County approves new affordable housing rules
May 28, 2014
EAGLE COUNTY — A new housing plan by Eagle County is designed to create more affordable housing and make it accessible to more people, but some developers say it will slam the brakes on construction.
The county’s new affordable housing guidelines take a two-pronged approach:
1. From the 2009 guidelines, the mitigation rates are reduced. It required that 35 percent of all square footage be earmarked for affordable housing. Now it’s 25 percent of the units or 15 percent of a project’s square footage. If you don’t want to build affordable housing, developers can pay a fee of about $236 per square foot.
2. The program’s target market has changed. In 2009, selling prices for units in the program were targeted at households earning 140 percent of Eagle County’s average median income, a family of three that earns $110,000 a year. Now they’re targeting a family of three that earns $78,000 a year.
It’s designed to make homes more affordable for families at the lower end of the county’s earning spectrum, said Kathy Chandler-Henry, Eagle County commissioner.
“It’s designed to help ensure a stable workforce,” Chandler-Henry said. “This set of guidelines is not designed to catch up. It’s designed to keep up from this point forward.”
HIGH COST OF AFFORDABILITY
“I met with eight different banks and not one said they would have any interest in doing anything in Eagle County with the affordable housing program,” said Rick Mueller, a local developer. “Close to 100 percent of everything built in this county requires financing.”
“Where do you go now?” Mueller asked. “Banks won’t give you financing when you tell them, ‘I’m going to lose 25 percent of my project.’”
“At some point you don’t do it because you can’t make it work economically.”
Mueller pointed to the 6,000 jobs lost in Eagle County since the construction industry collapsed with the recession.
A 2012 housing needs study said Eagle County will need more than 2,000 affordable housing units in the future. Under the new housing guidelines, that means tens of thousands of new homes would have to be built, Mueller said.
Gerry Flynn runs Polarstar Properties and manages apartment buildings all over Eagle County.
During the hearings, Flynn pointed out that while it’s probably not the commissioners’ intention to halt real estate development in unincorporated Eagle County, that could be the unintended consequence.
At $236 per square foot, a developer building an average chain motel could be required to pay more than $7 million in affordable housing fees.
For now, anyway, the affordable housing fee is higher than the square foot price of most moderately priced homes.
The old guidelines put the affordable housing fee at $104 per square foot based on units at 1,000 square feet. That makes it $104,000 if you choose to pay the fee instead of build affordable housing.
At $236 per square foot, that fee approaches $237,000 per 1,000 square foot unit.
According to Land Title’s latest monthly report, homes in Edwards are selling for around $229 per square foot on the open market. In Eagle, it’s $173 per square foot.
While that’s true for now, it’s a recent phenomenon, said Jill Klosterman, Eagle County’s housing director.
“We want to see affordable housing units built in Eagle County,” Klosterman said. “The guidelines are just one way to get those housing units built.”
They’ve carefully watched the deed-restricted programs around the county for the past five years, Klosterman said. The successful ones featured homes priced significantly below market.
For example, a single family home in the county’s Miller Ranch neighborhood is less expensive than elsewhere in Edwards.
Under the new guidelines, there are no income limits on people who can buy a deed-restricted unit. That’s to protect the owners by giving them a larger pool of potential buyers if they decided to sell.
The county doesn’t test for wealthy people with trust funds, but it doesn’t have to. To buy a home under Eagle County’s affordable housing program, you have to live and work in Eagle County to be part of the program, and you can’t own other real estate anywhere else.
If that’s being taken advantage of, then it can be quickly changed, Klosterman said.
Staff Writer Randy Wyrick can be reached at 970-748-2935 and firstname.lastname@example.org.