Trying to avoid payment in lieu
By Kendra Walker
The town of Mt. Crested Butte is weighing options for the required community housing units that will be triggered by a new high-end development called Honey Rock Ridge.
The project is located at 33 Marcellina Lane and includes 19 undeveloped lots. It was previously the Villas Phase V, and the new owner J 4:15 LP is proposing a three-phase development. Phase 1 includes four two-family residences (total of eight units) on four of the lots.
Phase 1 of the project triggers a required community housing component of 1.45 units (.25 employee housing mitigation and 1.2 inclusionary zoning), or the applicant can choose to provide payment of cash in lieu. The applicant is proposing to acquire two offsite units in the Crest House Condominiums located at 251 Gothic Road instead of building community housing on site or writing a check for payment in lieu. The plan is for the two units to be used for workers during construction of Phase I and then be deed restricted and sold.
“We want to do this beyond writing a check because housing is such a critical need for the community,” said general partner Nathan Sheets. “Part of the reason we went this route is because the area that we would have housing on site is needed on the road to access the lower lots so we would not be able to build until way later in the development. We’re just trying to get something on the books now.”
The town’s inclusionary zoning requirements state that the unit type and bedroom mix shall generally be proportionate to the unit type and bedroom mix of the free-market units, which are four-bedroom, 3,200 square foot units. Employee housing has a general standard that if providing existing units, the units should resemble a residence with an age of five years or less. The Crest House Condominiums were built in 1969 and the units are each 955 square feet and two-bedroom, two-bathroom. The units are currently listed at $495,000 and $515,000.
In a memo to the town council, community development coordinator Todd Carroll noted that “the Crest House units may not meet all of the standards but, per Section 22-8 Methods for Providing Housing, existing units may be permitted where the town council determines that the goals and objectives for community housing can be adequately addressed through acquisition of existing units.”
Gunnison Valley Regional Housing Authority executive director Andy Kadlec reviewed the proposed community housing plan and noted that the housing requirements demand 1.45 units and 5.05 rooms created. “The proposal exceeds the unit requirement but does not meet the room requirement,” he wrote in a letter to the council.
He also noticed a significant savings to the developer by purchasing the two Crest House units. “The developer would save around $373,154 by not paying the fees in lieu and instead purchasing the two units and deed restricting them.”
“These are two of the more affordable condominiums in Mt. CB right now,” said councilmember Michael Bacani. “The goal of Chapter 22 is to increase housing for employees and to make that more affordable. To increase that you have to build that. What I’d really like to see is more physical structures without taking away from someone who could probably afford in this range.”
“They do have the option to pay in lieu, though,” said mayor Nicholas Kempin.
“I get where Michael is coming from,” said council member Janet Farmer. “My concern is if we don’t move forward with this proposal, they’re going to come back to us with payment in lieu and I don’t like that option at all.”
Sheets noted that they had attempted to acquire a lot to build affordable housing but the opportunity fell through. “It’s a little cost prohibitive for us to acquire land and then build at this point,” he said.
“It doesn’t quite fit all the boxes. For me it’s pretty close, but that money gap that’s been identified is a little concerning to me,” said Kempin.
The proposed Honey Rock Ridge plan uses $500 to accommodate the $470 a month Crest House HOA due. Crest House also anticipates a special assessment of $25,000 to $50,000 per unit.
The council expressed the desire to build in some more protection for homeowners should there be a significant raise in HOA dues or special assessments in the future.
“There’s going to be surprises there. My concern is that people are going to buy this, move in and two years later all of a sudden there’s black mold on the ceiling because there was no snow removal done by the property management,” said council member Steve Morris. “I’m wondering if there’s a conversation to be had with pulling in Andy or town staff where they’re able to identify other housing opportunities and see if there’s a way to get to more of a balance with meeting the inclusionary requirements and reaching apples to apples with the units,” said Morris.
To help close the money gap, councilmember Roman Kolodziej suggested the applicant selling one unit and gifting the other back to the town, which wouldn’t deed restrict the unit but would rent out capped for a specific price range to local employees in good faith.
“We’re flexible to be able to do this and want to come up with a solution to provide housing for people as soon as we can,” said Sheets. “We can’t get our building permits until this box gets checked. Our ability to move forward is tied directly to this decision,” he said, stressing that they could always write a check if the decision gets dragged out too long.
Thank you for your creative proposal instead of just writing that check,” said Kempin. “We understand you’re on a short time frame.”
The council asked town staff to work with the applicant to come up with several more alternatives along the lines of looking at other units, adding protections to the units to avoid extra fees or gifting one of the units back to the town. The council will review those options at their next meeting on August 15 so the applicant can make a decision for how to move forward.