CB Council reaffirms fee increase for local housing

Too far, too fast or not fast enough?

The Crested Butte Town Council gave direction to the town staff at a work session Monday evening to take the next year to “phase in” maximum affordable housing fees. The direction will essentially lower the current affordable housing fee from $83 a square foot to $38 a square foot.

In 2013, the fee will be raised to $63.55 a square foot, the rate recommended recently by town staff and the town affordable housing subcommittee. Until the prior Town Council changed the ordinance last April, the fee was $2.09 a square foot.
To encourage the building of actual units the council also told the staff to adjust rates for developers who choose to pay fees instead of building units to pay one and a half times the new rates. The staff will also return to the council at the December 19 meeting to present some suggested language and rates on how to cut non-profit and government organizations a break in the fees.
The work session began with a half hour of public comment. Mayor Aaron Huckstep told the crowd of 22 citizens that this recently elected council was dealing with proposed Ordinance 19 that was set in motion by the prior council. “The previous council passed Ordinance 7 that set the affordable housing fees in April,” Huckstep explained. “After a couple of projects where the fees were imposed, the staff suggested some changes and they came in the form of Ordinance 19. This is sort of housekeeping from the previous council. It’s not something we chose to address right away as a new council.”
Arvin Ram, co-owner of Rumors Coffee and Tea House and Townie Books said he spoke for a lot of people who felt Ordinance 7 was totally appropriate. “We can’t afford free market housing,” he said. “Our only opportunity is the town’s affordable housing program. We don’t support the effort to water down the regulations to benefit a few real estate developers. These fees aren’t anti-business, they are pro-business. Do not forsake us, the working community, to benefit real estate developers.”
Harvey Castro said he owned residential and commercial space in town. “I am in favor of Ordinance 19,” he said. “The whole goal is to have units built, not collect checks. You should be thinking about how this ordinance will make people build units.”
“Working class citizens like myself can’t afford free market units,” said Jeremy Rubingh. “Keep the intention of the ordinance. The developers had their heyday.”
Former town attorney Jim Starr said he helped draft some of the original affordable housing regulations for Crested Butte 15 or 20 years ago. “The fact is, the town hasn’t kept up with the need in the last 10 or 15 years,” he said. “This helps keep the working community here. I do think you need to address some of the issues with the non-profit organizations and I discourage the idea of a sales tax to fund affordable housing. It is a regressive tax and taxes those with the smallest incomes the most on a percentage basis.”
“This is a way that growth pays its own way,” added Vicki Shaw. “I support keeping the fees.”
Center for the Arts board member Jennifer Hartman said the Center was a community asset that could be negatively affected by the fees. She said a planned expansion wouldn’t create more jobs and thus should not have to pay the entire fee.
Danica Ayraud, Ram’s partner in Rumors and Townie Books, has lived in Crested Butte her whole life. “We can only stay here with affordable housing or if we rent forever,” she said. “We live near the community housing on Eighth Street and that is where the people [live] who live and work and volunteer and make this community what it is. We want to see units built. We are also opposed to a new sales tax since we have a pretty high sales tax already in the county, the state and town. It would discourage people from shopping locally.”
Huckstep said the idea of a sales tax increase to help pay for affordable housing has been “kicked around” but it’s not part of any current ordinance.
Councilperson Jim Schmidt reiterated his position that kicking up the fees so quickly could compromise other community goals like stimulating business or encouraging nonprofit organizations. “I think phasing in the fees, especially in this economic climate, is a reasonable thing,” he said. “It might encourage some things from happening sooner rather than later.”
Schmidt said there are a couple of affordable housing units in town at the moment for purchase that remain on the market. In the county, he said, the housing committee had wanted to start six self-build affordable units but only one person showed interest so the project was cancelled. “People said they are worried about their job stability,” he said. “That’s a problem.”
Schmidt also reiterated that he felt the town should be looking at other funding options, such as a sales or real estate tax.
“We are in the worst recession since the great depression,” said councilperson Glenn Michel. “It is better to try to grow our way out of that and not inhibit the local economy. I think developers should be given a chance to look at the new fees and include them in their business plan. They need some time to do that.”
“Ordinance 19 is a softer version of what passed in April so it has been out there for six months,” countered councilperson John Wirsing. “Phasing doesn’t make sense. Developers want a return on investment. The point is to get them to build units, not write checks. If they build units, they can rent them or sell them and get some money back. Why beat around the bush? We have a program in place. Let’s go with it.”
Councilperson David Owen agreed. “No one in the audience tonight spoke in favor of phasing or reducing the fees,” he pointed out. “This is a linkage fee and it links the impacts of building to the problems that building is causing. If they build at a reduced rate we lose forever the ability to recoup that impact. I’d rather see no building occur than have to deal with the long-term impacts of not being able to have the town house its workforce.”
“Phasing won’t have a significant impact 15 years from now,” said councilperson Roland Mason. “But it could have a real impact on our economy in the next year or two.”
Councilperson Shaun Matusewicz suggested the town could use more “legs” to build a stronger affordable housing stool and hoped other funding sources would be explored. “For every eight citizens, there is an affordable housing unit in town,” he said. “In Truckee, it is one affordable unit for every 50 people. Keeping it in context, we’re not in a terrible place. Phasing for a year puts people on notice.”
“For me, it is a matter of fairness,” said Huckstep. “I look at going from $2 a square foot to $84 or $63, and making that jump overnight just doesn’t seem right. And we are in a tough economy. I see it every day in my work dealing with foreclosures and people having to close up their businesses. Looking at other resorts, most communities are looking at reducing their fees, not increasing them. It also seems that right now the demand is missing from affordable housing units.”
Huckstep suggested phasing in the revised fees starting at $25 a square foot, going to $38 and finally to $63 over three years.
Schmidt said there are plenty of open housing units, based on the local classified advertisements. He also said that counter to Wirsing’s economic philosophy, “Developers aren’t guaranteed to recoup their money if they build affordable housing units. If there was a big demand for housing units, people would be building condos. There hasn’t been a condo project built in town in 15 years. It costs money to build housing. And I’m more worried about people moving out of the valley because they can’t find a job,” he said.
While Schmidt lobbied for a five-year phase-in timetable, the majority of the council—Matusewicz, Michel, Owen and Wirsing—indicated a faster phase-in was appropriate. The council decided on a one-year phase-in timeline. Based on current staff metrics, developers will be required to build units based on the size of the project. Any percentage over the round number of units required will be charged the fee. The 2012 fee will be $38.13 a square foot and rise to $63.55 in 2013. If a developer chooses to not build any units as part of his project, the council decided to charge a fee of one and a half times the base figure fee.
As for government building expansions or developments, Schmidt suggested giving them a total pass. The town staff said the attorneys they ran that suggestion by indicated that wasn’t a good idea. So the staff will develop some language to give nonprofits and government projects some sort of break that fits into comfortable legal parameters.
“I don’t want to sound like an affordable housing curmudgeon,” said Schmidt. “I’ve been a supporter for years and still am. But I just think you can go too far and the consequence is that nothing gets done. No affordable housing gets built, and other projects get shut down. Nothing gets accomplished in that case.”