Candidate wants to increase appreciation cap

John ColsonAspen, CO Colorado

ASPEN Mayoral candidate Tim Semrau wants everyone owning government-controlled affordable housing to be able to earn more profit off properties.And, he announced Tuesday, he thinks the city should use its huge and growing affordable housing fund to help.Semrau issued a statement proposing an increase in the appreciation cap of deed-restricted affordable housing. Appreciation caps stand at 3 percent or the national rate of inflation, whichever is lower, for new ownership units under the control of the Aspen-Pitkin County Housing Authority, and for many older units.”I think everybody deserves a piece of the American dream,” Semrau said.He proposes increasing the appreciation cap to 5 percent for all ownership units and raise the value of allowable capital improvements from 10 to 20 percent of the unit’s overall value a the time of purchase.”The only time you can ever present a new idea and get it properly discussed is during a campaign,” Semrau said in response to a question whether the proposal could be construed as a way of buying votes with the promise of future housing profits. “Otherwise it gets buried by the bureaucracy.”Semrau’s main opponent in the mayor’s race, former Pitkin County Commissioner Mick Ireland, was critical of the proposal, maintaining that it would undermine the city’s ability to build future housing projects.Ireland also said Semrau was asking the city to “renounce its share of the bargain it made with people like me” when it formulated the affordable housing system over the late ’70s and early ’80s.Semrau said that under the current system, some units have higher appreciation caps than others, some as high as 7 percent. Under his plan, he said, owners of deed-restricted homes with appreciation rates higher than 5 percent could decline to sign onto the new rates.According to Semrau’s calculations, there are 755 deed-restricted units in the city his proposal would affect, which he said carry a “mean” price of around $182,000. If appreciation rates were increased to 5 percent, he predicted, the new pricetag on a unit would be about $3,600 higher each year than at the 3 percent level.He said that would translate to additional appreciation values of around $2.75 million per year, which he said could come from the city’s affordable housing fund.That fund, which is fed by a real estate transfer tax and has been growing by leaps and bounds in Aspen’s hot real estate market, now stands at nearly $36 million, according to Semrau’s figures By 2014, he said, the fund will hit $103 million, even accounting for all costs of the Burlingame affordable housing project now under way.If his plan is used, he said, the city’s housing fund will still hold some $87 million in 2014.”Those who have helped create the Aspen dream should also get some of the benefits from their contribution,” he said.Ireland, on the other hand, maintained that Semrau’s logic is flawed. First, he said, Semrau is assuming that affordable housing prices will rise 3 percent every year, when actually they have risen by less than 2 percent a year over the past couple of years.If the city needs to make up the difference between the annual increase and the 5 percent allowed appreciation, Ireland said, that will amount to 3 percent per year or higher, “and that will mean more like $4 million a year” out of the city’s housing fund.Over time, he said, the drawdown will “cramp the city’s ability to build more affordable housing,” particularly if construction slows.”It’s not necessarily true that we’ll continue to have the sort of boom we’ve been having,” Ireland said.In addition, said Ireland, who lives in deed-restricted affordable housing, using the public treasury to increase an individual’s profit from his home is a negation of the deal between the city and citizens more than 20 years ago. It was then, he said, that government offered subsidized housing to workers in return for an understanding that workers would not expect free-market profits.”When I bought my unit,” he said, “I didn’t buy it because the city would transfer tax dollars to me.”The third candidate for the mayor’s job, Councilman Torre, was not available for comment by Tuesday evening.Housing board member Ron Erickson, who had not had time to review Semrau’s proposal closely by Tuesday evening, said, “I think [Semrau’s ideas] have merit. He makes some good points.”Erickson said he is in favor of reworking deed restrictions to reflect a “simplified commonality,” rather than a patchwork of differing contracts. And he likes the idea of adding to allowable value of capital improvements that can be recouped when a unit is sold.”That’s the carrot to get some of the people to support a new [standardized] deed restriction,” Erickson said.But, he added, he has some concerns about the use of public money for an ongoing subsidization of units that were subsidized from the beginning.”Does that mean we subsidize [units] three times … once when they are built, again when they’re sold the first time, and on every subsequent sale?” he asked.