Truscott Place tenants could see a drop in rent, or a hike
Aspen Times Staff Writer
Rents for new studios at Truscott Place will drop substantially, but some Truscott tenants will see hefty rent hikes over the next two-plus years under a plan approved Wednesday by housing officials.
A restructuring of rental rates for all of the Phase II units at Truscott Place won unanimous approval yesterday from the Aspen-Pitkin County Housing Board. The proposal will go to the City Council on Monday; the council has the final say.
Of the 24 new studio apartments constructed as part of the Phase II expansion of Truscott, 10 remain unrented. Local workers have balked at paying $829 a month for a 390-square-foot studio.
“Even in affordable housing, the laws of supply and demand play a significant role,” said Paul Menter, city finance director. Menter outlined a proposed new, “more rational” rate structure to the housing board that will drop the studio price to $660 per month, beginning in March.
The reduction will apply to all the studios, including those that have already been rented, though tenants won’t receive a rebate for the higher rent they’ve been paying.
Renters in the 200 and 300 buildings will see their rents go up to make up the difference.
The idea is to make all of the rents in Phase II more equitable, compared to the market in general and within Truscott, Menter said.
The expansion of Truscott Place, completed last year, added 99 deed-restricted units to the complex of rental housing next to the city golf course. The apartments are only open to qualified local workers.
The expansion was done in two phases. Phase II, partially financed through low-income housing tax credits, included the construction of 41 new units, including 24 studios, and the renovation of 46 existing apartments in the 200 and 300 buildings.
Currently, the new units are considerably more expensive than the renovated units, and the new studios cost as much as 110 percent more on a square-footage basis than other units in the same complex.
The new rent structure will not change the overall rent revenue from the Phase II units, but will redistribute the rent collected from the various units, Menter explained.
Beginning next month, rents for the new Phase II units will be $660 for a studio, $878 for a one-bedroom and $1,050 for a two-bedroom. The rent for the two-bedrooms is going up by $4.
For the renovated units, a one-bedroom flat that goes for $515 per month will go up to $520 in March, $570 in October, $630 in October 2004 and $680 in October 2005.
Similar incremental hikes will increase the rent on a one-bedroom loft from $588 currently to $680 in October 2005; the rent for a two-bedroom flat will increase from $690 currently to $910 in October 2005; and the rent for a two-bedroom loft will increase from $920 currently to $1,080 in October 2005.
Meanwhile, by October 2005, the rents for new Phase II units will be $680 for a studio, $910 for a one-bedroom and $1,080 for a two-bedroom.
To make the increases more palatable to tenants in the renovated units, their rents will cover electricity with the change. Utilities are already covered by rents for the new units in Phase II.
To cover the revenue shortfall resulting from the unrented studios and to prevent dramatic, immediate jumps in some rents, a $35,000 payment from the city’s housing fund is proposed to cover the debt on the project, according to Menter.
The financing of Phase II at Truscott was a complex arrangement, involving a partnership of the Housing Authority, which is the managing partner, and Lend Lease Inc. the equity partner.
The Housing Authority faces penalties if it does not close on the purchase of Truscott Place next week as scheduled, and the city will not receive its final equity contribution from Lend Lease until Lend Lease can claim tax credits on the entire project. It can’t do that until the project has covered its debt costs for three months, which won’t happen until the apartments are filled.
Essentially, the Housing Authority and Lend Lease are the buyers of the Phase II units and the city of Aspen is the seller. The city provided a $2.28 million construction loan plus $2.9 million so the partnership could buy the 200 and 300 buildings and the land for the new Phase II units.
At closing, the city gets back close to $4 million, with another $1.4 million to be paid back over time, Menter said.
Despite the need for a rent adjustment, Phase II is a “very successful” project from a financial standpoint, he said.
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