Housing program still ‘under serious attack’
August 15, 2008
ASPEN ” Local housing officials are celebrating a recent court ruling that is seen as validating the Aspen and Pitkin County affordable housing program. But the housing office’s attorney said this week that the Aspen/Pitkin County Housing Authority ” which oversees an inventory of rental and for-sale units that numbers in the thousands ” is not out of the woods yet.
“The housing program’s been under serious attack over the last year and a half,” said attorney Thomas Fenton Smith, who represents the housing office in court.
Smith said there currently are six cases working their way through the courts, of which “all, or nearly all, are using the Telluride defense.”
The Telluride defense, he said, is a legal stratagem based on a Colorado Supreme Court decision in 2000 that invalidated the town of Telluride’s affordable-housing guidelines, because the justices felt the guidelines violated Colorado’s 1981 prohibition against rent control.
The state prohibition against rent controls, Smith said, was the Colorado Legislature’s way of holding the line against the kind of rules that had been written in New York City, where rising property values had threatened many residents with homelessness and prompted city officials to put strict caps on rent increases.
“So, it had a specific target,” Smith said of the 1981 legislation outlawing rent controls, and the Telluride guidelines were struck down because, in the judges’ view, they came too close to mimicking the New York system.
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The recent ruling in the case of Amanda Tucker, he said, was won by the housing authority on a technicality, rather than on the merits of the arguments of the two sides.
But Smith said a “dictum” or accompanying explanatory note issued with the decision indicated the court would have ruled in favor of the Aspen-Pitkin County guidelines had the case gone to trial.
As such, Smith predicted, the Tucker case “will discourage other owners of sales properties from trying to go after that part of the program. At the present moment, the sales program is not at risk.”
Turning to the rental units, Smith said that “in most cases, [the owner suing to get out from under the guidelines] is a second-generation owner,” meaning someone who bought a unit that was designated as a rental unit as part of the developmental review process. The housing units represent a tradeoff in which the developer gets certain concessions, such as increased density, in return for building affordable rental units.
The newer owners, Smith explained, did not benefit from the original agreement and “they’re saying, ‘I didn’t get any benefit out of this deed restriction. What’s in it for me to keep this as a rental unit?'” Smith noted that a local district court judge refused to dismiss a suit against a California couple in just such a situation. Larry and Mara Lawrence had turned what was supposed to be a deed-restricted accessory dwelling unit, into a recreation room.
The court in that case agreed with the county that the original developer, in making a deal with the government, essentially created a situation in which the government had an interest in the property in the form of the deed restriction.
And that, according to Smith, accords with what the judge termed an “exemption to the Colorado prohibition against rent controls.” Smith said the Lawrences have agreed to comply with the housing authority’s guidelines, after both the APCHA and the Aspen City Council rejected a proposal that they be allowed to pay cash-in-lieu as a way of getting out from under the deed restriction.
While the other cases still pending and each have their own specific facts and arguments, Smith said, they all are based in one way or another on the Telluride defense, and all pose a continuing threat to the Aspen-Pitkin County housing program.
“If people were to win, that’s the end of it,” Smith said. “That’s the end of deed-restricted rental units in the valley.”