Basalt eyes Vail model for help easing affordable housing blues

Town hires consultant to study “buy down” program on apartments

Construction progresses on the Stott’s Mill project in Basalt on Wednesday, March 23, 2022. The town wants to explore if it feasible to compensate property owners to reduce rents at some residences. (Kelsey Brunner/The Aspen Times)

Basalt officials are exploring whether they could follow Vail’s lead in easing the affordable housing crunch.

Town Council members want to consider a “buy down” program where developers or operators of rental properties would be compensated to reduce the rents by a certain amount over a given period, according to Basalt Mayor Bill Kane. The deed-restricted units would be rented to people who qualify through the town guidelines, with limits on income and assets.

“Right now, we need to have shelter for people that are here and working,” Kane said. “It’s not directed at trying to attract more people to the valley. It’s trying to house people that are already here.”

While buy-down programs have been discussed as a tool in the Roaring Fork Valley, they have been applied effectively in Vail in a nationally recognized program.

Through the Vail InDEED program, the town acquires perpetual deed restrictions from private property owners. Vail has focused on for-sale units and buys down the sales prices. The housing goes to qualified buyers for them to live in or units can be rented at rates that meet affordable housing guidelines.

The Vail Daily reported in September 2020 that 340 year-round or seasonal residents had been provided homes through the program at that time. The average purchase price of a deed restriction at that time was about $68,000.

“This term ‘buy down’ has been thrown around the Roaring Fork Valley for some time,” Kane said.

Basalt hired a consultant to study if a buy-down program is feasible for the town government and at what cost. Bruce Kimmel of Ehlers & Associates Inc., an independent financial advisory firm, will lead the feasibility study. Kimmel has worked extensively with Basalt on bond issues and feasibility studies on development proposals.

Basalt requires 25% of residences in new projects to be deed restricted sale or rental units. Even so, the town is falling behind on affordable housing needs.

Basalt voters approved a bond issuance in November that includes $6 million earmarked specifically for affordable housing. All potential solutions are on the table, including purchasing property for future construction of affordable housing, Kane said. However, a buy-down program might be the quickest bang for the town’s bucks, he said.

“We’re at the right place at the right time to try to strike a deal to get more affordable housing.” — Basalt Mayor Bill Kane

Here is an example Kane cited: A property owner charges $3,200 per month for a two-bedroom, two-bath unit, and the town aims to reduce the rent to $2,000 per month. The property owner would be forgoing $14,400 annually in reduced revenue for the first year and likely increasing amounts in future years. They would have to negotiate how much compensation would be required to convert that free-market unit to deed restricted residence for roughly a decade.

“Is there a market for it?” Kane asked.

He is hopeful there are potential partners at three projects that Basalt has recently approved that include free market apartments. They are Stott’s Mill, a project on Emma Road near Stubbies called Lot J, and the Basalt Center Circle project at the former City Market site.

“We’re at the right place at the right time to try to strike a deal to get more affordable housing,” Kane said.

The Basalt Center Circle project has received the first of two required approvals from the town. The project includes 67 apartments, including 17 that are deed restricted to meet the town’s requirement that 25% of units be affordable housing.

Stott’s Mill is under construction near Basalt High School. It includes 64 apartments, including 19 with rent caps.

Lot J includes nine free-market and three rent controlled units.

The town will chart a course on affordable housing solutions throughout the coming months. If the town can afford it, buy downs are desirable to Kane because they convert existing or approved units into affordable housing without additional growth in average daily traffic, school impacts or other related outcomes.

“Let’s try to tilt it more in favor of preserving it for long-term residents,” Kane said.