Fornell asks city to re-examine cash-in-lieu practices for housing
November 25, 2014
Developer Peter Fornell asked city officials to re-examine its cash-in-lieu practices concerning affordable-housing mitigation Monday, claiming the present fee structure creates a mixed message when developers choose mitigation options.
Fornell has developed three affordable-housing complexes where he has sold housing credit certificates. The certificate program was established in 2012 with the purpose of encouraging affordable-housing inventory that is immediately available. The credits are distributed to developers who build beyond affordable-housing requirements. The developer can then sell the credits to other developers looking to mitigate their own projects.
Fornell argued that while the city might accept cash-in-lieu payments of $140,000 for each full-time employee generated by a project, it costs him $180,000 to develop the same amount of space. For the person writing the cash-in-lieu check, it's a convenience, he said, while it's a burden for the receiver. He argued that everyone in the room could agree that cash-in-lieu does not equate.
Currently, the mitigation rate for developers of residential construction is $76 per square foot if the developer chooses to pay a fee to the city in lieu of building affordable housing. According to Affordable Housing Project Manager Chris Everson, construction costs at Burlingame Phase II were about $509 per square foot of liveable area, while Fornell paid about $520 per square foot to develop his affordable-housing complex on Main Street.
Community Development Director Chris Bendon said the city is expecting results for an employee-generation study for single-family homes in the next three weeks, with a work session scheduled in January.
Fornell pointed out that a cash-in-lieu study was completed in 2013, and the city has taken no action.
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Bendon said cash-in-lieu rates are set by the Aspen-Pitkin County Housing Authority, which is going through transition as it looks to replace former director Tom McCabe, who stepped down this year.
"We have the information at hand," Bendon said. "It's a matter of initiating that effort again, and I suggest that that's something you wait until the housing director has been seated" and responsibilities have been delegated.
Bendon said the question in the interim is if should the city continue accepting cash-in-lieu payments.
Councilman Dwayne Romero challenged Fornell's case by citing the city's real estate transfer tax, a fund that has contributed around $5.5 million each year to the affordable housing program since 2009, according to city records.
"The city's long since been in the business of delivering affordable housing," Romero said. "We accumulate, we reserve, we save and then we deploy it into a project, and things like Burlingame I and Burlingame II come rolling out."
Fornell's platform through the certificate program is one in several tools of mitigating and managing growth, Romero said, adding that there needs to be a broad conversation concerning any potential policy changes.
Councilman Art Daily called the employee generation study critical, and Mayor Steve Skadron said he hopes it's revealing.