Aspen electeds opt for new revenue streams over debt for more housing
Aspen City Council agreed Tuesday that new revenue streams should be sought to augment current funding sources to build and maintain affordable housing to provide homes for the community’s workforce.
Council also expressed support during its work session to ask voters possibly in 2021 to extend the existing 1% real estate transfer tax and 0.45% sales tax that fuel the city’s 150 housing fund, and are set to expire in 2040.
Some council members also said they’d be open to asking voters to reallocate a portion of the current real estate transfer tax dedicated to the Wheeler Opera House, which has a roughly $30 million endowment.
Those steps would minimize the debt needed to be issued to move forward with building as many as 400 units between Burlingame Ranch and the old Harbert Lumberyard at the Aspen Business Center, as well as maintain the existing 3,000 deed-restricted units in the inventory and protect the affordable-housing program in other ways.
The 150 fund has a finite amount of money, with most of the $53 million balance dedicated to building 79 ownership condominiums as part of the third phase of the city-developed Burlingame Ranch subdivision.
Most of council agreed to proceed with delivery of modular units at Burlingame in 2021 and 2022, with phasing as many as 300 units at the lumberyard in 2024 and 2026 and then from 2028 to 2030.
Most of council agreed to set aside a placeholder of $20 million for other needs in the housing program.
In those scenarios, debt will still have to be issued upon voter approval, which could prove problematic, Councilwoman Rachel Richards said.
City financiers have suggested that as much as $50 million would be needed to be issued without new revenue streams.
That is an annual $5 million payback over 30 years and perhaps the biggest debt issuance in city history, Richards said.
That’s why she said she adamantly supports finding new revenue streams. She floated the possibility of a vacancy tax on empty second homes to support the local affordable-housing program before issuing debt.
“Part of my concern would be that Aspen issues debt of $30 million, $20 million, whatever the number, there will be a perception that we’ve taken care of the problem and there is no reason to bring in new resources,” she said. “We need to get the resources first and then think about what debt to issue.”
Councilman Ward Hauenstein had a different take on the conundrum that council faces on funding future housing needs.
“My belief is that we have needs for housing now,” he said, adding he supports issuing debt at the time of construction of the lumberyard. “The cost of construction escalates every year and the same amount of money puts fewer heads on pillows and when the need is now, it seems to me that we should be building as soon as we can.”
Money can be borrowed against future revenue in the 150 fund, as well as rental income in units owned by the city, among other avenues, city officials said.
Past City Councils have operated on building housing and land banking for future projects based on what is in the 150 fund.
“I’d like to minimize the debt that we are leaving future councils with and support land banking so future councils have some opportunity for new housing,” Councilwoman Ann Mullins said. “But most important, make sure that the existing inventory we have is in good shape and can move forward for the next 50 years.
“The community has to realize that we don’t have endless amounts of money for affordable housing,” she added. “We need to know that they support whether we take on more debt than we are comfortable with or find an alternative source.”
The lumberyard is a product of council land banking a number of properties in 2007 and 2008 that, combined, cost over $30 million. The other parcels bought at that time are currently being developed in a public-private partnership with the city.
The current council expedited the lumberyard project by a year from what a previous administration had planned, along with an increased number of units, which put a strain on the 150 fund sooner than expected.
“The additional debt service, as well as just the cost of that total development is really what starts to play into this fund health in the out years,” said City Finance Director Pete Strecker.
Councilman Skippy Mesirow said he supports a vacancy tax, or some form of it.
“I don’t typically look at it as a vacancy tax, but it’s about community displacement,” he said. “I think an approach like that is really, frankly beautiful in that it’s not classist. It doesn’t say we are going to tax the billionaire to fund the others, it says we’re one community, we’re in this together … but if your presence here displaces our community, then you should help in making sure that community is here to serve you when you arrive.”
Mayor Torre said he supports taking a phased approach to the lumberyard development, minimize debt, find new revenue sources and extend the existing ones.
City staff will take council feedback, come up with a holistic approach to new revenue streams and right size the debt issuance while staying on course with the two new projects.
With many lingering questions still surrounding the fate of Aspen’s historic Old Powerhouse, City Council decided during Monday’s work session to hold off on providing staff direction on moving the preservation project forward until more information can be presented.