How do you build affordable homes?

EAGLE COUNTY - It's the million-dollar question.

Or the $535,350-question, which is the average price of a single-family home in Eagle County - but that price is almost $200,000 more than the average family in the area can afford, according to the U.S. Department of Housing and Urban Development.

Solving the problem of affordable housing in the valley is a top priority, county and town officials said in recent discussions. Possible remedies include new housing guidelines, publicly funded projects and requiring more fees and deed-restricted homes from developers who want to build here.

But actually building affordable homes is not so simple, some developers and builders said, and the responsibility of solving the problem should not fall entirely on their shoulders.

High land, construction and labor costs make it increasingly difficult to build affordably, and rising building fees and stricter regulations only add on to the price, said builder Carl Dietz, who has built several hundred affordable homes in the valley.

To build affordable homes, the county and town governments are going to have to partner with developers and work together, said Gerry Flynn, owner of Polar Star Properties in Edwards.

"Left to the free market, it's not going to happen," Flynn said. "Not unless there are construction guidelines and incentives for developers to build."

The land problem

High land cost is one of the biggest problems when it comes to building affordable housing, Dietz said.

"It's getting harder and harder because land is expensive. But you can't tell people what to sell land for. If that's what it's going for, why shouldn't people sell it for a high price?" Dietz said.

Still, he has been able to build a number of entry-level homes in the valley, such as the Tenderfoot development in Gypsum.

Usually the homes have to be duplexes or triplexes following the same simple design, he said.

Also, he eliminates overhead costs, by running the entire company himself - all his on-site work is sub-contracted, he said.

Developer Jeff Spanel's company, Wintergreen Homes, built Brett Ranch in Edwards and several affordable rental projects upvalley, such as Eagle Bend. However, the company is not working on any affordable housing projects right now because they do not have the land, he said.

"Finding a piece of land here is tough. You want it at a good price but also in a good location. When we did Brett Ranch, it was considered 'out in the sticks' and too far to drive out to," Spanel said.

Costs add up

Not only is land expensive, but labor and material costs are higher in the area, developers said.

Take concrete, for example, said Bob Warner of Warner Development in Eagle-Vail. In somewhere like Denver, not only is concrete cheaper, but it is easier to get and he would have companies "knocking on my door" to pour it.

Here, labor is more expensive, and concrete costs 30 percent more. It all adds to the cost of the home, he said.

It does not help that in addition to those costs, land-use standards are getting more restrictive, and the fees that go along with building any project are rising, Warner said.

Narrower sidewalks and roads or a simpler lawn watering system can make the difference between an expensive home and a more affordable one, Warner said.

However, there are guidelines about how wide roads should be, and there are landscaping rules about irrigation systems, he said.

"It's made standard housing much more expensive, because all those things cost money. Is watering more important or housing?" Warner said.

With all the costs, it is hard to make a profit building affordable homes, Dietz said, so it makes sense that so many prefer building high-end second homes.

Warner agreed.

"I've built over 500 homes that served working locals, but now I'm doing high end stuff because it's easier," he said.

Maybe builders of affordable homes should not be held to the same regulations and fees, developers said.

County and city governments can make affordable building more attractive to developers by accelerating the approval process, and waiving or lowering building fees, Flynn said.

"They have to start looking at some of those incentives," he said.

In the right direction

Most developers agreed that recent county and city efforts at creating more affordable homes are positive.

A county-wide housing panel has included not only government officials, but business owners and local developers, Flynn said,

Also, the 'West End' project, which will provide 72 affordable homes mixed with free-market homes and businesses, is a "step in the right direction," Dietz said. Much of the county's approval of the project hung on the developers willingness to incorporate the workforce housing.

"It's taking a step forward in getting with the developer and trying to make it work," he said.

But Warner said he thinks more could be done.

"The county doesn't need anymore housing above $800,000, but they need the courage to say that. They have the ability to put requirements on it and say, okay, no more high-end condos, no more commercial," Warner said.

Flynn said that developers want to see consistent and predictable guidelines for affordable housing.

"The biggest obstacle is that there haven't been any consistent, rational guidelines. Five years ago no one could tell you what was affordable housing. Now we're trying to get everyone on the same page," said Flynn, who is a member of the housing panel.

And the county is trying to do just that, county commissioners said.

The county is creating new housing guidelines, said County Commissioner Sara Fisher. The guidelines, which are being reviewed by the business and developing community, will save developers from having to deal with inconsistent policies, she said.

"We've heard clearly from the develoipment community - 'Tell us what you want, and we'll work with it,'" she said.

County officials also want to make the building process easier for affordable home builders and involve them in the discussion, Fisher said.

"The county never intentionally wants to be the hitch in the project. We will definitely try to reduce some fees and speed up the approval process for projects," she said.

County Commissioner Arn Menconi called the West End a "quiet victory" in how the county can work with the interests of developers.

The county has said for years it does not want more second homes, said Mencon, but now they are ready to take action. Officials are looking into either buying land and building on it or buying existing homes to sell back to residents at affordable prices, he said.

Deed restriction not the way to go?

The county and towns have begun requiring deed-restricted homes, which can only be sold to local residents and usually have limit on price appreciation, for many developments. However, some developers say it is not a good idea.

"Who wants that? I lose money on those homes immediately. Now I have to raise the prices on the other homes to make up what I lost, and I've just pushed all these other people out of what were affordable homes," Dietz said.

A better way to keep homes owned by locals is to use modified deed restrictions, such as in Brett Ranch, Spanel said.

The Brett Ranch homes were first offered to Eagle County residents at a reduced price. There were no caps on appreciation and the homes could be re-sold to a non-local resident, but only with an additional fee. That fee goes to the county to build more affordable housing.

That way, Spanel said, residents can get full appreciation on their homes and maybe buy something better, and if a second-homeowner buys it, it still provides funds to build more homes.

But, Warner points out, there is still a demand for deed-restricted homes. There are waiting lists to buy them, he said.

"Some people just would appreciate a place to live, and it's better than not being able to afford one at all," he said.

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Quick Facts

$535,350: the average price of a single-family home in Eagle County

$253,000: the price the average family in the county can afford to pay for a home

9: the additional hours per week a household of three would have to work to buy an average-priced home in Eagle County

Source: Urban Land Institute Study 2005

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What is affordable housing anyway?

Developers were hesitant to use the term affordable, prefering to call it "entry-level" or "starter homes."

"There's no such thing as affordable here," developer Carl Dietz said. "Who are we talking about? Affordable to who?"

According to the county, affordable home prices are based on a family's average median income, or AMI. The county wants families of four earning anywhere from $65,000 to $81,000 (or 80 to 100 percent of the AMI), to be able to buy a home.

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Staff Writer Melanie Wong can be reached at 748-2928 or mwong@vaildaily.com.