Basalt aims to team with developer on housing
February 14, 2014
Basalt officials hope to team with a private developer to build 56 low-income apartments, but the project could hinge on participation by Pitkin County.
The town determined through a fiscal-feasibility study that it must play some role to close the funding gap facing RealAmerica Development LLC's proposal to build the affordable-housing complex east of Stubbies bar. That is the site of a foundation that is part of an abandoned hotel project.
The town hired Bruce Kimmel, of Ehlers Inc., a consulting firm that specializes in public finance, to evaluate RealAmerica's plan. Kimmel said the town must get involved because high property-acquisition and operating costs create a funding gap for the developer.
Basalt Town Manager Mike Scanlon previously indicated that he wants to see the project succeed because RealAmerica is proposing a project that would provide rental units to residents with the lowest incomes — a market segment that needs to be addressed. RealAmerica would pay all town fees, and the firm wouldn't collect any upfront development fees under the current scenario.
Kimmel said there are a variety of options to help RealAmerica President Ronda Shrewsbury Weybright close the funding gap and increase her return on investment. One option is for the town to pay about $1.8 million to acquire the site from the current owner and lease it long term to RealAmerica. In return, the town would get credits for four one- and two-bedroom units and a priority on placing tenants in those units, according to Kimmel.
"The town's proposed acquisition and lease of the project site to RealAmerica, while unique for Basalt, is sufficient to close the financial gap and also secures 56 units of long-term affordable community housing," Kimmel wrote in a memo to the Town Council.
The problem is that the town doesn't have a spare $1.8 million. That's where town staffers want Pitkin County to come in. Town Manager Mike Scanlon said the county staff was approached about buying into the project. One method would be a loan or grant from Pitkin County to Basalt to acquire the property.
The more likely scenario is for the county to use money from its affordable-housing fund to buy deed-restricted units in RealAmerica's project, Scanlon said. The town also could contribute funds to the project with the goal of the governments being to "guarantee as many long-term affordable housing units as we can," he said.
RealAmerica is proposing to build all deed-restricted, permanent affordable-housing units. Any units that aren't purchased by the county and town would be available to other developers through a system of housing credits.
Developers are required to provide affordable housing to offset the employees generated by their projects. Instead of building the units, developers would have the option of buying credits from Shrewsbury Weybright, according to the plan laid out for the Basalt Town Council on Tuesday night.
That option allows developers to mitigate their housing requirements in the most cost-effective way, and it provides money for RealAmerica to reduce its debt, Kimmel said.
Pitkin County Manager Jon Peacock said he has held preliminary talks with Scanlon but hasn't taken the proposal to the county commissioners yet. It will go to the board next week, he said.
"The project itself has some intrigue to it," Peacock said, noting the challenge the county has faced providing rental units at the lowest income levels.
The idea of providing a loan or grant to Basalt probably won't work because of restrictions to the county affordable-housing fund. Instead, the county would more likely consider buying into the project, he said.
Peacock stressed it was too preliminary to say whether the county commissioners will be interested in getting associated with the project.
Kimmel said the best-case scenario would be to have an agreement between the governments and RealAmerica by mid-March, when the firm must decide if it will close on the purchase of the property.
If the project advances, apartments could be ready to rent by summer 2015, he said.