Letter: Another way for Eagle Co. workforce housing
Eagle County residents should be concerned that the recent housing guidelines passed by the county commissioners do not properly address the “housing shortage” in Eagle County, are unlikely to solve them, and in fact may exacerbate them.
As I understand the issues, the problem is that we don’t have enough affordable workforce housing now, and we fear a widening gap in the future. To address this problem, the county could pass laws that incent developers to build the desired categories of housing. This could be done in the form of density allowances for developers, as well as future property tax benefits for owners, which would effectively lower the ongoing cost of ownership. An additional advantage would be a shortened period of governmental review for such projects, effectively reducing the capital cost and the business risk of the projects. Developers could then analyze the market, determine the economics, and proceed with projects they judged to be profitable. This approach would integrate the benefits of a market-based approach with government incentives. Developers also could use their market analysis to determine the mix of rental versus ownership units to build.
Instead, the commissioners have created a system with relatively limited choice for developers. It reduces the impact of market mechanisms by offering choices based on a fairly rigid approach to the appropriate mix of affordable to market-price housing. People who understand markets know that these ratios are not rigid, but change over time. The new guidelines don’t seem to do much about any perceived existing shortage, as they are tied to new construction. Perversely, if the added cost of the new guidelines inhibit new construction, some new demand will need to be satisfied from the existing housing stock, further driving prices up and contributing to an even greater shortage of affordable housing. The system provides revenues for the county to acquire more affordable housing, based on transfer taxes. The irony is that these transfer taxes may not materialize if the guidelines inhibit development. This means that development and transfer taxes are positively correlated, when the county’s revenue portfolio needs more negative correlation with development.
Since these guidelines don’t solve the problem, there will be political pressure to change them, and the results of the recent Eagle mayoral election may signal to developers that they should wait for new commissioners to create new guidelines that properly address the issues. This very reaction would exacerbate the current shortage.
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