Drilling down to the final issues with Whetstone project

Roundabout gets commitment, tap fees still a question mark

By Mark Reaman

What appears to be a concerted and collaborative effort to identify and frame the remaining issues between Gunnison County and the town of Crested Butte over the proposed Whetstone affordable housing project was set in motion Monday, May 20. The county is relying on the town to provide a so-called “will serve” letter promising to extend water and sewer utility services to the project located about two miles south of town. The town has laid out a set of conditions that council members deem important to be part of any agreement for utility services to the project but not all have been finalized. Town also wants adequate time for its consulting engineers to vet any utility extension plan.

While three high-profile issues appeared to be in dispute a week ago, during Monday’s town council meeting two of those issues appear close to settled: 1) County and Whetstone development team representatives committed that they would include a roundabout and pedestrian underpass along Highway 135 in conjunction with construction of the housing project. The approximately $8 million project would make the Whetstone intersection safe and provide easy access to mass transit; and 2) the county agreed to soon begin the long-term corridor planning process for the North Valley. The issue of how much if anything the town should charge for water and sewer tap fees as part of the 252-unit project remains in limbo. A working group consisting of county and town staff along with elected representatives will drill into the issues and any other pertinent topics over the next month-and-a-half to see if the logic for resolution can be figured out by the middle of July.

“This is a complex project that is a big deal for our county,” said mayor Ian Billick.

“The town of Crested Butte has made some valuable strides with affordable housing and we are excited to partner with you on Whetstone,” said Gunnison County commissioner Laura Puckett Daniels, listing the benefits of the extensive project and its location close to town. “This project is of such a scale that it will make a big difference. I know it won’t solve all of our problems, but it can make a real impact given its scale.”

Puckett Daniels said the price of the development stands at $347 per square foot which she said was possible given the savings that come with scale.

Roundabout commitment

“We have heard the town’s concerns, especially when it comes to safety and access to transit. We understand we need a roundabout and pedestrian underpass with this project and we commit that will happen in conjunction with the project,” she said, without detailing how it would be paid for.

Puckett Daniels asked what other key points the town needed to proceed with a utility extension decision. She then suggested the formation of “an ad hoc committee to hash out any such points.”

Elena Scott of Norris Design reiterated the development team’s intention to include the roundabout as part of the project. “We are committed to build the roundabout (and underpass) alongside the project,” she said. “The corridor planning is important as well.”

Scott reiterated that at least 80% of the units would have some sort of workforce restriction included while 20% (50 units) could be built as free market rentals. Overall, the proforma indicates 30% of the units, or 76 of them, would be restricted with a minimum local workforce requirement, 40% would be restricted to people earning 120% Area Median Income (AMI) or less and 10% would be set aside for people making 170% AMI or less. A two-person household would have to make less than $98,880 to be considered below the 120% AMI threshold.

Scott said the development would offer a variety of housing types, would ultimately be “net zero” in terms of carbon emissions, utilize geothermal energy and have a central park to accommodate youth soccer.

Angel Rivera of Servitas, the development partner in the project, told council the $130 million project has $12 million lined up in grants, with the county having to borrow the rest of the money. Debt repayment played a part in how the rents were determined. He was confident given the experience of contractors bidding on the project that the $347 per square foot cost would hold. “The team is expert at building multi-family projects at scale,” he said. “Whetstone will be self-sustaining and is ready to roll. All we need is water and sewer.”

Tap fee waivers appropriate?

He then pitched the council to not charge tap fees on the project. Town has estimated those fees at about $7.5 million, or $29,761 per unit. Rivera said similar projects he is working on in Telluride and Dillon were not being charged tap fees. Crested Butte town manager Dara MacDonald said it was her understanding that while a direct tap fee charge was perhaps not being shown, the enterprise funds were being reimbursed in those communities for tap fee charges. “The general practice for towns is to make the enterprise funds whole,” she said. 

Rivera said implementing tap fees would raise rents on the units, so he was asking for zero tap fees on all 252 units. Town officials indicated it would not be wise to waive the fees that are set aside for future infrastructure replacement costs.

“Tap fees are not just a gratuitous charge, they are for replacing vital infrastructure,” said councilmember Kent Cowherd. “Maybe they can be paid over time instead of up front all at once.”

“We need to be creative in finding solutions,” said Puckett Daniels. “We hope to find a middle ground with you guys.”

“That is where the working group could come together to lay out the logic of the issues and lay out options to fill the gaps,” said Billick.

“I think we can sharpen our pencils and make it happen,” said Puckett Daniels. “What are all the final issues to discuss to get a will-serve letter from Crested Butte? I’d like to have two or three meetings in the next month to hash them out. But we don’t want to rush the process.”

“We are on track to do our diligence for July but there is still a lot of engineering to review,” said MacDonald. 

Hitting that middle income demographic

Council members expressed some concern over rents. One person making 120% AMI ($86,520) renting a studio apartment would have a $2,163 monthly payment that includes utilities. Two people making a combined $140,080 (170% AMI) would pay about $3,300. The idea is that rents will then stay relatively stable into the future.

Puckett Daniels said the monthly payment maximums included utilities and said the project was not meant to provide another LIHTC (Low Income Housing Tax Credit) project that focused on lower income workers. She said workers like teachers and hospital professionals would be the more likely tenants. “Whetstone won’t house the poorest of the poor,” she said.

“Whetstone is meant for example to provide housing for couples that can’t afford a free-market spot but make too much for low-income housing,” said Rivera.

Billick said given salary fluctuations in the North Valley he appreciated the AMI flexibility. As for filling up the units, Rivera said the opening would be staggered as the project was built over a 16–18-month period. “There would be the assumption of a gradual absorption rate,” he said. Puckett Daniels pointed out most affordable housing projects in the county have waiting lists. Tenants might have to qualify their incomes every year.

Billick presented the worst-case scenario and asked who would be responsible if a catastrophic macroeconomic event happened that cratered the economy. Rivera went over several potential options of what would be implemented to keep revenues available to pay off the bonds.

“The short answer is the county takes that risk,” said Puckett Daniels..

Rivera emphasized time was a factor in project cost. He said the sooner the issues could be worked out between the county and the town, the better. He noted potential delays in the project had already cost him the lowest bidders for some initial site work.

Crested Butte Community Development director Troy Russ said town has been spending time and money performing due diligence but indicated the informational flow wasn’t always expedient. “We are committed to the project but we want to make sure it works for the town,” he said. “That takes some time.”

“The bottom-line question is, can we do this project the right way with the right financial conditions,” said Billick. “What happens in the next six weeks is important.”

Town council and staff were appreciative of the inclusion of the roundabout as part of the project and on board with the idea of the working group that would focus on “framing” outstanding issues. Aside from staff, Billick and councilmember Anna Fenerty will be the elected representatives from the town to the working group. Puckett Daniels will be on board for the county.

Recognizing there was still a lot of work yet to be done, council was optimistic it would happen. “I’m happy with the direction but wish the county and town had a bigger dedicated revenue stream for affordable housing,” said councilmember Beth Goldstone.

“Hopefully we can find a way to solve the tap fee issue,” concluded councilmember Jason MacMillan. “Let’s get it over the finish line.”