Aspen government immune from development fees

The sidewalk along Rio Grande Place is closed as the city of Aspen builds its new office building. The encroachment of a right of way for development typically commands a high-priced fee but the municipal government is exempt.
Carolyn Sackariason

The city of Aspen, which is constructing the largest project in town with its new office building, is not subject to the same encroachment fees that were raised last month on developers who use the right of way during construction.

Aspen City Council in November agreed to up the fee on the temporary occupation of right of ways from $6.93 to $9 per square foot, per month, on any development in the commercial core.

Developer Mark Hunt at the time cried foul, saying it adds millions of dollars to his projects, such as the redevelopment of the Crystal Palace.

His attorney, Chris Bryan, said during a council meeting that the original proposal of a 145% increase on the fee was excessive, and pointed to how much it would cost the city with its 37,500-square-foot building at Rio Grande Place.

While the encroachment fees pertain to construction projects in the commercial core, the council also approved a 61% increase for developments encroaching in the public right of way elsewhere in town.

But the city doesn’t pay the fee because of an internal policy in which general fund departments don’t charge other general fund departments fees, according to Scott Miller, the city’s publics work director.

It was a policy enacted by former City Manager Steve Barwick, justifying that the general fund would just be writing itself a check.

Also, in the case of the city office building, the general fund would be borrowing the money through certificates of participation and paying interest on the amount of the fees.

“It costs the taxpayers more to charge the fee than waive it,” said City Manager Sara Ott, adding it’s a common practice for municipal governments to waive development fees for public amenity buildings. “This is the community’s building, not a private developer making a profit.”

While the square footage for the city’s encroachment will vary based on the project’s footprint over the next two years, the current number is 2,801 square feet, according to Rob Schober, the city’s project manager.

That includes the sidewalk on the south side of Rio Grande Place that is being taken out of commission — from Mill Street to Founder’s Place.

Based on the current footprint and next year’s fee increase, the city will not have to pay the $235,284 next year that a private developer would pay.

After council’s Nov. 26 meeting, Hunt estimated his Crystal Palace project will cost $500,000 a year in encroachment fees.

He told council that increasing costs on development that is going to occur regardless will affect rent prices in the end, which translates into high-end tenants.