Housing: Is the price ever right?
Local officials struggling to make affordable housing actually affordable for workers are now grappling with developers who say it won’t be affordable to build.
Some private builders claim new price caps on affordable housing will drive them out of the development picture, but surveys indicate the bulk of the local work force can’t afford to live in much of what they’re building anyway.
Previous income surveys indicate that 95 percent of the area’s working population can’t afford the Resident Occupied housing that developers say is necessary to subsidize lower-cost units.
In 1990 and again in 1995, independent surveys found that only 3 to 5 percent of people who work in Pitkin County can afford housing that costs more than $226,900 – the maximum price of a Category 4 unit.
Resident Occupied, or RO housing, has no cap on either price or the income/assets of its buyers. It is simply restricted to full-time residents working in Pitkin County. Recently built RO homes have sold for $550,000. One RO unit is valued at $800,000.
This week, the Aspen City Council approved changes to the housing guidelines that include a $425,000 price cap on RO units. The new rules would also require an average price of $170,000 for affordable units within a project, which will likely further bring down the price of RO units within a development.
Pitkin County commissioners have yet to adopt the new guidelines, but private developers are already predicting dire consequences. The new rules, they say, will drive them out of affordable housing, leaving only the public sector to tackle new worker housing projects.
But council members argue the changes are the only way to keep prices down and put more housing within financial reach of workers.
“Given the scarcity of buildable land left, I think we should be very discriminating about what kind of affordable housing we build. To justify more RO just to keep the private sector in the game isn’t a good enough answer,” said Frank Peters, chairman of the housing board. “Private development is not a silver bullet. It shouldn’t be a goal in and of itself, if it doesn’t serve a community’s needs.” What is affordable? According to a survey of 1,840 workers in Pitkin County nine years ago and 400 county employees in 1995, the vast majority of the working population has only the wherewithal to buy housing in categories 1-4, with Category 1 being the least expensive.
No formal independent survey has been undertaken more recently, but the housing authority keeps tabs on regional income and inflation rates and “nothing indicates any major shift in area wages,” said Housing Director Dave Tolen.
Under the guidelines, the maximum incomes (for a family of three or more) and sales prices for category housing are: $47,500 for a $62,400 single-family Category 1 unit; $62,265 for a $115,800 Category 2 home; $87,377 for a $158,300 Category 3 home; and $127,040 for a $226,900 Category 4 single-family residence.
One of Mayor-elect Rachel Richards’ priorities is to commission another survey of local work force wages. But in the meantime, she said her focus will be to keep affordable-housing prices within reach for the majority.
“I think the most important thing is to have the right category mix, but that doesn’t preclude going the extra lengths to make sure the private sector stays involved,” Richards said. “There is always a special review available. The guidelines set the standard, but if it’s too low, tell us why and if reasonable, we’ll consider the circumstances.” What price is right? Private housing developer Tim Semrau has predicted the new rules on affordable housing development will mean the end of private-sector involvement in affordable housing projects. The new average-sale-price rule will mean developers can’t build RO units for prices that can subsidize lower-cost housing, Semrau claims. Projects will no longer be financially feasible for the private sector, he said.
Local developer Ted Guy tends to agree with Semrau’s arguments, but suggested that other policy changes could keep the private sector interested.
Category sales prices are set at 18 to 28 percent of a buyer’s household income under the housing authority guidelines. According to Guy, that’s too low. Higher category sale prices would make projects more feasible to develop, he said.
“Eighteen percent is an unfair gift. I think if it was 28 to 40 percent of the income, the housing dollar would go farther and not bust performas,” Guy said.
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