Worker housing getting dumpy, but what to do?
Aspen Times Staff Writer
Owners of worker housing who do nothing to keep their unit in good repair shouldn’t be able to sell it for the maximum allowable price, local elected officials agreed Tuesday.
But City Council members and Pitkin County commissioners balked at a proposed policy that would reduce the price of a deed-restricted unit to reflect the depreciation of the roof, furnace and other items that are costly to replace.
While they agreed the current policy on capital improvements is unfair – socking whomever happens to own a unit at the time with pricey maintenance costs – they sent a proposed new policy from the Aspen-Pitkin County housing board back for more work.
Subtracting depreciation from the sale price of a unit could wipe out all of a homeowner’s appreciation and then some, argued Councilman Tim Semrau.
Deed-restricted units, sold to qualified local workers, are only allowed to appreciate by a certain amount annually – for new units, it’s 3 percent or the Consumer Price Index rate, whichever is less.
“It would effectively take out all the appreciation. You could lose money easily,” Semrau said. “People will be selling their units for less than they bought them for.”
Homeowners are guaranteed to at least recoup their purchase price, countered Maureen Dobson, director of the Aspen-Pitkin County Housing Authority.
“When you buy into the free market, you are not guaranteed a resale price,” noted Mayor Helen Klanderud.
The policy wouldn’t apply to current owners of units, but was proposed to go into effect for all new units and existing ones when they are resold. The new owner would be subjected to the policy.
Owners of deed-restricted units have become accustomed to getting the maximum allowed resale price unless the Housing Authority requires some amount to be placed in escrow to make repairs – if the unit needs new appliances, for example.
If someone sells an older unit after residing there for a decade, however, they do not pay for 10 years’ worth of the life of a roof that may be 25 years old. The new buyer may suddenly get hit with a special assessment for a new roof after paying top dollar for the unit, noted City Manager Steve Barwick.
In other cases, a homeowner who has spent no money on the upkeep of a unit for 10 years can sell it for the same price as an identical unit in the same complex that has been well maintained for the same period, said Ed Sadler, assistant city manager.
“This didn’t use to be an issue,” he said, “but your housing inventory is getting older.”
If nothing is done, the community is going to wind up with “really decrepit housing,” Sadler predicted.
“Without a doubt, we need to encourage people to keep up their units,” Semrau said.
Also proposed in the new capital improvements policy is a relaxation on the amount homeowners may spend upgrading a unit. Currently, the amount of improvements that can be recouped upon resale is generally capped at 10 percent of the cost of the unit over the life of the unit. The first owner can use up the entire 10 percent.
Instead, the housing board has suggested each new owner be allowed to recoup the cost of upgrades, up to 10 percent of the unit price, but the cost of a unit can’t increase by more than 10 percent in any five-year period. The improvements are subject to a depreciation rate.
In addition, some items – jacuzzis, saunas, steam showers, lighting, window coverings and replacement of things like appliances and carpeting – would continue to be exempt. Homeowners could still make those upgrades, they just couldn’t recoup their cost at resale.
[Janet Urquhart’s e-mail address is email@example.com]
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