Basalt plans overhaul of housing rule

Scott Condon
The Aspen Times
Aspen, CO, Colorado

BASALT – The majority of the Town Council expressed support Tuesday night to eliminate the leverage it has to require developers to replace 100 percent of affordable housing displaced by redevelopment.

Council members said in a work session they want to amend a portion of the town code that requires the nonprofit Roaring Fork Community Development Corp. to replace the 38 residences at the Pan and Fork Mobile Home Park.

Town Manager Mike Scanlon said the town’s 13-year-old requirement has prevented redevelopment of the property in the past and threatens to sink a current proposal. The cost to comply is too high for developers to make the numbers work, he said.

Scanlon asked the council if it wants to amend the code specifically for the Pan and Fork or to apply to all future projects.

“Once you weigh in, you’re pretty much setting the course,” he said.

Mayor Jacque Whitsitt and Councilwoman Anne Freedman, who voted to support the replacement-housing ordinance in 2000, said they want to scrap it so it doesn’t prevent redevelopment of other property.

“Why would we want to go through this crap again – this 100 percent replacement?” Whitsitt asked.

Freedman said former Councilman Steve Solomon suggested the replacement ordinance as a way to prevent development.

“He wanted to erect a hurdle that was impossible to meet,” she said.

Freedman said she cannot remember why the rest of the council went along with it.

Councilmen Glenn Rappaport and Herschel Ross also expressed support for eliminating the need to replace 100 percent of displaced residences, primarily on economic grounds. Ross initially was skeptical but eventually accepted the idea of changing the requirement. Councilman Rob Leavitt didn’t give a strong indication of his position, and Councilman Rick Stevens didn’t attend the meeting.

Councilwoman Karin Teague expressed skepticism about altering the replacement-housing requirement.

“Why are we feeling the need to make this change?” she asked.

“It’s not financially possible,” Scanlon replied.

Teague reminded the board that the members were all “excited” about Roaring Fork Community Development Corp.’s proposal because of their “compassion and concern” for the current residents of the Pan and Fork and pledge to find replacement housing for them.

“That was the premise for the entire deal,” she said. “If we hold (the development corporation) to their commitment, does the whole deal fall apart?”

Scanlon said that is probably the case. The nonprofit has a contract to sell most of the property to a for-profit development firm, which plans to build a hotel and commercial property. If the cost of the replacement housing is associated with the project, it isn’t financially viable, according to Scanlon. The developer would have to sink several million dollars into housing before getting to the for-profit part of the project.

The replacement-housing ordinance was approved when Basalt’s real estate market was heating up in the late 1990s and several major developments were under way or proposed. The idea was to make sure the town didn’t lose its inventory of free-market affordable housing, said Planning Director Susan Philp. The requirement replaces affordable–housing units to be replaced, but it doesn’t require that displaced people get a preference to live in them. That’s been identified as a flaw.

The council majority directed Scanlon and his staff to work on proposed changes to the replacement-housing requirements for future consideration and a vote.

Michael McVoy, president of the board of directors of Roaring Fork Community Development Corp., wasn’t invited to the meeting, but he said easing the replacement housing is vital to the Pan and Fork Mobile Home Park redevelopment.

“The extraction model isn’t working,” he said.

In a nutshell, here’s the problem with the town’s requirement, as McVoy explained: Appraisers assess the town’s requirement as saying the new housing units must be built by the developer and given to the displaced residents. In the case of the Pan and Fork, that is a requirement for 38 units at roughly $200,000 apiece for a total investment of $7.6 million. Banks frown on that encumbrance. The obligation makes it nearly impossible for a developer to obtain financing in today’s risk-averse climate, McVoy said.

Further complicating the issue is the legal status of some of the residents to be in the United States. Scanlon told the Town Council that a survey indicated that 50 percent of the Pan and Fork residents cannot prove they are in the country legally. Any housing project built with public money must verify the legality of renters or buyers, so some residents wouldn’t qualify for relocation housing.

Despite the hurdles, Community Development Corp. is still “100 percent committed” to providing an alternative housing option to all residents of the mobile-home park, McVoy said.

“We said we have to take care of the people here,” he said.

Different options will be offered to different residents. Roughly one-third of the Pan and Fork residents will likely qualify financially to buy housing and can prove they are in the country legally, according to McVoy. Another contingent of unknown size would qualify for government-subsidized housing, he said. Another option, for residents who don’t want to buy or rent housing offered or don’t qualify, would be to offer them a payment for their mobile homes, according to McVoy.

He believes the Community Development Corp. is pursuing an alternative that is better than the replacement-housing ordinance.

“We don’t want to deal with the units. We want to deal with people,” he said.

Essentially, the organization is telling the town and the Pan and Fork residents, “Trust us” to provide relocation housing even if the replacement-housing requirement is eliminated, McVoy acknowledged.

While Scanlon said he believes the replacement-housing requirement must be eased for fiscal reasons, he is concerned it could be abused by developers who claim they tried to help all displaced residents with relocation but, for a variety of reasons, couldn’t accomplish it.

“That’s my fear,” he said.

Scanlon said he favors the town retaining some type of leverage by having a requirement to fulfill relocation of residents. The difference between requiring relocation and requiring replacement housing is flexibility for landowners, he said. Relocation in the case of the Pan and Fork will be cheaper than replacement housing, he said, and it accomplishes the town’s goal.

He has one month to come up with a proposal for a mechanism that accomplishes the goal.

The town government of Basalt is part owner of a mobile-home park that one of its council members described in a public meeting Tuesday as substandard housing – for a Third World country.

While discussing the future of the 37-unit Pan and Fork Mobile Home Park, Councilwoman Anne Freedman said she had to raise an issue that was “politically incorrect.”

“I’ve been in Third World counties where that housing would be unacceptable,” Freedman said. She added that she didn’t know why the state government hasn’t “shut down” the mobile-home park.

The town teamed with a nonprofit organization, Roaring Fork Community Development Corp., to purchase the mobile-home park for $3.25 million in August 2011. The town owns approximately half of the 37 mobile homes in the park. The development corporation is acting as the landlord.

The owners haven’t taken substantial steps to improve the park in the 20 months since the purchase, though they have lowered the space rent. The goal of the development corporation and town is to relocate the residents of the Pan and Fork to other affordable housing off the site.

Michael McVoy, president of the corporation’s board of directors, wasn’t at the Town Council meeting, but he confirmed it was poorly maintained at the time of purchase and remains below the Roaring Fork Valley’s living standards. He said the mobile-home park was developed as temporary housing for construction workers at Ruedi Reservoir and the affiliated diversion systems 50 years ago. No owners have been willing to sink money into the mobile-home park because it is in a flood plain and the location was never viewed as permanent, he said. As a result, sewer and water lines regularly break and the general condition of the park is substandard, according to McVoy.

“A lot of these units are in the bottom 10 percent of housing in this valley,” he said.

Freedman’s comments didn’t spur any discussion about whether the town had an obligation as a landlord to improve substandard housing. Town Manager Mike Scanlon said after the meeting that he hopes an investment won’t be necessary because the residents will be relocated.

“If this becomes a long-term property interest, we have an obligation to” make improvements, he said.

If no progress has been made on relocation within 12 to 18 months, the town will have to take action on improvements, Scanlon said.

– Scott Condon