Housing funds falling short
Faced with a projected $19.3 million shortfall in funding for employee-housing projects, city and housing officials agreed Wednesday to seek public and private partners to help pay the way.
Members of the City Council and Aspen-Pitkin County Housing Board met for two hours to crunch the numbers. The bottom line was in the red.
City Finance Director Tabatha Miller outlined plans for six housing projects on the city’s wish list. The 568 units would add 1,117 beds to the city’s worker housing stock and require an estimated government subsidy of some $64 million to build.
The largest and most expensive of the developments, the proposed 225 units at the city-owned Burlingame Ranch, will cost a projected $25.3 million in city money, according to Miller’s report.
Bringing in partners for Burlingame – be it other public agencies that need housing for firefighters, hospital employees, school teachers, etc., or private businesses looking for places to house their workers – would scale back the subsidy required from the city’s housing coffers, Miller said.
City Council and Housing Board members unanimously endorsed that approach.
Allowing other public, private or nonprofit entities to buy 25 percent of the units at Burlingame would cut the city’s subsidy by $6.3 million, paring the total down to $19 million, Miller said.
The partners would be offered the units for a price that reflects the cost of their construction.
The subsidy per bedroom at Burlingame is estimated at $42,195.
Chuck Torinus, representing both Aspen Valley Hospital and the Aspen Fire Protection District, lauded the plan but cringed at the per-bedroom cost.
“We’re sincerely and definitely interested in this program. This is a real neat opportunity,” he said. “But the cost becomes the key issue for us.”
Burlingame is a large enough development to allow partners to buy in and still leave plenty of units available to the community at large, noted Mayor Rachel Richards.
“It’s really hard to go out and let employers buy 25 units when we’re only generating 30 units a year,” she said. At Burlingame, selling 25 percent of the units would still leave 165 available to the general public.
“I think that this is almost a new role for the housing office – to make projects happen both for the community and to let employers buy into,” Richards said.
Mick Ireland, a housing board member and county commissioner, predicted a number of small businesses that could never build or acquire housing for their workers on their own might be interested in a unit or two at Burlingame.
The extraordinarily high cost of building housing recently struck home anew when the city received just one bid for its planned 11-unit project at Seventh and Main streets. Fenton Construction submitted a $3.1 million bid – some $800,000 over the projected price tag. That’s a $202,382-per-bedroom subsidy, according to Miller’s report.
City officials are now negotiating with the contractor to bring down the price, but housing officials wondered aloud last night if they should go back to the drawing board.
“A $200,000 subsidy per bedroom at Seventh and Main? Maybe we have to relook at that project,” said Jackie Kasabach, housing board chairwoman.
“I think maybe it’s time to take Seventh and Main and hire someone to bid it and see if they can do it better,” said board member Tim Semrau.
Certainly, the bid underscores the need to revamp the city’s bidding/procurement process, said City Manager Steve Barwick.
“The traditional bidding process we’ve been using just isn’t working in this environment anymore. We’ve got to rethink a lot of things here,” he said.
While the cost of the Seventh and Main project is fairly firm, construction of the other housing developments on the city’s plate are based on assumptions that may or may not pan out, Miller warned.
Her report assumes “hard” construction costs of $150 per square foot. That doesn’t include land and infrastructure costs. The projections also assume 4 percent annual inflation for 10 years and reflect a 20 percent contingency fund for each project.
On the revenue side, the projections assume a 3 percent annual growth in the city’s sales tax revenues and 3.5 percent growth in the real estate transfer tax, or RETT, devoted to housing. Proceeds from the RETT have consistently exceeded what is budgeted in revenue each year, Miller added.
RETT revenue over the next 10 years, assuming voters reauthorize it in 2004, could be high enough to take care of the entire $19.3 million shortfall, Barwick said.
Among other options for cutting that shortfall, building more Resident Occupied (RO) units – which fetch the highest prices and help subsidize the more affordable units – is not an option, the group agreed.
“I don’t think we should be using any taxpayer dollars to build RO units,” said Cari Britton, housing board member.
Only Tom McCabe, city councilman and housing board member, expressed any strong support for hiking the price of affordable housing in general.
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The Roaring Fork School District began its transition of bringing students back to school for in-person learning on Monday, starting with K-3. If all goes well, grades 5-8 will start Oct. 26 and high school students on Nov. 2.