"The State is a gang of thieves, writ large."
-- Murray Rothbard
MITIGATION MAYHEM
Council chambers were full on January 28 with citizens in widespread opposition to the City's poorly thought-out plan to arbitrarily raise subsidized housing mitigation fees on any and all development. Dubbed Aspen's "mitigation industrial complex," the issue was met by numerous local residents and builders who spoke out, arguing that the expansion of single-family homes does not generate new employees and therefore housing mitigation is not an appropriate charge. Furthermore, citizens spoke out against increased development fees that would hinder the local construction industry, negatively impacting employment for many tradesmen who live in subsidized housing already in existence.
The outpouring of opposition raised the bigger question of housing mitigation in general. The following week, I sent council my Mitigation Manifesto:
"I watched every minute of the recent public hearing on the ADU/mitigation ordinances and have several thoughts and concerns that I wish to share with you now that these issues have been continued to some unspecified date in the future.
I listened attentively to the various comments by fellow citizens and do not wish to belabor those here. Rather, I found myself shocked by the relative lack of understanding each of you demonstrated (via your body language and the elementary questions you asked the speakers) about the ordinances that very easily could have been voted on and adopted that evening had it not been for a mad scramble by local citizens, myself included, to stop these two very punitive ideas with myriad unintended consequences.
It is definitely a good thing that the ordinances were tabled for the near term, but it was equally shocking to hear, just before your dinner break, that your potential solution is merely to find a mitigation fee that is "fair." I'm afraid that after 2 hours of public comment, you entirely missed the point.
When discussing mitigation, I suggest you back up. Go back to the very beginning. What is the mitigation for? For some time in our history, it has been one of several means of raising money for subsidized housing construction and development. No one is arguing that this community needs subsidized housing for its workforce, and in the 30 years of our housing program, we have built an inventory of 2800 units that have enabled many working folks to live in our community and remain here through economic booms and busts. The 2010 AACP (like its 2000 predecessor) specifically addresses subsidized housing, stating the goal of "establishing and maintaining a 'critical mass' of working residents." But herein lies the problem:
This "critical mass" number was seemingly intentionally left vague, and THIS (and not the fee) is at the very crux of the "mitigation" issue.
There is a willingness of all parties (and has been for years) to mitigate for subsidized housing. But to what end? (As Jack Wilke put it, "How far are you willing to go?") We need to figure out what that "critical mass" of employees is that we will house at public expense. And it should not be a moving target. Depending on where that figure nets out, we may already be there. Or we may be close. Or we may have a long, long way to go. But until we designate a definitive number (or percentage) for this "critical mass," we have no numerical basis for raising, lowering or eliminating mitigation fees. Without a hard number, we have no idea. And to keep building without a specific need is irresponsible at best. I won't even speculate on the legalities.
I suggest getting the cart back behind the horse. This "mitigation" question and its inextricable link to a very specific number that clearly identifies and defines our "critical mass" target must begin with a "needs justification" analysis; in other words, a complete and formal independent audit of our current housing stock.
Several key questions should include (but not be limited to):
And this information should be public information. This is, after all, public housing.
It is my opinion that we will find significant non-compliance through illegal ownership and rentals, as well as less than full-time (1500 hours/year) employment. In that case, we may already have enough inventory (or come very close) to reaching our "critical mass" goal. To build more and more subsidized housing because APCHA or the city "wants" more or there is money in the fund is no justification for the enormous expenditure(s) of doing so. And until we have 100% compliance in our existing inventory, APCHA will continue to be regarded as a sham by the community. Anything less than 100% compliance demonstrates that APCHA is ineffective in its management of this tremendous community asset. Enforcing compliance is tough. But it's not personal. Subsidized housing is a privilege, not a right. And those not in compliance do not deserve the community's largesse through a housing subsidy. The rules are very simple, and for those who comply, the benefits are great.
Through an independent audit, the community will know - empirically - where our pressing needs for more subsidized housing lie. Without one, the numbers are just anyone's guess. And this community deserves far better than someone's best guess!
We currently collect RETT revenue, mitigation fees and sales tax revenue toward subsidized housing. And we all just recently learned that there is yet another source - the commercial space mitigation fee - as illustrated by the example of the Nugget Gallery. Before hauling off with some arbitrary new ordinance to pick winners and losers by trying to define a "locally serving business," look at the root issue. It's subsidized housing mitigation again! The lack of definition of a specific goal clearly presents a problem that is not going to go away. This is not something that can be solved by creating one-off rules each time a related issue comes up. It's time to address the mitigation issue head-on and solve it.
With empirical data of what inventory we have and a specific "critical mass" number of what we are targeting (the "need" to meet our goal), we will be able to easily ascertain whether the money we have on hand (or in the pipeline) will meet/cover the costs of meeting this goal. It's not rocket science. If we need more than what the RETT and the sales tax provide, then that "gap" could be addressed by "mitigation" fees. THAT is where the "mitigation" discussion should BEGIN. Then, we can determine how much money we NEED from a mitigation source instead of some randomly chosen number.
To charge - or increase charges on - construction and development simply to "mitigate" for subsidized housing ad infinitum is arbitrary and punitive. (And, as Howie Mallory said, fraught with "unintended consequences.") Not to mention, likely illegal.
I strongly urge you to go back to the root of the issue and take the necessary steps that empirically justify your subsidized housing plans. The community will take you far more seriously with this verifiable information. And I look forward to this becoming an important campaign issue.
I am always willing to discuss this issue and any others."
To date, I have had zero responses from the council members. (Are you surprised?)
And the following week, Ordinance 4 of 2013 moved forward with its new "Employee Generation Rate Schedule" to determine "employee generation" by projects within the city limits. This ordinance proposes subsidized housing mitigation fees for a specified number of "employees generated per 1000 sf of leasable space." It's ludicrous. In these economic times, and especially when it's well known that our subsidized housing inventory is filled with un- and under-employed workers, should we really be penalizing those who actually bring jobs to town? In the commercial core, for example, for every 1000 sf of leasable space, the city says 4.7 employees are generated. No...... I don't think so! Those employees are already here..... And they're looking for work!!
As I wrote to the councilmen, this issue is NOT going to go away.
THE RED ANT IN THE NEWS
I recently spoke out at a city council meeting. It had been a long time. I had been learning a lot about the massive problems at Burlingame Phase 1 and writing about these here. Then I got my hands on the lawsuit filed by the homeowners at Burlingame against the City, APCHA, the builder of the project (Shaw Construction) and one of its vendors. This lawsuit was filed in September 2012. My point in addressing council was to raise their awareness of the lawsuit (it had never been publicly acknowledged nor addressed) and additionally inform them that my prediction in the last issue of The Red Ant (that owners of units in the project may soon be unable to sell their units because banks will refuse to carry a mortgage for potential buyers) had come true. Yes, last week a Burlingame owner's deal fell through when his buyer (approved by APCHA and for financing) was turned down by the bank because the purchase was for a Burlingame unit.
It has happened. The 84 individuals and families who live in Burlingame Phase 1 are now stuck. They cannot sell. According to local bank sources, there will not be lending for the purchase of Burlingame units for the "foreseeable future." And it's not only due to the lawsuit. It's also because of the shoddy construction and deteriorating condition of the 5-year-old property. No bank wants to own the note on something that's falling apart! There was no differentiation between Burlingame 1 and the under-construction Phase 2 in my correspondence, but given that the city is the owner-developer of Phase 2 as well, my suspicions are that lending on the new places may be in equal jeopardy.
The Aspen Times covered the story, and specifically included the brush-off of the lawsuit was given by city attorney Jim True. Both True and mayor Mick downplayed the city's involvement in the suit and proclaimed that The Red Ant is making this into a political issue. You bet I am! Read the Times article HERE. The Times went on to follow up on the issue with an editorial on February 15 (read it HERE), stating of my comments to council, "She raised a few valid points." It continued, "With the city holding myriad meetings over the last two years on building costs and development plans for the upcoming Burlingame Phase 2 construction, why hasn't the issue of cracked siding at Burlingame 1 popped up? One would think that someone would raise the matter simply as a precaution against a similar problem arising at Burlingame 2." Ya think?! The Times went on to call for more transparency from city hall, especially with regard to the various legal matters faced by the city. Don't hold your breath! But it sure would be nice!
This is another issue that is NOT going to go away!
A PATTERN OF NEGLECT
My "outing" of the Burlingame mess and lawsuit against the city set my inbox on fire! I have heard from numerous subsidized housing residents and various HOA officers with reports of the city and APCHA turning their backs on these folks when it comes to infrastructure problems. The city's common answer to all problems? "It's not our problem, it's yours." There exists a sick pattern of building and selling sub-par structures to qualified employees, and once the city and APCHA are out of the loop, they prefer not to be bothered again. Our community is better than this! It is with public funds from the RETT (Real Estate Transfer Tax) that these subsidized housing projects were built in the first place, and no employee should face enormous special assessments (that they likely cannot afford) to fix construction problems that occurred due to the knowing neglect and poor construction management of the city of Aspen!
Notably, a 19-unit townhome property (circa 2004) recently underwent a "reserve study" by Aspen Reserve Specialists, at the behest of and paid for by APCHA. The idea is for each subsidized housing project to undergo a review that will provide rationale and budgeting for establishing and maintaining a reserve account for preventative and ongoing maintenance. (To date, APCHA has never required its "owned" subsidized housing projects to have reserves nor perform preventative maintenance, and therefore the entire portfolio is in terrible disrepair.) The owners were astounded to learn that, among other recommended immediate-term repairs and maintenance, the estimate to fix the "major problems" with their fiber cement siding, including horizontal cracking and water infiltration, ran between $147K - $163K. This translated to $8+K for each homeowner there. (Recall, they are just now starting their HOA reserve account so there is nothing in the cash jar.) From my vantage point, it is unclear whether or not this issue is one of faulty construction and materials or owner neglect, but the place had terrible siding issues. If the former, the builder of this project is already out of business so residents have no recourse. (The HOA recently collected $14K from its residents for a "patch" to the siding issue, but whether or not this solves the problem is yet to be seen.) You can bet they are closely watching Burlingame's lawsuit against the city, however!
But whose responsibility is it? Owner neglect definitely raises big questions, but when APCHA has never required nor supervised the collection of reserve accounts, perhaps they bear some of the blame. And riddle me this, if the city is contracting with and supervising such inept developers who build shoddy structures with poor materials, why on earth does it cost them $800-$900 per square foot to build these projects?!?! Something MUST change, and soon!
LATE BREAKING NEWS: APCHA TRYING TO WEASEL OUT
At press time, APCHA doesn't think it has ANY responsibility for the problems at Burlingame and wishes to be dismissed from the lawsuit! APCHA believes that since it didn't "build" the project, it deserves no blame. But wait -- APCHA is the party that SOLD the defective units to local employees! There is indeed responsibility! And in case you didn't know, APCHA is ALWAYS material to each and every purchase and sale of subsidized housing. The seller sells to APCHA who quickly sells the unit to the buyer. Chain-of-title on each transaction demonstrates this -- and it's a HUGE liability for both APCHA as well as the entire community!
APCHA absolutely deserves to be named in this lawsuit. We've all learned that the only way to make these folks do the right thing is unfortunately to sue them!
BAD IDEAS BEFORE COUNCIL
IDIOCY AVERTED
Thanks to local restaurateur Gil Vanderaa of Brunelleschi's who spoke out in opposition to the insipid idea of removing parking spots along Aspen's "restaurant row" on Hopkins Avenue in order to place "parklets" in their place. These "parklets" were to effectively be subsidized outdoor dining spaces that the city proposed giving to select restaurants along the busy corridor. Once again, the city wanted to pick winners and losers, but it took a level-headed entrepreneur to point out to council that a better way to conduct such an experiment, if need be, would be to have restaurants bid for the spaces. Never mind the financials - facts the city likes to ignore when proposing and conducting its silly little experiments - the parklets would run $20K - $25K in addition to $8K in lost parking revenue. Thankfully, Vanderaa's reasoning swayed council and they shot down the idea, but not before mayor Mick put in his two cents. "Why not try it since we seem to have people willing to try it, and maybe it will spread and other people will want to have it and see more value in that than the parking," he said. Right.
SOLUTIONS IN SEARCH OF PROBLEMS
We all try to be responsible. And moral suasion plays a big role. But the city prefers the stick to any kind of carrot. City staff is currently spun up about local retailers who leave their front doors open to attract customers. Mayor Mick and mayoral candidate Steve Skadron (currently on council) are both advocates of some kind of government regulation to curb what they see as a blatant waste of energy. The Red Ant prefers councilman Adam Frisch's approach; "We should be as energy efficient as possible without being harmful to the business community." Ya think!?
But city staff continues its unabashed folly: conjuring solutions in search of problems. On one hand their "solution" to forcing businesses to close their doors is to provide them with "signs" that somehow "show they are open." But on the other hand, the city has just initiated a $65 annual "sign fee" for businesses that place "sandwich board" signs outside.
Go figure.
DID YOU KNOW?
City of Miami Beach officials must read The Red Ant. Our lazy and incompetent city manager Steve Barwick did not make the final cut in his bid for the Florida city manager's job. Instead, we get to keep him and his $170,352 annual salary, not including benefits. Oh joy.
THE "YOU CAN'T MAKE IT UP" FILE
Didn't we just raise the sales tax in Aspen to generate "much-needed" money for our schools? Yes, sales tax in Aspen is now up to 9.3% and is expected to bring in $1.75M annually. And don't forget, in 2010, property taxes were raised in order to generate $1.35M annually - again, for the schools. Never mind the school fundraisers (the Aspen Education Foundation) did not want to do the heavy lifting to gather signatures and put a measure on the ballot that could have re-allocated existing revenues (from the RETT, for example) - of which we have plenty -- their way. They just took the easy way out and raised taxes both times.
But look now. It's a bird, it's a plane, it's the Aspen Education Foundation (AEF) partnering with a local non-profit called Aspen Aerospace Alliance to purchase a $100,000 flight simulator last week. Yes, you read that right. The simulator will be housed in the Aspen Middle School and will "incorporate aviation into multiple fields of study." Good grief. The 3-phase boondoggle has just one phase left to go. It started with phase 1 ($25K) for "ground-school instruction," followed by $115K in phase 2 that includes the $100K simulator. Look for phase 3 ($350K) next, which would require the purchase of an actual aircraft! Can't make it up.