Snowmass to set prices for new affordable housing
August 18, 2008
SNOWMASS VILLAGE ” In setting the final prices for the first phase of its Rodeo Place affordable-housing project, the Snowmass Village Town Council on Monday plans to try to answer the critical question of just how affordable employee housing needs to be.
Town officials recently realized that the construction costs for the project’s modular units will be 37 percent higher than originally anticipated. Officials had expected to subsidize land, design costs and infrastructure for the units; now they must decide whether to also subsidize building costs in order to keep the units affordable.
In February 2007, Roaring Fork Custom Homes, the project’s original contractor, quoted the Town Council construction prices ” for the eight homes and two duplexes ” ranging from $250,870 to $393,821 per unit.
However, earlier this year the firm asked to be released from its contract. The request came after the first three homes had to be stripped and rebuilt, according to town staff.
The town released Roaring Fork Custom Homes from its contract and hired Rudd Construction. According to Rudd’s recent contract, the construction costs for the same eight homes and two duplexes will now range from between $344,811 and $569,559 per unit.
However, a recent housing study indicated that affordable housing prices in Snowmass Village should be staggered at prices between $153,426 and $431,866. Such prices would allow a range of buyers ” from those who make 50 percent of median income ($43,900) to those who make 140 percent of median income ($122,920) ” to afford a home with a mortgage that would not consume more than 30 percent of their annual budget.
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The RRC Consultants study assumed that buyers would be able to put 5 percent down and qualify for a 30-year, fixed-rate mortgage at an interest rate of 6.5 percent.
It also based its suggestions on its finding that median household income in Snowmass Village is $87,000.
In a memo to town staff, housing manager Joe Coffey further noted that the 5-percent-down assumption is no longer useful. Town staff recently talked with several banks and confirmed that the downpayment standard has risen to 20 percent, he wrote.
In a letter to council, the winners of the Rodeo Place lottery asked council members to require the homeowners to pay no more than 4 percent of the price increase for their homes.
The lottery winners argued that the town had only asked the winners of the first three homes to pay 4 percent of their building cost increases. Their situation was handled separately, as the first three homeowners have already signed contracts.
They also said that if they had to pay the full cost of the price increases on the homes, they would all be unable to purchase the units ” and that the homes would forever be unaffordable to those for whom they were intended.
In his memo, Coffey noted that the counterpoint to the homeowners’ argument is that the homes would likely be bought even if the town did not subsidize the construction costs at all. He also noted that the town has already substantially subsidized the project, paying for land, infrastructure, design costs and solar panels.
Ultimately, town staff recommended that council consider subsidizing between 75 and 100 percent of the increase in construction costs ” at a cost to the town of between approximately $1 million and $1.4 million.
The Rodeo Place housing currently is subsidized through the village’s housing excise tax on extra square footage in new homes. All full-time Snowmass Village employees are eligible for the housing lottery.
The Rodeo Place subsidy discussion is on the agenda for Monday’s council meeting, to begin at 4 p.m. at the Snowmass Town Hall.