City of Aspen holds developers’ feet to fire with affordable housing
Aspen City Council on Monday denied five property owners who own lots near the S-curves an extension of development rights because hundreds of thousands of dollars in affordable-housing mitigation would have been lost.
The U.S. Forest Service sold the lots via auction in 2013 as part of its plans to redevelop its administrative offices on Seventh and Hallam streets.
Forest Service officials told the city in 2012 of the agency’s intent to sell a portion of its property. They also told the city that as a federal agency, it is not subject to the municipal government’s jurisdiction.
The Forest Service recorded a survey with Pitkin County and created a subdivision with five lots. The owners essentially bought the lots with no development rights attached, said Jen Phelan, the city’s deputy director of planning.
Those lot owners got development approval from City Council in 2015 on the condition that the subdivision falls under an “inclusionary zoning requirement,” which means that 30 percent of the developed space has to be affordable housing.
The approval allowed that mitigation to be met through cash-in-lieu payments. The ordinance approving the development locked in a cash-in-lieu rate from 2015 — but only for three years of vested rights.
Those rates have increased twice since 2015, which translates into roughly $230,000 more per lot.
The vesting rights expired in May for two lots and are set to expire Oct. 18 for the other three.
That means the owners of lots four and five — under contract by LLCs represented by local developer Michael Brown — will have to pay current housing mitigation fees.
Owners of lots one, two and three have until Oct. 18 to submit a building permit to avoid paying higher cash-in-lieu fees.
The 2015 rate for those lots is estimated at around $350,000 each.
Phelan noted that four of the five lots are currently listed for sale.
The property owners argued that it’s taken too long to get approvals from the city and they’ve incurred expenses as a result.
They asked for three more years of vested rights at the lower affordable-housing rate.
Curtis Sanders, an Aspen-based attorney for Sherman and Howard, LLC., who represents the property owners, told council it’s real dollars for the affordable-housing program but also for his clients, who got “crushed” with increased mitigation fees.
Sanders, in an April 30 letter asking for the extension, suggested that his clients were under the impression that if city officials were going to make amendments to affordable-housing provisions, it would result in a decrease of cash-in-lieu fees.
And that’s why they sought land-use applications in approvals in 2015, Sanders wrote.
The following year, issues surrounding the lots remained for city officials. When the Forest Service sold the lots as a subdivision, infrastructure like sidewalks, alley access and utility relocation were not done.
“We are stuck with what the Forest Service did,” Phelan said, adding that a developer prior to the sale of the lot typically makes those types of property improvements.
To square that up, council passed an ordinance in 2016 that approved the recording of a city-sanctioned subdivision and a development agreement among property owners that clarifies they are responsible for infrastructure improvements.
“By creating and selling off five lots from their property without going through a city review process, the (Forest Service) left the city with a number of issues to resolve with multiple private owners, inclusive of ensuring that the properties would be developed according to city standards for infrastructure as well as the provision of affordable-housing mitigation,” Phelan wrote in a memo to council. “A number of agreements needed to be developed as a result of the 2016 ordinance passed by council. These took much longer than anticipated to finalize and record.”
Brown, clearly frustrated and disappointed with council’s decision, said as a prospective buyer he shouldn’t be saddled with hundreds of thousands of dollars in fees because the Forest Service circumvented the city’s process.
Councilman Adam Frisch, who was one of two dissenting votes and supported vesting rights be extended until the end of the year, said all parties involved had a role in the boondoggle — from the Forest Service to the buyers not doing their due diligence to the city’s slow approval process.
Tenants at the city’s oldest deed-restricted housing complex, Centennial Apartments, faced rent hikes as high as 30% in January that sent city, county, and APCHA officials into closed-door meetings with the relatively new landlord, Birge & Held.