Future owners of units at First Tracks at Wildhorse Meadows take a hardhat tour at the construction site in September 2008. A group of local developers and businesspeople is questioning the legality of the city's affordable housing ordinances.

Photo by Matt Stensland

Future owners of units at First Tracks at Wildhorse Meadows take a hardhat tour at the construction site in September 2008. A group of local developers and businesspeople is questioning the legality of the city's affordable housing ordinances.

Housing ordinance in flux

Linkage suspension, legal challenges among possible outcomes

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— Members of Steamboat Springs' business and development communities believe the city's affordable housing ordinance could be vulnerable to a legal challenge, and they threatened to take such a step if swift action isn't taken to change the law.

In a memo prepared on behalf of a group of local business leaders and developers, Denver lawyer Thomas Ragonetti wrote that he believes the city's affordable housing ordinances are challengeable under the takings clauses of the Colorado and U.S. constitutions, as well as Colorado's Impact Fee Statute and Taxpayers Bill of Rights, or TABOR.

Two main policies make up the city's affordable housing ordinance: inclusionary zoning and linkage. Inclusionary zoning requires developers to include affordable units in their housing developments. Linkage is an impact fee that requires developers to mitigate - with units or a fee - a percentage of the workforce housing their developments are thought to create.

Many in the development community have chalked the policies up as a failure and are hoping for major revisions. Developers who already have built units under the ordinance say they are finding it difficult, if not impossible, to sell them.

Brent Pearson, of Resort Ventures West, said the group that sent the memo to City Council does not want to resort to legal action. But in its letter to the council, the group wrote, "the status quo is not acceptable. If we are unsuccessful in moving toward new solutions in the near term, we will pursue other options."

City Attorney Tony Lettunich dismissed Ragonetti's opinion as "unique," and he also raised concerns about developers' preference to impose a real estate transfer tax on their projects as an optional alternative to the city's inclusionary zoning and linkage policies. Real estate transfer taxes are illegal in Colorado unless they are voluntary, negotiated as part of an annexation, or existed before the tax was outlawed.

Lettunich cited a Telluride ordinance that allowed rent controls as a voluntary option. The ordinance eventually was struck down by the Colorado Supreme Court. Rent controls also are illegal in the state.

"It was an illegal, voluntary option in a mandatory scheme," Lettunich said. "Even a voluntary (real estate transfer tax) in a menu of options for a developer would most likely be struck down. : In my opinion, it is much more assailable as unconstitutional than inclusionary zoning or linkage."

Council members asked for more legal research on the issue before taking a stance on it. And they also asked for more calculations comparing how a real estate transfer tax would compare to existing policies.

This and a variety of other issues - including major modifications to the city's affordable housing ordinance - were debated Tuesday night during a City Council meeting that included representatives from the Yampa Valley Housing Authority, the Community Alliance of the Yampa Valley, and the development/business group troubled by the existing ordinance. That group is calling itself Concerned Citizens for Affordable Housing.

Council took no official action Tuesday, and it will continue to debate the issue at a meeting in early February. However, after an informal poll showing it would be supported, council directed the creation of an ordinance that would suspend the linkage provision.

While developers have submitted data suggesting a real estate transfer tax of 0.5 to 1 percent would substantially outperform current affordable housing policies, calculations by the city and the Community Alliance suggest otherwise. Proponents of the tax argue that, as a perpetual fee, it will ultimately outperform the one-time units and cash produced by the existing ordinances. Critics point out that money pours in slowly and that a system based solely on fees, rather than units, ignores the issue of scarce and expensive land in the city.

A majority of council members expressed a willingness to make major modifications to, or even repeal, the city's 21-page community housing ordinance, which City Council President Loui Antonucci described as "cumbersome and confusing."

Councilman Jon Quinn said he would be willing to consider a repeal of the ordinance in its entirety, believing it has a negative impact on business development.

"It's reactionary just to throw it off the books," Councilwoman Meg Bentley disagreed, later noting that, "One of the things that is hampering the development of business is the lack of affordable housing."

Councilman Steve Ivancie agreed.

"You don't just take all this hard work : and then just all of a sudden say it's not working," he said.

Others, however, said they felt the ordinance was unfair because it lays a community problem entirely at the feet of the development community.

"When it comes to affordable housing, you look for someone else to solve the problem. That is not a community approach to try to solve a problem," resident Mary Brown said. "If the community's desire is only to make it somebody else's problem, I don't think it's a high priority."

Councilwoman Cari Hermacinski long has hoped to repeal linkage, but lacking a majority of council members who would support that step, she settled on drafting an ordinance to simply suspend it.

"You're essentially charged a penalty fee for creating a job," Hermacinski said. "I think that is particularly awful right now."

- To reach Brandon Gee, call 871-4210 or e-mail bgee@steamboatpilot.com

Comments

Steve Lewis 5 years, 3 months ago

The economy is broken. Not the ordinance.

Consider what they were saying before the economy was in trouble:

I sat with developers, including Brent Pearson and Chris Diamond, as a participant in the Affordable Housing Working Group at least 2 years ago. We had 6 or more meetings.

A core part of that discussion - the developers did not want to be saddled with unsellable deed restricted units. Their own recommended solution to this problem was added almost verbatim to the ordinance- an escape clause one year after C.O. of the units.

If you compare what the developers said before the economy tanked, and what they are saying today, its obvious the difference is the economy, and they are struggling with both free market and deed restricted units.

I've suggested the city to take steps to help relieve the burden of those deed restricted units, simply as a matter of partnership in this effort. But for the developer to, before C.O., say the ordinance is broken, is not consistent with their earlier agreement that "broken" or not would be fairly established a year after C.O.

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Fred Duckels 5 years, 2 months ago

Steve: I appreciate your effort on AH, and you have a point on the good-bad economy. It is very unlikely that the economy, under which the AH was born, will return.We need to revisit the problem and decide what to do. AH is essentially your firstborn, now, can you sit on the jury?

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skitownpuppet 5 years, 2 months ago

The issue is the economy but the heart of the beast actually lies within the City and the YVHA. The only way a bank is going to have a deed restricted property on its books is with a down payment assistance program that will enable the LTV of any particular deed restricted unit to be at or above 20%. It would also include a reversion clause where any payments over 6 months past due would mean the City would have to evict the owners and take over ownership of the property then find a new owner, get a new loan and figure out all over again. This would also entail having to manage finances and have fiduciary duties which is asking a lot of any public entity. Affordable housing is a pipe dream. As much as the City and the YVHA would like to think they are helping those in need they are actually creating a false sense of community, creating a policy that only the City and YVHA can adhere to and making the assumption that developers make nothing but high profits. The City and County need to step up and provide the money and resources to get a program off the ground and continue to fund it for a period of at least ten years. If it is a community issue the "community" should be willing to step up and embrace the program. Affordable housing exists in Oak Creek, Hayden and Craig. There is also a great bus system, schools, restaurants and nice neighborhoods in all these communities. Don't you think it would be more realistic for a family in an affordable housing unit to have a BBQ within one of these neighborhoods than with the new owners of the ST Cloud penthouse????? Create the program, manage the program and make a program that is supported by the City and County government. Form a committee that can formulate a "new" policy and have the members stem from realtors, developers, bankers, YVHA, City Council, City Planning and others. The program doesn't work, it is broken and there is no use in "polishing a terd". I cannot believe there are so many members of this community that are in denial! BROKEN but we can throw it away and be progressive, proactive and innovative and come up with a plan that actually works. Linkage, inclusionary zoning and affordable housing are things of the past just like the term "bailout". We can do much better but everyone wants to fight/antagonize one another about who is right instead of getting together to work it all out. The time is now but when will this community take the right steps starting with City Council?

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Fred Duckels 5 years, 2 months ago

Steve: Up until recently getting credit was a no brainer. Now, and for years to come, credit will be hard to come by. Developers have every right to reevaluate, as this is a new ballgame. Any programs that you instigate need to work under all circumstances. Without government intervention, we will never revert to the folly of the recent past.

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Steve Lewis 5 years, 2 months ago

Fred, Maybe Big Box was my firstborn. Think I moved on o.k. - we got a compromise that keeps big box footprints smaller east of 13th St. And I got to work with Kathy Connell.

My second was more heartfelt. That would be standing with Anne Rooney on the courthouse curb with peace signs in the Spring of 2003. Wow was that hard to do.

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Steve Lewis 5 years, 2 months ago

I came back to this article to pull a quote. This is a key story Brandon did. This is where "broken ordinance" was established. I need to prove to Brandon its NOT broken, the economy is.

I'm glad I found these comments.

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Steve Lewis 5 years, 2 months ago

Ski Town, You make a lot of good points. I'll get to two here.

You think the management of foreclosures would be a big problem. O.K., these units typically do have Fed guaranteed loans, and yes paperwork if defaults occur. But look around, Fox Creek is AH and no one is complaining about defaults in that AH example. I'll re-check this, but I believe AH foreclosures are markedly below the free market level.

You said, "The City and County need to step up and provide the money and resources to get a program off the ground and continue to fund it." YES!! Totally! In better times, the city should be kicking in. In my opinion, the Iron Horse was exactly that.

And the area plan sees this as what we should be doing. "Creating a false sense of community" is not what I'd call the act of making their vision come true.

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Steve Lewis 5 years, 2 months ago

Skitown, You said, "We can do much better but everyone wants to fight/antagonize one another about who is right instead of getting together to work it all out."

Per the first post of this thread, the 6+ meetings in 06-07 got to maybe 5 issues. Some things were deadlocks, and some were not. We did add the one-year escape clause that was asked for. I think we grandfathered all existing square footage from Linkage on remodels. I think PIL calc inputs got adjusted.

So no, I don't think "everyone wants to fight/antagonize one another" is what this is about.

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Steve Lewis 5 years, 2 months ago

Fred, I realize the economy and credit are crashed. Nothing is moving.

But that is different than talking about this ordinance. This ordinance is not about today or next summer. This ordinance rewrite is about the 5-8 years of vested permits that will come out of it.

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