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HomeMy WebLinkAboutagenda.council.worksession.20140303 CITY COUNCIL WORK SESSION March 03, 2014 5:00 PM, City Council Chambers MEETING AGENDA I. Lodge Incentive Goal Update II. Exhibit A - Lodge Incentive Goal March 3, 2014 Council Work Session – Lodging Page 1 of 8 MEMORANDUM TO: Mayor and City Council FROM: Jessica Garrow, Long Range Planner Chris Bendon, Community Development Director MEETING DATE: Monday, March 3rd, 5:00pm Council Chambers RE: Lodging Incentive Program REQUEST OF COUNCIL: Staff requests Council direction on next steps related to the lodge incentive goal. This memo details a number of different areas that represent barriers to lodge and condominium upgrades and redevelopment. Staff requests direction on which areas Council is interested in pursuing as part of a lodge incentive program. Specific questions for Council are in bold throughout the memo. BACKGROUND: One of City Council’s Top Ten Goals is to “Implement an incentive program for the short-term bed base.” Over the past two (2) years the city has worked with the lodging and condominium community to understand the sector’s challenges related to improving and maintaining their properties. An overriding theme staff has heard from the lodging outreach is city processes should be predictable and streamlined, while also responding to the unique needs and situations on each property. This is a difficult and delicate balance, and may not always be achievable. A summary of research to date is attached as Exhibit A. In the fall of 2013 City Council confirmed the desire to move forward with code amendments that would implement some kind of incentive program that focuses on lodging and free-market residential units that are in the short term rental pool. Council’s last direction to staff was to move forward with the “Standard Plus” level of incentives discussed in 2013. City staff has been working on potential code amendments that would implement City Council’s direction. A new program that aims to bolster the short-term bed base impacts many sections of the land use code and likely represents significant changes to the code, including to dimensional requirements and the Growth Management Quota System. Staff will present code language at a future work session. This meeting is to refine Council direction to ensure staff is on the right track. In preparation for this work session, staff has continued to meet with representatives from the lodging and development communities to determine if the potential changes will, in their opinions, result in investment and improvements to the bed base. Staff has also met with the Planning and Zoning Commission to gain feedback on the potential direction. In addition, an open house is scheduled for 3:30pm on March 3rd in Sister Cities, just prior to the work session, to enable the community and interested stakeholders to provide comments. Staff will summarize these comments in the presentation at the March 3rd work session. GENERAL: Staff has received a great deal of input and feedback on what is needed for a successful lodge incentive program. One of the primary complaints from applicants, Council, staff, and community P1 I. March 3, 2014 Council Work Session – Lodging Page 2 of 8 alike, is the complexity and length of the city review process. Currently the code essentially requires Council to be code technicians who understand complex competing calculations – what percentage is a project varying from zoning requirements - rather than being able to focus on policy matters – does the project fit in with the use mix and massing that fits in Aspen generally and the specific neighborhood. One goal for the incentive program is to implement a program that allows Council to focus on policy issues rather than having to be code technicians during each land use review. Some progress has been made on this front with the recent changes to Planned Development and Subdivision, but there is more that can be done. For instance, the City could limit the number and extent of variations requested in a land use process. Instead of varying every zoning dimension, the code can be written to allow only certain dimensions to be varied. Similarly the extent of those variations can be limited. While no code change can “fix” everyone’s issue or solve a community’s problems forever, code amendments can effectively address the issues of the day. The overarching goal, from staff’s perspective, is to create a program that focuses on increasing the number of hot beds in the community – both through traditional lodging properties as well as through free-market residential units. However, staff believes that any program must strike a balance between community values related to small town character and a world class resort. We do not believe these are mutually exclusive, and that changes to the code can encourage investment in the bed base through new product and improved existing product while staying true to Aspen’s history and unique character. As part of an incentive program, staff is proposing the following three (3) distinct use categories: • Lodge –A building or parcel with individual units that allows periodic overnight short-term rental to the general public for a fee, can have multiple ownership structures, and includes guest amenities, such as a front desk, concierge services, pool/hot tub, gym facilities, meal service, shuttle services, ski storage, etc. Occupancy by one person or entity is limited to 30 consecutive days and 90 days in one calendar year. (This is an existing type of use.) • Vacation Rental Unit – An individual free-market residential dwelling unit within a multi- family or lodge project that allows periodic overnight short-term rental to the general public for a fee. A Vacation Rental Unit complex may include guest amenities typically found in a lodge. Occupancy by one person or entity is limited to 6 months in one calendar year, and the unit must be available for short-term rental the remainder of the year. (This is a new type of use.) • Free-Market Residential Unit - An individual free-market residential dwelling unit within a multi-family or lodge project that is not required to allow periodic overnight short-term rental to the general public. Occupancy is not limited. (This is an existing type of use.) In the past, staff has referred to the Vacation Rental Units as condominium units and hybrid units. The intent is to encourage wholly-owned residential units that are available for rent throughout the year, much like the units at the Viceroy Snowmass, or the Gant. Staff believes these are the types of free- market residential units Council has expressed interest in promoting as part of a lodge incentive program because they contribute to the bed base. Staff continues to believe some assurances that there units will function as short-term rentals is needed. That said, as outlined in the 2013 lodging economics study by P2 I. March 3, 2014 Council Work Session – Lodging Page 3 of 8 EPS, basic free-market units that are not required to be in the rental pool continue to be a main economic engine for lodge upgrades and redevelopment and are included in the discussion below. DIMENSIONAL CHANGES: Staff is interested in hearing Council’s direction for dimensional changes that will facilitate improvements to the bed base. These topics are addressed below. Height: Throughout the outreach, staff has heard that some additional height is needed to justify investment in an existing lodge or to make a new lodge work. In general, feedback has indicated height for a fourth floor for properties closer to the mountain may be appropriate, while lower heights in neighborhood lodges is most appropriate. Currently, heights are limited by use and by zone district. In the Commercial Core (CC) zone, all properties on the south side of the street are limited to 28 feet, while properties on the north side of the street are limited to 38 – 40 feet. In the Commercial (C-1) zone, all properties on the south side of the street are limited to 28 feet, while properties on the north side of the street are limited to 36 - 38 feet. In the Mixed-Use (MU) zone district lodge and mixed-use buildings are limited to 28 – 32 feet. In the Lodge (L) zone district, lodge uses are limited to 28 – 40 feet depending on the lodge density (the more dense, the more height is allowed). There are a number of options Council can consider if there is interest in allowing flexibility on lodge height. These include allowing a 4th story: • south of Durant Street; • in the Lodge and Ski Base zone districts; • if it is limited to 50% of the building footprint; • through a Planned Development Review or a Special Review process; • if it has a 30 foot setback from the north property line; • with some additional mitigation requirements or additional open space/pedestrian amenity requirements; or • if public access is granted to any rooftop amenities • through the landing of TDRs. The Planning and Zoning Commission had mixed feelings about allowing a fourth floor, but they were generally supportive of allowing one if there were some tradeoffs. They felt a heightened review might be appropriate. If added height is considered, they recommended it be limited to areas near the mountain base, where one might expect additional height, but that it be in limited areas rather than an across the board allowance. In staff’s outreach, the general consensus from lodging developers is a 4th floor is critical for a lodge to succeed. They indicate other benefits are secondary because the added floor allows for needed density and amenities. Questions for Council: 1. Does Council support increasing allowed heights for lodge projects? 2. If so, does Council support this as an across the board increase or an increase limited to a lodge incentive program, location, or zone district? P3 I. March 3, 2014 Council Work Session – Lodging Page 4 of 8 Unit Size: Currently, there are unit size limitations on lodge units and free-market residential units. Lodge units are limited to 1,500 square feet, and the growth management code encourages smaller lodge unit sizes by requiring less affordable housing mitigation. Free-market residential unit sizes are limited based on zone district. Units located in the Lodge (L) and Multi-Family Residential (RMF) zones are limited to 1,500 square feet (which may be expanded to 2,000 sq ft with the landing of a TDR), while units in most commercial zones are limited to 2,000 sq ft (which may be expanded to 2,500 sq ft with the landing of a TDR). Unit sizes are a limiting factor on the free-market residential product that can be part of a lodge development. Some have indicated the size limits are arbitrary and limit the marketability of the units. Free-market residential units tend to be the economic driver for a lodge redevelopment, so if the unit sizes are raised it can potentially help the lodge be more successful. Some argue that the overall limit on free-market residential square footage, not unit size, is a more effective tool for the lodge. Their perspective is if the city allows some free-market residential space as part of a lodge development, does the configuration of that space (for instance two 4,000 sq ft units or four 2,000 sq ft units) really matter. There are a number of ways unit size caps can be addressed. For Free-Market Residential Units, two possible options are: 1. Keep unit size caps for free-market residential, and limit them to 1,500 square feet, while allowing an increase to 2,500 square feet with the landing of a TDR. 2. Remove the unit size cap for free-market residential if it is part of a lodge and/or vacation rental unit project. For Vacation Rental Units, staff suggests two options: 1. Limit vacation rental unit sizes to 1,000 square feet, while allowing an increase to 1,500 square feet through Special Review. Allow an additional 500 square feet (to 2,000 square feet total) through Special Review and landing a TDR. 2. Limit vacation rental unit sizes to 1,250 square feet, while allowing an increase to 1,750 square feet through Special Review. Allow an additional 500 square feet (to 2,250 square feet total) through Special Review and landing a TDR. There has been discussion that allowing some increases to unit sizes and allowing the combination of units might help some units be more rentable or enter the short-term rental pool. Staff has some concerns that significantly increasing allowable unit sizes could have the opposite effect, and could result in a unit functioning more like a single-family home than a short-term rental unit. This concern has been echoed by some condo experts and by the Planning and Zoning Commission. As such, staff strongly recommends adopting unit size caps for Vacation Rental Units. Based on the lodging studies that indicate a need for a variety of room types and flexible unit configurations, staff recommends eliminating the unit size caps on lodge rooms. In the options above, staff has proposed the landing of TDRs. The use of TDRs continue to be a high priority for staff. The program, which preserves historic resources by removing development pressures from historic properties, relies on demand for TDRs. Staff recommends incorporating TDRs to the extent possible in order to continue the success of this historic preservation program. P4 I. March 3, 2014 Council Work Session – Lodging Page 5 of 8 Questions for Council: 3. Does Council support eliminating unit size limits for lodge units? 4. Does Council support changing or eliminating unit size limits for free-market residential units? 5. Does Council support a unit size cap for Vacation Rental Units? Free-Market Residential Uses: As mentioned above, staff’s outreach has indicated free-market residential uses help fund lodge redevelopment. There have also been discussions on how much residential space should be permitted within lodge projects. If the city’s goal is to encourage short-term rentals in vacation rental units and lodge units, those uses should be prioritized in zoning. Currently the amount of free-market residential space allowed is based on the size of the lodge units – the smaller the average lodge unit the more free-market residential floor area is allowed. The following table summarizes the current allowances in the Lodge Zone District: Average net livable area of individual lodge units on the parcel Free-market residential FAR as a percentage of total lodge unit and affordable housing net livable area Greater than 600 square feet 5% 600 square feet 15% 500 square feet 40% 400 square feet 50% 300 square feet or less 60% Rather than tying free-market residential floor area to lodge net livable space, staff proposes comparing lodge net livable to free-market residential net livable so it’s more of an apples-to-apples comparison. Because staff believes lodge projects should contain primarily lodge uses, staff proposes the following change: Density of Hotel, Lodge, and Vacation Units on the Parcel Maximum free-market residential net livable area as a percentage of the total Hotel/Lodge/Vacation unit net livable area Total Hotel/Lodge/Vacation units is less than one unit per seven- hundred-and-fifty (750) square feet of Net Lot Area. 25% (can be increased by up to 15% through Planned Development Review) Total Hotel/Lodge/Vacation units is one or more units per seven- hundred-and-fifty (750) square feet of Net Lot Area. 35% (can be increased by up to 15% through Planned Development Review) In addition, staff proposes allowing free-market residential uses only be allowed in the Lodge Zone District if they are associated with a lodge or vacation rental unit project. Questions for Council: 6. Does Council support staff’s proposals on free-market to lodge size? P5 I. March 3, 2014 Council Work Session – Lodging Page 6 of 8 GROWTH MANAGEMENT CHANGES: Staff is interested in hearing Council’s direction for growth management changes related to lodges and vacation rental units. These topics are addressed below. Multi-Family Replacement Program: As was indicated in the Barriers to Condominium Development study, one of the main hurdles to condominium upgrades is the multi-family replacmeent program. Currently, if a residential unit has ever housed a local working resident it cannot be demolished or combined with another unit without providing mitigation in the form of built units on the project site. This location requirement has prevented many multi-family complexes from redeveloping because the density required by the location requirement exceeds what is allowed under zoning, or is deemed as unworkable by the complex. There are a number of ways this program could be updated address the barriers it creates for condominium upgrades. In terms of program applicability, there are two possible changes: 1. Exempt units participating in the incentive program and agreeing to be in the short-term rental pool. 2. Place time limits on the effectiveness of the program. For instance, rather than applying to the entire history of the unit, the program could require that any unit rented to a local working resident in the last ten (10) years be required to mitigate. The Planning and Zoning Commission did not support an outright exemption for properties in the short- term rental pool. Their preference was to change the timeframe, as outlined in option 2 because there are impacts from these conversions that should be mitigated. In terms of location requirements, there are two possible changes: 1. Remove the location requirement and allow mitigation to be provided through multiple means by right: on-site, off-site in city limits, through Affordable Housing Certificates, or through a cash- in-lieu payment. 2. Same as option 1, but only allow mitigation that is outside city limits or by a cash-in-lieu payment through a heightened review with P&Z or City Council. The Planning and Zoning Commission supported amending the location requirement to allow mitigation to be provided in many ways. They did not indicate a preference between options 1 and 2. Questions for Council: 7. Does Council support exempting or amending the timeframes for multi-family residential units that participate in the Incentive Program from multi-family replacement? 8. Does Council support amending the affordable housing mitigation location requirements in the multi-family replacement program? Lodge Mitigation: One barrier existing lodge operators and potential lodge developers indicate as a significant hurdle for a successful upgrade, remodel, or new development, is the amount of affordable P6 I. March 3, 2014 Council Work Session – Lodging Page 7 of 8 housing mitigation required. They feel the code requirements do not match with their operational needs. The current lodge mitigation requirements are on a sliding scale based on lodge unit sizes. The smaller the average unit size, the less mitigation is required. Staff recommends simplifying the system by no longer basing it on unit size, and suggests establishing a minimum number of affordable housing units required on-site based on lodge size. Priority could be given to a lodge manager or other staff that need to be nearby or on-call to respond to emergencies and guest needs. One option is: Total Number of Lodge Units Affordable Housing Unit Requirement 1 – 10 Units No Requirement 11 – 25 Units 1 Unit 26 – 50 Units 2 Units 50+ Units 3 Units Questions for Council: 9. Does Council support keeping mitigation requirements the same, reducing the requirements, or eliminating the requirements? Lodge Allotments: One barrier for potential lodge development is the number of allotments available in any one year. There are currently 112 lodge pillows available in any one calendar year. Each lodge bedroom is considered to have 2 lodge pillows, resulting in the ability to add 56 total lodge bedrooms in any one year. This represents a 1.5% annual growth rate. City Council decided to rollover 2013 lodge allotments into 2014, so this year there are 224 lodge pillow allotments available. A change to the number of allotments would enable more lodge projects to come forward in any one year. Few lodges have come forward in recent years, so eliminating or increasing allotments would likely “make up” for the unused allotments and could be tailored to stay within an overall growth rate of 2% over a number of years (5 or 10 years). In the early- to mid-2000s there were no allotment limits for lodge units. There are a number of options to address the lodging allotment issue: 1. Eliminate lodge allotments. A project would still be subject to growth management requirements, but would not need to worry about the city not having enough lodge allotments for their project. 2. Determine what the 2% growth rate of the last 10 years and next 10 years would be and establish one pot of allotments that any project can use for the next 10 years. This would enable small and large lodge projects to come through as they are ready rather than creating a rush of applications at the beginning of any one year. 3. Establish a yearly base number of allotments, and give City Council the ability to increase that number each year. This idea came from the Planning and Zoning Commission as a way to allow flexibility. They were not comfortable eliminating lodge allotments and felt this was a good middle ground. P7 I. March 3, 2014 Council Work Session – Lodging Page 8 of 8 Questions for Council: 10. Does Council support increasing or eliminating the lodge allotments? Residential Allotments: As part of the lodging outreach, staff has continued to hear that a free-market residential component is an important economic engine enabling lodge upgrades and redevelopment. There are currently 18 free-market residential unit allotments available in any one calendar year. This represents a 0.5% growth rate. Under the current system Vacation Rental Units and Free-market Residential Units would both fall under this 18 unit allotment, which may not be enough if the incentive program is successful. If the city is interested in encouraging Vacation Rental Units, they may need a separate growth management allotment bucket, or the city may need to consider increasing the number of free-market residential allotments beyond 18. There are a number of options for Council to consider: 1. Increase the number of free-market residential allotments. Without a restriction that some of these be used for Vacation Rental Units, this option could result in more residential units that are not in the short-term rental pool. 2. Increase the free-market residential allotments, and require that the allotments beyond 18 be Vacation Rental Units that are in the short-term rental pool. 3. Create a separate allotment for Vacation Rental Units. At this time, staff would recommend 18 units, so the total growth rate for residential units is 1%. The Planning and Zoning Commission felt it was important that any increases in residential allotments only be for units in the short-term rental pool. They did not indicate a specific number that should be available, but supported the direction of option 3. Questions for Council: 11. Does Council support increasing the free-market residential allotments? 12. Does Council support creating a new set of allotments for Vacation Rental Units? FEE AND MITIGATION CHANGES: Some incentives around fees and mitigation requirements are necessary to create a successful program. These could include building and planning fees, stormwater fees, and capital improvements in the right-of-way. Staff is prepared to present some options to City Council at the follow-up work session on April 1st based on the direction received in this work session. For instance, if Council is not interested in exploring any of the dimensional changes outlined in this memo, fee reductions associated with the incentive program may need to be higher than if some dimensional incentives are pursued. Staff is interested in hearing Council’s initial thoughts on fee and mitigation reductions/waivers: • No Way, Man • Maybe, kinda-sorta • Yeah, Like Totally NEXT STEPS: A follow up work session is scheduled for April 1st, where staff will request direction on fee and mitigation changes, as well as summarize direction received in the march 3rd work session. ATTACHMENTS: EXHIBIT A: Summary of research completed to date P8 I. 3.3.2014 Lodging Work Session – Exhibit A Page 1 of 5 EXHIBIT A – SUMMARY OF EXISTING CONDITIONS WORK TO DATE ASPEN’S LODGING SECTOR: LODGING DEMAND AND LODGING ECONOMICS: This report, released in June 2013, provides a big picture overview of the types of product most in demand by Aspen visitors, updates occupancy and rate information, and includes an EPS report on the economics of lodging development. Based on visitor survey data from ACRA, and interviews with booking agents at Stay Aspen Snowmass and Ski.com, there are more families visiting, flexible unit configurations and condominium-style units are increasingly in demand, new lodging product in competitor resorts impact Aspen’s competitiveness, and the difficulty (remoteness) of reaching Aspen impacts who visits. Since 2006, there has been a steady increase in the number of families visiting, which is likely related to the increased interest in condominium-style units with kitchens and a common gathering area. Aspen remains a strong destination, but investment by other mountain resorts in new lodge product coupled with the relative difficulty and expense to reach Aspen, will impact Aspen’s ability to attract guest in the future. In addition, visitors indicate they are happy with the relative quality of lodging, though ratings related to the upkeep and age of properties has slipped in recent years. Visitors consistently rate the range of lodging price points and the value of accommodations for the money paid low. The economics analysis compiled by EPS echoes these findings, specifically stating the newer inventory in competitor resorts may begin to attract visitors away from Aspen. Other key findings from the economics report include: • If Aspen is interested in new or reinvigorated lodging product, trade-offs related to accepting greater height, greater density, lower mitigation levels, or a combination of these and other measures may be necessary. • Aspen’s development process, from entitlements through building permit and Certificate of Occupancy is unpredictable, and can be costly and lengthy. If Aspen wants to encourage new or reinvigorated lodging product, a more predictable process, as well as some reductions in fees and review times at all levels of the review process may be needed. • Aspen’s condominium base is aging and needs to be upgraded, but simply allowing renovations may lead to a loss of those units from the rental pool. SEC rules related to condominium hotel rentals are unclear, and may warrant additional research by the City and other mountain resorts. • Current financial markets make any new hotel product difficult to finance and build, and land costs in Aspen can make any project economically infeasible. Lender requirements for condominiums and condominium hotels are more costly and strict than in years past, P9 II. 3.3.2014 Lodging Work Session – Exhibit A Page 2 of 5 while traditional lodges are often not economically feasible without some free-market component. ASPEN’S LODGING SECTOR: AN ANALYSIS OF EXISTING CONDITIONS: This phase 1 report, released in August 2012, provides a big picture overview of Aspen’s lodging base. The report provides an overview of the City’s role in lodging over the years, outlines Aspen’s lodging inventory, includes average occupancy and rate information, and provides a number of interviews with local lodging experts. One of the findings of this report was that over 40% of Aspen’s short-term bed base is in condominiums. Based on that information, staff contracted with Alan Richman Planning Services to conduct a detailed study of Aspen’s condominium market (see next section). In the summer of 2012, the Aspen Skiing Company commissioned a study with Mountain Travel Research Program, LLC (MTRiP) to provide updated data on the lodging bed base in Aspen and Snowmass. Findings from the study were included in the report, and showed there are 2,293 units and 10,085 pillows in Aspen’s short term rental market. This represents 56% of the units and 53% of the pillows in the overall resort area. This represents a decrease in units from 2009 and an increase in pillows since 2009. The differences are likely a result of discrepancies in the 2009 reporting from individual properties, as there have not been any significant new projects or decreases in projects in that time frame. The largest sector of the Aspen lodging inventory is Hotels/Lodges, which account for 50% of the bed base (-0.17% from 2009). Condominium units account for 41% of the City total (-5% from 2009), with private homes at 6% (+31% from 2009) and bed and breakfasts at 3% (+6% from 2009). In terms of categories, the overall availability of a range of lodging types and price points continues to favor deluxe accommodations, with Deluxe pillows making up 68% and Deluxe Units making up 62% of the inventory. The Rocky Mountain Lodging Report compiles data for lodging throughout Colorado and the Rocky Mountain Region. The information includes average occupancy data as well as information on average nightly rental rates. This information was compiled for the Phase 1 Report. The seasonality of the Aspen is seen in the occupancy and room rate information over the years, with the highest occupancy and room rates seen December through March and June through August. December through March consistently command the highest average room rates, ranging from an average of $542.30 in December between 2006 and 2011 and $419.89 in March between 2006 and 2012. Compared to other Mountain Resorts and the entire state, Aspen consistently commands higher average room rates. Perhaps the most telling information in the report is from the individual interviews with members of the lodging community. Interviewees consistently stated how important special events are to attracting visitors to Aspen. They also focused on the importance of ensuring Aspen is able to attract the next generation of visitors. Several warned that while Aspen has enjoyed unparalleled loyalty in its visitors for several decades, the younger generation is less influenced by loyalty, and more driven by adventure, new experiences, new places and exploring the many choices offered around the world. Many emphasized staying true to the values that make Aspen special today, including the character of the built environment, environmental stewardship, the metropolitan feeling of arts P10 II. 3.3.2014 Lodging Work Session – Exhibit A Page 3 of 5 and cultural offerings and the many recreational choices. Several were worried that locals don’t recognize that the Aspen brand is very intimidating to many people who have never been here, which can deter people from visiting. Finally, the general consensus from interviewees was that the city should have a minimal role in the actual development of a lodge, but that the city could help to provide incentives that could make a new lodge project or lodge rehabilitation more feasible. CONDOMINIUM REPORT: The Condominium Report produced by Alan Richman focuses on the regulatory and non-regulatory barriers to developing and upgrading condominiums in Aspen. Given that 40% of Aspen’s short-term bed base is in condominiums, staff asked Mr. Richman to explore what steps the city could take to bolster this portion of the bed base. Much of the information in the report is based on interviews with condominium and condominium lodge owners and operators. The report goes into great detail about how the land use code treats traditional lodge projects differently from residential condominiums, and how that has resulted in a lack of maintenance and upgrades in this segment of our bed base. These barriers range from zoning regulations to growth management to the multi-family replacement program. It is important to understand the difference between traditional lodging and condominiums that is outlined in our code: • A hotel or lodge unit may not be occupied for more than thirty (30) consecutive days per year by a person who has an ownership interest in the hotel or in the unit and may not be occupied by any person (owner or non-owner) for more than ninety (90) days per year. A multi-family condominium is not limited in terms of how much of the year it may be occupied by an owner or other person. Hotel units must be rented short-term, while condominiums are rented at the discretion of the owner. • A hotel or lodge unit may contain “lock-off units” whereby portions of the entire unit may be separately rented by locking the door between different rooms or combinations of rooms. On the other hand, multi-family dwelling units must have common un-pierced demising walls and cannot be separated into lock-off units. These differences prevent condominium units, even if they are rented on a short-term basis, from taking advantage of some of the height, floor area, and growth management benefits available to a traditional lodge. There are a number of condominium hotel properties in town that act as lodges, but are considered multi-family residential because of they are condominiumized. These properties do not “fit” into any zone district very well, which often means these properties are subject to additional land use reviews related to any maintenance or upkeep that a traditional lodge is not. LODGING CHARRETTE: On October 23, 2012 the city hosted a lodging charrette at the Gant with many of Aspen’s lodging stakeholders. This was one of the first times in many years voices from all of Aspen’s lodging sectors – from developers to condominium managers to large and P11 II. 3.3.2014 Lodging Work Session – Exhibit A Page 4 of 5 small hotel operators to land planners – were in the same room talking about lodging issues and what role, if any, the city should play. Participants discussed new lodging product, reinvestment/redevelopment of existing lodges, and condominium rentals. Below is a summary of comments related to the roles the City could play moving forward. In addition, outside consultants from EPS and BBC attended the charrette and provided written reports on their conclusions from the meeting. In terms of new lodging there were a number of comments that if the city wants to see more lodging that the codes should be examined and updated to encourage, incentives, and perhaps even subsidize new lodging. There was a general consensus that a free-market residential component of some kind is needed to make any brand new lodge work from a financial stand point given all of the city’s other requirements. Finally, there was consensus that lodging is the appropriate use at the base of Lift 1A, and that the city may have a role in helping create an environment where a new lodge could be successful. Some felt that improving that area would create a portal that then helps other lodges. While there was interest in seeing new lodging product, there was more support for examining ways to support our existing lodges and condominium units. One participant said the city should “enable existing lodges to thrive before focusing on new lodges.” In terms of reinvestment in existing lodges, there was a consensus that there are too many hurdles from the City in terms of fees and land use reviews. The process is complicated, unpredictable, and expensive, and the smaller lodges are often not able to afford the time or dollars it takes to go through a review process. There were some suggestions that the city could provide tax incentives or low cost loans to smaller lodges looking to upgrade. The Aspen Gems group has reformed, and participants suggested the city work with that group to determine what specific incentives and regulations would help these lodges thrive. The discussion related to condominium units focused primarily on how the land use code dis- incentivizes them. There were a number of suggestions on the city’s potential role, all involving ways to modify how the city regulates condominiums. Some felt the city should ease regulations on condominiums if a certain percentage of units were guaranteed to be in the short-term rental pool. Others felt requiring hotel-type amenities, like conference facilities and front desk services, would help encourage new condominium units to be rented on a short-term basis. Nearly all participants expressed concerns related to the multi-family replacement requirements and their impact in stifling reinvestment in condominium units. There were some general comments as well. Some felt that the city should look forward and consider which areas of town or specific properties they would be interested in seeing a new lodge or a revitalized lodge. This kind of exercise – focusing on what the city wants – could help the private sector have more certainty to bring projects forward. In general there was a consensus that the city’s regulatory structure is burdensome and prevents good projects from coming to fruition. A final thought from the group is that the city does not actually know what types of lodging is desired by our visitors because there hasn’t been any study or work on this issue. This was seen as an opportunity as the discussion moves forward. P12 II. 3.3.2014 Lodging Work Session – Exhibit A Page 5 of 5 2011 FRACTIONAL LODGING OCCUPANCY STUDY: This report, released in November 2011, provides information on Aspen’s fractional lodges. The report includes information about usage and occupancy in Aspen’s fractional lodge projects and is based on interviews with lodge fractional managers and officials from other mountain resorts. The report suggests better tracking of fractional occupancies would be beneficial to understanding the real impact and success of these units. P13 II.