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MEMORANDUM
TO: City of Aspen Planning and Zoning Commission
FROM: Ben Anderson, Principal Long-Range Planner
THROUGH: Amy Simon, Planning Director
MEMO DATE: February 10, 2022
MEETING DATE: February 15, 2022
RE: P&Z Recommendation related to FIL requests to City Council
REQUEST OF THE PLANNING AND ZONING COMMISSION:
The Planning and Zoning Commission is asked to review, consider and send a
recommendation to City Council related to Affordable Housing Mitigation requirements
and the ability for four properties currently in the building permit review process to pay
Fee-in-Lieu (FIL) to meet mitigation requirements. This recommendation and the
eventual review by Council is a response to a current shortage of available Affordable
Housing Certificates in the market.
Staff recommends P&Z approve the Resolution – providing P&Z support for the
identified properties/projects to pay FIL.
SUMMARY AND BACKGROUND:
The Affordable Housing Certificates Program – now in effect for over a decade – has
been successful in providing incentive for the private sector to produce affordable housing
units. Since the inception of the program, housing for more than 100 FTEs has been
produced – without any public dollars being expended.
The program is dependent on two things: 1) the willingness of the private sector to
successfully complete affordable housing projects, and 2) the demand for AH credits by
free-market commercial and residential development to meet their mitigation
requirements. The City, to encourage the program, established AH Certificates as the
preferred means to provide affordable housing mitigation for single-family and duplex
development. Primarily, this was accomplished by disallowing the payment of FIL for
mitigation requirements above 0.1 FTEs. A property owner pursuing a permit may pay
the first 0.1 FTEs due for a given project in cash, but to the extent that additional mitigation
is due above this threshold, AH Certificates must be provided to meet the mitigation
calculated for the project. (Please note that there are other alternatives, such as
voluntarily deed restricting the subject unit to Resident Occupied, or buying another free-
market residential unit in town and deed restricting it as mitigation, however these have
been unpopular and likely cost prohibitive options.)
Staff Memo, P&Z Recommendation
Page 2 of 4
The Land Use Code has long offered a process for paying FIL over 0.1 FTEs with cash
for larger mitigation requirements, but it requires a request and approval by Council,
following a recommendation from P&Z. No applicant has pursued that option due to a
perception that approval would be unlikely. Following is the code language that describes
this process:
26.470.110.
C. Provision of required affordable housing via a fee-in-lieu payment. The provision of
affordable housing in excess of 0.10 Full-Time Equivalents (FTEs) via a fee-in-lieu payment, upon a
recommendation from the Planning and Zoning Commission shall be approved, approved with conditions
or denied by the City Council based on the following criteria:
1) The provision of affordable housing on site (on the same site as the project requiring such
affordable housing) is impractical given the physical or legal parameters of the development or
site or would be inconsistent with the character of the neighborhood in which the project is
being developed.
2) The applicant has made a reasonable, good-faith effort in pursuit of providing the required
affordable housing off site through construction of new dwelling units, the deed restriction of
existing dwelling units to affordable housing status, or through the purchase of affordable
housing certificates.
3) The applicant has made a reasonable, good-faith effort in pursuit of providing the required
affordable housing through the purchase and extinguishment of Certificates of Affordable
Housing Credit.
4) The proposal furthers affordable housing goals, and the fee-in-lieu payment will result in the
near-term production of affordable housing units.
The City Council may accept any percentage of a project's total affordable housing mitigation to be
provided through a fee-in-lieu payment, including all or none.
At present, there are not AH Certificates available in the marketplace. There are a
number of Certificates unextinguished (40+ FTEs), but they are unavailable for purchase
as they are held by entities that have already dedicated their use to commercial and
residential projects in the pipeline. Staff has confirmed this condition through analysis of
the spreadsheet that we use to track the Certificates program and correspondence with
individuals that are seeking Certificates to meet mitigation requirements associated with
building permits and previous projects that have AH Deferral Agreements for working
locals. Staff has also had conversations with the entities that are holding unextinguished
Certificates to understand their intentions. It is clear that there is a problem in the market.
As noted above, in the 10+ year history of the Certificates Program, this is the first time
that we have had requests to pay FIL above the 0.1 FTE threshold. Looking at potential
AH Certificates projects that are in the development pipeline, this is a condition in the
market that is going to take some time to resolve.
Staff Memo, P&Z Recommendation
Page 3 of 4
In response, staff has established a policy and a process to facilitate these requests in a
“batched” review. At this meeting, P&Z is asked to consider requests from five property
owners to pay FIL for their full mitigation. These are all projects that require 1.0 FTE or
less in meeting mitigation requirements and are for building permits that are in their final
stages prior to issuance, or are previously completed projects that were granted mitigation
deferrals for local, working residents. It is important to note that the projects that are a
part of this request to pay FIL have mitigation requirements that are just a fraction of an
FTE over the 0.1 mitigation that can be paid in cash by right. It is not reasonable to expect
the property owners to pursue the other mitigation options offered by the code for the
relatively small employee generation related to their homes.
It is intended that until the shortage conditions in the market improve, that this process
will occur quarterly.
STAFF DISCUSSION:
With staff’s confirmation of the conditions in the Certificates market, it was clear that a
solution needed to be identified to allow otherwise compliant development projects to
proceed through the permit issuance process.
It is hoped that this process will accomplish the following:
1) provide some predictability for projects that are in the development pipeline and
are nearing building permit issuance.
2) prevent the clogging up of P&Z and Council agendas with these requests.
3) maintain important components of the AH Certificates Program, so that the
essentials of the program are not undermined.
4) Allow for a seamless and simple transition back to AH Certificates as the primary
mechanism for mitigation once the market conditions improve.
In staff’s view, if the process is not facilitated in this way, it would likely lead to suboptimal
outcomes for Community Development customers that have projects that have mitigation
requirements and additionally, could potentially undermine important aspects of Aspen’s
AH mitigation system.
Below are the projects that are requesting to pay FIL in this round of review. In the
information provided for each, the FTE and dollar amounts of the FIL are estimates that
will be confirmed and finalized as the last step of the building permit process. The land
use code establishes that FIL for most residential mitigation is to be calculated at the
Category 2 level, which is currently $376,475 per FTE. These numbers will typically not
change, unless a small technicality emerges in the final reviews.
• 1195 Black Birch Drive – .45 FTE / $169,414 (Building Permit)
Staff Memo, P&Z Recommendation
Page 4 of 4
• 1245 Mountain View Drive - .29 FTE / $109,178 (AH Deferral Agreement)
• 1315 Sage Court - .27 FTE / $101,648 (Building Permit)
• 543 and 549 Walnut St. (Duplex) - .73 FTE / $274,827 (Building Permit)
CONCLUSION AND NEXT STEPS:
On March 8, 2022, Council will consider this issue with P&Z’s recommendation and will
decide whether to authorize FIL for the identified projects. With this approval, each of the
projects would pay the finalized FIL amount as part of the permit issuance process. It is
likely that this process will be replicated in Quarter 2 of 2022 – sometime in early June.
RECOMMENDATIONS: Staff recommends the Planning and Zoning Commission
approve Resolution XX, providing support for payment of FIL for the subject properties.
EXHIBITS:
A – Letters from the applicants that were included as part of the application to
request to pay FIL