ASPEN - Though Aspen City Council members on Tuesday decided to move ahead with construction next year on part of the Burlingame II affordable-housing development, they also had to work on a few financial issues associated with the project.
City officials have received a contract proposal from Haselden Construction that calls for a budget increase of $1.93 million for the 82 units that would be built under Burlingame II-A. That increase is related to rising construction and labor costs, a trend that is evident across the state and country, as well as what officials say are necessary changes to designs and the phasing schedule.
The increase means the city will look to some form of in-house borrowing - probably from the Wheeler Opera House Real Estate Transfer Tax Fund - to maintain a positive fund balance for the project as it gets under way in 2013 and 2014, council members decided during a work session.
Another issue that came up was an estimated $3.9 million difference between last year's sales projections for Burlingame II and new estimates. Previous projections called for 16 of the 82 units to be assigned to the higher-priced affordable-housing categories of 5, 6 and 7. But of those 16 units, only one category 5 unit is reserved, which means the city might seek to lower the unit categories to match current market demand.
"Whether the reason is due to a buyer's market downvalley or other reasons, the pre-sales program has had success in capturing category 1 through 4 applicants fairly readily while attracting only a single category 5 applicant," city staffers wrote in a memo to the council.
Councilman Adam Frisch suggested that allowing home-buyers to keep dogs at Burlingame II might be the key to realizing better sales in the higher categories. He said neighbors of the future Burlingame II - consisting of the homeowners' association at Burlingame I and the developers of free-market residences at the former Bar-X ranch - recently decided they wanted to overturn their bans on dogs.
"It's funny to kind of bet all this stuff on the dogs, but it's a huge issue financially," Frisch said.
City officials want to lock in the Haselden contract prior to the end of the year before costs rise any more.
"We need to get on this before construction costs rise much faster than any savings you can wring out or manipulations we can do," Mayor Mick Ireland told assistant city manager R. Barry Crook and affordable-housing project manager Chris Everson.
"Construction pricing is only going to go up," Frisch said.