Council sets hearing for revised affordable housing regulations

Initial affordable housing fee settling in about $25 a square foot

After months of discussion, the Crested Butte town council agreed Monday on a solid proposal to consider for its revised affordable housing ordinance…but that’s about all they agreed on with the issue when it came to the proposed mitigation fees. A public hearing on the proposed ordinance was set for June.

Two members of the council, David Owen and John Wirsing, indicated their staunch opposition to the revised proposal because they didn’t feel the affordable housing fees were large enough. Mayor Aaron Huckstep voiced that he felt they go too far and will stymie growth and business in Crested Butte.  Council members Jim Schmidt, Roland Mason, Shaun Matusewicz and Glenn Michel felt the fee proposal was close enough for the council to at least officially consider and vote on.
The latest version of Ordinance 19 that will be open to a public hearing and then council vote on June 4 is a long, comprehensive document and  a separate set of guidelines that defines who and how people qualify for deed restricted units in town. It also defines who must provide the housing. And that falls primarily on the shoulders of commercial developers.
The most controversial aspect of the proposed ordinance, and the one that has consumed most of the council discussion and staff time since talks began last fall, is the fee that would be imposed on developers. If those developers don’t want to build actual units, they will be charged an impact fee. Up to about a year ago, that fee was $2 per square foot for every new commercial building. The previous council changed that ordinance and the calculation so that the current fee is closer to $83 a square foot. That caused numerous public outcries so the current council has been debating what constitutes a fair fee since last November.
Under this latest proposal, the fee will start at about $25 a square foot and fluctuate annually based on a complicated equation that takes into consideration local wages and home sales in town. That $25 represents a 10 percent mitigation rate, or 10 percent of the housing needs expected to be created as a result of any new commercial development.
Over five years, the mitigation rate would rise and settle to 20 percent.
“For me, the fee is still too high,” commented Schmidt. “Given the current economic situation in town, adding this high of a fee assumes the market is strong. It costs more money to build here already than someplace like Kansas. I just think we need to look at an impact fee number that makes sense and that is closer to $10 a square foot.  A year ago it was $2. Charging $22 or $29 is still too high and it’s 11 times the old fee. If people find a job they can always find a place to live. People that are leaving here do so because they can’t find a job, not because they can’t find a place to live.”
“I feel exactly the opposite,” countered Wirsing. “We are dealing with impacts to town. We have a legal right to demand 100 percent mitigation and we are talking just 10 or 20 percent. It would be like if someone came into town and burned down 10 houses and then were told they just had to rebuild one. What a deal. Why are we making this such a joke that no one will build the units? And what we want are the actual units, not the fees. Developers are creating real impacts. But by making it so cheap compared to the impact they cause, they will just write a check. The impact mitigation needs to happen at the time of construction. And a 10 percent mitigation rate is a joke.”
“Land in Crested Butte is a finite resource,” said Matusewicz. “We want our kids’ teachers and our police officers to live in town. The current 10 percent and $25 fee is the lowest I would go. Even the developers of Sixth Street Station have told us the $25 fee is workable.”
“I’m still at the other end,” said Mayor Aaron Huckstep. “I can’t support a fee in the high 20s. I’m more comfortable in the $10 range as well. The fee in lieu will just keep going up.”
Resident David Leinsdorf opined that while Wirsing is correct that the council has a legal right to charge more, “that’s not necessarily good policy,” he said. “The driving decision should be the state of the local economy and it isn’t great at the moment.”
Leinsdorf said he and his wife rent four affordable units in town and while they are all currently rented, “no one is banging down the door at the moment. Nothing puts a damper on economic development like more double digit fees.”
Sandy Leinsdorf weighed in that one unintended consequence could be that development might be pushed outside of town boundaries and end up near current commercial development in the corridor around town. “That’s not something anyone wants. It’s our open vistas and fields that make us unique and what we sell,” she said.
“I haven’t heard anyone tell me to keep the fee at $68 or $83 a square foot,” said Schmidt. “I’ve had a teacher tell me they think the fee is too high. Someone living in affordable housing says we are crazy to be thinking of implementing these high fees.  Would the Brick Oven building have built with these fees? The building where the Mexicali is? These are good additions to the town. Nobody is telling me the fees are too low.”
“And I’ve had exactly the opposite experience,” responded Matusewicz. “Plus I’ve had a friend have to leave town and go to C.B. South because he couldn’t find a place to live in town. But he has a job.”
“People need to understand the developers can build the units,” emphasized Wirsing. “It’s not all about the fees. They can then rent or sell those units and make money. That’s a good business decision. They don’t have to pay the fee.”
Huckstep and Michel pushed that the council needed to get on point and move forward.
Schmidt said they needed to abandon the current ordinance where the fee is set at about $83 a square foot.
Affordable Housing committee chairperson Margo Levy reminded the council that the task force was charged with coming up with an effective program. “Sometimes we get caught up in these details but the ultimate purpose of the fee is to pay for fractions of units the developers are responsible for after building complete units. We want a variety of units in town servicing a variety of people.
“Economic development isn’t just commercial building,” Levy continued. “That’s not the only arrow in your quiver to spur the economy. Keep your eyes on the result of obtaining affordable housing. The fee is just a piece of the program. Don’t dig yourself into a hole over time.”
“Let’s be clear that everyone up here is ready to raise the fee from the $2 a square foot that was in place a year ago,” reminded Huckstep. “We’re all talking about a larger fee. But when it went from $2 to $83 that was way too much.”
“There is too much focus on the fee,” responded Owen. “But without adequate funding, we can’t have an effective overall program. Plus I think when the middle and lower priced homes in town start selling, the fee will actually decrease.”
Huckstep said the actual monetary figure “has serious consequences. This will slow growth here. I can’t ignore that number and just focus on the mitigation rate like you have suggested.”
“It’s an Impact Mitigation Fee,” responded Owen. “If they don’t build the commercial space, there won’t be an impact. It’s new growth paying its own way.”
Owen also said he couldn’t vote for an ordinance that started out with a 10 percent mitigation rate. “It’s too low,” he said.
He did make the motion to set the public hearing on the revised ordinance for June 4.