Capital-reserves pitch for affordable housing gets mixed reception | AspenTimes.com

Capital-reserves pitch for affordable housing gets mixed reception

Dangerous levels of mold at the Centennial housing complex, which is suing local governments, is part of the reason for a proposal that would generate up to $16 million for homeowners associations that oversee affordable-housing complexes.
Jeremy Wallace/The Aspen Times |

Elected officials from Aspen and Pitkin County deliberated, brainstormed and dissented Tuesday over a proposal that could pump as much as $16 million into capital-reserves funds to support improvements to common elements of affordable-housing complexes.

The joint work session came after Aspen City Council solicited feedback Monday from members of the homeowners associations that run the units.

Both discussions came as the two government bodies as well as the Aspen-Pitkin County Housing Authority are seeking common ground to help mend the estimated $15 million shortfall of capital reserves among the 1,600 deed-restricted units that are individually owned. Those units account for roughly half of all affordable-housing units in the city and county; the remaining units are rentals.

“The only deal-breaker that I have on the table is that whatever solution we put forward has to remain affordable,” said Councilman Adam Frisch. “Otherwise, we don’t have an affordable-housing program.”

How those reserves are funded, if they are, is another question. But one apparent misconception in the community is the money would go into improvements, upkeep and maintenance of individual units. It wouldn’t.

The funds, however, would go in the escrow accounts of homeowners associations and pay for capital improvements to common areas such as work on roofs, sidings and boilers, among others.

A proposal drafted by Assistant City Manager Barry Crook seeks that each unit would be represented by $10,000 toward the capital reserves.

“What we’re talking about has nothing to do with interiors of these units,” resident Jackie Kasabach said at Tuesday’s work session. “What we’re talking about now is retaining the common areas of these valuable assets that the community basically created. Because we created those things, we have a viable living community here. We’re talking about common elements. We have to stop talking about units and start talking about associations.”

Kasabach’s comments came after a large chunk of the discussion concerned rights of buyers and sellers of affordable-housing units. Officials admitted that it is a complex and daunting issue with no quick fix available.

While City Council, at least in the conceptual stages, appears in overall support of the community-funded program, county commissioners had a different take.

Commissioner Rachel Richards suggested formulating an emergency or assistance loan program of sorts for homeowner associations facing dire situations. A loan, as opposed to grants or so-called bail-outs, would hold the HOAs more financially accountable, she said. The county’s general fund also couldn’t support Crook’s proposal, Richards said, noting the county doesn’t have a real estate transfer tax. The city does have one, which supports both its affordable-housing program and the Wheeler Opera House.

At Monday’s meeting, HOA representatives shared mixed views on the capital-reserves proposal. Some said their capital-reserves funds were in healthy shape and they didn’t need the money; others said their funds were well short of being financially secure.

The real estate transfer tax also doesn’t apply to sales of affordable-housing units. That tax is enforced only in free-market deals. One idea being mulled also is to enforce the tax in affordable-housing deals.

Part of what is driving the capital-reserves discussion is the plight of the Centennial complex near the base of Smuggler Mountain. In December, its HOA sued the city, county commissioners and the housing authority.

Filed in Pitkin County District Court, the lawsuit claims there is as much as $10 million in necessary fixes to the complex due to “dangerous levels of potentially toxic mold” and other structural damages.

The suit accuses the local government of violating local and state housing laws by passing on the cost of the repairs to the unit owners.

The suit argues that the city’s decision to not help pay for the repairs has put the unit owners in a difficult financial position. That’s because the housing authority’s 10 percent limit on capital improvements to deed-restricted homes doesn’t apply to such major structural repairs as the current dilemma, creating a disincentive for the owners to pay for it.

Richards questioned whether the Centennial issue has led to an overreaction by local government. Yet Frisch said he wouldn’t be surprised if other HOAs have faced or will face problems similar to Centennial’s.

“It’s highly irresponsible to say let’s go raise taxes and hit the community up, because the fault is not theirs,” resident Elizabeth Milias said at Monday’s meeting.

Members of HOAs often can be uninformed or incapable as well, housing board member Ron Erickson said at Tuesday’s gathering.

“You’re dealing with association boards and directors who have a responsibility to maintain their properties, and they have no idea of what they’re doing,” he said.

Between the city councilors and county commissioners, nine attended the joint work session. The next step is to winnow that number down likely to two representatives from each board as well as the housing board to simplify the discussion.

rcarroll@aspentimes.com


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