination methodologies for consideration, refine the proposal for residential expansion impacts and to commission a professional study to determine an accurate and defensible FTE determination. In effect, the study buys the community a good 6 months before this ugly beast raises its head again.
Strangely - and rather unexpectedly - councilman Adam Frisch, in his wise critique of the MAG methodology, deemed the current FIL "too low" in his opinion and, in a move that mirrored staff's arbitrary assignment of valuation, stated out of the clear blue that he thought $500/sf might be a good number. WHAT?!?!?!?
Read more about the housing mitigation issue in Paul Menter's recent column in the Aspen Daily News HERE.
As the staff proposal waits on ice for the housing mitigation study results, council would be well served to focus on the issue of "basing the residential mitigation requirements on employee generation associated with homes." This staff recommendation highlights a fundamental failure of the existing housing mitigation program in Aspen. This program quite likely violates Colorado State Law. C.R.S. 29-20-104.5 specifically prohibits local governments from imposing on a private property owner capital costs that ought to be financed by taxpayers at large. In other words, for a housing impact fee to be lawful, the city must be able to demonstrate that the fee will "defray projected impacts on capital facilities CAUSED BY proposed development." Simply put, the law requires that the city show two things:
- That a development for which a subsidized housing mitigation impact fee is charged actually requires the city to build more subsidized housing.
- That the fee charged is actually the amount required to defray the resulting effects on the city's subsidized housing stock.
In a 1/5/14 memo to council, 2013 mayoral candidate Maurice Emmer wrote, "The city has explored various modifications to its method of computing affordable housing mitigation fees. But the city has ducked the two fundamental requirements above. The city has built a complex and extremely expensive 'government within a government' in the form of its housing mitigation system, but skipped what any developer knows is the most important step: it skipped the foundation. The city simply ignored the necessity of complying with the requirements in the Colorado statute. The city's oversight has not escaped the attention of local developers and their lawyers. (See the 1/24/13 letter from attorney Joseph E. Edwards, III, to the previous council.)"
DO WE REALLY NEED MORE HOUSING?
It's a question that nobody (in local government) wants to ask. So I'm asking. All this talk of mitigation raises far larger questions: Who are we building this new housing for? Where are all the jobs? When the subsidized housing and FIL programs began, subsidized housing for employees was indeed a critical issue for the community. But here we are 30+ years later with a housing inventory of 2800 units, a robust valley-wide transit system and a big fat healthy 1.5% Real Estate Transfer Tax (RETT), two-thirds of which fills the subsidized housing coffers with every transaction. Who are the dwellers of our 2800 units? Where do they work? How many are retirees? In other words, are they in compliance? Or are we housing a bunch of squatters and scofflaws who, if cleared out, would create room for new employees? Why doesn't APCHA know? (They don't, I've asked.) Why isn't this information posted on a publicly accessible excel spreadsheet on the APCHA page of the City/County website? In other words, if we don't know what we have, and we don't know who lives there, how can we possibly know how much more housing we actually need?
My unscientific guess is that we have an under-employed population in our subsidized housing inventory. In Issue #89, I wrote what I call my "Mitigation Manifesto" which outlines my thoughts on this subject. If you're interested, check it out.
I believe the first step should be a thorough subsidized housing audit. None of these other studies matter until we determine what we're working with. It could be that we are legitimately in desperate need of more units. But it could also be that we have an out-of-control housing program desperately need of new management and better oversight.
Besides, with a projected $41 million forecasted to come into the program over the next 8 years, why isn't there a plan or a budget from APCHA that outlines what they would like to do with these pennies from heaven? The city is notorious for building up stashes of cash that they spend at will with no explanation or public oversight. The housing fund appears to be shaping up as a similar slush fund.
And, even more frightening is the fact that the city is working off some dubious forecasts and projections from a study that tells them to build and build and build, with no end in sight....
WARNING: THE FUTURE OF SUBSIDIZED HOUSING GROWTH
According to a recent (2012) study commissioned by the city and prepared by Economic & Planning Systems Inc (EPS), a firm specializing in real estate economics, public finance and land use policy, the forecasted number of subsidized housing units needed in Aspen in the next 8 years is nothing short of astonishing. EPS forecasts 1000 net new jobs in Aspen between 2012 and 2022. (Never mind that the past 10 years has had flat job growth and there is no indication that this will be changing, the city just loves this number because it fits their narrative.) Given that projection, EPS has determined that the subsidized housing need in Aspen from this growth in employment (while maintaining a 53% commuting percentage) is 230 new units. Additionally, the subsidized housing need in Aspen to address retirement (retirees staying in their units and no longer working) calls for 579 new units, and worker-occupied units lost to "gentrification" and re-development will necessitate 376 new units. Do the quick math: that's 1185 new subsidized units in the next 8 years!
APCHA's cost estimate for building new subsidized housing is $846/sf, based on costs at Burlingame, paid for land costs and other soft costs. And, the average APCHA subsidized housing unit is 1000 sf in size. So, back to simple math: call it 1000 new units x 1000 sf x $850/sf. That's a total of $850,000,000. EIGHT HUNDRED AND FIFTY MILLION DOLLARS that the city needs to raise and spend on subsidized housing in the next 8 years. Brace yourselves.
One of council's top ten goals for the year is to find new homes for various city departments while determining the best use(s) for the city-owned buildings that currently house the Aspen Art Museum and Mountain Rescue (both organizations are expected to vacate their respective facilities this year). Never mind that the city employs a "capital asset director," he and his staff "took a stab" at doing some of this work but determined it was over their heads so they needed to bring in some professionals... for $212,206 of YOUR money. Good grief. Please remind me again what the "capital asset director" and his staff actually do.
BURLINGAME PHASE 2 UPDATE
As new buyers of units in the second phase of Burlingame begin closing on their units and moving in, assistant city manager, aptly-named Barry Crook, is chomping at the bit for another $15 million to build more units out there. Regularly reminded by councilman Dwayne Romero that "reservations" for units "are a far cry from actual closings," Crook just won't give up! The 48 units currently available in buildings 1-4 are all but spoken for but not yet sold. And the reservation rate for the yet-to-be-built buildings 5-7 was recently just 50%. There is no longer a "lottery" for these units - if you qualify with APCHA and can get financing, you're in.
THE "YOU CAN'T MAKE IT UP" FILE: WE-CYCLE SUPPLIER BANKRUPT
It seems that the company that supplied Aspen's 100-bike, 13-station bike sharing program has declared bankruptcy, citing $50 million in debt. The Aspen We-Cycle folks don't see this as any kind of problem, but then again, this is the same group that considers its first year of operation a whopping success with $142,000 in operating costs and $146,000 in revenue. Oh, but don't forget -- as they continue to -- the program's $500,000 in initial subsidies and investment, including $6000 from the city and another $24,666 from Pitkin County.
SECOND HOMEOWNERS - A SURVEY
Who knows what this is all about, but the Aspen Times is conducting a survey of second homeowners and visitors. It's a brief questionnaire that includes demographic and lifestyle topics. Any chance to give a voice to our vital second homeowner community is A-OK with me, although we have a long way to go! Go to www.AspenTimes.com and look for the "Visitor and Second Homeowner Survey Invitation" on the homepage.
FOOD TAX REFUND TIME
It's that time of year again! Get your $50 food tax refund! In order to receive this, you MUST have lived within the city limits of Aspen for the entire 2013 year AND be a registered voter in the City of Aspen. HERE is the form. Deadline is April 15, 2014. Any questions, please call (970)920-5040.