Commissioners say no to idea of linkage fee moratorium

Looking for a boost for the building community

Gunnison County commissioner Phil Chamberland introduced the idea of an affordable housing linkage fee moratorium at a work session of the Board of County Commissioners on Tuesday, May 10. A full house turned out to discuss the possibility, with local contractors in favor of boosting the local economy and individuals concerned with the continued availability of affordable housing in Gunnison County.

“As I understand it, one of the criteria [in implementing the fee] was changed conditions including the [growing] economy of Gunnison County. And if that was one of the reasons you were looking at, maybe we can use that now as a springboard to discuss putting a moratorium on the linkage fee,” Chamberland said. “Right now within the building community, as slow as it is, any help we can provide would be a benefit—to jobs, to the construction community. It provides jobs that are above-average wage jobs, and in my perspective, it’s a good sector to give a good foundation.”
“I asked KT Gazunis to pull up some information and did some looking into who’s paying the linkage fee, where it’s coming from and where we are with building permits,” responded commissioner Paula Swenson. “We are up in 2010 over 2009.”
According to county data, there were 173 building permits pulled in 2010—32 permits and $4 million more than in 2009. In addition, Swenson indicated that looking at linkage fee collection in September 2010, linkage fees are not necessarily placing a burden on local residents. Of the $50,280.50 collected during that month, Colorado residents paid only $3,126.
“Compared to the city of Gunnison, which has no type of fee, they only had one permit. So I don’t think the linkage fee is stopping construction. There is no rationale or connection I can make between where building permits are pulled and who’s pulling them and the linkage fee,” said Swenson.
According to data provided by the county finance department, in 2010 over $150,000 was used from the linkage fee budget for affordable housing projects and programming, with nearly $35,000 more spent on administrative costs; approximately $243,000 remains for future projects.
Swenson pointed to the ongoing use of those funds and $182,000 that remains on the county books from the purchase of a Rock Creek property for an affordable housing project. The property was purchased prior to the implementation of the linkage fee; Swenson believes it points to the need for funding specifically linked to affordable housing.
“Without the revenue, everybody is paying for these projects because funding is coming out of general dollars. [The linkage fee] was a revenue stream linked to the cause of the need for housing and that is why we have it in place,” Swenson said.
Chamberland conceded that he could see where Swenson was coming from regarding the building permits, but still felt that a moratorium could persuade homeowners at the north end of the valley to “get off the fence” and build sooner rather than later.
“How many people, especially in the north end of the valley, would look at a $15,000 or $16,000 savings on a 5,000-square-foot home and look at that as an impetus to build?” Chamberland said.
“It’s important for us to distinguish between what we’re discussing today,” commissioner Hap Channell said. “A moratorium, if I am reading correctly, is the idea that it would help as a stimulant for the building industry. That is the cause and effect assumption.”
“Right,” Chamberland said. “And if it only creates an extra three homes being built, some of these homes employ people for up to two years. Is that enough of a boost? None of what we’re already doing [to boost the economy] is going to happen overnight. I think a linkage fee moratorium is something that could happen overnight. We’re losing a lot of laborers who can’t make a living here, and anything we’re doing to keep those people here is a good thing.”
Channell then opened the discussion to the audience. Local contractor Joe Puchek spoke in favor of the moratorium, suggesting that the building permit data considered by commissioner Swenson did not look at the big picture.
“You need to go back before 2009,” Puchek said. “2009 was down to 2008 was down to 2007. 2010 didn’t even equal 2006 for building permits,” he said, also challenging the comparison between county permits and those in the city of Gunnison. “Our clients don’t typically come from the city. A lot of homes bringing larger fees aren’t coming from small postage-stamp lots, they’re coming from larger lots. They employ a lot of people, and not just contractors and the people who work for them.”
Citing economic studies by Paul Holden, Puchek pointed out that the two largest industries in the valley are the ski resort and building contractors. Yet, he said, he has lost two potential clients because they chose not to build in Gunnison County after looking at all the fees and regulations.
“We need the jobs. This is one way that could make a difference quickly,” Puchek said.
“I don’t think this is the right time to not invest in affordable housing,” county planning commissioner David Owen said. “I think the figures Paula mentioned here show that we’re on the verge of a recovery. To remove a critical income source at a time the economy is turning around is the wrong time to do it…. If the concern is getting people working again, there are projects available. Could we use some of those funds to build affordable housing, especially in the north end where the need is very pronounced?”
But that suggestion caused concern for Crested Butte South metro district manager Jack Dietrich, who wants to see the moratorium abolished so towns and subdivisions can develop their own affordable housing.
“I’ve been told by KT (Gazunis, Director of the County Housing Authority) that there will never be employee housing in Crested Butte South. Then why should we be paying the linkage fee?” Dietrich said.
“I have a great deal of support for Crested Butte South,” Gazunis said, indicating that she would be happy to work with them on affordable housing projects. But, she stated, “Employee housing is better built in community centers where there are jobs, to reduce time in transit on the road and having children participate in communities and keeping parents off the highway.”
“I think the goal here is admirable. Gotta build industry. Gotta get back to where it was,” said former county commissioner Jim Starr. But, he suggested, the elimination of fees doesn’t always work.
“Crested Butte South agreed to drop all of its approval fees with the hope that it would help spur more building there,” Starr continued. “I had occasion to talk to the director about that experience, and he said it did not work. During that year, one single-family home and one duplex were built, and he said he felt they would have been built either way… I got the impression if they had the opportunity to make that decision again, they would not do it.”
“It is a really challenging assertion to say that a moratorium is going to make people do or not do something you can’t even measure until they do it,” said Margot Levy, suggesting that it would be prudent to look at other counties for a comparison. She also raised concerns regarding the slow real estate market.
“There is a big inventory of unsold homes. I keep hearing ‘Too much inventory, too much inventory, too much inventory.’ So I guess the question would be, why would the county want to encourage more inventory?”
The discussion continued as Gunnison County residents echoed the sentiments already expressed, vacillating between the need to provide a boost—however small—to the building industry and the need to remember the bigger picture and support affordable housing. It became clear at the end, however, that a moratorium did not have support by the board.
“As a couple of you said, there are so many factors involved in this, and I agree 100 percent,” Channell said. “No one thing will make a difference, as Ted Colvin said, and that goes to many, many factors in this. I have talked to builders and most recently with Realtors, and it’s lending, lending, lending. It’s not that we don’t have buyers, it’s that they don’t have buyers that qualify under today’s lending restrictions.”
“Phil, I agree the affordability gap has changed,” Channell continued. “But there still is an affordability gap… My problem ultimately comes down to the cause and effect issue… I don’t see, frankly, the blatant cause and effect here.”
Indicating that he would like to see a conversation take place on the “stair-step” nature of the linkage fees to smooth out the increases in the fee as square footage increases, Channell ended the work session by thanking the audience for their thoughts.
“This is not going to be the end of the discussion by any stretch of the imagination,” Channell said. “In terms of the moratorium, we’ll put that part of the conversation to rest. Thank you for coming and for your thoughts. Keep ‘em coming. I know you will.”