Council trying to fix housing fee conundrum

Other options: sales tax, free market sale?

How to provide and pay for affordable housing in Crested Butte continues to be a main discussion item with the Town Council. The board discussed the issue on Monday, November 21 and will meet again to try to hash out details of the issue and listen to public input at a work session scheduled for Monday, December 12.

At a work session on November 21, the council got some background on the issue from town planner John Hess. The current ordinance requires that developers of “non-residential” developments in town build affordable housing units based on the number of employees the project would likely employ. They would also be subject to building units and/or a payment-in-lieu fee that currently stands at about $83 per square foot. The staff is recommending dropping that figure to $64 per square foot. But some local developers and businesspeople are balking at the rate, especially because it jumped from about $2 per square foot last spring with the new ordinance.
“We have been working on this topic since 1990 and we still have an affordable housing situation in town,” Hess told the council. “We have 186 deed-restricted units that have been created in town since 1990. Still, the second homeowner structures are rising. We want a balance of second homes, owner-occupied units, and- short- and long-term rental units in town.
“The revisions we are suggesting make this cleaner and more affordable than what was approved in the spring,” said Hess.
Mayor Aaron Huckstep took a quick straw poll of the council and found that all the members felt affordable housing is a valid need and raising the fee from its $2.09 per square foot level was appropriate.
“But I think we all agree that economic growth is also important in town,” he said. “And a lot of people in the public feel this fee inhibits economic growth.”
Councilperson John Wirsing, who sits on the town’s affordable housing subcommittee, commented that in the big picture, the fee is not the issue. “People who think $83 per square foot is too much are not going to think $64 a square foot is the answer,” he said. “Our goal was to get people to build actual units. We don’t want them to opt out and pay the fee. Any savvy developer should be able to see it is better to build the units and either rent them or sell them and get their money back. For the committee, it was about getting units built and we didn’t want the fee to be so low that it was easier and cheaper to just pay the fee.”
“We all agree the $2.09 a square foot was too low but the council raised [the fee] too high, too fast,” countered councilperson Jim Schmidt. “But going to what really amounts to $166 a square foot if nothing is built, is too much.”
“It’s still cheaper than other mountain towns like Aspen and Park City and Telluride,” said Wirsing.
“I wouldn’t say we’re comparable to Aspen or Telluride,” said Schmidt. “The question is, when do our fees make sense for our area? That’s the hard part. Housing is a righteous goal but there are other goals for town as well. If you just look at housing you don’t see the big picture. The school probably couldn’t have afforded these bigger fees. The Center for the Arts probably wouldn’t be able to pay them easily for their proposed expansion.”
“I’ve looked around and property is certainly selling for a lot more in Aspen and Telluride than in Crested Butte,” said Councilperson Shawn Matusewicz.
“Instead of building ten commercial units, these fees are meant to motivate a developer to build eight commercial units and two residential units. What difference does it make if the rent is coming from commercial or residential tenants?” asked Wirsing.
“I’m sympathetic to a developer coming to Crested Butte and seeing the fees go up from $2 to $84. That’s hard to absorb,” said Councilman Glenn Michel. “But if they know up front what they have to pay, they can plan for it in their business plan. In 25 years, this will set up Crested Butte to be a great community where people still live. It’s a long-term thing.”
“The biggest concern for me is that these fees are a temporary solution to a long-term problem,” commented Matusewicz. “We’ll reach build-out in 15 or 20 years but we could still need affordable housing.”
“When we get to build-out, we’ll need those units even more,” said Wirsing.
“But we don’t want to see people leave the valley because they can’t find work now,” said Schmidt.
“We can’t rely on developers solely for affordable housing funding,” said Michel. “But these fees are one arrow in our quiver. I’d entertain other options.”
“Does it make sense to stagger the fee increase?” asked Huckstep. “Set the goal for what the fees will be but phase them in. Could this encourage development now? I think it is shocking to go from $2 to $83 or even $64 in one jump.”
Huckstep asked Hess to look at a Matusewicz idea to have a small sales tax put in place that would fund affordable housing.
“Maybe we ask the voters for a quarter percent sales tax for that and another quarter percent for parks and recreation,” said Schmidt. “There’s also the possibility of selling some of the land owned by the town in Paradise Park on the free market. That could pay for infrastructure. Five years ago it could have paid for a lot of infrastructure.”
Wirsing agreed, “These ideas are worth exploring but not ‘instead of’ but rather ‘in addition to.’”
“And we have to see what impacts they would bring,” said Michel.
“I think we need to give the developers different options,” added councilperson Roland Mason.
“People investing in town are investing in what the town is,” said Michel. “Having people around. Having a viable, livable community is ultimately a good investment for the developer.”
The council will continue the discussion on December 12.