City still wrestling with Burlingame RO cap
Less than a week after settling on a price cap for the most expensive homes at Aspen’s planned Burlingame Ranch, at least one City Council member is having second thoughts.Councilwoman Rachel Richards on Tuesday urged her colleagues to rethink the price cap for the RO, or resident occupied, single-family homes slated for the worker housing project.The $640,000 cap agreed upon last week isn’t sitting well with Richards, who called for another discussion on how to bring down that price.”I would like to have that discussion, too,” Mayor Helen Klanderud said. Councilman Torre agreed.With Burlingame opponents pushing for a public vote this spring on the project and blasting the city for subsidizing the higher-end housing, the RO prices in the project are likely to garner attention as the campaign season heats up.The city plans to sell RO lots at Burlingame to buyers who will then construct their own homes. The $640,000 cap reflects $155,000 for the lot; the balance will cover construction, architectural fees, permits, etc. The cap works out to about $220 per square foot; the homes will be limited to 2,200 square feet plus 500 square feet for a garage.Although the cap holds down prices by setting the upper limit on what RO owners can recoup for the construction of their homes, it isn’t so much a cap as a starting price for the homes. They will appreciate at 3 percent annually or the Consumer Price Index rate, whichever is less.Council members are anxious to keep the homes affordable for as long as possible; the lower the starting price, the lower the resale price over time. From the start, council members have cringed at the idea of million-dollar homes in what is supposed to be an “affordable” housing project for the local work force.”I had to swallow pretty hard about a unit that starts at $640,000 coming out of a government-sponsored program,” Richards said.The city has calculated a $640,000 home, with appreciation, would hit $1 million in 15 to 19 years, depending on how many times it turns over.Richards pondered lowering the lot price or eliminating it altogether to reduce the cost of the homes. If RO owners pay nothing for the lot, they would recoup nothing for the land when they sell.”The net effect would be, the initial sales price would be $155,000 less,” Richards said. “Those units will constantly stay further away from that million-dollar mark.”However, providing free lots to buyers who are well off enough financially to own the most expensive homes at Burlingame raises an “equity” issue, she conceded.Another option, she said, is lowering the land cost, but also eliminating any appreciation on the homes for the first three years, for example, for the first few owners. The RO owners wouldn’t gain as much in appreciation when they sell but would save on their house payments instead, as a lower land cost would translate to a smaller mortgage since they’d still be capped on what they could spend on the house itself.That sort of an arrangement could put off a $1 million RO sale for some 30 years, Richards said.The danger in clamping down on the price of the RO homes and their appreciation too much is that what are supposed to be lower-priced homes at Burlingame would surpass the RO residences in value eventually, according to Ed Sadler, assistant city manager.The first phase of Burlingame is slated to include 86 residences, including 11 lots, six of which would be in the top-end, RO category.The council expects to tackle the RO issue again on April 12.Janet Urquhart’s e-mail address is email@example.com
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