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HomeMy WebLinkAboutcoa.lu.ca.Condominiumization of Lodges.1980 / 'h f "~.'~ 'Y D'I' V~ ,- MEMORANDUM TO: Aspen Planning and Zoning Commission FROM: Richard Grice, Planning Office RE: Lodge Condominiumization/Lodge Preservation DATE: February 28, 1980 BES I \.pvfliY Many of Aspen's nonconforming lodges are no longer viable economic operations. The reasons most often cited are: The following are possible solutions to the above problem; (1) (a) Amend the nonconforming section of the Code so as to allow for the reconstruction, renovation, or modification of "",Ynonconformi ng lodges provi ded all new constructi on meets ;'" the area and bulk requirements of the underlying zone district ,\l,' and, provided that no increase in the square footage or the number of lodge units occurs. Such! new construction could be accomplished simply by meeting the requirements of the Uniform Building Code unless the proposal involves construc- tion within a Mountain Viewplane or in an Historic District. In those cases, the Planning and Zoning Commission and the HPC would become involved respectively. These amendments would result in a significant simplification of the Code in that most lodges would be able to renovate or reconstruct simply by applying for a building permit. In addition, since these lodges would remain nonconforming uses, the question of adjacent property owners being allowed to create new lodges is eliminated. - , v" ~ V" ~ " \)V ,\ ' ~ '\( 1-f' \') \ '"' .' y \- Q, "<'!I'~ (1) (?) q} Limitations on reconstruction and/or renovation imposed by nonconforming status, and Refinancing difficulties arising from nonconforming status, and The economic's of scale are not available to the small operations. (b) Create a new zoning category to be called the Lodge Preser- vation (LP) zone. The LP zone would be intended'as a means of encouraging the renovation of and preservation of the unique mix of exisUng lodges as to scale, character, size, type, location, quality, services, amenities, ambience and price. The zone would be applicable to those lodges which were constructed outside the lodge zones prior to the adop- tion of the 1973 Master Plan, i.e., all lodges which are nonconforming as the use. In order to legally justify the new zone category and the elimination of nonconforming status without allowing adjacent properties to build new lodges, we would also need to adopt a Lodge Preservation PLAN to act as a guide for the administration of the zone. The Plan could include criteria for evaluating the merits of any expansion proposal. However, we do not feel that expansion should be allowed for reasons covered in detail later in this memo. Finally, as the 1980 Planning Office budget did not include' the staff time which would be neces- sary for reviewi!rigproposals under the newly created plan, some other budgeted task(s) would have to be eliminated. (2) Lodges experi ence refi nanci ng diffi cuq:ti es with or without nonconforming status due to the fact that investors view lodges as a ht~h risk. Even without restrictions imposed by nonconforming status, the marketplace will allocate where investors place their money and each lodge must stand on its awn merits. In the capital-short money market which exists today in the United States, funds for refinancing will continue to be difficult to acquire even without restrictions -. ~ Memo to Aspen P & Z Re: Lodges February 28, 1980 Page Three BEST CUPY 1. In order to promote full utilization of existing residential and lodge facilities, amend the nonconforming section of the Code by the creation of a new section, 24-12.9 "Residential Preservation Clause": "All single-family, duplex-family, multi-family, lodges and hotel residential uses that were lawfully established and continually so-used thereafter are nonconforming uses but are considered to be allowed uses and are not subject to the provisions of Section 24-12.4 and 24-12.5; provided, however, that all new construction, renovation, reconstruction, or modification must meet the area and bulk requi'rements of the underlying zone district, and, provided that no increase in the square footage or number of units shall be allowed." 2. In order to clarify that it is not our intention to prohibit the condominiumization of developed nonconforming uses, amend Section 20'-'9(c) to read: \ Dqe S fINO subdivision of land shall be approved which is inconsistent with the provision of any zoning ordinance or other ordinance of the City of Aspen or law or regulations of the State of Colorado. " ;'1/ A' ,. \ ,,', r,/....', ;,/'. ." , ., ",..,j ,- j:' , 3. Amend Section 20-22, the condominiumization section, so as to allow the condominiumization of hotels and lodges in accordance with the Lodge Association's proposal provided that the proposal continues to guarantee continued short-term use. 4. Amend the definition of subdivision, Section 29-3(s)(2) so as to --<;-larifythat revi ew undersubdivi-sionregul atrons' 1'1111' not' be required for the renovation or reconstruction of nonconforming residential uses. That section should be amended to read as follows: "A tract of land including 'land to be used for condominiums, apartments or any other multiple-dwelling units, or for time sharing dwelling units; or" Section 20-3(s)(2) currently reads as follows: "A tract of land including land to be used for condominiums, apartments or any other multiple-dwelling units, or for time sharing dwelling units, unless the improvements with the same density has previously complied with the requirements of this chapter; or..." 21-{-\'2,\ * ,,~:' l .J\) 1;.'1' ( " ") , ,., ,') J ,,' "vv,:;jJ ,\ "'./'_'_: .~,~w/' Vi...- " ;4. -...;.. , (' .'" -.-1''") . ""2 L()) !r)""W\,'\. " , ),L&I c, X-()..~'-1 " \, r"'''-~'-+ VJ,.:.. I ( ~" ~ lvr' ~'C \t ,.' CJ"/2..,,l/}'l 2 4 - \"2, "3 ('b) ~i'-. j\.t/c.V,'...J).:t. 'i cH {\^J('/\ '^ , " e-- -4- . '-\kF.J..A,G..V-.?'....,.t ~ ,-, ,~~ tJMgud~+1 , 'I ~, I~ - 71 '- PROPOSED ORDINANCE A. Requirements. Any applicant seeking condominiumiza- tion of an existing lodge (for the purpose of this- section, a lodge is defined, as. a building containing three (3). or more units intended for temporary occupancy of guests and run in such manner prior to January 1, 1979), in addition to other require- ments set forth.in, Chapter 20 of the Aspen City Code (the Aspen, Colorado,., subdivision regulations), shall comply with the follow- I, . ing requirements: 1. The condominium units created shall remain in the short-term rental market to be ,used as temporary a~commoda- tionsavailable to the general public. The following shall con- stitute prima facie evidence that the applicant has complied with this paragraph: a. A condominium: declaration for, the condo- minium sought to, be created shall be filed in the records of the clerk and recorder of pitkin County, COlorado, which shall pro- vide, interalia: (1) An owner's personal use of his unit shall be restr-ictedto fourteen (14) days -or less -during the J~~ ~'Z6 ,seasonal period of December~ through April 1. This seasonal period is hereinafter referred,to as "high season." "Owner's personal use" shall be defined as owner occupancy of a unit or nonpaying guest of the owner or taking the unit off the rental market during the seasonal periods referred to herein for any reason other than necessary repairs which, cannot be postponed or which make the unit unrentable. Occupancy of a unit by a lodge manager or staff employed by the lodge, however, shall not be restricted by this section. (/I}'W I~ ~ f(~fd +1 ~e\, ~~ t"""\ ~. (2) A violation of the owner's personal use restriction by a unit owner shall subject the owner to a daily assessment of three times the daily rental rate for the unit, at the time of the violation, which assessment, when paid, shall be deposited in the general funds of the condominium association for use in upgrading and repairing the common elements of the condominium. (3) All sums assessed against an owner for violation of the owner's personal use restriction and unpaid shall constitute a lien ~or the benefit of the condominium " association on that owner's unit, which lien shall be evidenced by written notice placed of record in the office of the clerk and recorder of pitkin County, Colorado; and maybe enforced by foreclosure on an owner's condominium unit by the association in like manner as, a mortgage or deed of trust on real property. (4) A violation of the owner's personal use restriction 'shall be enforceable by ~~.:-Cit;:::-~_~~~ and the condominium association. ~__.._____.__. 2. The new condominium units shall provide on- site management and maintenance and other tourist accommodation services during high season consistent in quality and quantity to those provided during the high season immediately prior to the time of application when the property was operated as a lodge. If the lodge property sought to be condominiumized had p:q>videdon-site managemen{oy ?~~i~m shall provide r'contract for on-site management from 8:00 a.m. to 8:00 p.m. seven (7) days a week, on-call s\=rvices twenty-four (24) hours a day, maintenance of the grounds, common elements and emergency unit repairs and a continuation of the lodging amenities and host-guest relationship, consistent with that previOUSly provided by the lodge. A(-~~t7 ~i~t-~ I 1H1~~r~ ~,~;f{" ~~ U / ~ I ~ y7JN r?!lv4- ~ ~~/~ !~, iJI of , 3. The condominium units shall r~ available general tourist market. This condition ~ be met by inclusion of the units of the condominium in a local reservation system for the rental of lodge units in the City, of Aspen. 4. The common areas of the lodge shall remain common areas and be maintained in a manner consistent with its previous lodge character. ,Any changes, alterations or renovations made to common areas shall not diminish the size or quality of the common areas. , ./, 5. The lodge shall be physically upgraded as a result of the condominiumization either by applicant's fulfilling the requirements set. forth in subparagraphs a and b, infra, or in the alternative by applicant's compliance with subparagraph c, infra, as follows: a. An amount equal to twenty percent (20%) of the assessed value of the property is applied to the upgrading of the lodge facility pursuant to plans submitted to and approved by the City within six (6) months of condominiumization approval and the upgrading is completed within nine (9) months after the building permit for such upgrading is issued. -)". l1kIA T'f!9--:ff!housand, fire ,hund, red dOlla,r"s (~"'v~ (~f' ~ (J/Id..A).A.- rcLoJ';, ($2,500.0.0) per 10 gJ.ng unit s spent on the upgr~g of each rental unit pursuant to plans submitted to and approved by the ~~l ~ ~/ '"P:ft ~, ej City within six (6) months of condominiumization approval and the upgrading is completed within nine (9) months after the building permit for such upgrading is issued. n~~l~' The apPli~~nstrates by clear and vincing evidence to the Cit~ ~ 'I that funds previously expended by the applicant have upgraded the lodge to a high enough quality so as to make further upgrading unnecessary as a condition to condominiumization and that the upgrading done previous to the condominiumization will allow the condominiumized lodge to continue to accommodate its clientele in a manner ~ '--"7 -3!A-MA.. \~64~~, t""\. ^ consistent with or b~~j~ik~~ity than provided previous to c~d~i~jL~ization. the accommodation Due consideration shall be ,given by City Council to the fact that the lodges of Aspen attract clientele from diverse economic sectors, certain lodgesdcatering to certain sectors, and the intent herein is not to create a uniformity in lodge character and roles but instead to upgrade the physical appearance and facilities that each lodge provides. B. Applicability. All conditions set forth within this ordinance shall be made l::linding on the applicant, the applicant's ,; successors, heirs, personal representatives and assigns and shall govern the property which is the subject of the application for the life of the survivor of the present City Council of Aspen plus twenty-one (21) years. A condominiumization of a lodge pursuant to this section shall be modified only by the written agreement of the City Council and the owner or owners of the condominiumized lodge property. C. E'rocedure. Condominiurnization of an existing lodge shall be accomplished pursuant to the exception or exemption process rather than through the full subdivision review. /~p~ - N(JJ( ~ ~ X?o 0 , 1/~~vYkr~ Ckfr-t ~ ~ w/;;JJJ lin/! (i~ . _ ,~ raM.t fmtG ~ -4 - 1. / ~12 ~ uJ IIffi C!JJ..i I ~ .r>" MEMORA~DUM TO: Aspen City Council FROM: Richard Grice, Planning Office RE: Report on the Lodge Condominiumization Ordinance DATE: January 21, 1980 The Planning Office, the Lodge Association and Gideon Kaufman, as well as several members of the City Council and the Planning and Zoning Com- mission have been working on the Lodge Condominiumization Ordinance. The final product is not completed; however, we're getting close. In its present form, the ordinance addresses the three major concerns identified by the Planning & Zoning Commission and City Council: the need to physically upgrade, long-term management, and continuation of short-term availability. There seems to be some continued disagreement regarding how much upgrading and employee housing should be required as a condition of condominiumization. Gideon Kaufman is putting what hope- fully will be the final draft together at this time. We hope to be able to present t01iYOU a copy of the latest draft on Monday. In any case, we need for you to extend the moratorium long enough to allow a public hearing before Planning & Zoning, as well as first and second readings before City Council - roughly 75 days. (The code requires 15 days notice prior to the Planning & Zoning public hearing; agenda deadlines dictate that there will be 20-21 days between the Planning & Zoning hearing and the first reading by City Council; and finally, additional time jtll be lost in scheduling the second. reading before City Council, as it is a public hearing with 30 days notice.) Note: (3:00 P.M. Tuesday) Gideon has just delivered the latest Draft of the Condominiumization Ordinance to the Planning Office. We have not had time to review the draft, but are including it in your packet so that you will have time to revi ew it pri or to the meeting on Monday. ~ r>" D R AFT December 18, 1979 Tll: P13nning Office, Cit,' Attorney and City f.ianngcr ASpCil P c; Z Aspen City Council ALA Executive Committee ACR Board and Betty FRO\!: Al Blorr;quist, ALA Task Forc.e on r'~on-conformance SUBJECT: Proposed New Lodge 0verlay Zone --- Plus. This Te~ort deals with the problem of NON-CONFOR~HNG LODGING. Karen Smi ~~1 obtained and suggested that the ALA consider the Pheonix "Special Consey-;ut:c:1 Jis::-ictlf ordinance for a r.lcdel. The attached c::-aft of a LODGE CVERL.~.Y Z:NE '..~t:lizcs the Pheonix approach.. The Phconix ordinZl:lCe incleded a nei.gh~o::b:::Gd self-l)lanning feature. For Aspen the new zoning provision is called an 'tOve:-laytl zone because i~ le~ves the underlying districts a~d =egulations applicable to all uses excep~ "cxist:.::g lodging", to ~1hic!~ the Ove:-lay applies. It creates lodging as a. s~Jccial r'class:l of rn.lsi:1zss use ai1d makes existing lodging ~vithin the overlay .,(',-,.0 .......J.....- ft:lly legal 2nd enabled and encouraged to up-grade. Additional research done by the ALA suggests that ~ore than just a Lodge I F, :' Ovc:-lay Zone is needed. If the following objectives are to be achieved: 1. Legalize, without reservation, lodging in two mixed use nei"hborhoods ,<here such lodging is now non-conforming. 2 . .l\110h' 1. imi ted expansion and unl imi ted upgrading of existing lodges without automatically enabling (J~hcr J,rupertics to be used for totally new ifF: . ~ -- .3. PT'eSerVe ttH~ mixeJ-llse character anJ ncighoor~ In)0J um~)lcnce ..::..f 00th the Shadow M';,i,.;ntnii1 und Glv'.i.~Y iiolc P<ll~:\'~'cs:Ll~;1.tii.1l.~lod6i~?: i1C:~:100r.~ 1I0U;.L;. 4. c5t:1.i)lis:1 lo(:gin5~ as the Dusiness of providin:z shor"t ::cn:;; :"cnt31 a.:c;:.:;::odations to the :,:.\spGn 'lisi t:.J:~. ~. Provide fo~ li~ensi~g to the end that both t~e lodging in~cnto;y and szles tax functions n~e c08?letc, ~ccurnte, and curre~t. 6. ?:"o.....ide~:1 cPPo7t.t.::1ity for the Sh:ldc'N ~'~ou::~ai:: ~::d G10:-}' :':~le Pn:rk ::eigh~orhocc.!s to plc:'l -:or t::ei:r i::dividua! imp::ovc::1cnt both as :"csideDtial a:;d aslodgi::2 ne:.g::::o:::-::cods. " ?:5tablish ACR as a q:..:asi-2.o~Je:'n:7l~::~.a: :ax s:.:p- rOTted c~tity f=ce f=o~ a=cusations of priv~te ~o~ovoly, p=ice fi~i~g or collusic~ (ie. n~Ke .;... .....e..~.,no"':'~ "........1 ...... ..''-'6'.;................... ".."'" a free service to ~!l Aspen visi to~s wi:h all As}"'en !odgi:;.2: :-eprcsentcc;}.. To ac11ieve the above obj ecti ves, the following pTogTa:ns should be i;:;pl i- ::;c:-:ted: PR0G!{;\;'.! CNE .~- LODGE OVERLAY ZONE l (n) i\,";1cnd !'~_r.P?_s_c", Section 24-1.2, to include a ne!.: purpose: (i) 10 protect nnJ encourage the improvement of lodging ns all ,'spen business that offers tllC visitor v:lriety as to size, tvne 10c- ,. ~ , r""""'~__...~__ /"", .- 3tio~, q~~lity, services, ~mcnlt:os, ~@ulencc and pl"'J..ce. (;) ) . ., D .c. . "". f",ilenu __~J~~l_~~S'E~_' Section 24-3.1, to distin~uish bet~__'cenl:Loclging" as the business of providi:1g short te=m rental occo~odations for the ASyen visi- ............ 01'.'-0'" ...to.: c" ca' ~t:!' "'o:'lX 's cor' "",.....^,J) 1,.......... -\."~i-'- 'H -""'4 .. ~ ....:;;", l,.......r.. _......:;.....""u and n:.~o:.!si::~q as long te=m rental a~d owncr-occupnncy not for sho:"t- te::T.: :'0:1tal vis1 ~or use. 31 iminate t;.e des- ti::ction ~et~..een l~~:gc, hotel, ;;::.;1 ti-::zni:y ~nd/or cOi,:d:::>. ;\;ncnd =:ny other ordina:1ces :.;ith defi.nitions inccnsist~nt t~e~e~ith so the ~esti~ctio~ betwoerr sho::t...tc:::-; V~ISUS long-t8:-m is cO:1sist~nt t:'~::":.)t1ghc:..:~ tbeCi ty Code. ;:-:0......... _.~...... .. .........,. ........ . ~........~~ r,~.~-')t,~ V .:...v.....",;.:;:. .....-~, ...:."~:~.t. ':"".;-;'~.. a::~}:toxi::1:' t cly 85 ?:-o~.!idcJ 1.:1 ~::c at~::d:o:d A~'"lC:'" --....-... . p~CGnAM T:\10 --- EUSI~~ESS LICE:'~SE ~~end the Business License Ordinance, Section , to require all Lod5!;ing (short term rentals) to have a separate Lodging business license for each propcrty (as idc~tified by the Assesso:rf s ?arccl ~~uT'"lbeT-l~1 digit code). Said License shall not include a restaurant OT other business - only the lodging function. Other businesses on the same parcel shall have a separate license. PROGR^:'g'iREE_:.:_:_ .cSc~ :r..AxAl~~oJ:i.r'.:~l'-~~< A;ilend the Sales Tax Ordinance, Section .-.---.--.------.' to req:Jire 0.11 Sales Tax Account Nt:mbers to correspond to tile above i3i.:S.i.ih~SS tic$'n:;a Nt:mher and :\ssessor 1 S Parcel ;\.L:TIOer as dcfin-eJ aoo'".o 50 ti,at: cile t.oi1t;11:..- sales t:ax J.'(:'- cci;)ts r/c;; aC~OU71t sh3.1 i ref10ct 3.ccurately tile short te:-r:1 rcnt3.1 ~cti~:ity on t:1Z prcpertics so identifieu. PRCGRA,\! FOUR --- !<ON'n-;L~';ZE:'HTTAl'\CE OF SALES TAX :\::;end the Sales 7ax Crc:.nance, Section , to elimin::-:.te ~ll :f:li~g c~d ?ay';n~:1t cptic:1s ex~ept for ~0~t~1: filing ~~d ?~:~8~~. Negcciate tvi-th the S~ate ~~(! CD:'::1ty to ill:lke ,the Ci~y tnc (lgent to collect their snles tr:xcs f:-c;:: City bu:;;i:1eS$~s., ~7:~ to do so 'wonthly. ..'~OTE: T~e Aspe~ 2c~~omy ishi2hly seasonal ;:."l.....,! -.."'" . "e ....1.':> ffiO::~:11Y' fl:"O?:'CSS .....0."., ,~,'" ..,;..........JI to be l:ieasu7zd ncc:.~:;~tely an", 1:1 a tiwcly ~\:'J.y . ~::e f::':)~\' 0:' lcJ;:;i:1f, t'cc~~?'t:; os ~C3z~:"cd ~y selos ~ax s~llcct.- 0,' ;- ~ .0 t}:e ;:lost :'CC~:Tat.e -:",,,,".{ .,..-:..f::l: ~,..,... ~;~r~ ;.;.on... .. .........""'............... ~~dcx avail~ble for use t:1roH:.;~:O,Jt the jl2a!'. EG,;':ever~ ~.:hile ~:'7::C ~)::'opc:-tles :rC7'OTt :::~.:-~thly, :3E::1y=:::::ort <;r:;:. 3-;'"' ter 1:; ~ e:1d for 5c:::e of t~::;;:7l t.heir j.c.nua:ty recei:;ts ca:1 5!1ow :':11 in 'the st~'tistics as l:ttc as April O~ May. Thus, the sales tax r~cei?ts, as ~QW ~c- porteJ, do not accurately reflect the extreme seasonality of the local econo~y. P!{OGRA~,1 FIVE --- CQ~.1PUTER REPORTS The Finance Office should prci,arc monthly computer printD".:ts un rll(' ;h~)r.t ten" r8!1t:11 :CJ::ri\rj,::' i.n the Cit,v f(Jr \!';e uf the "'" r>" Zvninf~ Enforcement Officer) the planners anJ the loclging illdustry (ACR, ALA, etc.). !i~__.E?E3:1~~.:.._1_~s.'~}~~g~ wO;.lld inJentify all parcels (Assessor is 14 digit pnrcel i.Jcntification number). The :vning, t,,:c business liceHse number, the sales tax account number,. tiH~ SIC, the sales tax collected for the previous ;:orlth, and ~nv properties licensed but not paying this ffionth. T}.1e ....n..........~nly <;1;.,..,lu....;:co1 s."...~..,-v .........,1,.; ':":'_-':"~~"::,,~__~':~!.:'-':-,.~":-_~~:.~_~..L .. -................ report total r'cce:pts, number of pa~ticipants and number of deli~~u$ncies by ~zigh- borhcod and SIC fOT t:le current rr:onth, and ~he cha~~es f::-cr:; the same month a year 2.60, 2nd last :r:ontn. A s0~i-annual six month Te~oTt en lodging industry ?erfo~- r.:nnce each t.;intcT 2.nd each 5ur.....er toJci.lld be p:'e?::l:'cc, '.'~' ... ... .~... ..... special analysis cc~po,~ing the .6..ssessor; s inven'tf)!"y of lodging with the City Finance Office inventory and the ACR invento:-y. Each :'cport t1oult! :ll~o co....pa:-e Sl:::'.:1er (!;!::ry '::'1:"':..1 October) and \.;intcr- U~o'./er.:ber thru Ai):til) perfo=::;u:1ces, I !(f 1$ rl I;, nc~sure the off-seaso:1 lows, identify lo~g term tre~ds) ..,,-,.. .......- . Each would inclt.!dc a specific :-epo:-t C:1 the G.!? lodge 1.1:11 t quota and its relationship to market conditions Q~d the grotoith control objectives. .~~_~_P:::'~:1._2.I~_~.::-=- ~,-_ClU:~.S~~U_~0 C CO:~OR_AI~!\C~ ACR is the third or fourth or more in :l series of up-again and dOI;n-again reservations services purporting to represent all or most lodging availabil i ty -- each intended as a con- ^ .~ It is tilne to se,tle on one venience to the Aspen visitor. perma.nent entity, one nationally uJvcrtlsoJ telephone numoar and ll1a~e the finan:ing dirc<.:tlY proportional to the gross r~~cipts of each loJg.ing pl'0:)erty. Tv assure the peri:1anenc;e and effccti',:cness of ACR it s110ulJ i10~'; l)e created as a quasi publ,ic entity fir:ailceJ JY a fix2i percentage of Ci ty sales tax :teceipts fro::l lod~ing (sho::--:: te:Olli :'entals) and ~e :"cq:.drcd to ::'c7r'cSC:1t all lice:1scu lodgir:gp?opertie:s in the City li::iits, and thase au~side ...10 r"',;....v .. :;..,.,.:....s _ ......h... .....""...: .:. ...",... ~ ?d co~t::'nct :o~ 0 fec. Its charter s:,:ou!d Li::;.:.t it to the daily invc:-:to7')" oflcdg:r:g avnil::1.bility, .:: nntiona::y advertised telej1honern.1:71~2r U~C2?) ~ 3 ~otline to caeIl ~od~i~; e~:ity, 7cserv~tlon:s~s, etc., e:c.: Llnd :1.0 packages, etc., ctc,. Its board of directors s}-:o:;.ld in(:l:.:de ...t.~.;:\ r; ~,. .....,..... ............./ l.!anager 0:- the City Fi7iance Officer, D.:1C G:1e lcd~;i::6. c......:i.C:~ or ::-;anagc7' e1ectecJ f:-o:n each of the t;~Tee lcdg:.n::. :,Ci.g:1:~0I'hocds, :~~C president of t!~e ALA and the presider:t of the' r'J ~..~ "";'1,1.. cc'::CLtJS!Oi\ The above six programs interelate to st,rengthen the i\sTJen lodr;in?: industr;: by [.ivins:, it nc'..." status in 1<1\\' and some improved central and data services. They eliminate several current hindrances to ludrin~ effectiveness and they give to each owner considerable frecJom to improve uperations and \llWX;ldc fncilities. /\5 such thcy co.mprisc incentives to L;~ j!'",~'l:-..tn' ~, lL:;i!'O\"(. '~(:n'i('~..,; to the vls.it,"il'. --"', .--.-., r>" . 0~~a.t1t It~~ ~CtJ Director 'f':'- FROM: . . Aspen City ~ounc;i.l Jim Reents, Housing TO: DATE: December 18, 1979 SUBJECT: Low, Moderate & Middle Income Housing Price Guidelines When initially. established in 1978 the housing price guidelines were designed to reflect the current cost of construction. At the time of initial adoption, the Council in their resolution also adopted a method of updating these guidelines on an annual basis. The formula that was.proposed was an averaging of the Denver regional house pricing index and the national housing index. .For 1979 the average of these two indices was approximately 17% increase over the previous year. . . The intent of the housing price guideline was to set a level at which housing could be produced within the community. . It was felt that by having rental and sale p~ice restrictions lower than the cost of construction would be a disincentive rather than an incentive. However, at the time the guidelines were developed, no consideration was given to the fact that constr.ction prices within the community vary ~~t= codq rcq~ircments_ ~it~in t~e commer~ial ~nr~~ which already allows an FAR bonus to construct employee housing, there are very different fire code requirements,. thus the cost of building is much higher. OVer the past year the cost of construction has inflated at a more rapid rate than was. anticipated for the method of updating within the housing price guidelines. Thus any units to soon.be constructed but approved under the old guidelines are now not even in a break- even situation. In the original resolution No. 20 that was presented to you, it was proposed to update the existing guidelines and at the' same time 'adopt new guidelines to reflect current construction prices. In addition, this proposal was to reflect a staggered cost of construction reflecting the difference between residential construction without line costs to commercial construction ~ithout line costs. I believe we have already passed a point at which we can consider the development of low income housing within this valley. The only Wqy we will be able to obtain low income units within the ~mmunity is through the process of conversion of existing units .rather than new construction. . At best the guidelines should be considered just that, guidelines. If we se~ a guideline rental or sale level too low, there is no inceritiveto build. If we set a rental guideline.too high, it's no longer moderate income housing. I feel the only equitable way to ~ f: '.. , . ~ '" '." ~" " '~. .~ ..-" ^ r>" City Council . - 2 - . OeceIllber 18, 1979 . . evaluate projects is on an individual basis and make variations from the guidelines based on that while still retaining them as target figures. Attached is a photo copy of the previous Resolution 20 as well as some information developed by Don Fleisher and Associates with regards to cost of development. At the same time, there is no policy of screening or qualifying rental applicants so that the housing is in fact provided to individuals within the community who fall into a definition of low, moderate or middle income. ,.. JR:ds Attachments . . . . ~. '...... l. , . .. .... .. . , .. . .' . .. . - .... .' " " , ,..'0-. : I;'" " ~ . r:o/ ~, ~ r-,. RENT REQUIRED FROM EMPLOYEE HOUSING IN THE COMMERCIAL CORE TO GIVE A ZERO RE1iURN GN CASH INVESTED. r>" Assume a rent per s.f. of net 1~asab1e area of $1.00/s.f. Operating expenses, based on experience with other income properties, include taxes, insurance, water and sewer, repairs, custodial, management, etc., totalling about 20% of gross income. .. The net income to the owner is therefore 80~/s.f. of the net leasable area. This is the income per s.f..of net leasable area. After allowing for hallways, stiars, mechanical rooms and. other common building areas, a building can be designed for about an 80% efficiency of net leasable area to gross building . area. Net income to the owner is therefore 64~/s.f. of gross building area. Estimated raw construction costs of apartments in commercial core in 1980 (including carpets.and app1iance~) is $75;OO/s.f. Architectural fees, financing costs, development fees and other costs (NOT i.AND)tol:al. 30% or rawm . construction costs, based on experience, Le. 22.50/s.f. T?ta1 cost of construction, excluding land is $97.50!s.f. Assuming 70% financing for 30 years at 10~% interest, the monthly mortgage payment per gross s.f. is 62~~. " On'an investment of $30/s.f., an owner will receive a return of 1~~ per annum, or 0.5% perannu~. In practice, due to the poor cash return an owner would not be able to borrow 70% of the_cost of the building, making his cash outlay even larger, though his cash return would also be larger. 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