Brandon Gee

08-06-2009

The Steamboat Springs City Council on Tuesday drastically reduced the fees it charges developers who choose to make a payment in lieu of building affordable housing units required by the city.
The city’s inclusionary zoning policies previously required a payment of about $118,000 per unit. That formula was based on the average sales price of housing in Steamboat Springs and a cost per square foot of $369. The new formula is based on construction costs and includes a major discount. The new payments in lieu of providing affordable housing range from about $39,000 to about $63,000 per unit, depending on the size of the unit a developer chooses not to build.
The new formula is based on construction costs of $145 per square foot, land costs that are calculated at 20 percent of construction costs and other smaller factors. City staff had previously suggested that construction costs be calculated at $200 a square foot and that land costs be calculated at 25 percent of construction costs. The fee generated by the initial formula is then discounted by 75 percent. That’s because of a 25 percent “leverage ratio” and the city’s belief that they will be able to leverage collected fees with funds from federal housing programs.
“The theory is that the money that we’re getting has additional value because you can leverage it,” Planning and Community Development Director Tom Leeson said.
In an e-mail sent to the city, Summit Combined Housing Authority Executive Director Jennifer Kermode said her organization has had “very little” success leveraging its money with federal funds. In another e-mail, city of Boulder Community Development Program Manager Jeff Yegian said the $2.6 million Boulder spends on affordable housing each year is leveraged by $1 million from federal programs.
The new fee also includes a $2,500 administrative charge. City staff had recommended $5,000.
While opponents may use approval of the new formula as ammunition as against City Council — candidates for this year’s election have claimed current members are too pro-development — City Council President Loui Antonucci said the new formula makes more sense.
“It was based on sales price earlier, but we were never going to buy stuff. We were going to build it,” he said. “I never really agreed with that philosophically.”
Since the funds will be used to build affordable housing, Antonucci said it makes more sense to base the formula on construction costs. He noted that sales prices as high as $850 a square foot were built into the previous formula.
“Why would you do that? I don’t live in a house that costs $850 a square foot,” Antonucci said. “I don’t have any friends who live in a house that costs $850 a square foot.”
The new formula was created — based on council members’ direction — by city staff members who worked with a group of community members. Leeson said the group included representation from the development community, the Community Alliance of the Yampa Valley, bankers and others. When the formula was finalized for Tuesday’s City Council meeting, however, the city could not assemble the entire group and worked only with developer Paul Franklin as a representative of the working group.
Earlier this year, City Council suspended linkage, the second component of the city’s affordable housing ordinance. Linkage is an impact fee that requires developers to mitigate — with units or a fee — a percentage of the work force housing requirements their projects are thought to create.
The second reading of an ordinance further amending the city’s affordable housing ordinance was tabled Tuesday until Aug. 18.