Affordable housing series: How one developer is trying to keep up with Aspen’s demand
City properties eyed for housing
Location Number of units
Burlingame Phase 3 79
517 Park Circle 20
802 W. Main 12
488 Castle Creek 30
BMC West 150
312 W. Hyman 4
Peter Fornell surveyed his latest affordable-housing project, this one at the Aspen Business Center. Construction on the eight units, each with three bedrooms and two baths, was winding down, with finishing touches being done on the complex’s exterior and interior.
“When I build a complex that doesn’t have as many applications as front doors then we’ll know we’re done,” said Fornell, who partnered with his brother-in-law on the development.
In other words, Fornell isn’t primed for retirement just yet.
Known as Alpine Grove Phase II, it is Fornell’s third affordable-housing project in the Aspen area, with a fourth one on the way at Park Avenue. All told, the four projects will account for 71 units housing as many as 160 people. Fornell said he averages about eight to 11 bidders per unit.
The Alpine Grove project attracted 64 bidders, resulting in 60 qualified buyers who participated in the Aspen-Pitkin County Housing Authority’s lottery on July 6 to get a crack at owning a piece of coveted property in the upper Roaring Fork Valley.
The word “crisis” is often tagged to the state of Aspen’s affordable-housing arena. Fornell doesn’t view it that way.
“Do we have a crisis?” Fornell said. “I don’t think this is a crisis. Do we have a shortage? I think so.”
Public housing by private developers
Fornell has found a niche in Aspen’s employee-housing market by capitalizing on the city’s affordable-housing credit program.
He explains it this way: “I give these (units) over to the housing authority; the housing authority runs a lottery. The recipients in the lottery become the buyers and I’m the seller. I sell these units to the buyers and then I’m gone from this deal, and I go down to City Hall and they give me certificates of affordable-housing credits equal to the number of employees that I’m housing.”
That’s not quite affordable-housing calculus, but at first blush it can seem more complex than it actually is. Simply put, Fornell collects payment for the units he sells to the lottery winners — the program also allows him to choose buyers for 30 percent of his projects — and he also can sell the housing credits on the free market.
“People get confused by it,” Fornell said. “But it’s really quite simple.”
Indeed, before the City Council approved the program, which Fornell lobbied for, in March 2010, developers had three options when it came to mitigating their projects with a required number of employee-housing units — pay the city cash in lieu of housing, or build housing on or off the development site.
The city cooled off to regularly taking cash-in-lieu payments. And the private sector “rarely volunteered to build affordable housing, largely because of the artificially low sale or rental rates they were allowed to charge for the units,” according to a 354-page document — called the “Strategic Review of Housing” — issued in 2012 by the city, county and housing authority.
The housing-credit program allows a private developer like Fornell to build a housing project and sell the full-time employee credits to developers seeking to offset required housing for new projects. The city’s Growth Management Quota System requires that developers provide housing mitigation for 60 percent of employees generated with new commercial space. Fornell has sold credits to bullish developer Mark Hunt, among other builders.
Fornell’s first project, the Ajax Apartments Condominiums, was built at 301 E. Hyman Ave. The eight-unit development, completed in February 2012, translated into the city giving him 14 affordable-housing certificates, nearly half of those being sold to Hunt when he erected the structure that replaced the old Gap building at East Hopkins Avenue and Galena Street.
Fornell’s brand-new development, the Alpine Grove project, has four Category 2 units and four Category 3 units, which are sold to buyers having lower-moderate — $66,500 with one dependent, $71,000 with two dependents — and upper-moderate incomes — $95,500 with one dependent, $103,000 with two dependents — respectively.
The Category 2 units will sell for $168,000 each; $234,000 will buy a Category 3 unit.
Keeping up with demand
The Aspen Area Community Plan, a summarization of residents’ vision for the quality of life here — that includes housing, transportation, historic preservation and the environment, among others — once set a goal to house 60 percent of the town’s workforce. The most recent iteration, in 2012, abandoned any expectations, instead seeking a more analytical approach.
“This should not be perceived as a wavering of support for affordable-housing units,” the 2012 version stated. “The plan calls for exploring the potential of a new housing unit goal, but specific research on this topic was not conducted as part of this plan . … At the same time, the 2012 (Aspen Area Community Plan) calls for further research on the physical limits to development in the form of ultimate build-out, projected future impacts related to job generation, demographic trends, the conversion of local free market homes and other factors. This kind of statistical analysis will help inform future decision-making and goal-setting in a more meaningful way.”
Currently 47 percent of Aspen’s workforce lives in both free-market and deed-restricted housing managed by the Aspen-Pitkin County Housing Authority, according to city estimates. Between Aspen and Pitkin County, there are 1,500 deed-restricted units owned by employees and retired workers, and another 1,400 rental units, Assistant City Manager Barry Crook said.
Data also show that the county’s population will continue to grow, necessitating a need for more affordable housing. Central Colorado, which includes Pitkin County, is forecast to see its workforce grow from 21,490 in 2010 to 24,209 in 2020, an uptick of 1.2 percent, according to the strategic review of housing report.
“Given above historical and projected data — further supported by signs of an improving economy, especially through increased construction activity and the return of leisure spending in the area — it is reasonable to anticipate that Pitkin County will continue to see larger positive and negative fluctuations in employment, with an averaged annual growth rate that will net to just over 1.0 percent, but perhaps be stronger in the near term,” the report said. “These employment trends will ultimately increase demand on affordable housing.”
To meet that demand, Crook and Chris Everson, the city’s affordable-housing project manager, have several projects under consideration.
In December 2007, the city paid $18.25 million for a 4.74-acre parcel, located off Highway 82 across from the eastern end of the airport. Commonly known as the BMC West property, it currently is rented from the city by ProBuild, a construction-materials retailer, for $500,000 a year, Everson said. In 2017, the city can give ProBuild a 30-month termination notice should it decide to build there.
Crook and Everson envision more than 100 rental units being built there by 2025 or 2030.
“There’s no end for what people want to do with that property,” Crook said. “Some say build a Holiday Inn Express, build a multi-use kind of project, which we’re open to. But we don’t want to lose many housing units. … We’re open to mixed use, but we can’t lose too many housing units.”
Crook and Everson said there’s just not enough land to build on or property that can keep up with the demand for affordable housing.
“We don’t have the land or the money to build fast enough,” Crook said.
But three city-owned properties — two are undeveloped parcels at 517 Park Circle and 488 Castle Creek Road, another at 802 W. Main St. has a house — are eyed for more housing. The older part of the city’s Truscott Apartments complex, once a Red Roof Inn, also is being eyed for a remodel and expansion.
And the third phase of the city’s Burlingame Ranch housing complex has another 79 townhomes that will go under construction sometime after 2020.
Conversion of older free-market housing into deed-restricted units also is catching on.
Last week, the Aspen-Pitkin County Housing Authority’s board of directors adopted guidelines for conversion projects, whether for buy-downs or housing credits. Among the guidelines are that the projects meet basic building-code requirements and be no older than 10 or 15 years. All developments would require a capital reserve study and capital reserve fund. The housing office would inspect the projects to make sure they are suitable for livability — carpets and interior appliances must be less than 5 years old, the interior walls must be freshly painted, the roof must have a remaining life of at least 10 years, and heating, plumbing, windows and electrical windows must be in good condition, among other requirements.
Everson offered a piece of advice for the worker bee who is not independently wealthy, has no housing lined up and wants to move to Aspen.
“You might need to change your mindset about what you’re willing to accept as housing in return for the opportunity to be here,” he said.
Said Crook: “When we hire people from out of the valley, I talk long and hard about how hard housing is to find and it can be expensive. You may need to land in Basalt, Carbondale or Glenwood Springs.”
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