Aspen’s encroachment fees encroaching on developer’s cost to build
Aspen City Council’s decision on Tuesday to apply substantial increases on developments that encroach on right of way and public spaces like sidewalks during construction will have a multimillion dollar impact on developers, including the municipal government.
Council 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.
It had been proposed to be $17 per square foot each month.
Aspen attorney Chris Bryan told council that he first thought the proposed 145% increase was a typo.
He said for a project like the Crystal Palace currently being rebuilt into a boutique hotel, it would cost developer Mark Hunt $900,000 a year.
It turns out that it will be just under $500,000 in 2020.
Hunt, who owns several buildings in Aspen, said increasing costs on development that is going to occur regardless will affect rent prices in the end.
“To me the bigger concern is these fees are not going to deter a building,” he told council. “You fast forward and you pay this kind of money and you just keep adding and adding and adding.
“What are we trying to accomplish here?” he continued. “It’s a death by a thousand cuts and it will affect who is going into these buildings, which will ultimately affect what this town looks like.”
Council members said they are concerned about the economic sustainability of town, but they also value public spaces and want to curb the impacts of development.
The increased fee could have multimillion-dollar implications on taxpayers when it comes to the 37,500-square-foot city office building currently being constructed along Rio Grande Place, which is the largest development occurring in town right now.
While that project is outside of the commercial core and does not fall under the $9 per-square-foot, per-month fee, council did approve a 61% increase for developments encroaching in the public right of way elsewhere in town.
City officials could not confirm Tuesday evening what would be the additional costs to the Rio Grande project, or the future remodel of the current City Hall on Galena Street.
City Manager Sara Ott said the intent and direction from previous councils has been to aggressively manage the privatization of public spaces and construction impacts in town.
A majority of council voted for Councilwoman Rachel Richards’ amendment to the ordinance that reduced the fee increase because the proposed amount was too much all at once.
City Engineer Trish Aragon explained that the fee hadn’t been substantially changed for years, with the last increase being roughly 3% in 2016.
She compared it to a parking space that is taken by a construction project, which costs $75 per day and is going up to $100 at the beginning of the year.
At $6.93 per square foot per month for public right of way encroachment, it compares with about $40 a day for a parking space.
“The parity has been left alone for a long time,” Richards said, adding that protecting public spaces is important. “This is about public rights of way across town.”
She also pointed out that projects have contingencies to absorb increased fees and based on history, what the market bears is what determines what a tenant will pay.
City Finance Director Pete Strecker wrote in a memo to council that it’s been a decade since a comprehensive evaluation and update of the city’s fees on land use development reviews and building permits was last done.
“Consequently, a third-party study and analysis of those fees, and expanding the scope to include engineering, utility, recreation and other current programming fees by the city will be conducted in 2020,” he wrote. “This critical study requires outside expertise of public fees, state law, and will be a joint undertaking by engineering, utilities, community development, and parks departments.”
Bryan said he didn’t understand why council would not wait until that study was complete before increasing the fees so radically.
“Let there be more conversation,” he said. “There’s a lack of public discussion about this.”
Ultimately, council voted 4-1 to pass the ordinance, with Councilwoman Ann Mullins dissenting because she didn’t agree with separating one item out from a long list of municipal fees.
“This is not the only thing that is debatable,” she said, adding she wants to see the study carried out.
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