A payment-in-lieu option for developers is a smart element to incorporate into the city's inclusionary zoning ordinance for affordable housing.
The Steamboat Springs City Council discussed the option Tuesday but did not make a final decision. We think the option may be one of the best ways to secure funding for the Yampa Valley Housing Authority to acquire land for affordable housing projects.
As it stands, the city's inclusionary zoning ordinance requires that at least 15 percent of the units in any new development in the city be deed-restricted affordable units. The ordinance allows the city to consider letting the developer make a payment in lieu of meeting the affordable housing requirement. The City Council is considering ways to formalize the payment-in-lieu alternative.
We think it is an idea well worth exploring.
The Yampa Valley Housing Authority continues to rely on $120,000 in annual contributions from the city and Routt County and any grants it can acquire as its sole funding. The Housing Authority has discussed seeking a tax to secure dedicated funding, but there is no consensus that this is the right step at this time, and it will be a tough ballot issue to sell at any time. Previous community surveys have shown residents are leery of paying taxes for affordable housing.
But payments in lieu are a practical means of securing funds for the Housing Authority for its most pressing need -- land acquisition for affordable housing projects.
The payment-in-lieu option also makes sense in certain areas of the city, such as within the boundaries of the Urban Renewal Authority around the base of the ski area.
Although it may be ideal, in theory, to include affordable units in such areas, it is, in reality, impractical because of the price of lots. There are scant lots available within the city limits, and the price of those lots has risen dramatically. It is hard to build an affordable home on a lot that costs $250,000, the minimum for an in-town lot these days.
We certainly would not want to discourage any developer who wants to meet the 15 percent requirement. That incentive can be addressed by making the payment-in-lieu alternative more expensive for the developer than it would be to meet the 15-percent requirement.
Still, it may prove more efficient for developers to take the payment-in-lieu option. Such payments will create a pool of funds that the Housing Authority can leverage for projects in areas west and south of the city, where affordable housing is more practical. Also, the payment-in-lieu option will create a revolving fund as projects are completed, housing is sold and the resulting money is used to fund future land acquisition.
There is less housing inventory available in Steamboat Springs than at any time in the past decade. Costs have never been higher, and even as demand for affordable housing rises, the ability to provide it in the city becomes more difficult. The payment-in-lieu alternative won't solve our affordable-housing crunch, but it will make the city's inclusionary zoning ordinance more practical to implement and stretch the funds we have available for affordable housing as far as possible.