Pitkin County studies six-fold hike in development fees
October 28, 2008
ASPEN ” Pitkin County is eyeing the possibility of increasing its affordable-housing mitigation fees as much as six-fold, according to public records.
County Attorney John Ely recently sent county commissioners a memo about the county’s current impact fees. Based on a study by a consultant, Clarion Associates, the fee schedule was adopted in 2005 as a way of ensuring that the rising costs of real estate would not drive out all of Aspen’s working-class residents.
But things have changed since 2005, Ely’s memo states.
“The cost of constructing an affordable housing unit, including the cost to acquire land, has seen a very significant increase since the adoption of the current employee Housing Impact Fee, while the fee structure has not been modified since that time,” Ely wrote.
In 2005, Ely’s memo states, it cost a total of $281.97 per square foot to build affordable housing, including the basic construction, infrastructure, “soft costs” (design, planning fees, permit fees and others), land acquisition and finance charges on money borrowed to build a project.
Today, those costs have nearly tripled, to $607.20 per square foot, based mostly on increases in the cost of basic construction and of land.
“Using the cost calculation for a residential unit [as estimated],” Ely wrote, “a subsidy of $394,200 is necessary to make a 1,000-square-foot residential affordable housing unit in 2008.” The memo bases this conclusion on a complex set of formulae having to do with median income of area wage-earners, housing costs and other factors.
Ely’s memo indicates that, as a result of the rising expense of building affordable housing, the county needs to consider raising the fee paid by developers, based on the number of employees that would be generated by the development in question.
The county’s current impact fee, which covers residential and commercial development, is a tiered schedule involving different rates for residential, primary homes; residential second homes or vacation homes; and commercial properties.
For example, concerning development of a home that is to be the primary home of a resident, developers would see the mitigation level rise from $34,173 per employee generated by the new home, as established in 2005, to $225,257 per employee generated, which reflects 2008 development costs, Ely’s memo says.
For a 6,000-square-foot primary home, which would currently call for a fee of approximately $5,000 per employee generated, the new fee would be approximately $33,300 per employee generated.
The fee would be larger for a second home, as high as $130,300, versus the current fee of just under $20,000 per employee generated, based on the county’s conclusion that vacation homes generate more employees than homes occupied full time by their owners.
Ely’s memo suggests the county commissioners discuss his findings and projections, but adds, “Changes to the costs of land acquisition and construction produce a dramatic and perhaps too large of an increase to the fee structure to be done at one time.”
The discussion of Ely’s memo is scheduled for 3 p.m. Tuesday at the commissioners’ temporary meeting space, the Rio Grande Meeting Room in the old Aspen Youth Center building next to the Pitkin County jail.