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HomeMy WebLinkAboutagenda.council.worksession.20120521MEMORANDUM TO: Mayor and City Council FROM: Jessica Garrow, City Long Range Planner Chris Bendon, City Community Development Director MEETING DATE: Monday, May, 21,�:30pm Council Chambers RE: Changes to CC and C-1 zone district REQUEST OF COUNCIL: No action is requested at this time. Staff is providing a status. update on the process for updating the CC and C-1 Zone Districts. BACKGROUND: On April 2"d, City Council a es to the CC and C-1 zone approved changes districts related to height and free-market residential development. The specific changes included reducing the maximum height in the CC and C-1 zones to 28 feet for two-story buildings. At the time, City Council indicated an interest in exploring additional code amendments to allow a third story, but that additional discussion regarding the specific height and allowed third floor uses was necessary. Staff has outlined the process for updating these zone districts, in the "Public Outreach Process," below. In addition to changes to height, the April code amendments incorporated minimum first floor floor -to -floor heights into the zone districts (13 — 15 feet , in CC, and 11 — 13 feet in C-1). The amount of Free -Market Residential floor area allowed for non -historic properties was reduced from .75:1 to .5:1 in both zones, and only if equal amounts of Affordable Housing is provided on the same parcel. Historic properties maintain a .5:1 Free -Market Residential FAR by right. Finally, changes were made to the allowances for rooftop equipment. The required setback for all rooftop equipment, except railings, was increased to 20 feet from any street -facing fagade. In addition, rooftop railings must be setback equal to the height of the railing. PUBLIC OUTREACH PROCESS: Earlier this year, City Council approved a new process for amending the Land Use Code. The following steps are part of Step One of that process — Community Input: 1. Compile existing public feedback from the AACP update related to appropriate downtown heights and land uses. 2. Conduct an updated survey asking the community to identify the heights and uses that are appropriate for downtown. The survey went on-line today and will be open for 3 — 4 weeks. Staff sent a survey link to ACRA, CCLC, P&Z, and HPC asking them to* respond to the survey. In addition, staff has sent a "letter to the editor" asking the public to respond to the survey. 3. Conduct an online forum using Open City Hall. Staff is utilizing this new tool to enable community members to provide their own comments and feedback on the code amendment. This went "live" today and will be open for 3 — 4 weeks. + 4. Receive input from P&Z and HPC. Staff will be meeting with P&Z and HPC in early June to receive their feedback on downtown heights. 5. Conduct an analysis of mechanical and stfuctural needs in mixed -use buildings. Staff has commissioned an outside study to explore this issue. The final report will be reviewed by local architects and city building officials to ensure it reflects the realities of construction in our climate. 6. Receive initial direction and input from City Council on the uses / heights that are appropriate for downtown. Staff has scheduled a follow-up work session on June 18th, which will provide City Council an opportunity to discuss all the public outreach and to give staff direction on processing a code amendment. Staff is also organizing a downtown walking tour for that date. 7. Utilize selected 3-D modeling to illustrate what different heights might look like. This information will be presented later in the process, when there is more clarity on what direction City Council is interested in going. The second and third steps of the code amendment process are presenting City Council with specific code language. Staff anticipates being able to present code language to City Council in early August, with public hearings expected in August and early September. Staff requests City Council provide feedback on the proposed Public Outreach process and timeline 2.0 TO: MEMORANDUM Mayor and City Council FROM: Jessica Garrow, City Long Range Planner Chris Bendon, City Community Development Director MEETING DATE: Monday, May Z 1, 15:30pm Council Chambers RE: Mitigating the Impacts of Development white, paper REQUEST OF COUNCIL: Staff is requesting City Council provide direction on the suggested implementation steps outlined in the Mitigating the Impacts of Development white paper. BACKGROUND: Earlier this year, City Council directed Community, Development staff to analyze the various negative impacts of development as part of the implementation of the AACP. The attached report (Exhibit A) is a compilation of work by the Transportation, Parks, Environmental Health, Engineering, Building, and Planning Departments, as well as the Canary Initiative, APCHA, and Kids First. The report focuses on six areas of the community that are impacted by development. Staff has outlined how impacts are currently mitigated and, where appropriate, outlines recommendations on other methods to mitigate those impacts. The chapters are: • Parks, Open Space, Recreation & Trails • Transportation • Environment • Affordable Housing • Construction • Public Health and Human Services The purpose of this paper is to outline, at a high level, how development impacts these areas, and what steps the City currently takes to mitigate those impacts. In many cases the City has effective and proven methods of mitigation. In other cases the City could, mitigate in a different or more effective way. The paper outlines, when appropriate, potential additional implementation steps the City could take to better mitigate the negative impacts of development. Staff requests direction from City Council on proceeding with any of the steps outlined. Some items are currently underway, or are in existing work programs, like APCHA's update to the housing cash -in -lieu fee study. Other items are not currently part of department work programs or will require additional monies, like the standardization and study of transportation mitigation methods. ATTACHMENTS: EXHIBIT A: Mitigating the Impacts of Development white paper Mitigating the Impacts of Development r yR°.. 4�� .:•:F� '�:)•..y:i: ?§'4::• aX, Development creates a myriad of both positive .and negative impacts. On the positive side, development of affordable housing creates places for local workers to live, and development of transit systems improves the connectivity of the community. Development can also increase the tax base and result in new community organizations.. On the negative side, development creates construction which can increase the dust and noise in our neighborhoods. It can also result in more people using our parks and trails. All development has an impact, both positive and negative, on our quality of life and community character. This white paper, Mitigating the Impacts of Development, outlines the impacts most often associated with development as "bad," or "negative. It is important to note from the outset that the positive aspects of development are not the focus of this paper this paper is intended to provide a general overview of how negative impacts are mitigated. -While there are a variety of impacts from development, this paper focuses on six key areas of Aspen's community character, natural resources, and quality of life. - Parks, Open Space, Recreation & Trails - pg 3 • Transportation - pg_ 5 • Environment - pg 8 • Affordable Housing - pg 13 • Construction - pg 18 • Public Health and Human Services - pg 19 The purpose of this paper is to outline, at a high level, how development impacts these areas, and what steps the City currently takes to mitigate those impacts. In many cases the City has effective and.• proven methods of mitigation. In other cases the City could mitigate in a different or more effective way. The paper outlines, when appropriate, potential additional steps the City could take to better mitigate the negative impacts of development. Each topic is divided into four sections: • Identify the impact - Methods to offset impacts • Current mitigation techniques • Suggested Next Steps It is important to note that mitigation takes three general forms, but in all cases it is meant for physical, or capital, improvements: 1. A physical offset, such as a newly deed -restricted affordable housing unit, or additional bike racks. 2. A fee -in -lieu, such as a cash -in -lieu payment for affordable housin Fee-in-lieus are intended to enable the construction g of physical improvements at a later date. As an example, the C ity of Aspen Mitigating Impacts of Development 1 City collects a cash -in -lieu fee for the School District at the time of building permit. The money collected from. this fee is transferred to the School District for their use on physical/capital improvements. 3. A Development Impact Fee is a one-time fee assessed on development for their infrastructure impacts. Impact Fees can only be used for capital infrastructure improvements. ' They cannot be used for ongoing operations or maintenance costs and they cannot be used to address -existing service deficiencies. The City assesses Impact Fees for Transportation / Air Quality, which is used for capital costs related to transit. The City also assesses a Parks -Impact Fee, which is used for land improvements, land purchases, and facility construction. City Council requested this Mitigating the Impacts of Development white paper as part of the implementation, of the 2012 Aspen Area Community Plan. Community Development staff requested input and direction from City Departments to ensure the white paper is accurate and up to date. This white paper represents a collaborative effort of the Transportation, Parks, Environmental Health, Engineering, Building, and Planning Departments, as well as the Canary Initiative, APCHA, and Kids First. 2 Mitigating Impacts of Development Parks, Open Space, Recreation Tr ils ..\a dent"fy J3:1ti.:;:�..:R� •:r:., a�a,,. ��...: LZ:f 1..:,. x: impact The impact of development on parks, recreation, open space and trails can be measured in terms of population: As the number of people in a community increases, so does the intensity of use on active and passive parks, recreation facilities, trails and open space, potentially reducing the quality of the experience, impacting ecological health and wildlife habitat, reducing the availability of facilities, and resulting in increased maintenance costs. �. ,..\\.;. ...R\":.. Q\r:,, .:i .a :±'+i'\'. a\ ..a�.. \iih.;:; 'i. ti<L. .\o,: :;w. .r.,:. �'�'�i±:. Y::<.•.:. '•• .. a:• .• f.: .ab. .... .:.. ::.. ...i � ':S .,,... �h, v`\ ,: `hr '♦o.. .�,.. '` \\.' �. .\:" \..4 oE.. �..\ ?\;t;, ) :;'\i. .,... ,` < :\�a$; ".r.Y,q,, :.. �:}. ..,., •:w' ;:�'' :.�.. )Z :.'P `:. x: a�:' :an `$0 :.�. y '.\�.:�: .\� a`r< \ :.\: \\L S\„� y2� .;:\; y1.S. ': t.�: Iy 2;:> �4:Y �.<: :�:r: �r '��a;2w . .:: \$.`' .<'7. \La+ 'ai:;> ':::�W` pro.. .\. :\'< :C: ' .�." � •era:.: '':t:;.:i \;A .`x:.c. '<C,. \.. .R�• :,'4:.v ,:J.::: h�. �M The types of mitigation for parks, open space, recreation and trails are relatively straightforward: Obtain land for active and passive parks, recreation, and open space, and obtain land and/or easements for trails. Another type of mitigation is ensuring there is adequate physical infrastructure and maintenance in the parks, open space, recreation, and trails system required to accommodate the increase in users and created by the new development. Determining the level of development impacts may be easiest in terms of active recreational parks and river -related recreation areas. A healthy balance means there is adequate capacity so that recreational areas are available for use by sports groups, schools and ind.ividual users without conflict. The Parks Department regularly evaluates this balance. For open space and trails, this balance may be harder to assess, as they are used by individuals and not organized groups. Surveys, trail counters and field staff observations help determine the quality of experience and level of impact to the trails and open space. Current iiton i techniques Currently all development is assessed a Parks Impact Fee. The basis for the Parks Impact Fee was established by a 2006 consulting study by BBC Research & Consulting. Essentially, the total cost of replacing all land now used for parks, trails and open space, along with the cost of replacing infrastructure (paved trails, etc) was divided by total developed floor area in the City. This established a baseline service level for the fee. Today, the Parks Impact Fee is $5.45 per square foot of residential floor area, and $4.10 per square foot of net leasable commercial floor area. The Parks Department uses the Parks Impact Fee along with a 1.5% sales tax for open space to buy parks, open space and trails, and Mitigating Impacts of Development 1 3 to install appropriate infrastructure to optimize public use. After more than a decade of extensive land purchases and acquisitions, the Parks Department is now more focused on establishing open space management plans and designing and constructing capital improvements to existing structures. Land management planning, while costly, does not involve capital purchases and cannot be funded by the Parks Impact Fee. Suggested Next Steps The Parks Department believes the current Parks Impact Fee is adequate to mitigate for the infrastructure impacts seen from development. In the future, the City may want to re-evaluate amount of the fee to ensure it continues to adequately offset the impacts to the parks, open space, and trails system. 4 Mitigating Impacts of Development Transportation Identify .;x,`;' "C .: impact Development can result in increased traffic and congestion. This, in turn, results in additional strains on the heavily burdened valley - wide transportation system, a reduced quality of life for commuters, residents and visitors, and increases in a.ir pollution, such as PM-10, carbon dioxide and ozone emissions. 1..+. ... Li .. .. .. .. \ .. .vv.v , .. na.,.]... .v. ... v. ,\\�v .nM n v.nP .. .:v,n \vv ... v..:. .\:.. ]n 4.v:^: „�`• :J•;.''\vv •iCn'<:'. :' M., .. \\,.... ...\. . :•).. ' .s>: .e,,,. o\ .o.a ..,.. ..1,: \ .K:.; .2: �ijy� ?:. \<' \..,Z '.�,. '`?;): apt::.;�.,..,v .:'.. ,: ..;:': �:!:a. ...,`'.......,.;,' "' <. ':>. , ., .]! ..,.: is\. :.:... .v.,• :4?. :\�` .!•.lRRF:`:4�. �: �Y. V:f.: a:. + fin. .. ... , .:........ .. n.. ..� .. ..v " :, •.v.:. :tv., ':..::. .., .. :\.., ..i !. ..�. n'N ]. 1.. .,f+' r. \ .•4a + v\ There are a variety of methods to offset transportation impacts. For instance, on -site improvements such as on -site bike fleets or participation in the City's Car to Go program can encourage fewer vehicle trips from new development. . The development of affordable housing can result in fewer transportation impacts on the valley's transportation system by enabling commuting workers to live and work in the same community. Additionally, the provision of alternate methods of mobility, including valley -wide public transit, park n' rides, carpooling, Transportation Demand Management strategies, an efficient and user-friendly airport, and a network of safe and efficient pedestrian and bicycle paths can offset adverse impacts. Exactly what types and amounts of mitigation is appropriate for a given development application is a challenge to define. The City does not currently have a clear set of standards outlining what mitigation types are appropriate for a given development proposal. Current �<;]::?i:e!,<�::ii.i. E`:: '?:k!:"::;::i§'<>>rfi.`i`:�.: n:mitigation '.`:Q,..\.vs:.<:�:J)� •R>.\;'i,..:�.�i:'f";�, ¢;:.c:' `:�:]��yA�.>..+c..v!:; �\:.:C>;`J\'k:..n?ay \.•'\.o a,;`�`(;�' ':;�:��\' ���'�?:`��o-.,,.�.,;,`��'YS:„1: :'�2�'' �. .,yr`�' vv" ;�,.. F;:i':',::;1v"`,, : `..:!C].: :'.i<'.+}:`i] "Vi,..E>C:: '.?;..: Y••;4 ;4, .`qy,',L`:'.�,.,JZ�:'. \f), :..� '.r ., a+:. «�!w.J.,.,` :o:t sEJ; ':. .... .:.v.::2 :vxC^: ]:`\`.ti v\C,`.3,:, .3,,; •�;iy;.?; kvX4\. is \.. techni,,..,­ At In 2006, the city instituted a Transportation Demand Management/Air Quality Impact Fee. The fee can be used for infrastructure and capital improvements, but cannot be used to defray operation costs. The fee is currently set as $0.61 per square foot of floor area for residential and hotel projects, and $0.46 per square foot of net leasable commercial space. This fee is currently the only mitigation method for air quality impacts. The primary tool for requiring mitigation is review standards contained in the Land Use Code. These are varied and do not provide clear direction. There is currently no specific requirement Mitigating Impacts of Development 1 5 that an applicant provide a baseline study of existing parking and traffic conditions in the vicinity of a new development. Nor is there a formalized requirement for an applicant to generate. a study of potential parking and traffic impacts that may result from the new development. While the city has requested studies for PUDs and SPAs, there is no consistent scope of work for such studies, and the Land Use Code does not provide clear direction that non-PUD/SPA project in the downtown is required to provide such information. Determining a development's share of mitigation is done on a case - by -case basis, starting with meetings of the City's Development Review Committee which reviews applications and informally discusses impacts and possible mitigation strategies. Because there is no set of clear guidelines regarding potential mitigation methods, the applicant often relies on the Transportation Department to provide a mitigation strategy for the review process. Currently, a mix of mitigation options is worked out between the applicant, staff, the P&Z and City Council. This is often a haphazard process with constantly changing targets, and it is often not resolved until the final ordinance is ready to be drafted for approval. Staff believes there is substantial room for improvement in this process. Aside from mitigation that is directly related to a specific development, the City gathers revenues for the Transportation Fund from the following sources: • 0.15% sales tax; 0.5% accommodations tax; 2.1 % construction materials use tax; • A portion of Parking Department revenues, determined annually. Revenue .from the Pitkin County 0.5% sales tax is collected and disbursed by the Elected Officials Transportation Commission (EOTC), mode up of representatives from Aspen, Pitkin County and Snowmass Vi1.l,l.age. Substantial funds are provided to RFTA, as well an annual "set -aside" for a future Entrance to Aspen project. Suggested Next Step Planning,, Transportation, Environmental Health and Engineering staff believe there is room for substantial improvement in this area. There are a number of implementation steps outlined below, but staff believes the following 3 should be completed to ensure all development mitigates for its share of transportation impacts and that all development is treated fairly and consistently. Staff estimates these efforts will require $50,000 and 1 year to complete. This money is not currently allocated and will require a supplemental appropriation. 1. Establish a "`trigger point" for required parking and traffic studies. This should include a standardized scope of work for the studies, including baseline information, projected impacts, and potential mitigation options. Quality of Service as well as Level of Service should be addressed in any studies. 2 " Establish Transportation. Demand Management (TDM) Guidelines, which will include a wide range of potential user, infrastructure, and safety improvements to mitigate varying levels of development impact. 6. 1 Mitigating Impacts of Development 3. Explore the creation of an Aspen -specific trip generation model that can be used by applicants when they prepare traffic and transportation studies. This would ensure that the data provided in transportation studies relates to on -the. ground conditions in Aspen. Standardize the review standards for different types of land use review. Language should address developer's share of mitigation. Planning staff believes this will provide greater clarity for staff and applicants alike. There have been changes in the composition of,transportation and air quality infrastructure funded by the current Transportation Demand Management / Air Quality Impact Fee. Staff believes it may be worthwhile to update and re-evaluate the fee in the future to ensure it continues to adequately offset transportation impacts. Explore the ability to impose a fee or other form of mitigation to offset the transportation and air quality operational impacts that result from development. Re-evaluate on -site parking requirements to ensure they 'reflect the parking demand resulting from development. This could include a discussion of a maximum parking standard. Mitigating Impacts of Development 1 7 Environment Identify t-he i Development has numerous impacts on the environment, ranging from destabilization of mountain slopes, destruction or removal of riparian areas, the generation of stormwater run-off and pollutants, energy consumption, the production of demolition debris and household wastes, and the degradation of the visibility and quality of air. Air pollution caused by increased traffic and congestion can lead to a multitude of health impacts to the community, including increased respiratory illnesses and heart disease. Because of their ties to transportation, air quality impacts are discussed in the Transportation section of this paper. ;\C, ;'a,+�vt2.., .,.,�\•°: ''.a:{.,. ,v . iis�,.:�., . <..,.\ .<av ` .vp:>'.::::`iifi:3:,? -to x: S, Riparian areas: Development located in riparian areas can affect the health of our rivers and streams. It can result in increased erosion and sediment in our watercourses, changes to the natural river flow, and changes to the natural vegetation. These impacts can be offset by locating development away from the top of the river bank, requiring areas adjacent to the river to be undisturbed, or allowing only native vegetation. Storm water run-off: All development generates stormwater runoff, and is required to calculate the amount of runoff it generates and propose mitigation techniques. Stormwater management requirements are. detailed in Chapter 28 of the Municipal .Code, which assigns the updated version of the Urban Runoff Management Plan (URMP) as the document that governs the standards and guidelines for managing the quantity and quality of runoff allowed from each development. The URMP requires development to mimic natural site conditions by detaining to the historic rate of runoff and by capturing and treating runoff from 80% of rain and snowmelt events that occur within the City. It details all information required to meet the City's minimum storrmwater standards and provides a menu of options for meeting those standards. By following the requirements of the URMP, developments are reducing the amount of stormwater runoff leaving the site and reducing the amount of pollutants leaving their site. Waste & Recycling: All development creates waste. The clearest way to mitigate the waste generated is through recycling and composting. Waste is an 8 I Mitigating Impacts of Development. AXoperational" aspect of new development and as such cannot be the subject of an impact fee. To some degree, participation in recycling programs becomes an individual responsibility. However, the City works to encourage recycling and proper management of waste and the City could require construction to recycle all applicable items. The Environmental Health Department has continually improved _the City's recycling program, and is currently working to expand the compost program. The Environmental Health Department is also researching possible code amendments to update the amount of space required for waste collection. Demolition debris: Impacts on the landfill is under Pitkin County's purview, however, the. City has continually explored and implemented new types of mitigation through the building permit process. The Efficient Building Program included a demolition component, which required development to outline where demolition debris was going and how much was being recycled, re -used, and thrown away in a landfill. In 2009, the City adopted a new Energy Code which eliminated the requirement that a development track. demolition debris. Since the code change, the Building Department has seen that the recycling and re -use of materials has become a regular course of business because it is more cost effective than simply sending everything to the landfill. Energy Consumption: Buildings use energy, which has impacts on the environment, especially when that energy is created from non-renewable sources like coal or oil and gas. As an electric utility, the City is striving to increase its usage of alternative energy sources, such as solar, hydro and wind power, from 75% to 100%. In addition, energy consumption is addressed through the Building Department's Energy codes. Current A'c'+'.,.;:;..:.dya. .•.;\Z'..to .: aq �:',::'ti <''.`a i.::.i.J,'.,. ismi ..: \..., toi-ga .1;:>, ;;;);!••: ., h•..y �...\,'^ �'."{,0. :,.��M' 2 0 \ion .:. ;4a: G.} .tt'"^ y•!. �:2.:`�. ,$:a:£�; d'••�.�;; �:.i t \ :: to :}w. ,�c,.' .�;,��+� '?<`> techniques Mountain slopes: The land use code includes a chapter called "Environmentally Sensitive Areas" (ESA), which requires all development within 150 feet of the 8,040 elevation line to go through a heightened review, called the 8040 Greenline Review. This review is intended to reduce impacts of development on our air, water, steep mountain slopes, and the forest. Visual impacts of development are also addressed through this review. ,The code does not clearly identify the kinds of baseline information needed to conduct a thorough review. Nor does it clearly outline the required information or the minimum standards that must be met for development to prevent or mitigate negative impacts. The review typically includes highly technical issues, including how the applicant is addressing ground stability, mine subsidence, mud flow, rock fall, avalanche dangers, adverse effects on the natural watershed, runoff and soil erosion. An applicant must submit a site improvement survey, and may be required to submit a 3-D model illustrating how the development proposal will blend into the open character of the Mitigating Impacts of Development 1 9 mountain. However, the scope and adequacy of technical information to be submitted is typically negotiated on a case -by -case basis, which creates confusion in the review process. Riparian areas: The Environmentally Sensitive Areas (ESA) chapter of the land use code requires a heightened review of development located adjacent to rivers and streams, called the Stream Margin Review. Developments within 100 feet of the high water line from our rivers or within the 100-year floodplain trigger Stream Margin Review. This review is intended to reduce impacts of development on the natural watercourses and natural ecosystems along the rivers. Visual impacts of development are also addressed in this review through an additional setback requirement and lighting requirement. Like the 8040 Greenline Review, the Stream Margin Review typically includes technical issues ranging from drainage, erosion, sedimentation, bank stability and floodplain impacts. The code does not prescribe the kinds of baseline information needed to conduct a thorough review. Stormwater run-off. Developments are required to detain all increases in runoff to the historic, undeveloped rate and are required to remove pollutants from the first 1/4 inch of runoff from all impervious areas. Developments are encouraged to accomplish this through green infrastructure and infiltration, thereby reducing the amount of runoff generated from each site. Essentially developments are required to mimic the natural system (to the extent reasonable) that would be present, as if the development did not exist. Waste & Recycling: All.development is currently required to provide a minimal amount of space for trash, recycling, grease and other types of waste collection. If:. a development has adequate space for recycling, trash and compost bins, it is easier to implement a new program. Any new recycling program would require a contract with one of Aspen's waste haulers for the pick-up and disposal of these items. Implementing recycling programs such as an expansion of the compost pick-up program typically involves negotiations and contracts with waste collection firms/franchisees. Demolition debris: There are currently no requirements in the building code to recycle or re -use materials. The City is expected to adopt the 2012 International Green Construction Code (IGCC), which contains a set of standards for the demolition of structures. The goal is separate 75% of all construction waste into the recycling stream. If. the City adopts the IGCC, it will be enforced by the Building Department and will represent a new cost of development. Because rriany developments currently recycle and re -use materials now, the new cost will essentially be for the additional documentation. Builders who do not currently recycle demolition debris would need to begin doing so. Energy Consumption: Energy consumption is mitigated in a number of ways. The City's Canary Initiative produces a Greenhouse Gas Emissions Inventory every three years, calculating how transportation, the heating and 1G.Mitigating Impacts of Development cooling of buildings and other sources impact our Greenhouse Gas Emissions. This inventory helps guide different mitigation techniques, which are currently voluntary for development. The Canary Action Plan is our guiding document with the comm.unity-wide goal of 30% reduction in GHG over the 2004 baseline by 2020 and 80% by 2050. The Canary Initiative, in cooperation with CORE provides a number of incentives for property owners to upgrade their buildings to use less energy. They conduct "contests" between property owners to challenge them to make energy upgrades -to save the most energy. Additional programs could be explored to continue encouraging property owners to make energy improvements. The City's REMP. program requires applicants seeking to use energy outside the principal structure (pools, heated driveways etc.) to offset such energy use through on -site renewable energy systems, or the payment of a fee. Funding from REMP helps pay for renewable energy systems, as well as education, and energy efficiency ,,improvements, like electric car charging stations or solar panels on public buildings. An energy code review fee equal to 10% of the permit fee is collected to offset the additional plan review and field inspection workload. Explore increasing the required stream margin setback and adding techniques to effectively re-establish native vegetation when past development has negatively impacted the stream margin area. This would be a joint effort between Planning, Engineering, and Parks. Storm water run-off: Examine methods to better coordinate the Land Use Code's Stream Margin Review requirements and the Engineering Department's stormwater requirements. The Engineering Department believes the stormwater section of the municipal code is, at this time, adequate to address the estimated environmental impacts from stormwater runoff and no amendments are recommended. In the future, the Engineering Department may consider limiting the amount of impervious area on a site or requiring infiltration of a certain amount of stormwater runoff generated by the site. Waste & Recycling: Expand the compost pick-up program. Amend the Land Use Code, and/or the Environmental Health Code to include more space requirements for waste collection. Research other options for encouraging waste reduction at new and existing development. The Environmental Health Department is currently working on this effort. Mitigating Impacts of Development I 11 Demolition debris: Adopt and implement the 2012 International Green Construction Code to separate 75% of construction debris into recycling stream. Energy Consumption: Explore the creation of a Clean Energy Plan. This would require continued multi -departmental collaboration and public process. The Plan would rank future renewable energy. projects in terms of feasibility and cost/benefit, followed by long-term capital planning. Explore implementation of an'Aspen-specific energy rating system for buildings. Consider requiring an energy audit at the time of any real estate sale, which would indicate how energy efficient the unit/ building is so the new owner can prepare for energy upgrades using existing incentives. The Canary Initiative is currently exploring this possibility for affordable housing units. Create a Climate Adaptation Plan to help plan for climate change. This will require updating the 2006 inventory. The plan could include considerations for development impacts. Consider updating the Building Department's Energy Codes. The 2012 International Green Construction Code (IGCC) contains a new approach to reducing "phantom" energy loads in commercial b.uild.ings related to unnecessary energy consumption by commercial appliances, office equipment, elevators, restaurant equipment, etc. For residential development, the I -CC 700 Standard requires energy star appliances and basic standards related to energy efficiency. Neither the IGCC nor the ICC 700 Standard are currently adopted by the City, but if adopted they could go a long way toward improving energy efficiency in buildings. 12 Mitigating Impacts of Development Affordable Housing , is v to . a...:v:: .. v..vv c, ...:. . ,,,.yamoffset §q'. ... , �: � .v::.,.; ., ..2....i.v::; v �:\i:,iS^:iiii is� v:.q.>A.A a:.,,v. \•. '. •.v..:.!'i .'(,C.l�. .:1:� .<v:,v•. ,:,��i.,... ::::q: 'Yam, '.... ♦.?..,.. �\....,�. +, Q.v:`:: !..:;; \ \?; A �.,..?.. \,;::..:;`>a`J:;?:' :+` fir. impacts .i.. .. 4:;.. The generation of new employees creates the need for additional housing for those employees. The provision of affordable housing or a cash -in -lieu fee for the construction of future affordable housing offsets the job and housing impacts created by development. Under the Growth Management section of the land use code, job generation is calculated by land uses: Commercial, Lodging, Free - Market Residential, Essential Public Facilities, and Affordable Housing. The Growth Management Quota System (GMQS) outlines different employee generation rates for each use. Development has been required to provide affordable housing for its employee generation since the 1970s, when the Growth Management Quota System was established. The City has never required development to mitigate for all of its employee housing impacts the highest rate of housing mitigation is 60%. The amount of mitigation required of development varies widely, based on the proposed land uses and on various identified "community benefits." Currently, GMQS requires: • New commercial space to provide affordable housing mitigation for 60% of the employees generated. • New lodge units with rooms averaging 600 square feet to provide affordable housing mitigation for 60% of the employees generated. • New free-market residential units (multi -family units and units in a mixed -use building) to provide affordable housing mitigation equal to 30% of the free-market net livable area. • New free-market residential units (demolition and redevelopment of single-family and duplex) to provide affordable housing mitigation based on the net increase in floor area. There are many instances where mitigation rates are lowered in an effort to gain a community benefit, for example: • After determining that small lodge rooms were becoming scarce, the City reduced the mitigation rate to 20% of new employees generated if a new lodge project featured average room sizes of 400 square feet or less. There are similar rate reductions for the expansion commercial Mitigating Impacts of Development ( 13 lodging, and residential uses in Historic Landmark buildings. The rationale is that such properties are already under a unique and costly regulatory burden, and it is preferable for the long-term health and viability of the landmarks to be physically improved and functional, while retaining historic integrity. Many properties, include those going through the AspenModern Program, have utilized these exemptions. • "Alley stores" of 600 square feet or less are exempt from any housing mitigation. The concept is that small, "out of the way" stores would create a unique experience and might tend to be local -serving or locally -owned and therefore reflect a community benefit. There have been no applications for such space since this exemption was established in 2005. While affordable housing has clearly been a priority for the City since the .1980s, the City's track record of providing exemptions from mitigation indicates that other community benefits are considered to be just as important. It may simply be that housing mitigation is the City"s most powerful and versatile negotiating instrument when it comes to influencing the nature of new development. Current m"itiogation L.t {:a.a:.o .,::...:. '.�<: isra ty,, Asa\, w.. i,Fo;, ,2 Cfi'..�vG,�'N: Z There are a wide range of methods for providing housing mitigation. Over the years, the most highly valued method was the construction of affordable housing on the same site as the new development. However, this has at times resulted in objectionable height and _massing to fit all uses on the site. As a result, the code allows new development to provide affordable housing through actual units built or deed -restricts off -site, through the payment of cash -in -lieu or a housing impact fee, or through an Affordable Housing Certificate program. Cash -in -Lieu & Housing Impact Fee: The code allows for a "cash -in -lieu" payment as a method to pay for required affordable housing mitigation. The amount of the cash -in -lieu payment for one free-market unit is intended to equal the amount necessary to subsidize one affordable housing unit. The current cash -in -lieu fee has its origins in 1992, when the Housing Authority reviewed the costs and sale prices of the West Hopkins affordable housing project to establish a subsidy amount for one FTE. In 1995, the Housing Authority looked at the costs and sale prices at the Juan Street and Benedict Commons projects to further refine the subsidy estimate. Since 2001, the Housing Authority has used the Denver Area Consumer Price Index (CPI-W) for Urban Wage Earners and Clerical Workers to approve annual fee increases. To complicate matters, the City uses a cash -in -lieu fee in some cases, as noted above, and a "housing impact fee" on other cases - and the fee amounts differ substantially. For development that involves free-market multi -family residential, commercial, or lodging uses, the cash -in -lieu fee is based on the subsidy amount necessary for a Category 4 housing unit. Because Category 4 units are intended for relatively high -income households, 14 I Mitigating Impacts of Development the sales prices are higher, and therefore the subsidy is lower. The current Housing Guidelines establish $139,890 as the subsidy for one Category 4 unit. However, for development that involves the demolition and expansion of single-family homes or duplexes, the "housing impact fee is imposed. This fee is based on the subsidy required for the average of Category 2 and Category 3 housing units. Because these lower categories are intended for lower -income households, the sales prices are lower, and therefore the subsidy is higher. The current Housing Guidelines establish $230,790 as the subsidy for one such unit. Some argue that the cash -in -lieu and housing impact fee amounts are lower than the funding necessary to subsidize one housing unit. Affordable Housing Certificate Program: The Certificate of. Affordable Housing Credit program was enacted in 2010. Three projects, each proposed by the private -sector, have been approved through this process. Only one project is fully constructed, so there has been little chance thus far to demonstrate the effectiveness of this program. However, it could emerge as a critically important method of producing affordable housing. Previous to the -new Certificate program, the private sector rarely volunteered to build affordable housing, largely because of the artificially low sale or rental rates they were allowed -to charge for the units. The new Certificate program allows the private sector to not only sell/rent the units, but also to sell the Certificates to others in the private sector who needed to meet City mitigation requirements. This makes it more financially viable for the private sector to build affordable housing. Because a Certificate reflects that affordable housing has already been voluntarily constructed and occupied, it also means that developers buying the Certificates are offsetting. their impacts immediately, if not sooner. Demolition and Replacement of Single -Family and Duplex Development: When a property owner proposes to demolish a single-family or duplex home and replace it with a larger structure, they are given a `menu' of mitigation methods from which to choose: 1. Construct an on -site Accessory Dwelling Unit (ADU), which can be rented to an eligible employee by the property owner on a voluntary basis; 2. Pay the affordable housing impact fee; 3. Provide a Certificate of Affordable Housing Credit, reflecting that a fully deed -restricted unit has been voluntarily constructed elsewhere. 4. Provide a fully deed -restricted housing unit off -site, within the Aspen Infill Area; 5. Place a Resident Occupancy (RO) deed restriction on the single- family .dwelling, or one unit of the duplex. Since 1990, property owners have overwhelmingly chosen either option 1 or option 2 - to build an ADU or pay the fee. In the last 10 years, property owners have overwhelmingly chosen to pay the fee. Going back to the mid-1990s and currently, critics have strongly maintained that because ,ADUs are not required to be rented, they represent an ineffective method of mitigation. Others believe ADUs house more people than the impact fee and is therefore a valid method of mitigation. Mitigating Impacts of Development 15 In APCHA's experience, the above options each have strengths and weaknesses. It is unclear how many employees are housing in ADUs. Some study of this issue would be beneficial. APCHA believes there have been successes with options 2 and 3, partly because the mitigation it straightforward and there are few future enforcement or tracking issues. Option 4 has resulted in_ unforeseen complications related to minority deed -restricted units in a majority free-market complex or a mixed use building. Over time, owner assessments (monthly dues) become completely un-affordable for the owner of the deed -restricted units, with some affordable housing units ultimately being sold as free-market units, with the proceeds going into the Housing Fund to help fund future affordable housing opportunities. Regarding option 5, it is very rarely used, but perhaps more importantly APCHA's data indicates that there is an overabundance of RO homes in the program. Inclusionary Zoning: It is important to note that much of the provision. of affordable housing in the downtown core (Commercial Core and Commercial Core-1 zone districts) and other commercial areas is based on inclusionary zoning and not mitigation. This means that the zoning code requires the development of affordable housing when free- market residential development is proposed on a parcel, regardless of_.th,e mitigation requirements outlined in GMQS. In most cases, the inclusionary zoning requirement will result in more on -site affordable housing than GMQS mitigation would. Other Sources of Funding for the Development of Housing: Aside from mitigation that is directly related to a specific development, the City gathers revenues for the Housing Development Fund from two sources: • 1 % fee on real estate transactions, known as the RETT 45% of the income from a 0.55% sales tax for housing and day care without a current "target" or ceiling for the production of affordable housing, it is difficult to determine whether the current revenue streams are adequate to meet housing goals. Both the RETT and the sales tax fluctuate considerably with economic conditions, as does the demand for affordable housing. Suggested Next Staff believes there is substantial room for improvement regarding affordable housing mitigation. The following are suggested areas of focus: The job generation study that was used for commercial, lodge and office uses is 10 years old and should be updated. Staff believes this is an important step in ensuring the Growth Management program reflects accurate and current mitigation levels. The cash -in -lieu and housing impact fees also need to be updated. This process is currently on -going and is scheduled to be completed ain Au.9ust 2012. City. Council may want to consider evaluating the accuracy of using 16 1 Mitigating Impacts of Development CPI-W for annual cash -in -lieu increases and determine if updated methodology is appropriate. It is possible to have this discussion following the conclusion. of the cash -in -lieu study. The "mitigation menu" for single-family and duplex development should be reviewed for effectiveness. This should include a review of the ADU program and the viability of the Certificate of Affordable Housing Credit .program. Planning and AHPCA staff believe .this is an important policy issue that needs to be addressed going forward. Address issues related to single affordable housing units within a mixed -use or free-market residential building. The Land Use Code encourages the development of affordable housing units within mixed -use buildings. Planning staff believes this is an important aspect of zoning and ensuring downtown remains a vital and vibrant neighborhood. APCHA has experienced issues related to condo declarations and assessments on single affordable housing units within mixes -use buildings. Staff believes some improvements to the approval process, such as requiring separate condominium declarations, could address these issues. Planning staff recommends. that this be addressed through the APCCA guidelines rather than the Land Use Code. The recent zoning changes to the Commercial Core (CC) and Commercial (C-1) zone districts should be reviewed. Any update to these zone districts, including what uses are appropriate for a third floor, should include an evaluation of how inclusionary zoning has performed, an examination of the on -site housing incentive and a feasibility study regarding the ability to provide mitigation on -site versus restrictive dimensional requirements. If Council desires to define or redefine "community benefit," it will involve a comprehensive review of Growth Management to determine whether current exemptions should remain, if some should be removed and whether new community benefits should be added. This process should also include a re-evaluation and update of the objective scoring system. Based on past work, staff estimates this process would take 1 - 2 years due to the complexity of the discussion - one person's "community benefit" is not anothers and coming to a consensus on this issue is difficult. While this is a worthwhile endeavor, staff does not recommend proceeding with this analysis at this time. Mitigating Impacts of Development 1 17 Construction Identify the Impact All development, whether a small remodel or a large redevelopment, has a construction impact. This can range from street or sidewalks closures to .noise and dust to changes in traffic patterns. The types of mitigation for construction impacts are relatively straightforward: require a plan that controls dust, noise, sidewalk closures, etc. However, each construction project is different, so the specific methods change based on project scope and location. The Engineering Department administers the Construction Management Plan (CMP) process and the Construction Mitigation Officer monitors compliance with the plans. A larger policy discussion could focus on the creation of a construction pacing program, which could limit the amount of construction in town .at any one time. Current mitigation techniques Currently, all projects impacting or disturbing 400 square feet or more S no uggested 2`•.by<, :Y.. �`2:+, '!•y . .n.:.:Next :x}f k: i. \�i!�.:Steps C:; •,: , ;\ .?c;::;A>. p �;.;:.. ,Y.So!? �k! ` „o . v.k � :b$:"'>`.„0, �� ..`.'9.,�v „.. x,:C;`�?�.' `C 1� . `.'aN�nk: Cv. `� S3 '�h�. Y�`:. \'y;x::;.,`u.•�,n.4 ;!•::: �'\'� '',>�\r,''. �. `ix1 .Y'!;.Y.,<.::•.•:.•. , h�\`.. �\y. .,`, '�\'.. C:Ji. • :: �?it .m�p.': ,+� ` y�yy� .s.�. y:"� S�\bo \ , :'' y:'a ' a4 y � ..y�,\::a;; \0;: w '\@ .: •. ).` .:''. � u..,. yx':a " '\i.' Y C;??:sb The CMP process was instituted in 2006 and has been regularly updated as appropriate. It has been effective in managing the impacts of development. Staff recommends a continuation of this approach. Based on recent City Council direction, Engineering staff is exploring changes to encroachment licenses related to construction work during peak seasons and in areas with high pedestrian traffic. This effort could include revising the fee schedule related to right-of- way encroachments by area or by time of year. Staff recommends continuing this effort. A Council check -in is scheduled for this summer. 18 1 Mitigating Impacts of Development City Council may want to consider a construction pacing'system that would limit the number of construction projects occurring at any one time. This has been discussed a number of .times over the past 30 years, but has never been implemented. In. staffs experience, this issue is raised every few years and significant community and city. time and resources are spent exploring options, but no program is ultimately adopted due to significant lack of community consensus. Staff --does not recommend moving forward with this work at this time. Mitigating Impacts of Development 19 Public Health and Human Services identify the impact In the past few years, the planning and public health professional communities have engaged in a discussion related to the impact that development has on health and social services. This is an emerging area in the planning and land use field. Typically, a large development or redevelopment project is asked by the local government to quantify its impacts through a Health Impact Assessment (HIA). That was recently done in Battlement Mesa related to the development of Oil & Gas Development in a residential area. An HIA is ,not typically required of projects like the ones seen in Aspen as they are of a smaller scale and it is not easy to quantify how a single mixed -use development might impact health. It would be more typical for a city policy to be evaluated through an HIA. For instance, a policy related to housing or bike connections might be evaluated through this process. A Health Impact Assessment (HIA), as defined by the World Health Organization, is "a combination of procedures, methods, and tools by which a policy, program, or project may be judged in terms of its potential effects on the health of a population, and the distribution of those effects within the population." Currentrri'im anon techniques Currently there are no adopted City policies or fees related to health and human services impacts specifically from a development. Determining the impacts in this area, and therefore a developer's share of impacts, is complicated because of the relatively small scale of projects in Aspen. There are no straightforward impacts from a specific development. While there may be impacts from development in general, or a unique project, research in this area would need to be conducted to accurately determine any incremental impact directly related to a development project. A portion of the Housing and Day Care sales tax goes to the Kids First Program each year. This is a dedicated tax passed by Aspen voters, which funds operational costs, as well as direct contributions, indirect services, and support to young children, families, and 2O' I Mitigating Impacts of Development childcare programs, through the Kids First department. In addition, fho rninfvtc wmmifhv r'nmmi inifw M inA iL f# ir%AnA f-hrn� �nh rl�,rlir•��-r..�l Mitigating Impacts of Development 21 FROM: Ben Gagnon, Special Projects Planner Jessica Garrow, Long Range Planner Chris Bendon, Community Development Di ector MEETING DATE: Monday, May 21,1J30pm Council Chambers RE: Lodging Study Update REQUEST OF COUNCIL: No action is requested at this time. Staff is providing a status update on the Lodging Study, and is interested in Council direction regarding the next phase of this work. BACKGROUND: One of City Council's Top Ten Goals is to "examine the desirability and sustainability of preserving existing lodging and producing more lodging in Aspen." As part of this effort, staff is conducting a lodging study to examine our existing inventory and to understand the current state of the lodging market. Staff is utilizing a two-phase approach to Council's Lodging Goal. Phase One: The first, stage includes an overview of the City's role in the lodging sector, interviews with key players in the lodging industry, and an inventory of lodging in Aspen. This initial report is attached as Exhibit A. The lodging inventory was compiled through staff conversations with lodge operators. In some cases information was not available at the time of this phase due to seasonal closures. Staff will continue to update these numbers as lodges open for the summer season. In addition staff will be updating the lodging inventory with new MTRiP data (expected in late June), and will be conducting an analysis of lodging demand, building off of the 2006 HVS report, Phase Two: Staff requests City Council direction on proceeding with the second phase of the lodging study. Staff proposes the following process for Phase Two of this work. This process would be based on the work contained in the Phase One Report, and would require hiring outside consultants. a Phase two would begin with a series of facilitated roundtable discussions between lodging owners, planners, developers, general businesses, ACRA, the Aspen Skiing Company, Stay Aspen Snowmass, and outside lodging experts. The discussion would- focus on three topics: 1. Is there a problem in the lodging sector as it relates to product diversity? 2. Should the City have a role is addressing any problems? 3. If so, what can the City do? Staff would like to hire .two to three outside consultants to each create a report on. potential code changes to the City's lodging program. Either during the drafting of the reports, or after, staff would request the local lodging -experts interviewed. as part. of the Phase One report to review these to provide an "Aspen reality check" to the proposals. Staff believes this conversation, even if it results in a finding that the City does not have a role in lodging, is an important one. Phase Two work could be handled as part of the existing AACP Implementation budget, and would take approximately 3 — 4 months to complete, depending on how quickly consultants could be hired. ATTACHMENTS: EXHIBIT A: Lodging Study Phase One Report Aspen's Lodging,.S . ector An Analysis of Existing Conditions One of City Council's Top Ten Goals is to "examine the desirability and sustainability of preserving existing lodging and producing more lodging in Aspen." This study represents the first phase of .this effort. It is intended to provide a "big picture" overview of Aspen's lodging sector. The study is divided into five sections: • History of Aspen's Lodging Policies - pg 2 This section provides an overview of the City's role in lodging since the 1970s. • 2006 Analysis of Aspen's Lodging Profile - pg 7 This section provides a brief summary of a detailed 2006 report on the lodging sector, and possible the role government could play in providing moderate lodging. • Lodging in the 2012 Aspen Area Community Plan - pg 8 This section outlines the public feedback that was received as part of the 2012 AACP update, as well as an overview of the lodging policies contained in the plan. • Interviews with Aspen's Lodging Sector - pg 10 This section provides detailed interviews with key players in Aspen's lodging sector. • Aspen's Lodging Inventory, 2012 - pg 28 This section lists Aspen's current lodging inventory based on conversations with Aspen area lodges. Some information was not available due to off-season closures. This information will be updated as these lodges open for the summer season. May 18, 2012 Lodging Study - Phase 1 1 .. ... ) . . .... :.,... ....:,,,u;T< "' .'•u, .:: ..^. :. •..,.::T :•. r>!.:.:. •T?; .. .i, .u... •R,\: !i!\� :a.an. .. 52:�:?.. ;�Pr+ , �. ,a : .,.• v, �.,:... .?,:n \,. .:: v. ,\R \\. �; �, ,..� F, .. :..i ,i,.: r .. .. .:... .... .. `�+. � . a..:.. .<. . :2:.^c�\ \�'<? G;2� ti ��' Y \ ,`) T J. �, .! \ . M :P) .,\. ,,:Y .•:(�",.}. ..`,�. Cl+. Y .\, C ?�,. •,.£ \:A •�:. w\ .<.n .\. ,M2 .l..ti. \v. \. �;Z� .r•: ;a` .\\. ;..\ T... yip \ 1+ K o �\ U\ s .,. , ,.. T PT • a, \,p... �\,,,�,,,v .,,, � .,..., �.:\.. .,,v .... ..,T. ,. k. .. vC a . ....,... >, ..,.v ..Jt., .\t : r. ...�.\. s.... ..� . .\. .. \ "^\`: :; ...� .. City government has played a wide variety of roles in Aspen's lodging sector over the years, ranging from the philosopher -sociologist to- the market economist - and at times, financial supporter. One of the earliest statements about lodging came in the 1966.Aspen Area General Plan, which defined the purpose of the Accommodations/ Recreation Zone District as ... encouraging varied and interesting development as a means of perpetuating Aspen's prominence as a quality resort.... This perspective reflected a belief that local government should treat lodging as infrastructure for the local economy. Without a solid lodging base, a resort is not a resort - and every other sector of the economy suffers. Over the years, this viewpoint meant sometimes giving lodge development a break from Aspen's rigorous regulations and mitigation requirements. On the other hand, growth management advocates have supported annual development limits and tough mitigation requirements on lodging, just as they would on any other kind of private sector development. These different positions have been debated through the years - often favoring lodging during economic slumps, and Favoring stronger growth restrictions during boom periods. The. philosophical side of the lodging debate emerged in the Aspen/ Pitkin County Growth Management Policy Plan of 1977: "In short, we have a responsibility to vacationing, working Americans who hold the vision of one or two weeks a year in a quality Colorado. mountain environment ... (rather than) a setting for the fortunate few who, are wealthy enough ... In other words, working Americans are entitled to enjoy the public lands surrounding Aspen, and high costs shouldn't act as a barrier. The other side of this argument has been to let the market decide what kind of lodging is built, how much it costs and what demographic is. targeted. This viewpoint often takes note that a destination resort is expensive by definition, due to high land and travel costs. 2 Lodging Study - Phase 1 May 18, 2012 Hotel Lenado, one of the hotels redveloped in the 1980s and taking agvantage of the zoning changesof .the. time. In addition, affordable housing for lodging projects had to be provided on -site, potentially creating conflict with the emphasis on limiting mass and scale, and physical compatibility with the neighborhood. As the national economy suffered, the Lodge at Aspen (26 rooms) was the only lodging development to apply for GMQS approval between 1977 and 1981. The City commissioned a lodging study in 1981, .which concluded that "most of the lodging available today was built .many years ago and consequently do not reflect current standards for maintaining a premier resort classification." The report also found that a mid-1970s downzoning "resulted in severe limitations for their opportunity to expand and modernize" in some neighborhoods, including the Shadow Mountain area. The report". claimed the City had lost about 4% of its lodging base each year during the 1970s. Loosening Regulations & Lodging as Infrastructure City Council responded in July 1982, by increasing the annual lodging allotment from 18 to 35 units. A month later, Council stopped awarding GMQS points for smaller lodges, removed the mandate for on -site affordable housing and. increased the percentage of points awarded for guest amenities from 10% to 20%. In August 1983, Council created a Lodge Preservation Overlay Zone, making it easier for dozens of older lodges in areas such as Shadow Mountain to renovate and expand. At the same time, Council awarded new GMQS points for "rehabilitation and reconstruction," and set aside a- quota of 10 lodge. units per year for development in the new Overlay Zone. Between 1982 and 1987, many lodges underwent renovations, including Independence Square, Snowflake, Aspen Club Lodge, Endeavor Lodge, Shadow Mountain Lodge, the Inn at Aspen, Red Roof and the Prospector Lodge. Four lodges added units between 1982 and 1987: The Aspen (+3), Hotel Lenado (+4), the Sardy House (+21) and the Jerome Hotel (+67). The Aspen Mountain Lodge project essentially replaced the Aspen Inn and Blue Spruce, and The Little Nell (92 units) opened in 1989. In 1987, the City Council stepped squarely into the role of financial supporter for lodging, by establishing the Aspen Lodge Area Special Improvement District. Council authorized $5.4 million to pave streets, install storm drainage, sidewalks, landscaping, streetlights etc., with the City picking up the large majority of the bill. The public works project was focused on neighborhoods featuring small lodges and condos, including the Shadow Mountain neighborhood, and from Spring Street to the Roaring Fork River. Ritz -Carlton as Sbol: The Upscale Trend As the 1980s wound down, the Aspen area was experiencing a whole new level of popularity and celebrity. Home prices were increasing dramatically, many locals were selling their modest houses and the percentage of commuting workers jumped from 40% to 55% between 1987 and 1991. May 18, 2012 Lodging Study - Phase 1 3 During that same period, the proposal for a massive Ritz -Carlton Hotel was being hotly debated, and was slowly making its ways through the City's review process. Council approved non -binding Resolution No. 29 in 1988, setting the size at 294 units and 305,000 square feet. In July 1989, City Council responded to growth management advocates by cutting the annual quota for free market residential units from 39 to 20, and decreasing the lodging quota from 45 to 22. In February 1990, a much -debated City ballot election on the Ritz - Carlton was a snapshot in time of political feeling about lodging: • Option A would approve the 294-unit Ritz -Carlton Hotel. • Option B would reduce the size of the hotel by 60,413 square feet (about 20%), reduced the height and required much more employee housing. Sixty percent chose Option A, with 1,561 in favor and 1,059 opposed. The approval of the Ritz -Carlton symbolized a distinct trend away from economy or moderate rate hotels, and towards more deluxe accommodations. The Ritz partially met its mitigation requirements by converting the 43-unit Alpina Haus Lodge and the 14-unit Copper Horse Lodge into affordable housing. In: the late 1990s, the economy/moderate rate Grand Aspen Hotel was demolished to make way for the deluxe Grand Hyatt. Perhaps in response to the trend, the 1993 Aspen Area Community Plan (AACP) emphasized the importance of small lodges. "S.m.all lodges immediately set the stage for the guest experience in Aspen," according to the AACP Growth Action Plan. "These lodges promote a sense of scale and feel that provide the visitor with a transition into the uniqueness of Aspen." The 1993 AACP called for lowering mitigation costs for small lodges, but it turned out to be a losing battle. Throughout the 1990s, older lodges were converted either to free market homes or affordable housing, including, to name a few: . ..The 20-unit Fireside Lodge converted to townhomes. 1 .The 22-unit Bell Mountain Lodge converted to five free market homes and five affordable units. .. The 11-unit Alpine Lodge converted to four free market homes .: and 10 affordable units. The Aspen Country Inn was converted entirely to affordable housing All told, the number of "Economy" lodge pillows dropped from 1,012 to 704 during the 1990s, a 31% drop. By 1998, the percentage of "Economy" lodge pillows had dropped to a mere 12% of the total. Oddly, the 2000 Aspen Area Community Plan barely touched on the subject of lodging. The Economic Sustainability chapter ca.:lled for "a lively, small-scale downtown with ...a varied choice of accommodations, including small lodges." In winter, taxable lodging sales eroded significantly between 1997 and 2003, a pattern linked to a decline in skier visits and a slowdown in travel after 9/11. Winter lodging rebounded after 2003, along with the national economy. The Ritz -Carlton, now the St. Regis Hotel. 4. I Lodging Study - Phase 1 May 18, 2012 While Aspen's lodging inventory continued to shrink (a 27% decline from 1994 to 2007), it was the "Economy" (-79%) and "Moderate" (-47%) lodges that were disappearing the fastest. The decrease was smaller for "Deluxe" lodge" (-7%). Despite the declining base, taxable lodging sales jumped 49% from 2003 to 2007, reflecting an estimated 40% increase in average prices. It was no great surprise that new lodges approved during this boom period featured large rooms and deluxe amenities, including 26 units at the Residences at Little Nell, 21 units at The Chart House and- 18 at the Dancing Bear. City Tries to Re -Balance the Lodging In ventory While a few luxury lodges were being approved in the 2000s, city government was launching an effort to replenish the overall inventory, and was also trying to encourage the return of so-called "moderate" lodges. In its 2002 report, the Economic Sustainability Committee made the deteriorating lodging base its "#1 Issue," stating: "Aspen has a deteriorating lodging and tourist facilities inventory. This includes small lodges and condominiums that are placed in the rental pool. Not only has the number of available rooms decreased greatly, but also remaining facilities are not perceived by -the visitor as offering appropriate value for their pricing. Lodging owners and potential developers do not perceive a sufficient return on investment to improve existing facilities and develop new -ones. " At the same time, the Infill Advisory Committee was drafting code changes to encourage more downtown area development, including lodging. In 20,05, City Council approved the Lodge Incentive Program, encouraging the development of lodging with rooms that averaged no more than 500 square -feet - relatively small compared to recent deluxe lodge approvals. The Lodge Incentive Program cut the housing mitigation rate in half, and allowed the development of free market residential condos on 25% of the development's total floor area (also at half the usual mitigation rate), to make the overall development financially viable. Also in 2005, the Limelite Lodge applied to demolish its 60-year- old facility next to Wagner Park, along with the Snowflake Inn next door, proposing to replace 115 rooms with 125 rooms in one larger new building. The development application argued that "Preserving and expanding mid -priced lodges such as the Limelite will allow the community to provide accommodations for a `diverse visitor population,' as emphasized in the (2000) AACR"' Along similar lines, the application quoted the AACP Vision for the Aspen Area; "Our nature has been consciously inclusive and has abhorred exclusivity ..." In addition, the Limelite argued that mid -priced lodges are a "staging area for supporting personnel and participants ... in the special events that are a vital element of the local economy." (The' point was made following the recent departure of the HBO Comedy Festival, which publicly blamed the lack of affordable lodging for its relocation to Las Vegas.) May 18, 2012 Lodging Study - Phase 1 I 5 T_.e. Limelite proposal was in the form of a PUD because it proposed to.. use 40% of total floor area to build condos (more than the 25% that code changes allowed). Lodge incentive code changes from 2005 also allowed for greater height and massing in the Lodge Zone District, and the large Limelite building drew many critics, but Council approved the project. In 2007, Council adjusted the Lodge Incentive Program, creating a sliding scale: As room size grew smaller, the ratio of total floor area for free market condos increased and affordable housing mitigation was reduced. Lodge projects .with room sizes of 300 square feet or less would have to mitigate only 10% of employees generated, and could use 60% of total floor area for condos. No lodge projects have since applied for the incentives. Current Status As ,,part of the 2008 State of the Aspen Area Report, a build -out analysis showed that zoning could allow for about 330,000 square feet more lodging, with the most potential in the Lift 1A neighborhood. In November 2011, City Council approved a lodging proposal at in the Lift 1A neighborhood, including 22 lodging units with a room configuration allowing them to be broken down into 84 units averaging 524 square feet. Although technically eligible for reduced housing mitigation (60% to 40%, due to a room size between 500.and 600 square feet), the developer proposed 100% housing mitigation for the lodging, five condos and 6,000 square feet of commercial space. At the same time, former lodges continue to convert to other uses, th,e most recent being the Boomerang Lodge, which received approval to, convert its existing rooms and build an expansion, all as affordable housing. The 2012 AACP calls for "replenishing" the Lodging base, while seeking to,..balance the inventory by encouraging a wide range of product types. Aside from the Lift 1A area, the greatest potential for a new lodging development is at Buttermilk Ski Area, which is under Pitkin County jurisdiction. The former L'Auberge d'Aspen Hotel. The property is approved for a redevelopment that does not include lodging. 6 Lodging Study - Phase 1 May 18, 2012 ... .Y1. �. .. ! v ., ....: v. ,. ..n .v•, , n, iiJi.v\ ^'. ': , � vV. .,,:.. .,, .. \Y. .... ., ., ....,. ,. .. ., , , ,, o., .,. ., ..a ..,1 ., .. .,• ., .. ... � \,. .\ :Jxo Y. ..\ Y^C:, ..w.. ?Y •t. :?.\: .a.. \ . ,,.+.+. .ttt:. ::,tii :;k`'''�`,. , C.JJ. j'.Ci n... .♦ .. n,. ,. ,\nn v n ,. `? n.. , \. v , , •, n .. \ ': •:., .'fd+ �Sv..v.K.., n, .... ... .:,.. o....., ..,.v ... E. c. .,t,..... J. ....... ....t,.. .. .. :::v ....... vv w✓ .+.o.,r,^.:. ..\.: ..� >.:sa:.fi. -: Council asked HVS to generate a financial feasibility report for an "example" hotel in the City of Aspen. HVS found that for a 103- room hotel on 1.4 acres, the cost of land and development would "far exceed the economic value of the hotel," based on projected revenues. HVS said either the land costs would have to be subsidized, or a profitable "residential component" would have to be included to make the project feasible. Council had already adopted free market residential incentives in 2005, a year before the .HVS report. The new code allowed 25% of the total floor area of a development to be developed as condos, with the other 75% featuring a lodge with an average room size of 500 square feet or less. This 25% allowance was essentially a "guesstimate," and Council later approved the Limelite Lodge application with 40% of the total floor area to be developed as condos to make the rest of the hotel financially feasible. After the 2006 HVS report estimated that moderate lodges averaged room sizes between 300-400 square feet, Council adopted a sliding scale in 2007: Lodges averaging 500 square feet could use 40% of total floor area for condos; lodges averaging 400 square feet or less could use 50% of total floor area for condos; and lodges averaging 300 square feet or less could use 60%. Although this language has been in the land use code since 2007, no applications have been filed to use the incentive. The HVS report concluded that a moderate hotel could be developed in the City of Aspen either by allowing a substantial free market component, or if the land was donated by the City or subsidized in some substantial way. May 18, 2012 Lodging Study - Phase 1 I 7 As part of the 2012 Aspen Area Community Plan (AACP), the city conducted extensive public outreach. to hear how the community felt about growth and development issues. The public outreach process included a number of questions related to lodging, and the issue of lodging consistently rated high in terms of importance to the public. There was consistently high opposition to building more large, deluxe - style lodging units, and fairly strong support for focusing on additional moderate or economy lodges. The public feedback came after the 2008 State of the Aspen Area Report found the lodging based had declined by 27% since the mid- 199.0s, but that lodging rated moderate and economy had declined even more steeply. A Population Segments Chart, which estimated population changes. between 1990 and 2008, estimated that the average number of people -staying in lodging during a given day in peak season declined from 6,548 in 2000 to 5,778 in 2008. At the same time, the number of people staying in the area's growing inventory of second homes climbed from, 8,563 to 9,427. AACP Feedback Summary Respondents to the 2010 Instant Keypad Voting Sessions in ranked "smaller lodging units" as their second choice in terms of the type of development they want "to encourage." In terms of the type of, development they most wanted "to discourage," the top choice was "larger lodging units." When asked a similar question in 2009, respondents stated they "would place the most growth restrictions" on . larger lodging units and "would place the fewest restrictions" on smaller lodging units. (2009 Instant Keypad Session) On, the same topic, respondents were even more emphatic when the q.u:estion included some well-known slang terminology for the Aspen Area: Sixty-one percent wanted to focus on lodging for "the next generation of ski bums," versus 15% who wanted to focus on "deluxe" lodging for our "world class" resort. (2009 Instant Keypad Session) Area residents felt strongly about encouraging a diverse visitor population - 75% of Aspen area voters and 66% of homeowners were willing to support government "incentives for small to moderate dodges." (2008 Community Survey) In ithe 2011 Community Survey, the "most beneficial" type of djevelopment was identified as "essential businesses," with "diverse, balanced lodging" coming in second. In a related question about replenishing lost lodging inventory, the top choice was to replenish inventory without a specific focus on type (35.5%) - but coming in a c.lose second (31%) was to replenish inventory with a specific focus on moderate and economy lodging. However, the gap was wider in the 2010 Instant Keypad Session, when 51% favored replenishing lodging inventory ,with no particular focus on type, compared to 28% who favored replenish inventory with a: focus on moderate to economy lodging. 8 I Lodging Study - Phase 1 May 18, 2012 - In the 2011 Community Survey, smaller lodging units dropped from second to sixth in terms of the type of development people wanted to encourage - but larger lodging units remained at the, top in terms of development people most wanted to discourage. If there was a community value that appeared to work in opposition to replenishing the lodging base, it was preserving small town character. Asked why they might keep lodging development modest in size; the most popular answers were 'small town character" and "mountain views." (2011 Community Survey) The top answer to a very similar question at the 2010 Instant Keypad Session was "small town character" at 38% -- but the second most popular response was "don't restrict Lodging size" at 31%. AACP Lodging Policies During the drafting of the AACP, many discussions focused on the feasibility of producing moderate lodging and what role the city could playa Because the AACP is an aspirational document, focused on establishing a vision for the future, the AACP itself does not address these issues. Instead, it outlines a vision of a thriving, diverse visitor base. The Philosophy of "The Lodging Sector" contained in the 2012 AACP states: "The formulation of a strategy that replenishes the lodging base and favors a diverse lodging inventory is important to the long- term sustainability of a visitor -based economy that purposefully seeks to attract a diverse visitor base. Without a diversity of lodging options, we limit the ability of future generations of visitors to experience the Aspen Area and its surrounding public lands. Many of today's longtime Locals first experienced Aspen thanks to "entry-level" lodging. The concept of providing equal access to Aspen has been present in long range plans dating back to 1976. We seek a broader demographic in order to sustain a diverse, visitor -based economy. Finally, we recognize that a diverse lodging inventory ensures there are places to stay for those who produce and participate in many of our critically important special events, workshops and other activities." The top two lodging policies in the 2012 AACP are "Minimize the further loss of lodging inventory," and "Replenish the declining lodging base with an emphasis on a balanced inventory and diverse price - points." Regarding the scale of new development, the 2012 AACP includes a policy saying new lodging should be "compatible and appropriate within the context of the neighborhood." May 18, 2012 Lodging Study - Phase 1 I 9 v ., r•.+: :'✓fi: c a ::y: '+a. �?.; `�� ::SEE :;:i�;:;:5: n✓ h. �.,v.. C\ \nv n. v v ..< \v v \ v V, n .. �': n. v:: •3. .n.n ,. liii: .:: :':C�fiii. :•!:Ji J: a3;JY ll p ,. ,. , .. n. n .. ,.. n.• :U+:: \:;tin/. i. v1. A .0 ,J: >.�, ;C Y� ,\ n,� :R: ,v., ., .: \ . ...•A ... ....v v:. � N:.J .vN: �W\w:: ^Y:. A:•!...,.. : J .. .... m It ,.n .. .. vv. : , �: , � .v vJ... ... v. ;.!••.vC,v ., l aC. ..., v ... \. C .[n. :v\•.: %a:: .\. L J .. .. + n:.. tl v.+. .v.. „v< •. < v.».. C; »; vh�: :n:: �h:v v. v. ;Y,, ;;�. n\.. 'JC:4�� �: i5 ;.v);; Div .ti .\ .. .... ..vm. ... .. .v :... .. v.., � .. . .....a Z... Z.. , ...1 $. a .\ ... .\ .n a`t .h., .. n. .l n,. \ .., ... ,. , .. n. ,. ..,n .... ...\. .k:. .. \v.v.. .♦.+..,... 1.. .\�� �nY:. 4�fY f: v .n. The following is a distillation of the answers from interviews with lodging managers, describing repeated themes, ideas and suggestions. Full responses begin on page 13. 1. For many years, stayAspensnowmass and ACRA asked lodges to identify themselves as deluxe, moderate or economy. Which category does your lodge fall under? The lodges represented in this feedback effort ranged from economy to moderate and deluxe, with several including two to three categories within the same lodge. For older structures that don't meet the expectations of modern travelers, high levels of service can place them in the deluxe category. In general, economy lodges tend to, be further from downtown, while deluxe tend to be closest to the ountain. Although the economy/moderate/deluxe categories are not industry terms, and some lod-ges might choose a category for .marketing purposes, most felt the categories were generally accurate. 2. Can you describe your average customer, or the different kinds of clientele that stay with you? Is there a certain type of room, or size of room that people like most? There are many niches in the Aspen lodging market. Some focus on Baby Boomer skiing families, some on beginner skiing families, others focus on couples and/or single professionals attending conferences or consulting. Still others tend to cater to the support personnel and participants of special events. In the deluxe category, the share of the foreign market (South America, Australia) appears to be growing. The' -only hostel in town (St. Moritz) appears to be less in demand in recent years. There is no single type of visitor, so a successful lodge is about meeting expectations in their niche. Families and those staying for longer periods (i.e. the Music Festival, or extended skiing vacations) tend to demand larger room sizes to accommodate kids, to stow gear and, to allow for work -space. In general, the lodging industry has retreated from the 1,000 to 3,500 square foot room size that was the trend before 2008. Smarter, modern design is aiming to accommodate reeds from roughly 400 to 700 square feet. Everyone emphasizes the importance of service, but especially those working with outdated structures, such as the aging condo inventory. (Many condos have eight -foot ceilings, far lower than what modern travelers expect.) 3'Are there amenities that you find people demand more and more? If there is one thing you could add to your lodge, what Would it be? The top demand is technological services. Free Wi-Fi is a must, along with I -Pod docking and enough outlets to handle everyone's needs: high speed and bandwidth are key as well. Pools and exercise rooms .. a .. re standard. Transportation is also key, with more lodges offering bicycle fleets as well as shuttle and car service. Almost everyone emphasized service: People traveling to a destination resort place a very high value on their time. Service means not just having a stack of brochures, but talking with customers about the many choices of events and recreation options - including tips about Community Development Staff conducted interviews with ** local lodging experts, ranging from developers to operators. The interviews are intended to highlight. the various opinions and experiences within Aspen's lodging sector. Interview were conducted with large and small hotels, and, hotels from economy to luxury. 1 I Lodging Study - Phase 1 May 18, 2012 P' ,l Y having a genuine Aspen "experience." 4. What is your lodge's strategy for success? What are the ingredients that make up long-term viability for you? Trends in the lodging industry change quickly: many said the .key is continually evolving with the interests and demands of the customers. Phrases used by respondents included `staying fresh," "building relationships," "providing choices," "creating memories" and "keeping up with technology." S. How important are special events? What special events bring you the highest occupancy? Is there a type of special event that you think would fill your lodge? Generally, the participants named Food & Wine and the, Music Festival as most important, followed closely by the X-Games. Most also described the constellation of smaller events (Aspen Eco Fest, Aspen Institute Socrates Dinner etc.) as creating an atmosphere of choices that's important to the modern traveler - and reinforcing the -Aspen brand. Many wanted to see at least a modest expansion of the tourist season - into the first two weeks of December and the last week of August. Most were satisfied with the level of collaboration that's critical to producing specials events. Many said events should be consistent with Aspen's character. While all resorts have special events, Aspen's exceedingly strong arts and cultural institutions bring a level of quality that few other resorts can match. 6. How will Aspen as a destination stay. relevant, attractive and compelling for future generations? Are you seeing changes in demand for types of rooms, amenities? What do you think visitors will be looking for in the future? Most respondents talked about the importance of Aspen being compelling to young people, with a sense of vitality in the downtown, including things like jugglers on the pedestrian malls. Changes that lodge managers liked included informal public gathering places, including the increase in outdoor dining, tables and chairs around the pedestrian malls, the upgrade of the Durant Street ice rink, the Saturday Market. Managers wanted more of the same. Among the suggestions were more colorful vendors (i.e. jugglers etc.); a revival of the (FAC) Friday Afternoon Club (music and kegs outside the Jerome); more Music Students on the malls (as in hiring them); nightclubs for young people (the loss of Cooper St. Pier was a negative); and improving the way we leverage the Aspen Idea. 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 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've never been here, which can deter people from visiting. (There seemed to be no easy answer to that problem.) Most applauded the Skiing Company's efforts at attracting young people, dating back to opening Aspen Mountain to snowboarders in the late 1990s, and the X-Games. May 18, 2012 Lodging Study - Phase 1 11 7 'Many of today's year-round residents stayed at a relatively affordable lodge when they first came. to town, grew to love Aspen and decided to live here. Today, public feedback tells us there is strong support for "entry-level" lodging. With 'a steady decline in moderate and economy lodging since the mid-1990s, there is. a community aspiration to replenish those types of lodges. What do you think about this? Do you agree? Disagree? Responses were mixed to this question: Many agreed that the aging of. the Baby Boomer generation is resulting in fewer visits, and attracting the next generation is critical. Some said a diverse visitor base is good for the town in general. Others said the young seasonal workforce will become future guests, adding that affordable seasonal housing has helped build for the future in that sense - though many employees commute from cheaper housing markets downvalley. Managers of economy properties said they continue to offer entry- level lodging, one adding that Front Range and West Slope residents are a market for lower -end lodging that could be tapped. Economy lodges were also identified as essential for support personnel and participants of special events to stay while in town. Non -economy lodge managers said the erosion of the lower -end is due. to several factors, including inability to market aggressively; too few rooms to achieve critical mass economically; difficulty in matching service levels offered by others;. the competition when upper -end lodges aggressively lower off-season rates; and outdated buildings and facilities. Many said that the reality is that people must pay for the quality of. -.the amenities that the Aspen area offers, including the natural environment, scenic views, multiple recreational opportunities, high. -quality arts and cultural offerings, the genuine historic built environment and even the genuine and vital local community. Several would rely on the market to find a balance in lodging inventory. 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. Several again cited the "intimidation factor" as a barrier that should be addressed. S. Do you think the growth management incentive program for small sized -rooms is viable? Respondents said the program was either flawed, not widely applicable or could be improved to be more effective. 9. There has been talk of the city partnering with a developer to - build a moderate/economy lodge. Do you think this is viable? Do you think it's a good idea? Respondents were generally unenthusiastic. Such a partnership was c es�cribed as possible if the City "put real value on the table," and if s'u:ch a lodge were "in off -beat locations." 12 I Lodging Study - Phase 1 May 18, 2012 Interviews With Aspen's Lodging Sector'* low :»v. \. v.. ,,.. .... 1... ..1 ... .. n..m ..).... v n... ... \.. ..\. ...., .... '. ..n� v• .� .: ,. f. .:: :.: v: n: ::::: v,. Q:vvnri.i•.; :'ir' .,\ :.J:\�...�:v:< \.:�...!.. :M :\;;j .\); ..;\!• ..... ..\. .. �. .. .. . �, :o-.. I vv!!: 1. For many years, StayAspenSn'owmass and ACRA asked lodges to identify themselves as deluxe, moderate or economy. Which category does your lodge fall under? Michael Behrendt / St. Moritz We have very different types of accommodations, from a 900 square foot condo to the 2nd floor hotel rooms and the 3rd floor hostel.We have people from millionaires to flat -busted. Chuck Frias / Frias Properties We provide economy to luxury rentals. -1 Donald Lee / The Gant We are deluxe, but sell in all three categories. Our premier units have • been completely remodeled at very high levels and include king size beds and washer/dryers among other things to achieve sucha rating. Standard units don't have such amenities and weren't remodeled to the same extent and therefore command lower rates and occupancies. It varies, but generally our clientele makes $150,000 per year and up. Paul Lovelace / Inn at Aspen The Inn at Aspen is comprised of privately -owned condos, often used by owners and otherwise leased as lodge units. We are an economy hotel partly because of the age of the facility a,nd the location - everyone wants to stay in town. But we're looking to move into the moderate category -- half of the rooms are now under renovation. We want to perform well at the economy level, and break into the next level as best we can. Rick Moore / The Innsbruck After the renovation in 2007, The Innsbruck became a fractional property, selling 1/12 interests. Although we don't have a kitchen, all the units have kitchens and washer -dryers. I consider us deluxe. Skiing Company / The Little Nell + The Limelight The Little Nell is luxury, the Limelight is moderate. Stan Clauson / Clauson Associates The practice of lodges choosing the category they fall into (economy/ moderate/deluxe) may have as much to do with their own marketing and positioning than which category is appropriate. The factors that go into determining a hotel's category are cost, room size, amenities, location, design, ambience and character. Terry Butler/ The Residence Hotel Deluxe. John Corcoran / Aspen Alps On an annual basis, about 45% of the people here are owners and their guests. I think everyone has a niche that goes beyond the. categories of economy, moderate and deluxe. Even though we're 50 years old, I'd consider us deluxe because of our location, privacy and decorum - 70% of the people here are return guests who value those things. May 18, 2012 Lodging Study - Phase 1 13 Bob Daniel / Lift 1 Lodge Deluxe. Craig Melville / Mountain Chalet The categories don't always capture what the hotel is all about. We are generally viewed as. an economy sector hotel, though we have very nice deluxe rooms and 2 bedroom apartments that are definitely not economy. We also offer a list and quality of amenities that is not typical in the economy level. John Sarpa / Centurion Partners The categories we use in Aspen are not industry terms, but generally they're OK. If anything, the "deluxe" category is a little too much of a catch-all - I would add the category of "luxury" just above that, which would have only a very small number of lodges in it. Warren Klug / Aspen Square I consider us in the moderate category. We are a full ownership condominium hotel, and draw visitors from the upper -middle class. 2. Can you describe your average customer, or the different kinds of clientele that stay with you? Is there a certain type of room, or size of room that people like most? Michael Behrendt / St. Moritz I_ -have upper -middle class people who are happy with the 200-plus �yare feet on the second floor. I have people staying for all the athletic events. The average age used to be low 30s; now it's more low 40s. People used to be satisfied with the hostel, but that's been changing - in the last five to 10 years, people have been more willing to pay extra to have privacy, and the kitchenette. I don't know how long the hostel is going to last. The hostel was also affected when the City built seasonal housing, such as Marolt Ranch, for the music students and Sk'i. Company workers - it's hard to compete with that. a. Chuck Frias / Frias Properties Our customers tend to be on the wealthier side, considering the travel costs. Because we rent condos and homes, we have more families. Compared to the resort industry in general, Aspen condos are smaller because the buildings are older and dated by ceiling heights and lack of master bathrooms. We overcome it by providing hotel -type services. Donald Lee / The Gant We are deluxe, but sell in all three categories. For example our premier units must have been completely remodeled at very high Levels and include king size beds and washer/dryers among other 6i�n, rgs to achieve such a rating. Standard units do not have to contain such amenities and would not have been remodeled to the same extent and therefore command lower rates and occupancies. It varies, but. generally our clientele makes $150,000 / year and up. Paul Lovelace / Inn at Aspen Ouraverage client is beginning skiing families and economy -minded travelers. Grandma can sit in a chair inside our common area and watch the kids learning to ski. Our room size averages 350 square feet, and that works for the short stays we have now. Some of the 14 I Lodging Study - Phase 1 May 18, 2012 older owners will stay much longer of course. Rick Moore / The Innsbruck We have 10, two -bed units at 1,275 square feet, and 7 one -bed units from 600-750 square feet. The Larger size of our rooms makes us attractive to families, and 30% are coming from South America and Australia, staying one or two weeks. Skiing Company / The Little Nell + The Limelight Little Nell: Our customers are well traveled and affluent and tend to stay about five days. The off-street suites are in highest demand. People who are staying two to six weeks want the bigger rooms with all the activities and gear. Limelight: We get a variety of guests, from the economical traveler to the affluent for our suites. The customers of the old Limelight were saying the rooms were too small for families, the hallways were small and they needed two beds. What we have now, averaging 500 square feet, and two beds in half our inventory, seems to .work well. Stan Clauson / Clauson Associates We have had clients with differing ideas about lodge size. There are those who believe that it requires 1,000 square feet and up to create a viable lodging product, and a recent lodge owning client who is happy with units that average 300 square feet - it's all over the map.. But many lodging professionals seem to believe that 500 s.f. makes for an minimum size lodge room in the context of a ski resort. Terry Butler The Residence Hotel I have mostly couples in their 40s and 50s. It's not the size of the room they care about as much as. the spaciousness of the high ceilings, and the elegance of the decor. John Corcoran / Aspen Alps People do care about size. We have families who are looking to spend quality time away from their work lives - people who stay up to three to six weeks, whether they own here or rent. I think high quality, established events like the Music Festival, the Ideas Festival draw those people here. When people are on vacation, they are still going to work, and that requires space that condominiums provide. Bob Daniel / Lift 1 Lodge We expect to be family -oriented, but we have flexibility as well because of the ability to lock off so many units into smaller units. If you have a Baby Boomer couple that wants to spend time alone, they can; if they want to bring the extended family, they can do that as well. I think it will be multi -generational - there are a lot of safe choices for kids, being so close to downtown. In general, the industry has started to look at pulling back from very big rooms (in excess of 1,000 sf), although there are still properties that cater to this segment of the market and is looking at smarter, more functional design, flat screens and the right kind of furnishings. One of the challenges in the mountain environment is accommodating all the stuff people bring on mountain vacations. Craig Melville / Mountain Chalet Our typical traveler is an older skiing couple from the United States who has stayed with us before. As often as not, someone we would call a friend. Generally, people prefer more space, though they seldom May 18, 2012 Lodging Study - Phase 1 1 15 ask about that when booking a room. They want to know what kind of beds and other amenities there are. It depends on the time of year, .but the economy rooms that at least have a queen bed usually sell out first. During certain times, such as Food & Wine, our middle of the road rooms tend to sell out first, followed by deluxe rooms, and the economy rooms sell out last. John Sarpa / Centurion Partners Market demand for room sizes has been changing. A few years ago, people were focusing on very big rooms and very high rates, but the industry has come down from there. Location has a lot to do with how big rooms can be. The Nell averages 600 square feet - I'd say for a winter resort, you don't want to go much below 450 square feet, which is roughly where the St. Regis is. But there are other niches - for your 3.5 to 4 star hotels, 350-400 is OK. A lot of. it is about just satisfying expectations for whatever market niche you're after. .Warren Klug / Aspen Square Our customers tend to come from the upper -middle class. We have a lot of visitors 50 years old and up, but they are not our only customers. We get families and couples, partly because we have diverse options, from studios to three -bedroom units. Out of 102 condominium, 68 are studios at about 500 sq ft, so they are good for couples. Studios are roughly size of a hotel room, but they offer more than an average hotel. Each has a full kitchen, fireplace, living and seating area, and balcony. We get some groups who will use our conference room. On average, customers will stay for 5 nights in the winter and 3 nights in the summer. 3. Are there amenities that you find people .demand more and mpr.e? If there is one thing you could add to your lodge, what would it be? Michael Behrendt / St. Moritz We have a pool and a small common area. I think we need more common area. If I could I'd have an elevator, a bigger kitchen, an exercise room and a real conference room for groups. Chuck Frias / Frias Properties The most important amenity is service, service, service - we treat customers like family. The age and size of our inventory can be a liability and we have to make it up with a lot of personal service - you won't find that anywhere else. Most condo rentals involve picking up a':key and that's.it. We pick people up at the airport, get them a pass to the Aspen Club, we offer 24/7 concierge and maid service ... If there is one thing we could add, it would be parking, larger units and master baths. Donald Lee / The Gant Transportation is our marquee service, also Wi-Fi, exercise rooms, strong TV programming with HD TV's, well appointed kitchens, high quality bedding and linens are just expected - even more than just five. years ago. We now see more demand for king size beds and washer/dryers in the units - consumers want luxury offerings and high service levels. Paul Lovelace / Inn at Aspen Because of our out-of-town location, we emphasize the free parking and, our ability to serve breakfast, lunch and dinner - to be self- 16 I Lodging Study - Phase 1 May 18, 2012 s. contained. We have three banquet halls, which helps us get groups here. We also provide what people are demanding now, including free Wi-Fi, I -Pod docking and chargers. The shuttle to town is key for us - :: everybody want to experience downtown. Rick Moore / The Innsbruck Since we are relatively new, we have all the technology people are demanding, such as Wi-Fi, I -Pod dockers, plenty of outlets. Transportation is key - we have a van, an electric car and eight bikes. Skiing Company / The Little Nell + The Limelight It's not just Wi-Fi anymore, it's speed and bandwidth. You can't make excuses for not having high-speed, and that's a significant investment. You can have six devices in one unit and both the .Limelight and the Nell have recently reinvested in this area. I hear expectations that the entire town should have Wi-Fi - after all, it's Aspen. Fewer people are renting cars, so everybody expects a complimentary shuttle, and the Nell is offering Audi test drives. The Limelight provides five bikes, with a room set aside for storage and tuning. The Nell has six bikes for rental. The lack of bigger meeting spaces across the board is a barrier to landing groups. We're always interested if the City is exploring a new public gathering place, as stated in the Civic Master Plan and the AACR Stan C/auson / Clauson Associates In terms of amenities, people with busy lives and short stays want amenities on -site. A pool and a work-out area are almost essential now. Terry Butler The Residence Hotel We've been wireless for years, people like the Jacuzzi tubs. Because of our downtown location and the land and leasing costs, you can't have on -site amenities. But we're the most centrally located hotel in Aspen, so we partner with Jean Roberts Gym, the Little Nell for the pool, our guests have access to the Caribou Club and the Aspen Mountain Club. We bring in any kind of service, from masseurs to spa treatment and baby-sitting. And we're right in the middle of all the restaurants. If we could add something ... parking would be nice - that's a big problem for us. John Corcoran / Aspen Alps The biggest demand for amenities right now is free Wi-Fi, and we had to invest in that. The other two. are concierge service and transportation. People place a high value on their time here, and they don't want to sweat the details. If I could add something, it would be nicer, newer more spacious accommodations. Bob Daniel / Lift 1 Lodge We're going to have the advantage of being a new product that - responds to people's technological needs which have become more and more a requirement for guests. Also convenience and service are two big things that customers demand. Traveling is more of a hassle today than ever and once they arrive, they want to fully enjoy their experience without hassles. Craig Melville / Mountain Chalet To most travelers it is first and foremost about value. What am I May 18, 2012 Lodging Study - Phase 1 I 17 getting at this hotel for this price versus what I would get at another hotel for another price. They are firstly looking at price, room type and location. They then consider the amenities and the character of the hotel. They associate a set of expectations with each price level. For us, the personal connections over the years are very important. John Sarpa / Centurion Partners At the Residences at Little Nell, we're focused on creating memories every time someone visits - you have to love to come back to overcome the competition and the transportation barrier. Providing guests with options for things to do during their stay is part of a very high level of service that places a high value on people's time while they're here. Warren Klug / Aspen Square We are a limited service hotel, which means we don't have our own food and beverage service. We have a front desk with concierge services, a fitness area, conference facilities, pool, and hot tub. I'd say our most important amenity is our service. We strive to provide high quality service in all aspects of the business. In the condominium business there are different levels of service. We only manage the Aspen Square, so we can focus on the service provided here. We operate similarly to the Gant in that respect. If we were going to add one thing it might be limited breakfast service because it seems travelers, especially Europeans, expect breakfast to be included in their rates. We might also consider additional meeting and function space to accommodate more groups and special events, like weddings. 4L What is your lodge's strategy for success? What are the ingredients that make up long-term viability for you? Michael Behrendt / St. Moritz Xust keep giving good value. I don't plan any changes in the short - run, but if present trends continue, we may want to convert the hostel to regular hotel rooms. Chuck Frias / Frias Properties I think there's a lack of awareness in town about the stock of functionally obsolete condos. We had the very first condos in the United States, and a lot of them have 8-foot ceilings, and many have no .parking. The level of service we provide and the attraction of Aspen is what keeps us going. But it would be great if the City could focus on how to address this inventory - we're talking about a lot of units and a lot of customers that spend money. Donald Lee / The Gant continuous improvement of the product and service, service, service. You truly have to connect to the customer - knowing their name, what they like. Overall, staying current with customer expectations is critical, which includes staying ahead of all the technological changes - that can be as simple as having enough outlets when every family member is plugging something in. Paul Lovelace / Inn at Aspen We're looking at both interior and exterior remodels. We have room fo-r`Water features outside in the back, volleyball or bocci courts, outside food service - it's still in the planning stage. Beyond that, when you have a building that is dated, you need to focus on 18 I Lodging Study - Phase 1 May 18, 2012 customer service, and that means building relationships one at a time. We need to continue to leverage the three banquet halls by focusing on group business. Rick Moore / The Innsbruck High quality rooms and service. I think we are in a niche that will .keep working, in terms of occupancy. The fractional ownership market has been down for a few years now. Skiing Company / The Little Nell + The Limelight Little Nell: Twenty years ago, the Nell was the only five-star hotel in a mountain resort. Now there are hundreds. You have to continually evolve as people's interests and expectations change all the time. We've had tremendous loyalty, but now as they're getting past 60 and 70, they're not coming as often. We have to make sure we're relevant, we're looking to stay fresh and have a more modern appeal. That's reflected in the renovation and the new room furniture -less overstuffed, more spacious. Limelight: Younger people are more adventuresome and value - conscious, and they're getting bombarded by marketing. This generation will have 15 jobs in their lifetime, while the older generations had two - in general, the sense of loyalty is not as strong as it was. I think we'll need a bigger fitness center. Stan Clauson / Clauson Associates As a lodge, you need a critical mass of rooms to make the economics work, and that's why so many of the smaller lodges aren't here anymore. The small lodges that remain tend to be owned by people who are committed to keep it going for their own reasons. Terry Butler The Residence Hotel As the owner -operator, I follow up with customers all the time. I live in the hotel, so we sit down and talk and become friends. I call them on the phone, I send cards to their dogs - we're very dog -friendly. Forty percent of our customers bring their dogs. People who want the new modern room, they won't come here - but there are people who like the heavily decorated rooms with antiques from all over the world and a lot of personality. It's a very personal hotel, like a big family.. John Corcoran / Aspen Alps We're always keeping a close eye on the implications of generational change. What is happening with the Baby Boomer generation? What are the personal interests of the next generation? Bob Daniel / Lift 1 Lodge We recognize that the Gen X and Gen Y generations want more choices and a variety of experiences - there's less automatic loyalty than in the past, and that's a reality. We need flexibility and options in terms of our product mix. Craig Melville / Mountain Chalet The hotel biz is pretty simple: provide a quality product for a good value. We have the huge advantage of owning the property for a long time, so we have avoided the difficulty of new costs of building. John Sarpa / Centurion Partners The seemless ability to have different experiences through the lodge. We want to bring people choices of experiences - we want May 18, 2012 Lodging Study - Phase 1 19 the customer to look back and say; "They convinced us to do it and we loved it" - whether it's hot air ballooning, Nordic skiing or :experiencing the real Aspen. Warren Klug / Aspen Square We build on the strengths we have - our location is almost unmatched, and we have high quality accommodations. We really emphasize quality and friendly service. This goes for the staff as well as the quality of the accommodations. We have to keep the apartments up and remodel as necessary. Our owners are committed to maintaining and upgrading our common areas and individual units as needed to keep up with the marketplace. We are really fortunate to have condo accommodations that have in -room facilities (full kitchen, living/siting area, patios, fireplace). We also have a full time marketing and sales person. We've started focusing on international sales, which was a huge success this winter. 5. How important are special events? What special events bring you the/'highest occupancy? Is there a type of special event that you think would fill your lodge? Michael Behrendt / St. Moritz We benefit from all the special events except Forstmann -Little (an annual gathering of the very wealthy). We have all kinds of people bleeding over to us, with our prices -- from Food & Wine to all the athletic events. We get participants and the support personnel. Chuck Frias / Frias Properties There's a huge correlation between special events and occupancy. They do work and they're essential. Donald Lee / The Gant Some special events are vital and others not so much. Food & Wine is, extremely important to the community. It is a great example of what the right type of special event can grow into and is a good fit for Aspen. I'd like to see a greater focus on reviving Gay Ski Week - that A wa.s working extremely well and then it wasn't. We should be working with them, maybe move it to March and support it. One -day events like the bike race just don't have the impact on lodging, but the PR and marketing is important - the question will become: Is it a big enough return for the investment? The collaboration on special events across lodging, retail, restaurants, ACRA - that has gotten better over the years. Paul Lovelace / Inn at Aspen We get a lot of support crews for special events - the most extreme example if the X-Games, when we're ESPN's headquarters. We get a lot of participants in the athletic events, and from events in .:- Snowmass. Rick Moore / The Innsbruck Food & Wine and X-Games are no-brainers. I like the bike race; it keeps our name on TV, and if it grows it could become a big deal. Bicyclists love Aspen. Skiing Company / The Little Nell + The Limelight They're very valuable, especially the destination events, the long-term events with more moving parts and support personnel, where most of the participants and spectators are from out of town. Eventually, 20 I Lodging Study - Phase 1 May 18, 2012 the bike; race could become that. In the summer, it's all about timing - what is there before Food & Wine? What is there after the Music Festival, in the last week of August? The smaller events are also important because they add to vitality; people want choices and that small event could make them stay another day. There has been . more collaboration across the board on events, and that's good for everyone - there's been more of an effort to get all the players involved. The restaurants are becoming more of a player, and that's a big deal. We need a short-term, mid-term and long-range strategy on special events. The City has been reaching out more with the Mining for Ideas Committee. It might be valuable for the City to track specific events with tax revenues, so we can all get a sense of the impact. When the Music Festival changed its dates, it had a huge impact - we even saw it in the Gondola rides. Finally, there are so many calendars, it doesn't seem as if there's'a one -stop shopping calendar. We know through our service experience that people love to be handed a menu' of events with the kind of detail they need. Stan Clauson / Clauson Associates If special events are consistent with Aspen's character, they work really well. Food & Wine is a very successful special event. The X-Games are a little dysfunctional with regard to the lodging sector and overall ambience, but the overall publicity is certainly important. Terry Butler/ The Residence Hotel Food & Wine and X-Games are great, but we need more big events to fill out the seasons; 'in early December and late August. I'd rather one big event than four little ones. It helps me because I can't do the kind of marketing that others do. John Corcoran / Aspen Alps Special events are great - we participate in lower rates. It's important to experiment with events that are consistent with Aspen's character, which is a combination of culture and outdoor activities. Only rarely do newer special events have any contribution to the bottom line for us - usually it is the established events that are more productive. Bob Daniel / Lift 1 Lodge Every mountain resort has festivals and things like that, but Aspen has a really strong set of arts and cultural institutions that bring a level of quality that's undeniable. That's what sets us apart. People know the difference between a "made up" festival and one that offers a real experience. The X-Games is so critical, it creates a young, h i p vibe that Aspen just didn't have before and helps Aspen be relevant for the future snow riders. Craig Melville / Mountain Chalet Special events make Aspen a more desirable place to be, and whether that improves our bottom -line directly or indirectly is not important. I'd say the Music Festival is the longest lasting and the best for business. Considering short-term events, Food & Wine is the best. The bike race is a nice addition, but we will have to wait each year to see if it comes to Aspen so it is not ideal. And it requires a lot of comp (or nearly comp) rooms. Any popular event that happens downtown is likely to fill our lodge. May 18, 2012 Lodging Study - Phase 1 21 John Sarpa / Centurion Partners The big special events are big enough to fill everything. While the smaller ones aren't that great for occupancy, they do build the brand a.nd that's important. Warren Klug / Aspen Square They are extremely important to the community because they give people that much more reason to come visit. The king of special events is X-Games and Food & Wine. Food & Wine is important .because it is at a time when we're not typically busy. June can be a tough month to attract people because people are wrapping up school and haven't maybe made their summer plans yet. The bike race is also an important event, but it has only brought people for one night. As the race continues to gain notoriety we expect it to help drive visitors to the area. It can be hard to attract visitors in June and even in August, so Food & Wine and the bike race are helpful for us. we were disappointed to see the BBQ event dissolve. It was during a slow week, and could have helped draw more visitors. 6. How will Aspen stay relevant, attractive and compelling for future generations? Are. you seeing changes in demand for types of rooms, amenities? What do you think visitors will be looking for in the future? Michael Behrendt / St. Moritz more venues for young people. downtown. If you approve a larger building, let's have an economical nightclub in the basement. We really lost something with Cooper St. Pier. The more outdoor dining the better, more buskering* and jugglers, more vendors, more music -,how much would it cost to pay different groups of music students to be gout every night? The chairs .around the pedestrian malls are great, but more tables that aren't just for a restaurant would be nice. The new C.P. Burgers at the ice rink and things like the Saturday Market. (A busker is a street performer.) Chuck Frias / Frias Properties One aspect that people might not be aware of is the tremendous success of the fractional inventory. People who own a whole ownership condo outright have been less and less likely to rent .it over the years. R,u.stJn terms of hot beds, the performance of fractionals is better than anyone anticipated. Donald Lee / The Gant It's about the exceptional experiences that Aspen has to offer. The sheer number of cultural offerings gives people a lot of choices - it gives us metropolitan flair in a small town. We don't have to reinvent t.h,e -wheel. I think we are all after the same thing -- how do we bridge maintaining Aspen's, character while embracing modernization, embracing energy efficient technologies, etc? We need to. maintain strong air service, continue to modernize. What the SkiCo and the lodges have done with international markets is really showing up now. Paul , Lovelace / Inn at Aspen Stay fresh, stay relevant - you have to evolve and change. The TV exposure of the X-Games shows Aspen is.a place where young people can have a good time. - it's not as elite and stuffy as the reputation ca n be. 22 Lodging Study - Phase 1 May 18, 2012 y. h.i t Rick Moore / The Innsbruck I'd love to see Aspen get young again. Only two of our 13 employees live in town. I think if we had more rental employee housing, you'd r see that young labor force enjoying town and coming back, not just for work. On the other hand, losing the Cooper St. Pier was a real loss. It's not easy for working kids to go out and have a. good time at night like they used to. Skiing Company / The Little Nell + The Limelight How do we get the 16 to 20-year-olds coming back we've focused on that ever since allowing snowboarding on Aspen Mountain and with the X-Games. That has to be part of the mindset in the whole town. There has to be as many compelling things off -hill, with music and public gathering areas. People don't do 8:30 to 4:30 skiing anymore we need to feed that social component. Stan Clauson / Clauson Associates We need to keep changing and evolving. We need to embrace dramatic bold strokes; the new Art Museum is an example of that. If it's a I I about preserving a certain image of the 1970s and `80s, that's not, in our best interest. There's a certain phobia about development that's not based in reality - to have a three-story town is not emulating Vail; we won't inherently lose our soul and character. Terry Butler/ The Residence Hotel I've been on the Commercial Core and Lodging Commission for 15 years and fought for the outdoor dining - we need more nightclubs. We need fun, exciting activities that keep our visitors busy. The City shouldn't pass so many regulations that it's no longer fun. John Corcoran / Aspen Alps We need to stay true to ourselves. What are our values? It's recreation, the arts and culture, environmental stewardship - all the things that make this place special - we shouldn't lose sight of those basic` things. I would trust the people who come here in the future to appreciate what's here, and also to be part of innovative thinking - that's part of Aspen's heritage; but I don't think it's necessarily the government's job. Bob Daniel / Lift 1 Lodge The Skiing Company has done a great job of planting the seeds. Carbondale has done some interesting things with First Fridays. In Aspen, we used to have the FAC (Friday Afternoon Club) where the Jerome had music and kegs outside. As a traveler, coming across things like that, finding that informal fun is so important. We should remember that for most people who don't know Aspen, it's very intimidating, and we need to be aware of that. The malls are great, with outdoor dining, and people playing music that's. a comfortable approachable environment for visitors no matter their background. Craig Melville / Mountain Chalet Character and media attention that derives from special events, which are on track thanks especially to the Ski Co. Also, we need to maintain the character of downtown, but I have no idea how. We do a fair job of maintaining the look, but you can't force character. The market will determine what succeeds. John Sarpa / Centurion Partners The Aspen Idea is unique to us, it's historic, it's genuine and we don't May 1812012 Lodging Study - Phase 1 23 leverage it as much as we should. The three parts of the Aspen Idea mind, body, spirit - could be a way to organize the choices Aspen can offer - like a menu of experiences. Warren Klug / Aspen Square We need to honor our history and the historical look of our community. New development should fit in with the community. We also need to understand that a discerning public wants nice accommodations. There are a lot of old and tired condominiums in town, so updating and upgrading those accommodations is important. We have to keep up with guest expectations, and remember there is a lot of new, high quality inventory all over ski country (Park City, Deer Valley, Vail, etc.). We must have an ongoing and concerted effort to make sure our service is the best there is. Personal service is important. In terms of new lodging, we need to think about -on - site mitigation requirements. It doesn't always make sense to have employees living on -site, especially when they have families, and when that space could be used for lodging. 7. Many of today's year-round residents stayed at a relatively affordable lodge when they first came to town, grew to love Aspen and decided to live here. Today, public feedback tells us,there is strong support for "entry-level" lodging. With a steady decline in moderate and economy lodging since the mid-1990s, there is a community aspiration to replenish those types of lodges. What do you think about this? Do you agree? Disagree? Michael Behrendt / St. Moritz I `think we already. serve that purpose. I understand the common wisdom that we need low-cost accommodations and I can sympathize, bmt there are economical lodges. Our phones aren't ringing off the hook. People thank us for being here, but at the same time, we're not turning people away the way we used to. Occupancy levels for economy lodges show only moderate demand. Lower prices don't seem to give me a big advantage. If the price is too low, people can be suspicious of the product. Chuck Frias / Frias Properties I don't know the solution. There are plenty of owners I know who came on a college trip or with mom and dad and that's how Aspen became their place. The question is how do we keep young people coming? We used to have significant college groups in the 1970s, but then the resort industry expanded substantially. There were lots of other choices where the travel costs were lower, and the Internet has made all resorts more visible. That makes higher -priced resorts like Aspen more difficult to sell. We should continue to solicit economy lodging customers but the lodges over the years have closed because they are not financially viable without subsidies. The intimidation factor of Aspen as a luxury celebrity destination is a reality as well - I'm not sure as locals we really appreciate how the rest of the world sees us. Af'd since the mid-1980s, we've lost about 50% of our company's original condo inventory because people don't want to rent out anymore - they don't have to financially, and they don't want to worry about damage to the property. 24 I Lodging Study - Phase 1 May 18, 2012 Donald Lee / The Gant It is not 1970 any longer, times have changed. While I do think that period 'was the glory years for the ski industry for a lot of reasons, it 'is now 2012 ... I don't think we move forward by looking backwards ... I don't think we replenish new ski bums with economy lodging. I think other factors are at play today. There is simply no demand for this lodging and it is not viable to run .and maintain the appropriate infrastructure to be competitive at economy rates, which is why these properties have diminished. Paul Lovelace / Inn at Aspen I think entry-level lodging is important for Front Range and Western Slope visitors who want to see what Aspen's all about. We want them to stay for two or three nights and not just one - getern hooked on skiing and the area. People budget their vacations: They might spend on the lodging and skimp on food. Families with kids might prefer the comfort of the lodging versus going out to eat. I see people being more frugal not renting a car, and we want to provide amenities like free wine and cheese in the common area to help them decide to come. Rick Moore / The Innsbruck My parents owned Bethune & Moore at the ABC back in 1966 when I was starting college and we used to stay at the Smuggler Inn as a family, and Aspen has been my home base since. I see that the demand is there for the upper end, but I'd like to see more lower end for people with limited means - it's good for town. I'd even go along with a government subsidy. Skiing Company / The Little Nell + The Limelight Nell: Six months out of the year, we are economy and entry- level. I think there is an on -ramp in Aspen. We're trying to build a late April skiing school and are looking at a coordinated effort for early December. The Skiing Company supported the COWOP recommendation for the Lift 1A area - a bigger hotel base would be a catalyst for bigger citywide events. The economy hotels struggle at that entry-level because they can't market the way people expect today, or Expedia takes a big cut. We recognize that our low rates in the off-season are tough for them - if their rates are relatively low in peak season, where do they go from there in off-season? Stan Clauson / Clauson Associates The bottom line is that it's not cheap to get to a destination resort, and you have to pay for the quality of Aspen: the natural environment, the scenic views, the recreation, the arts and culture, the historic buildings. It's a unique place. that's in demand, and that means prices are relatively high to stay here, to eat here, to ski and paraglide and so forth. Relatively few people will come here as tourists with limited means. On the other hand, the workers who come from all over, with six or eight. kids renting a house - many of them are going to enjoy Aspen and come back as they get older. So I don't really subscribe to the idea that we can effectively bring economy travelers here with affordable lodging. Terry Butler / The Residence Hotel I believe in the free market. Water finds its own level. I'd like to see less government control of everything. May 1 18, 2012 Lodging Study - Phase 1 25 ,John Corcoran / Aspen Alps A -healthy mix is important, but I think the market can take care of that. The lodging incentive program is fine, as long as it does not serve as a disincentive for higher end accommodations. I don't think. it's the City's place to have an impact on the industry. Bob Daniel / Lift 1 Lodge Part of the answer is that the next generation comes from the current generation bringing their kids with them to vacation. Another is the young people who are willing to live eight to a house to work here - they're going .to come back. The reality is that there are far more opportunities now with the affordable housing program for people to come and live here than there were when I arrived in 1988. Craig Melville / Mountain Chalet I agree and disagree. I think that there is a strong desire for value lodging. We are not going to get many customers who are looking for the cheapest vacation. They simply will not look to Aspen because of our reputation. However, there are a lot of middle -income people who \have heard about how great the skiing and town, are here and want to come, but cannot afford the more expensive properties. They want a value option and those are hard to come by because of the costs associated with a new hotel. How do you build a new hotel and run it"profitably in the moderate sector? I do not have an easy answer for, that question. When you get into the costs of building in Aspen it be very hard to make it work -- from the land, to the stringent codes, to the design/architectural work in conjunction with city council to construction costs. The cards are stacked against building affordably and thus succeeding as a moderate hotel. John Sarpa / Centurion Partners It's a great idea to see if we can preserve the few that are left or find a way to assist some development in the lower tiers. The question for the, community is how much do we want to do this, because it's going to take either public funding, financing or some public land. At the same time, we need to continue to attract a high -end clientele -we're one of the best in the world, but there are far more choices now. The traveling public spends less time in more places, and that's new.. There's more pressure on maintaining the high -end clientele than ever before. Warren Klug / Aspen Square Times have changed. That is no longer Aspen's market. We are a middle to upper -middle class market, in terms of lodging, restaurants, and activities, and should not be building ski bum accommodations. I.don't think small lodge rooms will sell because it's not Aspen's market. And I don't think the City should be promoting that. If the goal is affordable lodging, that goal is wrong. The marketplace should determine what the town needs, and the market is just not there. Aspen has a strong affordable housing program, which helps with this issue. We have a few affordable housing units both on and off -site. 8. Is the growth management incentive program for small sized -rooms viable? Stan Clauson / Clauson Associates We are very familiar with. the program. The residential component and lowered mitigation are essential incentives and need to be retained. On the other hand, the smaller rooms favored by the incentive program will not be favored by all lodge development. 26 1 Lodging Study - Phase 1 May 18, 2012 Bob Daniel / Lift 1 Lodge It would work better if the requirement was just a certain square footage average for rooms. But when you add in the total floor area requirement, it really squeezes people too, much. The effect is there just isn't enough room for basic amenities and non -unit space you need to make the hotel work efficiently and to meet the demands of the guests. John Sarpa / Centurion Partners Generally speaking, it's not viable. It might work here and there, but there aren't many properties I can think of where it would work. Skiing Company / The Little Nell + The Limelight Discussion ran late, no answer on this question. 9. There has been talk of the city partnering with a developer to build a moderate/economy lodge. Do you think this is viable?. Do you think it's a good idea? Stan Clauson / Clauson Associates Generally, I don't think the City should get into the. lodging business. If the City is going to partner on anything, it should make sure the Lift 1A area.truly becomes a second portal with great amenities. This should have happened with the COWOP process, but now needs some alternate incentives. I'd even suggest that upper Aspen Street. is a blighted area worthy of an Urban Redevelopment. Authority. More than anything, Aspen Street/Lift 1A improvements will help save the smaller lodges in the Shadow Mountain and Main Street neighborhoods. Also, the City should consider taking the Lodge Incentive Program and let it apply to multiple sites. If a lodge project on one property, can use 40% of its total floor area as free market condos to make it financially viable, there's no reason we shouldn't be able to apply the same math to two sites. One site might get the residential development, the other would get transferred lodging units to make for a more viable lodging complex. Bob Daniel / Lift 1 Lodge If you want to do it, do it in locations that make sense. Where do you see the affordable lodges now? They're in off -beat locations. Maybe the Zupancis property, maybe the BMC property, where you're on. a bus line. The City shouldn't be a developer, but it's possible to partner with someone if the public sector brings land to the table, or very steeply discounted - and you couldn't require full mitigation. John Sarpa / Centurion Partners Only if the town puts more value on the table. Even then, the private and public sectors are very suspicious of each other. I think the private sector would be worried about how long the whole thing would take. I think meaningful incentives are the best way to go, and let the market take it from there. Skiing Company / The Little Nell + The Limelight The City can be most helpful by focusing on how to improve occupancy as a whole, and helping existing lodges. May 18, 2012 Lodging Study - Phase 1 27 .AspenLodging inventory - 2012 28 I Lodging Study - Phase 1 May 18, 2012 * Staff unable to verify information at this time. ** Christiana Lodge only rents 1 unit as a hotel *** L'Auberge d'Aspen is in the process of converting from a hotel to a religious use. These hotel units appear to be off-line May 18, 2012 Lodging Study - Phase 1 1 29