Basalt developer lobbies for lower affordable housing requirement
October 6, 2015
A longtime midvalley developer contends that Basalt needs to lower its affordable-housing requirements or risk "putting development on hold" and playing into the hands of competitors such as Ace Lane.
Michael Lipkin claimed in a recent meeting with the Basalt Town Council that the midvalley economy hasn't bounced back to allow developers to absorb the extra costs required in Basalt to provide affordable housing.
Basalt currently requires 35 percent of a project's total residential floor area to be affordable housing. For commercial projects, it requires developers to provide affordable housing for 25 percent of the employees generated. The Town Council is considering reducing the residential requirement from 35 to 25 percent and the commercial from 25 to 15 percent.
Lipkin said the requirement should be dropped even further. He is the architect and original developer of Willits Town Center as well as the developer of the residential units in the surrounding Willits subdivision.
“We are selling today 35 percent below per square foot what we were selling for in 2008. Construction costs are up roughly 15 to 25 percent.”Michael LipkinDeveloper
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"I know what it costs to build. I also know what we are able to sell things for today," Lipkin said. "We are selling today 35 percent below per square foot what we were selling for in 2008. Construction costs are up roughly 15 to 25 percent."
Lipkin is part of a company developing the Park Modern condominiums in Willits, which he labeled "upper end" units for the midvalley. He has completed two buildings and is breaking ground on a third.
Current listings are $876,600 for three-bedroom, three-bath units.
"That's the one product in the midvalley where I can make any money," he said.
Real estate sales are hardly on a blistering pace, he said. One unit at Park Modern is getting sold or put under contract about once every six weeks. Single-family home lots in Willits were selling for more than $400,000 prior to the recession. Now they are being offered for less than $200,000, "and there are no takers," Lipkin said.
That leads him to deduce that Basalt needs to drastically reduce its affordable-housing requirements to remove a costly obstacle.
Lipkin has always been critical of affordable-housing requirements, even before the recession hit in 2008. He tried to negotiate with Basalt to reduce the amount of affordable housing in Willits Town Center.
Now he says it's economics, not a philosophical debate.
"The project today can't afford that affordable-housing contribution," Lipkin said.
Lipkin warned the Basalt Town Council that failing to lower its housing mitigation rates provides an advantage to developers of neighboring projects in unincorporated Eagle County. He specifically pointed at Ace Lane's Tree Farm development in El Jebel. Lane and his Woody Ventures LLC want to build as many as 400 residences and 134,500 square feet of commercial space across Highway 82 from Whole Foods. The county is reviewing the proposal.
Lipkin suggested Basalt is giving Lane a "gift" by allowing him to build a project for less than what is required for a developer in Basalt. Eagle County's housing mitigation formula in the case of the Tree Farm will allow Lane to provide 25 percent of the 400 units as affordable housing. That produces a requirement for 100 units. Lane is seeking double credit because he is building rental units. If granted, that would reduce his requirement to 50 units. He is seeking another five-unit credit for offering other "public amenities" in his plan, reducing his development to 45.
Lipkin said he doesn't view the Tree Farm as "smart development" but a project made feasible because of low infrastructure costs. He said it doesn't meet the standards of Willits Town Center. Willits, he said, creates a town center for the surrounding suburban sprawl.
"I'm afraid the project across the street is just more suburban sprawl," he said.
The council members had little response to Lipkin other than to ask if he wants them to keep their housing mitigation rates the same or lower than the proposed rate. Lipkin responded that the rates should be dropped even further than Basalt is contemplating.
Jeff Orsulak, who works at Lipkin Warner Design, said if Basalt wants development to pay its way, it would require about 10 percent of the residential floor area to be affordable housing. Anything more would provide affordable housing "for people who work at Prada and Skico" in Aspen, he said.