ISSUE # 9 ... OWN AN ASPEN CONDO? TOWNHOME? HEAD'S UP ... AND QUICKLY!

The Red Ant is scratching her head. A vortex is spinning and we're now in it. We've heard a lot these past two days from many of you asking about proposed Ordinance #22 - next Monday night's hot topic at City Council, which, if passed, is slated to become law thirty days afterward.

In short, Ordinance 22 seems to update an old law that stipulates affordable housing mitigation for the redevelopment/demolition/ combination of units of "multi-family dwelling units." The effect is to make it almost impossible to redevelop/demolish/combine a condo without building affordable housing on a 1-for-1 basis.

Build A Worker's House FIRST-then Rebuild Yours

Let's say that your condo building is aging and needs redevelopment (an undefined term), or partial demolition (anything over 40% of the walls torn out). Before you can rebuild your unit, it appears that you must FIRST build an affordable housing unit to be controlled by the City---in most cases on your condo site.

The flawed theory is that by redeveloping an older condo property you destroy potential housing for a "local worker," and should have to replace that potential worker dwelling BEFORE you can build a free market unit. (Never mind that the economic logic is insane.) The same punitive measure is required if you attempt to enlarge your unit by combining with a neighboring unit. You must FIRST build an affordable housing unit (which will be anything BUT affordable for you)!

Maybe your neighbor combines two smaller units to make a larger unit. He may be forced to put an employee unit on your common site. Depending on your HOA restrictions, this could be a complex mess.

What?? Impossible. What about your property rights? We thought the same thing. It is clearly not economically viable. It makes redeveloping condo property impossible. Apparently, that's the point. Not to mention the depressing impact on condo values.

The Proposal That Makes Us Nervous

Here is the official Ordinance #22 proposal from the City's website for all of you who, like us, are just hearing about it: The City Proposal--click here At least during the first reading in August, Council requested an array of additional options to be considered on Monday. These options are included in the document linked above. The Exhibit C memo in the packet came to Council from an affected homeowner. It may contain some factual errors, but the general concerns seem appropriate, and have served to draw needed attention to this proposed measure.

Seems the law has been around for a long time, but has been apparently easily navigated through vague "exemptions" in the past. These exemptions to the rule of having to match units demolished or combined with new affordable units before building new free market units (at the same location) were easily obtained. Now, the City wants to better define (and presumably reduce) these exemptions and begin to enforce the regulation. Many definitions are still fuzzy - we're giving them a close look.

The City bills this technically as "loosening" the old law by creating clear exemptions. We are nervous that, in practice, the effect could be quite the opposite.


Why???

No doubt that affordable housing for the workforce is a problem in Aspen. The current City Council has an almost blind zeal to address the issue. Today's Aspen Times reports on long range planning efforts being undertaken. Note the emphasis on the increase in free market housing and concern about affordable housing.
http://www.aspentimes.com/apps/pbcs.dll/article?AID=2008809169953
Measures such as Ordinance #22 seem designed to address the trends that concern the Council.

Checking With The Pros

Some of our readers who are real estate professionals see the legislation as outright violations of private property rights. (How can the city tell a townhome HOA that a major renovation - more than 40% of the structure demolished - must include a 100% match in bedrooms converted to affordable housing ON SITE before the replacement of the original free market units?) Others tell us that Ordinance 22 merely clarifies the distinctions between demo projects where affordable units MUST be built and others where they don't. (If you can prove that a local worker - another undefined term - NEVER EVER lived in your unit, then it's exempt from the rule.) Regardless, the economics seem punitive.

Yes, we're confused. But we're wary too. The City's obsession with the increased value of free market properties that at some point in history housed local workers concerns us. We're not entirely clear on the ramifications of Ordinance 22, but we don't like the notion that whether a locally employed person ever rented or owned your unit is a defining issue in your permission to demolish and re-build your unit. Also the fact that the burden of proof that employed citizens did not live in your unit is on you. It is hard to prove a negative!


While we generally like to tell you what we think, this time around we're asking. What's your read on Ordinance 22? Does it go too far? Should the City really be able to stipulate that "multi-family dwellings" in Aspen be responsible for 1-for-1 affordable housing unit construction (on-site) when it's time to re-build their aging structures? We'd love your thoughts. And if you're a condo, townhouse or "multi-family dwelling" unit owner, you may want to hear what your real estate advisor and/or attorney has to say. We'd love to hear, too. Share your comments on our blog at www.TheRedAnt.com to enhance the collective knowledge.

We will learn what we can and report back before Monday's 5 p.m meeting. Make plans to be present, or send your local representative. This is likely the only public hearing on this matter.

Please pass this along to friends who own condos and townhomes here.

Comments

[Elizabeth]

The following email with some enlightening comments is posted with permission from a property manager /real estate broker and Chris Bendon, the City's most senior Community Development executive.

Chris,

Are the statements in this document accurate? This has been circulated locally in the past 2 days. Some attorneys I asked said they thought it was accurate?

Are there any contemplated changes to the code affecting multi family buildings (condominiums) in the City which would need renovating?

Given we manage # 35 such buildings we would need to know how to advise our owners.

Thanks.

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From: Chris Bendon [mailto:Chris.Bendon@ci.aspen.co.us]
Sent: Wednesday, September 17, 2008 9:35 AM
Subject: RE: City of Aspen code changes

These requirements have been in place for some time now, about 20 years. They don’t affect remodeling, but do affect demolition and combining of units. The requirements became very restrictive as a result of the moratorium that ended in May 2007. Staff is proposing a few exemptions to these regulations to accommodate situations that we don’t think should be required to provide mitigation – for example, replacement after a catastrophic fire. City Council did want to see a wholesale range of options for more substantive changes to the program and may be interested in further loosening of the requirements or getting rid of the regulation altogether.

So, yes – the requirements are very limiting for those who want to do more than interior remodels. Any combining of units triggers substantial mitigation. But, the regulations are not new. They’ve been in place for some time and were made more restrictive during the moratorium. Staff is proposing some relaxation for unique situations. And, Council may want to go further on relaxing the requirements.

Monday night, staff will be asking for approval of the proposed exemptions at a minimum and direction on the more substantive changes that Council wanted to discuss.

Cheers,

Chris
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Sent: Wednesday, September 17, 2008 10:19 AM
To: Chris Bendon

Subject: RE: City of Aspen code changes

(Q FROM REAL ESTATE PROFESSIONAL, ANSWERS FROM BENDON)

Q:So if a 4 to 40 unit condominium complex becomes obsolete by way of not being economically feasible to remodel and best to completely rebuild at same dimensions, # units etc., how does current code handle that? A; There would be required mitigation. In the past, the mitigation would only be required for the expansion, not the replacement. But the 07 code changed that. This type of situation is really where there’s a desire to look at the whole program. There is a point at which older buildings have fundamental issues beyond aesthetics.

Q: How would new proposal change that if any? A: There’s a full range of options from keeping the situation the same to getting rid of the requirements altogether.

Q: If not a complete re build is their some % of renovation, and if so how calculated, at which the same rules would apply as a complete re build? A:The City has a definition of demolition with a defined methodology of measuring demo. It was last amended in ’01 or ’02 (?).

Q: If true that a building would want to re build do they switch from free market to deed restricted? A: There would be required mitigation under today’s code, yes. The existing free-market units can be replaced without having to be deed restricted. If the code is amended, that could change.

Q: we have heard there may be a proposal to mandate all buildings be sprinklered in the City - is that true? A: I’ve not heard that although starting about 15 years ago the fire code requires buildings over 5,000 s.f. gross to be sprinklered.

Thx Chris.