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HomeMy WebLinkAboutagenda.council.worksession.20140128 CITY COUNCIL WORK SESSION January 28, 2014 4:00 PM, City Council Chambers MEETING AGENDA I. Board Interviews II. Discussion with P&Z III. Burlingame Phase 2B P1 I. City Council Board Interviews - Tuesday – January 28, 2014 4:00 pm – CITY COUNCIL MEETING ROOM G:interviews.doc Board Applicants Planning & Zoning (4 openings) 2 members reapplying 1 regular vacancy 1 alternate vacancy reapplying Bert Myrin reapplying Jasmine Tygre Jason Elliott Michael Edinger Jared Goulet Spencer McKnight Jesse Morris Michelle Kiese Brian McNellis Julie Maple Ryan Jackson Ollie Nieuwland-Zlotnicki Wheeler Board (2 openings) 1 member reapplying 1 vacancy reapplying Tom Kurt Brent Miller Charles Cunniffe Richard Cohen Ziska Childs P2 I. City Council Board Interviews - Tuesday – January 28, 2014 4:00 pm – CITY COUNCIL MEETING ROOM G:interviews.doc P3 I. P2 I. P4 I. P3 I. P5 I. P4 I. P6 I. P5 I. P7 I. P6 I. P8 I. P7 I. P9 I. P8 I. P10 I. P9 I. P11 I. P10 I. P12 I. P11 I. P13 I. P12 I. P14 I. P13 I. P15 I. P14 I. P16 I. P15 I. P17 I. P16 I. P18 I. P17 I. P19 I. P18 I. P20 I. P19 I. P21 I. P20 I. P22 I. P21 I. P23 I. P22 I. P24 I. P23 I. P25 I. P24 I. P26 I. P25 I. P27 I. P26 I. P28 I. P27 I. P29 I. P28 I. P30 I. P29 I. P31 I. P30 I. P32 I. P31 I. P33 I. P32 I. P34 I. P33 I. P35 I. P34 I. P36 I. P35 I. P37 I. P36 I. P38 I. P37 I. P39 I. P38 I. P40 I. P39 I. P41 I. P40 I. P42 I. P41 I. P43 I. P42 I. P44 I. P43 I. P45 I. P44 I. P46 I. P45 I. P47 I. Page 1 MEMORANDUM TO: Mayor and City Council FROM: Chris Everson, Affordable Housing Project Manager THROUGH: R. Barry Crook, Assistant City Manager DATE OF MEMO: January 24, 2014 MEETING DATE: January 28, 2014 RE: Sales Update and Decision on Additional Construction at Burlingame Phase II REQUEST OF COUNCIL: To facilitate decision-making related to proposed construction of 34 additional affordable housing units in buildings 5 through 7 at Burlingame Ranch Phase II, Council has requested an update on progress of sales and presales of 48 affordable housing units in buildings 1 through 4 at Burlingame Ranch Phase II, which are currently nearing completion. At the time of this meeting, a consent item has alread y been placed on the February 10, 2014 consent agenda which consists of a construction contract for buildings 5 through 7 and which results in the detailed 2014 budget provided herein. Staff requests direction as to whether that consent item should remain on the February 10 consent agenda or if it should be removed. BACKGROUND: P46 III. P48 I. Page 2 DISCUSSION: 2014 Budget for Construction of 34 Additional Units, Phase IIAii, Buildings 5-7 In 2012, staff established a 2014 budget estimate of $15 million for the construction of buildings 5-7. In late summer of 2013, staff received a draft GMP proposal for the construction of buildings 5-7 from Haselden Construction which would have required staff to raise the 2014 budget request above the previously estimated $15 million level. Staff issued an RFP to seek market pricing for the construction of buildings 5-7. The RFP process proved fruitful, and RA Nelson is the recommended GC for the construct ion of buildings 5-7. A summary of the updated 2014 budget is shown in the table below and contains a very large project contingency as a result of the RFP process and RA Nelson’s bid. The memo which has been submitted for the February 10 consent calendar for approval of that contract with RA Nelson describes the vetting and qualification process for the RA Nelson bid and will not be further discussed in this memo, however it is important to note that there is a significant opportunity for savings as a result the RFP process given that it has resulted in over $1.7 million in project contingency. Sales / Presales Update:  Buildings 1–4 (48 units currently under construction):  8 of 48 units have been sold, four in building 1 and four in building 2.  20 of 48 units are under sales contract and are scheduled to close over the next 8 weeks. All but three of these are in buildings 1 and 2 since those buildings are the first two ready. Three are in building 3.  19 of 48 units are reserved and yet to be converted to sales contracts. All but one are in buildings 3 and 4. More than half of these have paid a non-refundable deposit of $1,500 toward the purchase of a finish upgrade package. Most of the buyers in building 3 toured their units on January 13 & 14 and are ready to sign sales contracts. Those appointments are in process. Buyers in building 4 will tour their units on January 30 & 31 and will subsequently sign sales contracts. So far we are experiencing 97% (28/29) conversion of reservations to sales contracts and 100% (6/6) conversion of sales contracts to closings.  1 of 48 units remains unreserved. This is a 3-bedroom category 6 townhome unit. P47 III. P49 I. Page 3  Buildings 5–7 (34 units proposed for 2014 construction start):  13 of 34 units are reserved. This is lower than previously reported to Council because some reservation-holders have chosen to move to sales contracts in buildings 1-4.  21 of 34 units are unreserved. Due to the workload at APCHA related to buildings 1–4, no additional marketing effort is being made toward reservations in buildings 5–7 at this time but could resume as closings on the units in buildings 1–4 get completed and free up resources. Staff also anticipates that positive experiences from the buyers of the units in buildings 1–4 will provide positive marketing throughout the community.  Wait List:  APCHA currently has 37 potential buyers on wait list, but only 5 of these are above category 2. Most are looking for 1-bedroom units, some for 3-bedroom units, few for 2- bedroom units. Most of these people currently rent housing in Aspen, Snowmass, Basalt, Carbondale and Glenwood Springs. APCHA staff is working on fitting these people into available units but most recently have been focusing on filling the units in buildings 1–4. Where are people moving from?  27 (46%) Rent Deed Restricted (almost all from Aspen, about a third from Truscott)  22 (37%) Rent Free Market (about half in Basalt, half in Aspen)  6 (10%) Own deed Restricted (Centennial, Annie Mitchell, Lazy Glen, Burlingame Ph1)  4 (7%) Own Free Market (Carbondale and Basalt) Cost and Subsidy Update: At the November 13, 2012 budget work session, staff presented the subsidy projection below for the entirety of the Burlingame Phase II project. P48 III. P50 I. Page 4 Below are two tables which illustrate that the two tranches of construction (2013) Buildings 1 through 4 and (Proposed 2014) Buildings 5 through 7 are working toward improving that goal: * Note that the ‘Total Cost’ values shown in the two red summary tables are greater than the expenditures shown in each year in the blue table because the expenditures from 1997 through 2012 have been apportioned on a square footage basis toward the total cost of the buildings constructed in 2013 and (proposed for) 2014. What if there are unsold units in buildings 5-7? Assuming 4% interest, carrying cost for unsold units is about $25,000 per unit per year. Over the past four years, regional construction costs have increased by an average of less than 2% per year, but more volatility has been seen in the past year, which could be a precursor to sharper increases in in the short term. Assuming 2% construction cost increase for the next two years, we could carry all 34 units for two years and still break even as compared to the November 13, 2012 projections. This is analogous to an insurance policy against higher construction cost increases over the next two years. Since it is unlikely that more than a handful of units would actually remain unsold for more than a year, there is instead an opportunity for over a million dollars in savings as compared to the November 13, 2012 projections. It is also important to consider that staff and its consultants are in the process of completing construction of a largely similar tranche of construction. Although it is difficult to place a dollar value on the knowledge of the management team which is in place, there would surely be loss of value and quality assurance expertise if a future remobilization were sought. What is the current affordable housing need which was determined at the 2012 joint City Council / BOCC housing worksession? A 2012 Strategic Review of Housing study assembled for the joint City Council / BOCC housing worksession held in the fall of 2012 determined that the City and County would collectively need to develop about 55 units per year for the next 10 years in order to keep up with job growth, gentrification and retirement to hold constant the approximate 47% of Pitkin County workers currently housed locally. According to that study, with 48 units constructed in buildings 1-4 in 2013 and 34 units constructed in buildings 5-7 in 2014 at Burlingame Phase II, over 450 units would still be needed from 2015 to 2022. P49 III. P51 I. Page 5 APCHA Lottery Bid Data: 2010 Average: 10 bids per lottery occurrence 2011 Average: 9 bids per lottery occurrence 2012 Average: 7 bids per lottery occurrence 2013 Average: 13 bids per lottery occurrence Although the 2013 increase suggests more recent participation in APCHA lotteries, it is difficult to gauge demand specific to family-style nature of the Burlingame environment, thus staff feels that the actual Burlingame Phase II sales contracts and reservations serves as a more accurate estimate of real-time demand for affordable housing at Burlingame Phase II. APCHA Resale Listings: Staff notes the obvious difficulty in the Category 6 and Category 4 1-bedroom market:  Currently in bid period:  Annie Mitchell, Category 3, 1BR, 1BA, 780SF  Burlingame Ranch Ph1, Category 3, 3BR, 2BA, 1,555SF  Hoaglund Ranch, Category 3, 2+BR, 1BA, 945SF  North Forty, Category RO, 4BR, 3.5BA, SF Home, 3219SF w/2-car garage  Midland Park, Category 4, 1BR, 1BA, 625 SF  No bid period:  Burlingame Ranch Ph1, Category 4, 1BR, 1BA, 897SF  Burlingame Ranch Ph1, Category 4, 1BR, 1BA, 1,052SF  Burlingame Ranch Ph1, Category 4, 1BR, 1BA, 1,052SF  Hoaglund Ranch, Category 3, 1BR, 1BA, 942 SF  Woody Creek, Category 6, 3BR, 2BA, Manufactured Home 980SF + Lot 2464SF  Woody Creek, Category 6, 3BR, 3BA, SF Home 1899SF RECOMMENDATION: Staff recommends that Council consider approval of the contract for construction of buildings 5– 7 which has already been placed on the February 10, 2014 consent agenda and which results in the detailed 2014 budget provided herein. ATTACHMENTS: Exhibit A: Proposed detailed 2014 budget P50 III. P52 I. Burlingame Ranch Phase IIAii, Buildings 5-7, 34 units 2014 Detailed Budget Estimate (carry-forward from 2013 not yet included) rev. Jan 17, 2014 ce SOURCES Budget Actual Variance 2013 Carry-Forward Balance tbd 2014 City Council Budget Approval 15,056,020$ Grant Funding tbd Total Sources 15,056,020$ -$ -$ USES A.Construction - General Contractor 11,429,114$ -$ (11,429,114)$ Access/Infrastructure Remaining tbd Vertical Buildings 1-4 Remaining (HCL)tbd Vertical Buildings 5-7 including Solar Thermal (RAN)11,279,114$ (11,279,114)$ 2014 Irrigation connectivity - design and construction 150,000$ (150,000)$ City of Aspen Parks Contribution (pumps/pumphouse)-$ B. Construction - Developer Responsibilities (City of Aspen)129,000$ -$ (129,000)$ Offsites Sunk -$ Mitigation Sunk -$ Offsite Storm Sewer -$ Site Gas Supply, Electrical Design, Utility Oversight -$ Site Elect Underground -$ Site Elect Supply -$ Site Sanitary Line -$ Owners OCIP Insurance 129,000$ (129,000)$ C. Soft Costs 1,772,003$ -$ (1,772,003)$ Design Administrative Services COA PM 200,000$ (200,000)$ Legal 20,000$ (20,000)$ Presales 10,000$ (10,000)$ Owner's Agent 390,880$ (390,880)$ Architect & Consultants 408,609$ (408,609)$ CxA Constr Phase 74,600$ (74,600)$ Enhanced Civil Oversight -$ Enhanced Vertical Oversight 64,130$ (64,130)$ Professional Services Materials Testing Geotech (inc materials testing)44,000$ (44,000)$ Survey 40,000$ (40,000)$ Medium voltage electrical oversight 5,000$ (5,000)$ Fees Sewer Tap Fee 191,784$ (191,784)$ Water Tap Fee - waived Parks Impact Fee - waived TDM Impact Fee - when buildings online 37,000$ (37,000)$ School Impact Fee - when buildings online 31,000$ (31,000)$ Road Impact Fee - n/a only for Pitkin County Permit Building Permit Fee 150,000$ (150,000)$ Stormwater Fee - waived Land Use Fee Home Sales Fee HOA Setup 20,000$ (20,000)$ Burlingame Phase I Parking, Design & Engineering 75,000$ (75,000)$ Other Construction Power and Water 10,000$ (10,000)$ D. Contingencies 1,725,903$ -$ (1,725,903)$ 2013 Contingency 1,725,903$ (1,725,903)$ Project contingency expressed as % of construction cost 15.1% Total Uses (A + B + C + D)15,056,020$ -$ (15,056,020)$ Page 1 of 1 P51 III. P53 I. Page 1 MEMORANDUM TO: Mayor and City Council FROM: Chris Everson, Affordable Housing Project Manager THROUGH: R. Barry Crook, Assistant City Manager DATE OF MEMO: January 24, 2014 MEETING DATE: January 28, 2014 RE: Sales Update and Decision on Additional Construction at Burlingame Phase II REQUEST OF COUNCIL: To facilitate decision-making related to proposed construction of 34 additional affordable housing units in buildings 5 through 7 at Burlingame Ranch Phase II, Council has requested an update on progress of sales and presales of 48 affordable housing units in buildings 1 through 4 at Burlingame Ranch Phase II, which are currently nearing completion. At the time of this meeting, a consent item has alread y been placed on the February 10, 2014 consent agenda which consists of a construction contract for buildings 5 through 7 and which results in the detailed 2014 budget provided herein. Staff requests direction as to whether that consent item should remain on the February 10 consent agenda or if it should be removed. BACKGROUND: P54 III. Page 2 DISCUSSION: 2014 Budget for Construction of 34 Additional Units, Phase IIAii, Buildings 5-7 In 2012, staff established a 2014 budget estimate of $15 million for the construction of buildings 5-7. In late summer of 2013, staff received a draft GMP proposal for the construction of buildings 5-7 from Haselden Construction which would have required staff to raise the 2014 budget request above the previously estimated $15 million level. Staff issued an RFP to seek market pricing for the construction of buildings 5-7. The RFP process proved fruitful, and RA Nelson is the recommended GC for the construct ion of buildings 5-7. A summary of the updated 2014 budget is shown in the table below and contains a very large project contingency as a result of the RFP process and RA Nelson’s bid. The memo which has been submitted for the February 10 consent calendar for approval of that contract with RA Nelson describes the vetting and qualification process for the RA Nelson bid and will not be further discussed in this memo, however it is important to note that there is a significant opportunity for savings as a result the RFP process given that it has resulted in over $1.7 million in project contingency. Sales / Presales Update:  Buildings 1–4 (48 units currently under construction):  8 of 48 units have been sold, four in building 1 and four in building 2.  20 of 48 units are under sales contract and are scheduled to close over the next 8 weeks. All but three of these are in buildings 1 and 2 since those buildings are the first two ready. Three are in building 3.  19 of 48 units are reserved and yet to be converted to sales contracts. All but one are in buildings 3 and 4. More than half of these have paid a non-refundable deposit of $1,500 toward the purchase of a finish upgrade package. Most of the buyers in building 3 toured their units on January 13 & 14 and are ready to sign sales contracts. Those appointments are in process. Buyers in building 4 will tour their units on January 30 & 31 and will subsequently sign sales contracts. So far we are experiencing 97% (28/29) conversion of reservations to sales contracts and 100% (6/6) conversion of sales contracts to closings.  1 of 48 units remains unreserved. This is a 3-bedroom category 6 townhome unit. P55 III. Page 3  Buildings 5–7 (34 units proposed for 2014 construction start):  13 of 34 units are reserved. This is lower than previously reported to Council because some reservation-holders have chosen to move to sales contracts in buildings 1-4.  21 of 34 units are unreserved. Due to the workload at APCHA related to buildings 1–4, no additional marketing effort is being made toward reservations in buildings 5–7 at this time but could resume as closings on the units in buildings 1–4 get completed and free up resources. Staff also anticipates that positive experiences from the buyers of the units in buildings 1–4 will provide positive marketing throughout the community.  Wait List:  APCHA currently has 37 potential buyers on wait list, but only 5 of these are above category 2. Most are looking for 1-bedroom units, some for 3-bedroom units, few for 2- bedroom units. Most of these people currently rent housing in Aspen, Snowmass, Basalt, Carbondale and Glenwood Springs. APCHA staff is working on fitting these people into available units but most recently have been focusing on filling the units in buildings 1–4. Where are people moving from?  27 (46%) Rent Deed Restricted (almost all from Aspen, about a third from Truscott)  22 (37%) Rent Free Market (about half in Basalt, half in Aspen)  6 (10%) Own deed Restricted (Centennial, Annie Mitchell, Lazy Glen, Burlingame Ph1)  4 (7%) Own Free Market (Carbondale and Basalt) Cost and Subsidy Update: At the November 13, 2012 budget work session, staff presented the subsidy projection below for the entirety of the Burlingame Phase II project. P56 III. Page 4 Below are two tables which illustrate that the two tranches of construction (2013) Buildings 1 through 4 and (Proposed 2014) Buildings 5 through 7 are working toward improving that goal: * Note that the ‘Total Cost’ values shown in the two red summary tables are greater than the expenditures shown in each year in the blue table because the expenditures from 1997 through 2012 have been apportioned on a square footage basis toward the total cost of the buildings constructed in 2013 and (proposed for) 2014. What if there are unsold units in buildings 5-7? Assuming 4% interest, carrying cost for unsold units is about $25,000 per unit per year. Over the past four years, regional construction costs have increased by an average of less than 2% per year, but more volatility has been seen in the past year, which could be a precursor to sharper increases in in the short term. Assuming 2% construction cost increase for the next two years, we could carry all 34 units for two years and still break even as compared to the November 13, 2012 projections. This is analogous to an insurance policy against higher construction cost increases over the next two years. Since it is unlikely that more than a handful of units would actually remain unsold for more than a year, there is instead an opportunity for over a million dollars in savings as compared to the November 13, 2012 projections. It is also important to consider that staff and its consultants are in the process of completing construction of a largely similar tranche of construction. Although it is difficult to place a dollar value on the knowledge of the management team which is in place, there would surely be loss of value and quality assurance expertise if a future remobilization were sought. What is the current affordable housing need which was determined at the 2012 joint City Council / BOCC housing worksession? A 2012 Strategic Review of Housing study assembled for the joint City Council / BOCC housing worksession held in the fall of 2012 determined that the City and County would collectively need to develop about 55 units per year for the next 10 years in order to keep up with job growth, gentrification and retirement to hold constant the approximate 47% of Pitkin County workers currently housed locally. According to that study, with 48 units constructed in buildings 1-4 in 2013 and 34 units constructed in buildings 5-7 in 2014 at Burlingame Phase II, over 450 units would still be needed from 2015 to 2022. P57 III. Page 5 APCHA Lottery Bid Data: 2010 Average: 10 bids per lottery occurrence 2011 Average: 9 bids per lottery occurrence 2012 Average: 7 bids per lottery occurrence 2013 Average: 13 bids per lottery occurrence Although the 2013 increase suggests more recent participation in APCHA lotteries, it is difficult to gauge demand specific to family-style nature of the Burlingame environment, thus staff feels that the actual Burlingame Phase II sales contracts and reservations serves as a more accurate estimate of real-time demand for affordable housing at Burlingame Phase II. APCHA Resale Listings: Staff notes the obvious difficulty in the Category 6 and Category 4 1-bedroom market:  Currently in bid period:  Annie Mitchell, Category 3, 1BR, 1BA, 780SF  Burlingame Ranch Ph1, Category 3, 3BR, 2BA, 1,555SF  Hoaglund Ranch, Category 3, 2+BR, 1BA, 945SF  North Forty, Category RO, 4BR, 3.5BA, SF Home, 3219SF w/2-car garage  Midland Park, Category 4, 1BR, 1BA, 625 SF  No bid period:  Burlingame Ranch Ph1, Category 4, 1BR, 1BA, 897SF  Burlingame Ranch Ph1, Category 4, 1BR, 1BA, 1,052SF  Burlingame Ranch Ph1, Category 4, 1BR, 1BA, 1,052SF  Hoaglund Ranch, Category 3, 1BR, 1BA, 942 SF  Woody Creek, Category 6, 3BR, 2BA, Manufactured Home 980SF + Lot 2464SF  Woody Creek, Category 6, 3BR, 3BA, SF Home 1899SF RECOMMENDATION: Staff recommends that Council consider approval of the contract for construction of buildings 5– 7 which has already been placed on the February 10, 2014 consent agenda and which results in the detailed 2014 budget provided herein. ATTACHMENTS: Exhibit A: Proposed detailed 2014 budget P58 III. Burlingame Ranch Phase IIAii, Buildings 5-7, 34 units 2014 Detailed Budget Estimate (carry-forward from 2013 not yet included) rev. Jan 17, 2014 ce SOURCES Budget Actual Variance 2013 Carry-Forward Balance tbd 2014 City Council Budget Approval 15,056,020$ Grant Funding tbd Total Sources 15,056,020$ -$ -$ USES A.Construction - General Contractor 11,429,114$ -$ (11,429,114)$ Access/Infrastructure Remaining tbd Vertical Buildings 1-4 Remaining (HCL)tbd Vertical Buildings 5-7 including Solar Thermal (RAN)11,279,114$ (11,279,114)$ 2014 Irrigation connectivity - design and construction 150,000$ (150,000)$ City of Aspen Parks Contribution (pumps/pumphouse)-$ B. Construction - Developer Responsibilities (City of Aspen)129,000$ -$ (129,000)$ Offsites Sunk -$ Mitigation Sunk -$ Offsite Storm Sewer -$ Site Gas Supply, Electrical Design, Utility Oversight -$ Site Elect Underground -$ Site Elect Supply -$ Site Sanitary Line -$ Owners OCIP Insurance 129,000$ (129,000)$ C. Soft Costs 1,772,003$ -$ (1,772,003)$ Design Administrative Services COA PM 200,000$ (200,000)$ Legal 20,000$ (20,000)$ Presales 10,000$ (10,000)$ Owner's Agent 390,880$ (390,880)$ Architect & Consultants 408,609$ (408,609)$ CxA Constr Phase 74,600$ (74,600)$ Enhanced Civil Oversight -$ Enhanced Vertical Oversight 64,130$ (64,130)$ Professional Services Materials Testing Geotech (inc materials testing)44,000$ (44,000)$ Survey 40,000$ (40,000)$ Medium voltage electrical oversight 5,000$ (5,000)$ Fees Sewer Tap Fee 191,784$ (191,784)$ Water Tap Fee - waived Parks Impact Fee - waived TDM Impact Fee - when buildings online 37,000$ (37,000)$ School Impact Fee - when buildings online 31,000$ (31,000)$ Road Impact Fee - n/a only for Pitkin County Permit Building Permit Fee 150,000$ (150,000)$ Stormwater Fee - waived Land Use Fee Home Sales Fee HOA Setup 20,000$ (20,000)$ Burlingame Phase I Parking, Design & Engineering 75,000$ (75,000)$ Other Construction Power and Water 10,000$ (10,000)$ D. Contingencies 1,725,903$ -$ (1,725,903)$ 2013 Contingency 1,725,903$ (1,725,903)$ Project contingency expressed as % of construction cost 15.1% Total Uses (A + B + C + D)15,056,020$ -$ (15,056,020)$ Page 1 of 1 P59 III.