Council to rethink new building fees

“They could potentially be a deterrent”

Mt. Crested Butte community development coordinator Carlos Velado told the Town Council he was concerned the costs associated with a couple of recently adopted ordinances might put too high a cost on building in town.

The first was a use tax ordinance that changed the way building projects are valued during the permit process. Lower valuations mean a lower fee for the town and were based on an inaccurate picture of how much a project would cost to complete, Velado said.
The second change was made when the town adopted the 2009 International Building Codes and adjusted the cleanup deposit required from developers to 8 percent, up from 2 percent.
Looking at one building permit under the old fee structure and again under the new system of valuation, Velado showed the council how the cost of the permit might prohibit a project from starting at all.
“I feel we made the right move in adopting the use tax ordinance and we’re realizing some more revenues that we weren’t because we were undervaluing certain building projects,” Velado said. In the permit he used for comparison, the cost of the permit was about $56,000 before the system of valuation was adjusted and almost twice that after the change.
Referring to the adoption of the International Building Codes, Velado pointed out a “dramatic increase and a dramatic number” that could make some people think twice about the cost of building. After the adjustment was made to the cleanup deposit after the latest ordinance was adopted, the cost of permitting the same house shot up to $267,000.
“Even though this is just one permit, I think it’s worth revisiting,” Velado said.
One contractor Velado was working with wasn’t able to get banks to put up that much money for a deposit, even under the original ordinance. “He went to three different banks and wasn’t able to get coverage for that. The reason given was just that banks really don’t provide bonds for single-family home construction to cover that [cleanup deposit] for such a short period of time.”
Part of what the town is trying to protect itself against is a situation like the one in the Wildhorse Subdivision, where several large foundations were built without houses on top of them, leaving a safety hazard, as well as an eyesore, in the neighborhood.
“When we were accumulating our data, all the valuations we were using for our formula, mostly was in Wildhorse, where we mainly had new construction,” Velado said. “Our valuations were based on that original system, which we now realize was grossly underestimated.”
Concerns about the latest ordinance, with the higher cleanup fee, have come from the community as well. Mt. Crested Butte Mayor William Buck said he and Town Manager Joe Fitzpatrick had been cornered on the street by a contractor who wasn’t happy with the new cost of doing business in Mt. Crested Butte.
“Even though it’s a deposit, $210,000 could be difficult to acquire and, two, could potentially be a deterrent, which is contrary to what we were really trying to accomplish here. And it’s excess of what we would need if we would cash it in,” Velado said.
Velado and other town staff are trying to figure out where the right balance between cost and protection might be. There’s still agreement, he said, on using a percentage of a project’s value as a cleanup fee, but determining that percentage could take some time.
One option being explored is to have a construction deposit big enough to cover the costs of building the shell of the project, so it looks good from the outside even if the inside is left unfinished. That could make it easier for developers to find bonding for the project and ensure the town will get an attractive outcome regardless of how things work out.
The council will take a deeper look at how much coverage the town really needs from developers and will discuss possible changes soon, as some projects might be on the horizon, but no date was set for discussion.