Saturday, September 13, 2008

Affordable Housing Guidelines to Developers - Steamboat Springs, CO

Bar set higher for developers
Changes to affordable housing requirements could prove costly
By Kristi Mohrbacher
Wednesday, July 23, 2008

Steamboat Springs — Recent changes to the city’s community housing guidelines will result in higher costs to developers and increased affordable housing in Steamboat Springs, city officials said Tuesday.

The Steamboat Springs City Council voted unanimously to pass a resolution amending the guidelines last week. One change in particular increases the amount developers are required to pay in lieu of providing affordable housing units, causing frustration in the development community.

“The purpose of the Com­munity Housing Guidelines is to provide a diverse inventory of permanently affordable housing units for sale and for rent,” states the guideline’s introduction.

“The new formula is more substantial than 2007,” Nancy Engelken, the city’s community housing coordinator, said Tuesday. “(It) is a more fair representation of the market right now.”

The formula Engelken referred to is used to calculate payment in lieu, which developers can use to satisfy linkage and inclusionary zoning requirements for their developments. The requirements are intended to provide housing options that are affordable to households with various incomes, in most cases lower than the area median income.

Under certain circumstances, developers can make a payment to offset affordable housing requirements and the additional need for affordable housing — meaning increased local workforce — that will be generated by their developments.

Originally, the average sales cost per square foot was used to determine the payment in lieu, however, city officials deemed it more appropriate to use the median sales cost per square foot instead.

“The average sales cost per square foot can change significantly with high-end and low-end properties,” Engelken said. But the median, which has 50 percent of costs above and below it, is less impacted by single properties and more representative of the market; a fact Engelken said was confirmed by sales data provided by the Routt County Assessor’s Office.

Cost questions

In 2008, the payment in lieu for linkage increased by about 20 percent, to $172,012 per unit. For inclusionary zoning, the payment increased by about 32 percent, to $117,624 per unit.

Engelken said the increase “represents the price of housing in Steamboat and how it has gone up over the last year.”

Even though City Council voted to approve the resolution, some members were not convinced that this change was right.

City Council President Loui Antonucci, who is also a Realtor, voiced concern about basing the number on home sales prices from last year — a time he considered to be a “bubble” when homes sold for much higher prices than they are selling for now.

“Are these numbers that accurate? Prices are coming down every week. I’m not sure we should base it on those prices,” Antonucci said.

Brent Pearson, vice president of Resort Ventures West, developers of the Wildhorse Meadows project at the base of the Steamboat Ski area, said the payment in lieu calculation is not accurate.

“It doesn’t reflect the price that affordable units will actually sell for at market prices,” Pearson said.

Although the guidelines report the number to be about $117,000, Pearson said that in reality, the number is more like $70,000. He described the additional costs that developers could face as “unintentional consequences” of the inaccurate number.

Further comments from Pear­son echoed those of Jane Blackstone, development manager for the Atira Group. Pearson and Blackstone said the community housing guidelines are fairly new and have details that need to be worked out. Blackstone said the process requires discussion from the city and the developers as they work to define the goals of the program and seek accurate data. Both developers said they were pleased with the city’s willingness to evaluate the policies.

Antonucci said City Council asked Engelken to evaluate the market in October to see whether the data is accurate and present her findings to the council.

To obtain information on any property in Steamboat Springs or the surrounding areas with Buyer Representation, contact
Michelle Diehl, GRI Broker Associate at Prudential Steamboat Realty.
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