HomeMy WebLinkAboutagenda.council.worksession.20090331MEMORANDUM
TO: Mayor and Council
FROM : Tom McCabe and APCHA staff
THRU: Barry Crook
DATE OF MEMO: Mazch 25, 2009
MEETING DATE: Mazch 31, 2009
RE: Affordable Housing Rents
SUMMARY: Due to the economic climate, City Council is requesting information on the rental
rates in the deed-restricted units.
PREVIOUS COUNCIL ACTION: In 2004, City Council directed Housing staff to freeze the
rents in the Truscott Phase I units and also requested rental freezes at Aspen Country Inn (ACI).
Because the City of Aspen does not own the Aspen Country Inn and cannot set or freeze the
rents, the City chose to provide a subsidy to the small group of non section 8 seniors at ACI for
one yeaz. The rents were increased for all other ACI tenants at the normal rate. After the first
yeaz, the Housing Authority Board provided the subsidy for an additional two years out of
APCHA (non-city) funds. The rent increases then returned to our normal schedule of increases
for all ACI tenants.
BACKGROUND: The syndicators that are the ownership partners at ACI never saw a reduction
of their income, consistent with the LIHTC program, and the small individual rent reductions for
the above-mentioned three-yeaz period were absorbed by either the City Council or the Board of
Director of APCHA. The subsidy amounted to azound $1,300 per yeaz, a loss the APCHA Boazd
was unwilling to continue to absorb. The rents at Truscott I remain frozen. The frozen rents at
Truscott I have reduced the revenue at that property by $131,482.17 through 2008. The 1987
boiler at the #100 building, along with the associated piping and pumps and controls that aze
scheduled to be replaced this year, are estimated to be close to that cost. Attached is a list of
APCHA managed deed-restricted rental properties that contain more than 10 units. The
properties that aze managed by the Aspen/Pitkin County Housing Authority (APCHA) are as
follows:
• Aspen Country Inn
• Marolt Ranch
• Smuggler Mountain Apartments
• Truscott Place - Phase I and Phase II
Of these properties, Aspen Country Inn and Truscott Place Phase II are low income housing tax
credit (LIHTC) properties and APCHA is the managing partner (minority) obligated to honor it's
agreements with the syndicators for those properties, including setting the rents per the federally
established Area Median Income Charts. The Housing Authority has never charged the full rent
permitted under the LIHTC program, as shown in the attachment.
The Board of Directors of the Housing Authority are the sole owners of Smuggler Mountain
Apartments where all the units are Category 1 and the rent increases always follow the protocol
established in the APCHA Housing Guidelines.
Mazolt Ranch has a contract with the Music Associates of Aspen until 2019 and the budget and
rental rates are approved by the Marolt Ranch Finance Committee in keeping with the terms of
that contract. Because Mazolt Housing is seasonal housing it experiences wear and teaz
significantly beyond that of the other properties and APCHA is kept busy spending money to
repair all the damage done by the tenants and the numerous friends who drop by to party and
"visit".
Promissory notes aze employed at APCHA properties and allow for a tenant to spread one
month's rent over athree-month period of time. The one-month rental deadline is forgiven and
spread over the next three months. The tenant has to pay full rent plus 1/3 the next month, then
full rent plus a 1/3 the next month, and then one more time. The property managers rarely allow
a promissory note to exceed three months, but have been realistic about extending the note for a
month or two more if that makes it possible to avoid an eviction of a good tenant.
In the projects that aze managed by APCHA, there aze currently six promissory notes at Truscott
Phase I, six at Truscott Phase II and one at Aspen Country Inn. As a reference for your
consideration, there aze 13 now compazed to 27 at this time a yeaz ago.
APCHA's rent increases for 2009 were .7%. (CPI-W - US City Average and Regions, Urban
Wage Earners and Clerical Workers where 1967 = 100)
APCHA had a discussion with the property managers at Castle Ridge and Centennial regazding
their rental situations. They stated that they aze not experiencing anything out of the ordinary at
this time.
DISCUSSION: The one rental property managed by APCHA that the City can unilaterally
change the rents is Truscott Phase I. As stated before, these rents have been frozen since 2004
and include the oldest building in the Authority's inventory, the 100 building which was built in
the 1950's. While this property is still self sustaining, significant upgrades to the kitchens and
bathrooms would be desirable improvements, and a long awaited renovation of the westernmost
9,000 squaze feet of space at that location keep the space lazgely unused.
The widening difference in rents between Truscott I and II, which are across the street from one
another, has the unintended but understandable consequence that when any unit opens up at
Truscott Phase I. APCHA receives requests for an in-complex transfer from Truscott Phase II so
the tenant can take advantage of the significantly lower rent at Truscott I. This doubles the total
number of Truscott turnovers, associated turnover costs and lost revenue at Truscott Phase II.
All of the properties are 100% occupied, as well as the others listed on the attached Rental Rate
Comparisons sheet.
FINANCIAL IMPLICATIONS: All Housing Authority rental properties aze either Enterprise
funds, LIHTC (Federal) funds, Trust Funds or Agency funds. As such they are required to be self
sustaining without support from the City's General Fund. Rents are the primary revenue source
for all these properties and any reduction in revenues would require an offsetting reduction in
administration, maintenance, capital replacements, insurance, compliance or other such
functions. In order for the day-to-day operation of the properties to function, a subsidy would
more than likely be needed. In some cases, legal requirements would prevent reductions. The
Housing Authority and properties pays an overhead fee to the City General Fund based on a cost
per employee basis. The aggregate of those fees that APCHA pays the city is $211,880 for 2009.
If the City decided to forgive any or all of these fees, the resulting savings could be applied to
reducing rents.
ENVIRONMENTAL IMPLICATIONS: There aze no environmental implications at this time.
RECOMMENDATION: The APCHA staff has discussed the economic challenges and
potential rental impacts with the APCHA Boazd of Directors and they have instructed staff to
keep the rental rates unchanged at all properties and would request that the City Council follows
their lead.
ALTERNATIVES: City Council does have the following options:
1. Request that the rents remain as is for 2009.
2. Release the rent freeze on Truscott Phase I in order to make that project more compatible
with the neighboring property and better able to make needed improvements.
3. The rents would increase as allowed in the Guidelines, with an increase of .7% for 2009.
The City Council, if so desired, could subsidize the tenant rental obligations.
CITY MANAGER COMMENTS:
Notes:
Attachments:
A -Deed Restricted Units Rental Rate Comparisons 2009
B -Spreadsheet Comparing the Rental Rates at ACI and T2 to allowed rental rates
C -Example of Promissory Note
DEED RESTRICTED UNITS
RENTAL RATE COMPARISONS 2009
Approximate
Property Unit Size Category Square Ft. Rent
Alpina Haus* # 43 Units Room with Bath RO 97 $407 - $650
Aspen Country Inn Studios 1 & 2 408 - 562 $525 - $688
40 LIHTC Units 1-Bdrm 1 & 2 545 - 691 $620 - $791
2-Bdrm 1 & 2 835 - 1,022 $955
Burlingame 4 LT Units 1-Bdrm 2 480 $1,150
100 Seasonal Units Small 2BR RO 480 $1,150 inc. local phone
Castle Ridge Studio - 21 3 448 $739.00
70 Units 1-Bdrm - 7 3 631 $991.00
(80 Units before fire) 2-Bdrm - 36 3 864 $1,191.00
3-Bdrm - 6 3 1,062 $1,318.00
Centennial Studio - 41 3 455 - 470 $776 - $1,078
1-Bdrm Flat - 36 3 598 $1,014 - $1,387
148 Units 1-Bdrm Loft - 12 3 733 - 841 $1,407 - $1,608
2-Bdrm - 45 3 881 $1,504 - $1,802
3-Bdrm - 14 3 1,097 $1,826 - $2,071
Copper Horse" # Room In House RO 100-162 $614
13 Units 72 $510
16R 261-335 $871 - $1,104
HunterLonghouse 1-Bdrm 3 560 $772
33 Units 2-Bdrm 3 725 $990
2-Bdrm/Annex 3 850 $1,152
Marolt Ranch* Long-Term 3 442 $1,030
96 Seasonal Units 1-Bdrm Units 3 442 $1,030
Maroon Creek Apts. 1-Bdrm 1 & 2 875 $605-877
42 LIHTC Units 2-Bdrm 1 & 2 1036 $697-$1002
3-Bdrm 1 & 2 1228 $784-$1131
Smuggler Mountain Studio 1 394 $320
11 Units Studio #11 1 394 $340
2-Bdrm #1 1 737 $598
2-Bdrm #5 1 879 $711
2-Bdrm #10 1 856 $714
Truscott Place" Studio RO 392 $595
Phase I Studio 2 / 3 392 $672 / 850
108 Units 1-Bdrm 2 / 3 616 $790 / 1,076
2-Bdrm 2 / 3 840 $906 / 1,189
Phase II New Studio 2 392 $746
87 LIHTC Units 1-Bdrm 3 616 $746
2-Bdrm 3 840 $1,172
Remodeled 1-Bdrm Flat 2 500 $746
Studio Loft 2 570 $746
2-Bdrm Flat 2 670 $996
2 B~.m Cott 3 896 $1,172
Utilities included except phone and cable
# 6 month lease
^ Seasonal (available September -April 30)
LIHTC =Low Income Housing Tax Credit Property
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