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HomeMy WebLinkAboutagenda.council.joint.20160216 CITY COUNCIL & JOINT WORK SESSION February 16, 2016 4:00 PM, Council Chambers MEETING AGENDA I. Joint Work Session with BOCC 4:00 pm Housing Guidelines Discussion 5:15 pm REMP Request 5:35 pm Hunter Creek Prescribed Burn 5:45 pm Closing Discussion and Future Topics 1 | Page   MEMORANDUM    TO:  Mayor and City Council, City of Aspen    Board of County Commissioners (BOCC), Pitkin County  FROM:  Barry Crook, Assistant City Manager, City of Aspen    Mike Kosdrosky, Executive Director, Aspen/Pitkin County Housing Authority    Chris Everson, Affordable Housing Project Manager, City of Aspen  DATE OF MEMO: February 12, 2016  RE: Policy Study, Aspen/Pitkin County Housing Authority Affordable Housing  Guidelines (February 8, 2016)                                                                                                                                                                      REQUEST OF BOCC AND CITY COUNCIL:  Receive presentation and summary of key issues and findings of  the Policy Study of the Aspen/Pitkin County Housing Authority’s Affordable Housing Guidelines.    SUMMARY & BACKGROUND: The Aspen/Pitkin County Housing Authority (APCHA) establishes  Affordable Housing Guidelines (Guidelines) periodically to govern deed restricted workforce housing for  City of Aspen and Pitkin County. The last comprehensive review of the Guidelines was back in 1999.     In early 2015, APCHA advertised a Request for Proposal (RFP) to conduct a policy study of the  Guidelines, including an in‐depth analysis of affordability; incomes, assets and categories; household  sizes and qualifications; and best practices of peer housing programs in four high‐cost mountain  communities. The scope was expanded to provide an overview of APCHA’s goals and objectives,  including identifying segments of the workforce currently served by the Affordable Housing Program.    A professional services agreement was signed last April with Navigate, LLC, and its three‐member  consultant team, to begin work in early May. On February 8, 2016, after nine months of extensive  research and analysis, the consultants submitted a 100‐plus page policy study to APCHA of its Affordable  Housing Guidelines.    DISCUSSION:  Today’s work session will include a half‐hour presentation of the key issues and  recommendations of the policy study from two members of the consultant team – Christine Walker of  Navigate, LLC, and Wendy Sullivan of WSW Associates. The presentation will be followed by a Q&A  discussion.     RECOMMENDED ACTION:  To consider the “big picture” conclusions (key issues and recommendations)  of study, and provide support and direction to APCHA staff and Board of Directors to lay out timetable  and plan for making recommended improvements to Affordable Housing Program.   P1 I. ! Prepared by: Navigate, LLC Jackson Hole, WY Rees Consulting, Inc. Crested Butte, CO WSW Consulting San Anselmo, CA Policy Study Aspen/Pitkin County Housing Authority Affordable Housing Guidelines ! February 8, 2016 P2 I. Policy Study: Aspen/Pitkin County Housing Authority Affordable Housing Guidelines. February 2016 Navigate, LLC; WSW Consulting; Rees Consulting, Inc. Table of Contents – 1 Contents LIST OF TABLES ................................................................................................................. 5 LIST OF FIGURES ............................................................................................................... 7 EXECUTIVE SUMMARY - KEY ISSUES AND RECOMMENDATIONS ................................. 8 APCHA’S AFFORDABLE HOUSING PROGRAM ..................................................................... 9 Inequities Serving Workforce Households .............................................................. 9 INCOMES AND ASSETS ...................................................................................................... 10 Number of Income Categories ............................................................................. 10 Income Category Methodology .......................................................................... 11 Recommended AMI Conversion .......................................................................... 11 Calculating Income ............................................................................................... 12 Asset Caps ............................................................................................................... 13 Negative Perceptions related to Income Qualifications ................................... 15 AFFORDABILITY ................................................................................................................ 15 Affordability Standard ............................................................................................ 15 Affordability over Time ........................................................................................... 16 AFFORDABILITY OF CURRENT RENTS AND OWNERSHIP PRICES ............................................... 16 QUALIFICATIONS FOR APCHA OWNERSHIP AND RENTAL HOUSING ..................................... 17 Income Qualification - Distinctions between Owners and Renters .................. 17 Bedroom Qualification ........................................................................................... 18 ADMINISTRATIVE COMPLEXITY ........................................................................................... 18 INTRODUCTION ............................................................................................................. 20 METHODOLOGY .............................................................................................................. 21 Pitkin County Employee Survey ............................................................................. 21 Community Interviews ............................................................................................ 23 Review of Peer Housing Programs ........................................................................ 24 Secondary Data ..................................................................................................... 24 ORGANIZATION OF THIS REPORT ....................................................................................... 24 DEFINITIONS .................................................................................................................... 25 CONSULTANT TEAM ......................................................................................................... 28 ACKNOWLEDGEMENTS ..................................................................................................... 28 ELECTED AND APPOINTED OFFICIALS ....................................................................... 29 Aspen/Pitkin County Housing Authority (APCHA) ............................................... 29 City of Aspen Council ............................................................................................ 29 Pitkin County Board of County Commissioners ................................................... 29 Administration ......................................................................................................... 29 SECTION I – EXAMINATION OF APCHA’S AFFORDABLE HOUSING PROGRAM ......... 30 PURPOSE ........................................................................................................................ 30 HOUSING PROGRAM ....................................................................................................... 30 EMPLOYEE HOUSING GUIDELINES 2015 ............................................................................. 31 HOUSING PROGRAM GOAL ............................................................................................. 31 EVOLUTION OF THE ASPEN COMMUNITY AND RESULTING HOUSING CHALLENGES .................. 32 P3 I. Policy Study: Aspen/Pitkin County Housing Authority Affordable Housing Guidelines. February 2016 Navigate, LLC; WSW Consulting; Rees Consulting, Inc. Table of Contents – 2 INVENTORY OF UNITS ........................................................................................................ 33 Ownership Units ....................................................................................................... 35 Rental Units .............................................................................................................. 35 COMPARISON OF APCHA RESIDENTS AND PITKIN COUNTY WORKING HOUSEHOLDS ............ 36 Household Demographics ..................................................................................... 37 Housing Costs .......................................................................................................... 38 Cost Burdened ........................................................................................................ 39 Work Location ......................................................................................................... 39 Type of Industry ....................................................................................................... 40 LOCAL LENDING ENVIRONMENT ........................................................................................ 41 SECTION 2 – INCOME, ASSETS AND CATEGORIES ...................................................... 43 PURPOSE ........................................................................................................................ 43 APCHA INCOME LIMITS BY CATEGORY ............................................................................. 43 Maximum Renter Incomes ..................................................................................... 44 Maximum Owner Incomes .................................................................................... 44 APCHA INCOME MAXIMUMS TRANSLATED TO AREA MEDIAN INCOME (AMI) ..................... 45 Area Median Income (AMI) Defined ................................................................... 45 APCHA Categories Expressed as AMI .................................................................. 48 Considerations for Transitioning to an AMI-Based Program ............................... 49 MEASURING INCOME ....................................................................................................... 51 APCHA Standards ................................................................................................... 51 Federal Standards ................................................................................................... 52 APCHA ASSET LIMITS BY CATEGORY ................................................................................ 54 APCHA Asset Maximums ........................................................................................ 54 The Effect of APCHA’s Asset Limits ........................................................................ 54 MEASURING ASSETS ......................................................................................................... 57 APCHA Standards ................................................................................................... 57 Federal Standards ................................................................................................... 59 NEGATIVE PERCEPTIONS OF INCOME/ASSET QUALIFICATION ............................................... 59 Unreported Income ................................................................................................ 60 Trust Funders ............................................................................................................ 60 Complexity and Transparency .............................................................................. 60 APCHA’S CATEGORIES ................................................................................................... 60 Inventory of APCHA Units by Category ................................................................ 60 Distribution of Units and Employed Households by Category ........................... 61 COMPARISON TO PEER COMMUNITIES (BRECKENRIDGE, JACKSON, TELLURIDE, VAIL) ............ 63 Income Categories and Limits .............................................................................. 63 Asset Limits ............................................................................................................... 64 SECTION 3 – AFFORDABILITY ANALYSIS ....................................................................... 65 PURPOSE ........................................................................................................................ 65 STANDARDS OF AFFORDABILITY ......................................................................................... 65 Government Agencies ........................................................................................... 66 Mortgage Lenders .................................................................................................. 67 Peer Resort Communities ....................................................................................... 68 Inputs for Housing Cost Calculation ..................................................................... 69 Weaknesses in the 30% Affordability Standard ................................................... 69 AFFORDABILITY OF APCHA HOUSING ............................................................................... 70 P4 I. Policy Study: Aspen/Pitkin County Housing Authority Affordable Housing Guidelines. February 2016 Navigate, LLC; WSW Consulting; Rees Consulting, Inc. Table of Contents – 3 Part 1 - Rental Affordability .................................................................................... 71 Part 2 - Ownership Affordability ............................................................................ 80 Affordability of New APCHA Units Over Time ...................................................... 91 OTHER IMPACTS TO THE AFFORDABILITY OF APCHA’S UNITS ............................................... 94 Deferred Maintenance .......................................................................................... 95 Capital Improvements ........................................................................................... 95 Interest Rates ........................................................................................................... 96 COMPARISON TO PEER COMMUNITIES – BRECKENRIDGE, JACKSON, TELLURIDE, VAIL ............ 96 Initial Prices/Rents ................................................................................................... 96 Price Appreciation Limits ....................................................................................... 96 Resale Price Guarantees ....................................................................................... 97 Evaluating Affordability over Time ........................................................................ 97 Capital Improvements ........................................................................................... 97 Special Assessments ............................................................................................... 97 Deferred Maintenance .......................................................................................... 98 SECTION 4 – HOUSEHOLD SIZE AND QUALIFICATIONS .............................................. 99 PURPOSE ........................................................................................................................ 99 DIFFERENT INCOME AND BEDROOM QUALIFICATIONS ......................................................... 99 INCOME QUALIFICATION - DISTINCTION BETWEEN OWNERS AND RENTERS ........................... 100 Equity in Housing the Workforce ......................................................................... 101 Affordability ........................................................................................................... 102 Compatibility with AMI ......................................................................................... 103 Impact on Income Categories ........................................................................... 103 Fair Housing Concerns ......................................................................................... 104 Administration ....................................................................................................... 105 BEDROOM QUALIFICATION ............................................................................................ 105 Federal Household Size Restrictions and Fair Housing ...................................... 105 CHFA Household Size Limits ................................................................................. 106 APCHA’s Qualifications ........................................................................................ 106 Ownership Units ..................................................................................................... 107 Rental Units ............................................................................................................ 107 PEER COMMUNITY COMPARISON (BRECKENRIDGE, JACKSON, TELLURIDE, VAIL) ................. 108 Household Size Calculations ............................................................................... 108 Bedroom Occupancy Standards ....................................................................... 108 APPENDIX A: SUPPORTING DATA FOR SECTION 1 – EXAMINATION OF APCHA’S AFFORDABLE HOUSING PROGRAM ........................................................................... A-1 HOUSEHOLD COMPOSITION AND SIZE ................................................................................. 1 AGE OF HOUSEHOLD MEMBERS .......................................................................................... 4 HOUSEHOLD INCOMES ....................................................................................................... 4 YEARS WORKED ................................................................................................................ 5 APPENDIX B: SUPPORTING DATA FOR SECTION 2 – INCOME, ASSET AND CATEGORIES ................................................................................................................ B-1 APCHA CATEGORIES EXPRESSED AS AMI .......................................................................... 1 Direct Translation Not Possible Discussion .............................................................. 1 Estimated Translation to AMI ................................................................................... 2 Measuring Assets – Federal Standards (HUD) ........................................................ 5 P5 I. Policy Study: Aspen/Pitkin County Housing Authority Affordable Housing Guidelines. February 2016 Navigate, LLC; WSW Consulting; Rees Consulting, Inc. Table of Contents – 4 APPENDIX C: SUPPORTING DATA FOR SECTION 3 – AFFORDABILITY ANALYSIS ..... C-1 PART 1 - RENTAL AFFORDABILITY ......................................................................................... 1 Affordability for Renters in Existing Units ................................................................. 1 PART 2 - OWNERSHIP AFFORDABILITY .................................................................................. 1 ESTIMATED AMI RENTS ....................................................................................................... 3 ESTIMATED AMI SALE PRICES .............................................................................................. 6 APPENDIX D: MATRIX OF PEER COMMUNITY HOUSING PROGRAMS ...................... D-1 APPENDIX E: MAP OF OWNERSHIP EXCLUSION ZONE .............................................. E-1 P6 I. Policy Study: Aspen/Pitkin County Housing Authority Affordable Housing Guidelines. February 2016 Navigate, LLC; WSW Consulting; Rees Consulting, Inc. Table of Contents – 5 List of Tables Table 1. Recommended AMI Categories with 2015 Income Maximums .............. 12! Table 2A,B. Survey Representation ............................................................................. 22! Table 3. 2015 HUD AMI - Pitkin County ........................................................................ 26! Table 4. Year APCHA Ownership Units Built ................................................................ 33! Table 5. APCHA Inventory of Deed Restricted Housing ............................................ 34! Table 6. APCHA Ownership Inventory ......................................................................... 35! Table 7. APCHA Rental Inventory ................................................................................ 36! Table 8. Representation in the APCHA Program ....................................................... 37! Table 9. Housing Costs ................................................................................................. 38! Table 10. Cost Burdened .............................................................................................. 39! Table 11. Where do you and others in your household work? ................................. 40! Table 12. Rentals: Maximum Income Limits, 2015 ..................................................... 44! Table 13. Ownership: Maximum Income Limits, 2015 ............................................... 45! Table 14. 2015 HUD AMI - Pitkin County ...................................................................... 46! Table 15. APCHA and HUD Defined Income Levels .................................................. 48! Table 16. Estimated Upper AMI Limit for Each Category: 2015 ............................... 49! Table 17. Estimated AMI Range by APCHA Category: 2015 ................................... 50! Table 18. Maximum Income Based on Size Category: Current Compared to Proposed AMI (2015) ..................................................................................................... 51! Table 19. HUD Income Compared to APCHA Income Inclusions ............................ 53! Table 20. Net Asset Cap: 2015 .................................................................................... 54! Table 21. Assets of Households Employed in Pitkin County by Income: 2015 ........ 55! Table 22. Affordable Purchase Price Given Income and Asset Caps: 2015 ......... 57! Table 23. Household Assets .......................................................................................... 58! Table 24. APCHA Redistributed Inventory: 2015 ........................................................ 61! Table 25. Permitted Increase in Rent for Existing Affordable Rentals ...................... 71! Table 26. 2015 APCHA Maximum Monthly Rental Rates .......................................... 72! Table 27. 2015 Category Incomes for APCHA Rentals .............................................. 72! Table 28. Households Paying Over 30% of Income for Rent: APCHA Renters 2015 ......................................................................................................................................... 73! Table 29. Average Affordability of APCHA’s Maximum Rents: 2015 ...................... 74! Table 30. Percent of Monthly Income Spent on Rent by Qualifying Households: New APCHA Rentals, 2015 ........................................................................................... 75! Table 31. 2015 APCHA Maximum Sales Prices ........................................................... 81! Table 32. 2015 Category Incomes for APCHA Ownership ........................................ 81! Table 33. Households Paying Over 30% of Income for Mortgage: APCHA Owners 2015 ................................................................................................................................. 82! Table 34. Average Affordability of APCHA’s Maximum Sale Prices: 2015 ............. 83! Table 35. Percent of Monthly Income Spent on Mortgage and HOA by APCHA Households: 2015 .......................................................................................................... 84! Table 36. Incomes Needed to Afford Current Sales Prices ....................................... 90! Table 37. Average Percent Change in APCHA Maximum Rents and Maximum Incomes by Category: 2000 to 2015 .......................................................................... 92! P7 I. Policy Study: Aspen/Pitkin County Housing Authority Affordable Housing Guidelines. February 2016 Navigate, LLC; WSW Consulting; Rees Consulting, Inc. Table of Contents – 6 Table 38. Dual and Single-System Comparison ....................................................... 101! Table 39. Household Makeup by Owners and Renters ........................................... 102! Table 40. Rental: Category 1 APCHA vs AMI ........................................................... 103! Table 41. Income Categories: Rental vs Ownership .............................................. 103! Table 42. Percentage Adjustments for Family Size: 2015 ........................................ 104! Table 43. Peer Community Bedroom Occupancy Standards ............................... 109! P8 I. Policy Study: Aspen/Pitkin County Housing Authority Affordable Housing Guidelines. February 2016 Navigate, LLC; WSW Consulting; Rees Consulting, Inc. Table of Contents – 7 List of Figures Figure 1. The Type of Industry for Which You and Others in Your Household Work ......................................................................................................................................... 41! Figure 2. Households With a Pitkin County Employee by AMI: 2015 ...................... 47 ! Figure 3. Distribution of APCHA Rental Units Compared to Households Employed in Pitkin County by Category: 2015 ............................................................................. 62! Figure 4. Distribution of APCHA Ownership Units Compared to Households Employed in Pitkin County by Category: 2015 .......................................................... 63! Figure 5. Rent Affordable to Households Within the Permitted Income Range for Each Category Compared to APCHA Rents: One-Adult Household .................... 77! Figure 6. Rent Affordable to Households Within the Permitted Income Range for Each Category Compared to APCHA Rents: Two-Adult Household ..................... 78! Figure 7. Rent Affordable to Households Within the Permitted Income Range for Each Category Compared to APCHA Rents: Three-Adult Household .................. 78! Figure 8. Estimated AMI Rents Compared to Maximum APCHA Rents ................. 80! Figure 9. Sale Prices Affordable to Households Within the Permitted Income Range Compared to APCHA Rents: 0-Dependent Household ............................... 87! Figure 10. Estimated AMI Sale Prices Compared to Maximum APCHA Sale Prices ......................................................................................................................................... 89! Figure 11. 2015 Resale Value Compared to APCHA Sale Prices by Category: 2015 ................................................................................................................................. 90! Figure 12. AMI Affordability of APCHA Units Based on Income Category Designation and the Resale Price of Units: 2015 ....................................................... 91! Figure 13. Average Percent Change in APCHA Maximum Sales Prices and Maximum Incomes by Category : 2000 to 2015 ....................................................... 93! Figure 14. Change in Maximum AMI for Category 1: 2000* to 2015 ..................... 94! P9 I. Policy Study: Aspen/Pitkin County Housing Authority Affordable Housing Guidelines. February 2016 Navigate, LLC; WSW Consulting; Rees Consulting, Inc. Recommendations - 8 Executive Summary - Key Issues and Recommendations The Aspen/Pitkin County Housing Authority (APCHA) Program has been successful in achieving its primary goal of housing those that work or have worked in Aspen/Pitkin County. An impressive and diverse inventory of over 2,900 restricted units has been produced that is housing seasonal and long-term workers, as well as workers in a representative mix of industries in the County. APCHA housing is also affordable. Comparing incomes to home prices and rents shows that the vast majority of APCHA’s residents live in homes they can afford, most spending a far lower percentage of their income for housing than in peer communities. Employees express the benefit that this housing has had on the community and its workers: Despite APCHA’s positive impact, there is room for improvement. As APCHA’s housing program has evolved over the last 40 years along with the communities it serves, some provisions in the Guidelines are no longer applicable. Other additions have been made over the years to address shifting needs. While all provisions at one time served important purposes, the patchwork of Guidelines created over the past 40 years has: • Contributed to the complexity of the program creating management challenges and large staffing requirements; • Reduced transparency, created misconceptions and made it difficult for residents to understand; • Made it difficult to evaluate the performance of APCHA’s programs as evidenced by the complexity of the analysis in this report; • Resulted in methods that are totally unique to Aspen, thereby limiting the ability to learn from lessons in peer communities and work with State and Federal programs when desired; and • Disproportionately served different types of employee households. "[T]hanks for providing an opportunity for people to own/rent in Aspen. [W]ithout the housing authority Pitkin County would be a ghost town"! – Survey Comment "Keep up the good work. This is the most necessary program we operate in the city/county. It is vital for the long term health and existence of Aspen”. – Survey Comment P10 I. Policy Study: Aspen/Pitkin County Housing Authority Affordable Housing Guidelines. February 2016 Navigate, LLC; WSW Consulting; Rees Consulting, Inc. Recommendations - 9 The following key issues and recommendations address major elements of APCHA’s Guidelines – affordability, home prices and how households qualify to buy or rent APCHA housing. The overriding conclusion is that a major overhaul is warranted. Minor adjustments will not address the problems identified. Also, because the elements of the Guidelines are interdependent, changes cannot be made to one without also changing much of the system. For example, prices cannot be raised without establishing an affordability standard. The basis for the income categories cannot be changed as recommended without also changing the method for qualifying households. The following key issues and recommendations do not address several pressing aspects of the housing program that were beyond the scope of this study, such as how many or what type of units should be developed, the selection system, how to grapple with retirees remaining in their APCHA homes and how to address deferred maintenance. They do, however, highlight how the existing Guidelines relate to the program’s goal of serving the Pitkin County workforce, where the current system may be falling short of meeting that goal or not functioning well, and what changes can be considered to improve APCHA’s ability to meet the housing needs of the local workforce. APCHA’s Affordable Housing Program Inequities Serving Workforce Households Issues: Some segments of the workforce are presently under-served by APCHA housing, including: • Couples with and without children in both ownership and rental housing; • Persons that have been employed in the area for 4-years or less; • Very low income renter households earning under $25,000 per year; • Higher income owner households earning between $100,000 to $200,000 per year; and • Many APCHA renters, particularly those earning under $50,000 per year, are cost-burdened (paying over 30% of their income for rent). Recommendations: • Focus on serving lower income categories; higher income households have more options for housing. • Change the Guidelines as they pertain to income categories and the dual qualification system as recommended below so that all types of households are qualified for housing by the same method. P11 I. Policy Study: Aspen/Pitkin County Housing Authority Affordable Housing Guidelines. February 2016 Navigate, LLC; WSW Consulting; Rees Consulting, Inc. Recommendations - 10 Incomes and Assets Number of Income Categories Issues: • Eight categories (including RO) are more than in any peer community. Economic diversity has been achieved as a variety of income levels are served through an assortment of product type and variety in pricing; however, it does not appear that as many categories are needed to maintain this diversity. RO has served multiple purposes over time and has units that are priced above, as well as within, Category ranges. The assumption made that mobile homes would not significantly appreciate if classified as RO units proved to be incorrect. • The number of categories varies – four for rental and seven for ownership plus RO. This complicates converting to alternative methods for basing income categories. Recommendations: • Develop clear policies for future RO units. RO units should be used for housing above the highest priced-capped Category. Units priced below Category 7 should not be classified as RO units, but rather fully price-capped regardless of unit type. Tracking the level at which RO units are priced should be done to allow evaluation of APCHA’s inventory in the future. Using designations like “RO4” aids this process. • Consolidate Categories 5, 6 and 7. About 3% of APCHA’s inventory and only 6% of households employed in Pitkin County are in these Categories combined. Consolidating them into a single category could simplify administration, but would require changes in the Guidelines to reference recorded deed restrictions and education of homeowners. • Add Category 5 for rental housing that largely replaces Category 4. The new category would be comprised primarily of households in the upper end of Category 3, in which the highest number of APCHA rental units are classified. P12 I. Policy Study: Aspen/Pitkin County Housing Authority Affordable Housing Guidelines. February 2016 Navigate, LLC; WSW Consulting; Rees Consulting, Inc. Recommendations - 11 Income Category Methodology Issues: Aspen’s unique income categories were derived from a combination of five sources used in a difficult-to-replicate methodology and last calculated 14 years ago. A new system is needed that can be easily updated for simplification, transparency and compatibility with potential State/Federal funding and to set prices/rents and maintain affordability over time, Recommendations: Base Categories on AMI. The advantage to this is that it: • Is a reliable, trusted and readily available data source; • Is updated annually by HUD, APCHA would need only to copy figures into its documents; • Would reduce the complexity of the program; • Would more consistently maintain the relative affordability of Categories over time; • Is consistent with Federal housing programs and multiple funding sources; and • Is used by peer communities, which would enable Aspen to evaluate the performance of its housing programs relative to similar programs. The AMI’s for households with an employee working in Pitkin County are now well documented by the survey, making it possible to judge relative affordability and how the categories should be targeted when developing additional housing. The chart AMI by Own/Rent in Section 2 contains the basic data for these purposes. Recommended AMI Conversion The conversion to AMI should align current incomes to their average AMI equivalent, as shown below. This would lessen the impact on current residents of Category units and their ability to sell their homes, and shift fewer households from one Category to another than would setting categories at AMI’s either lower or higher than current equivalents. P13 I. Policy Study: Aspen/Pitkin County Housing Authority Affordable Housing Guidelines. February 2016 Navigate, LLC; WSW Consulting; Rees Consulting, Inc. Recommendations - 12 Table 1. Recommended AMI Categories with 2015 Income Maximums Cat 1 Cat 2 Cat 3 Cat 4 Cat 5* (5-7) AMI Range: 20% - 50% 51% - 85% 86% - 115% 116% - 185% 186% - 235% 1 person HH $34,150 $48,445 $78,545 $126,355 $160,505 5 person HH $52,650 $74,758 $121,095 $194,805 $247,455 NOTE: The calculated upper AMI limit has been adjusted to the nearest 5%. *Category 5 would be a new Category for rentals and would merge Categories 5, 6, 7 for ownership. Source: Consultant Team The recommended categories most closely align with the current incomes in the Guidelines for ownership housing while shifting the incomes downward for renters. The reasons for this are detailed in Section 2. Converting to the recommended AMI system involves tradeoffs. Advantages include: • Simplicity • Transparency and consistency • Ease of transition • Portability • Compatibility with program goals Any conversion of the underlying basis for APCHA’s income categories will affect existing conditions (such as deed restrictions and leases), current and future households served, and income, rent and sale prices within Categories. The shifts are minimal in Category 1 but increase gradually being greatest in Category 5. Calculating Income Issues: What APCHA includes and excludes in income when qualifying applicants does not appear to have major gaps. Although different than federal standards, the method is similar to other resort communities and responds to the challenges of measuring incomes for workforce households in resort economies where holding multiple and seasonal jobs is common. Concerns include: • Under-reporting of tip and cash income; • Parents being allowed to provide funds to help purchase homes, which is a very common practice in resort communities; and • The ability or not of “trust funders” to live in affordable housing. P14 I. Policy Study: Aspen/Pitkin County Housing Authority Affordable Housing Guidelines. February 2016 Navigate, LLC; WSW Consulting; Rees Consulting, Inc. Recommendations - 13 Recommendations: • Limit the financial contribution that parents or other non-occupants make to no more than 20% of the purchase price. This would allow buyers access to conventional mortgage financing without the cost of mortgage insurance. It would be a compromise that addresses negative perceptions about “trust funders” and it would still allow buyers to obtain down payment assistance from sources like CHFA. • Verify income reported to the bank for the mortgage application at least two weeks prior to closing. Tip and other cash income may be reported to qualify for the mortgage, but may not match the income reported to APCHA. • For applicants holding jobs that typically generate tip income, require that an estimate of the income be provided. Confirming this estimate through employment verification should also be considered. • Revise the bid submission form/application to further itemize income and specifically ask about being the beneficiary of a trust. • Inquire of applicants about trusts that may not be reported on current tax returns, like those for which the applicant is not yet old enough to receive income distributions or the income is exempt from taxes. Asset Caps Issues: The scaled asset caps in place: • Disqualify approximately 36% of employee households working in Pitkin County; • Were last changed in 2002; • Disproportionally impact the income categories, although this is not necessarily a negative; • Are a disincentive to saving for retirement, college education and other major life expenses; • Have led to two policy changes – reducing the amount of retirement counted and allowing a portion of assets to be counted as income so households can income-qualify for a higher Category unit, which could cost burden some households. • Add to the amount of staff time needed to qualify applicants. P15 I. Policy Study: Aspen/Pitkin County Housing Authority Affordable Housing Guidelines. February 2016 Navigate, LLC; WSW Consulting; Rees Consulting, Inc. Recommendations - 14 Recommendations: Eliminate the asset caps on Category units and RO units with a price appreciation cap. Requiring that 75% of income be earned in Pitkin County, along with a minimum number of hours worked, eliminates buyers with significant income-producing assets and ensures residents are contributing to the local economy even if they have been able to save. The locally-earned income percentage could be increased to further reduce the amount of income-producing assets applicants could own. This is an approach used in other resort communities. Neither Breckenridge nor Vail have asset caps. If asset caps are not eliminated, the following changes are suggested: • Apply one cap equally to all units. Applying the $900,000 cap, which is currently the RO Category limit, would only disqualify about 8% of workforce households compared with 36% currently. • Exclude qualified retirement savings, as done in Jackson. Retirement savings cannot be used for housing without high tax penalties. Discouraging employees from saving for retirement could ultimately increase the length of time they remain in their APHCA units upon retirement. • Limit the exclusion from assets of one-time gifts to no more than 20% of the purchase price. The lack of down payments is often an impediment to home purchase. Possibly disqualifying applicants because of down payment assistance seems counter to APCHA's goals yet allowing parents to outright purchase homes has been raised as a concern. • Raise the caps to lower the percentage of disqualified households. • Retain caps on RO units that are not resale price capped since competition generated by the more affluent households with significant assets will escalate price increases. Asset caps should reduce the inflationary competition by reducing the number of applicants who qualify, unless a surplus in these units develops. • Retain the provision prohibiting ownership of other housing within the OEZ. • Exclude one automobile per employee from the asset calculation. Cars cannot be used to purchase or rent housing and are often needed for work or child care. HUD considers cars to be necessary personal property, not an asset. Counting cars with a price over a designated amount could be a compromise that addresses complaints about APCHA residents having expensive automobiles. ! P16 I. Policy Study: Aspen/Pitkin County Housing Authority Affordable Housing Guidelines. February 2016 Navigate, LLC; WSW Consulting; Rees Consulting, Inc. Recommendations - 15 Negative Perceptions related to Income Qualifications Issues: Surveys and interviews identified negative perceptions about APCHA’s program related to income qualifying, primarily under reporting of income (especially tips), “trust funders” qualifying for APCHA housing and complexity that makes it difficult to understand how to qualify. Recommendations: Update APCHA’s website to help improve public awareness and program perceptions. Specific changes could include: • Clarifying objectives • Providing limited access to a database of the inventory • A report on the number of units sold per year • A simplified explanation on how income is calculated • Information on the affordability of purchase prices and rents The other recommendations herein, such as limiting the exclusion of gifts when calculating assets to 20% down payments, should result in a system that is easier to explain, more likely to be perceived as equitable, and address concerns about inappropriate use of the system. Affordability Affordability Standard Issues: Prices are not determined consistently based on an adopted standard for affordability. In some Categories, rents and prices are too high, about right, or too low relative to income, yet affordability is a clear objective of the Housing Program. Recommendations: Define affordability based on the housing payment equaling 30% of income. This standard is used widely to determine if housing is affordable. The benefits of doing so outweigh its weaknesses. Defining affordability on the 30% standard will support better decision making on many aspects of the Housing Program such as initial sales prices, appreciation caps, deferred maintenance, and qualification. It will also provide a basis from which to evaluate whether the program is meeting its objective of affordability. P17 I. Policy Study: Aspen/Pitkin County Housing Authority Affordable Housing Guidelines. February 2016 Navigate, LLC; WSW Consulting; Rees Consulting, Inc. Recommendations - 16 Affordability over Time Issues: APCHA’s current income-calculation method results in a program that does not consistently serve the same target income market each year. In some years, defined incomes target a higher income market and in some years they may target a lower market. An advantage of linking income limits to HUD AMI is that the target income market would remain constant over time (e.g., always at 50% AMI) APCHA maximum rents and incomes have generally increased at about the same rate over the years. For ownership, APCHA maximum sale prices have been permitted to increase at faster rates than incomes on average, primarily reducing the affordability of new homes for larger families. Despite this, sale prices remain very affordable for these households, indicating that prices had room to increase. Recommendations: Use the annual change in AMI to update prices for new units, which would create stability in the relationship between prices and income over time. This is the preferred approach of peer communities reviewed as part of this study and has been found as the best way to retain the affordability of housing over time. Recognizing that many existing APCHA deed restrictions are based on CPI and can only be changed at resale, at least future deed restrictions could tie price increases to AMI and better retain the affordability of these properties over time. Affordability of Current Rents and Ownership Prices Issues: • Many renters in APCHA units are cost-burdened (pay over 30% of their income for rent). This is particularly acute in Categories 1 and 2, while rents in the upper income categories could be raised and would still be affordable. • Ownership prices are lower than affordable levels in all Categories, although the difference is much greater among the upper income Categories. Recommendations: • Raise prices for new ownership units based on the amounts affordable for the recommended AMI categories. P18 I. Policy Study: Aspen/Pitkin County Housing Authority Affordable Housing Guidelines. February 2016 Navigate, LLC; WSW Consulting; Rees Consulting, Inc. Recommendations - 17 • Lower rents for Category 1 by reducing the income levels that the Category targets when converting to the recommended AMI income/price structure. Qualifications for APCHA Ownership and Rental Housing Income Qualification - Distinctions between Owners and Renters Issues: The current method of calculating income based on the number of adults for rental and dependents for ownership: • Disadvantages families with children in rentals and larger families in ownership. • Raises concerns about Fair Housing. • Is not compatible with AMI-based income categories. • Is based on data that are not readily available – neither the Census nor HUD publish income estimates based on number of adults or dependents. • Is unique among housing programs. • Is more complicated to manage than programs where household size is measured the same for owners and renters and it is confusing to applicants. • Involves different scaling factors based on the number of adults or number of dependents making the gap between categories vary between owners and renters. Recommendations: Use the total number of persons per household for both owners and renters to determine household income. The advantage to this is that it: • Simplifies the program by using one method for both rental and ownership; • Is consistent with HUD methodology for determining incomes and relates to AMI; • Treats households more equitably based on the number of persons, rather than differently based on the number of adults or dependents; • Eliminates Fair Housing Issues; • Maintains the same AMI level within the category regardless of household size; and • Is used by peer communities, which would enable Aspen to evaluate the performance of its housing programs relative to similar programs. P19 I. Policy Study: Aspen/Pitkin County Housing Authority Affordable Housing Guidelines. February 2016 Navigate, LLC; WSW Consulting; Rees Consulting, Inc. Recommendations - 18 Bedroom Qualification Issue: APCHA determines the number of bedrooms for which a household qualifies based on the total number of persons in the household, as is done by peer communities with the exception of Breckenridge. As household composition and size have changed over the years, situations of overcrowding (families in one-bedroom units) or under-utilized units (empty nesters in larger units) have developed. The priority that APCHA gives to current residents of the property in which units become available attempts to address this problem, yet there is insufficient movement within the inventory to accommodate changing household needs. APCHA’s limit of two persons per bedroom for rental product is likely reasonable, however, based on HUD standards. Recommendations: • Develop additional units to allow for movement within the inventory to accommodate changing household needs. • Continue to base the qualifications on the total number of persons in the household. Administrative Complexity Issues: • Aspen has exceptionally complex Guidelines that requires a large staff to administer, are very hard to update, and difficult to understand. • There are gaps in understanding of the inventory of units likely resulting from an outdated system for collecting, maintaining, and disseminating data. • APCHA’s inventory has grown to nearly 3,000 units, increasing the complexity of keeping track of and monitoring units. The current record keeping system does not support periodic program evaluation. • The extensive changes recommended herein will initially take more time and effort than maintaining the status quo. Recommendations will have to be approved, residents and the public will need to be educated, Guidelines and deed restrictions changed and new record keeping systems created. P20 I. Policy Study: Aspen/Pitkin County Housing Authority Affordable Housing Guidelines. February 2016 Navigate, LLC; WSW Consulting; Rees Consulting, Inc. Recommendations - 19 Recommendations • Prioritize implementation of the recommended changes even if staff time has to be re-directed from day-to-day responsibilities. The investment of time should save time and taxpayer dollars in the long run. • Improve and consolidate the APCHA housing database. Implementing a centralized system to collect, track and disseminate data will help APCHA reduce its administrative burden, make its inventory more transparent, keep track of what is working well and where changes may be needed, more easily disseminate information, and make the system less reliant upon institutional knowledge. • Simplify current Guidelines by removing provisions that are outdated and that are not helping APCHA meet its goal. Overly complicated guidelines are hard for the public to understand, contribute to the perceptions that the application process is unfair or “rigged,” and add to the cost and difficulty of operating the program. P21 I. Policy Study: Aspen/Pitkin County Housing Authority Affordable Housing Guidelines. February 2016 Navigate, LLC; WSW Consulting; Rees Consulting, Inc. Introduction - 20 INTRODUCTION The Aspen Pitkin County Housing Authority (APCHA) contracted with the team of Navigate, LLC, WSW Consulting, and Rees Consulting, Inc., to conduct a comprehensive review of its affordable housing program to ensure it is meeting the intended purpose as stated in the Aspen/Pitkin County Employee Housing Guidelines, Amended and Adopted October 2015: To provide affordable housing opportunities through rental and sale to persons who are or have been actively employed or self- employed within Aspen and Pitkin County, and that provide or have provided goods and services to individuals, businesses or institutional operations within Aspen and Pitkin County (prior to retirement and/or disability). The purpose of this analysis is to help APCHA understand: 1. The ability for its housing program to serve employed households in Pitkin County; 2. Where the program has been most effective; 3. Where improvements could be made to better meet the intended goals of APCHA’s workforce housing program; and 4. Potential policy changes that could help APCHA better meet its goals. This report answers the primary questions raised in the RFP, including: 1. Affordability: Is APCHA’s methodology for setting maximum sales prices and monthly rents creating affordable outcomes? Is there a better method that would be more effective? 2. Income/Assets: In the context of the existing Category system, is APCHA’s methodology for measuring income and assets achieving affordability for its target households? What assets/income should be included? Are current Categories segmented appropriately and how do they compare to a system based on Area Median Income (AMI)? Is there a better approach that would be more effective? 3. Household size: Is APCHA’s methodology for determining household size based on number of adults for renters and number of dependents for buyers effective? Is there a better method that would be more effective? 4. Qualifications: Is APCHA’s twofold system of qualifying renters and buyers achieving its desired outcome of serving employees? Or should both be based on the same household size criteria? P22 I. Policy Study: Aspen/Pitkin County Housing Authority Affordable Housing Guidelines. February 2016 Navigate, LLC; WSW Consulting; Rees Consulting, Inc. Introduction - 21 5. Best Practices: How do peer communities address challenges of affordability, income/asset levels, household size, and qualifications to rent or purchase? Methodology Information used in this study included a mix of primary research and secondary data analysis. Data collection for this study took place during the months of May through September of 2015. Pitkin County Employee Survey To conduct this analysis, it was necessary to understand the mix of employed households occupying APCHA housing compared to the housing needs and demographics of all employees working in Pitkin County. Secondary data sources such as the US Census and American Community Survey (ACS) provide information on households living in a given area, but do not supply information on households that are employed within a region. In this case, only about 47% of employees working in Pitkin County actually reside within the county – the rest commute in. For this reason, the results of this survey cannot be collected from, nor are they comparable to, the Census or ACS for households living in Pitkin County. The survey probed household demographics, where workers live, their experience and familiarity with APCHA’s program, length and type of employment, interest in purchasing an affordable home or renting an APCHA unit, housing expenses and needs, and income and asset characteristics. Survey results are presented for households that have at least one employed person in Pitkin County – the primary focus for APCHA’s housing program. The goal of survey distribution was to reach a representative selection of persons employed in Pitkin County. With only about 18,000 employees in the county, it was essential to have the largest employers in the area participate in the survey, which have a proportionately larger impact on employee housing needs in the county, along with a mix of smaller employers to capture the array of employment in the county. To achieve this result, various distribution methods were used: • The survey was distributed on-line through Pitkin County employers to their employees with assistance from the Aspen Chamber Resort Association and their almost 700 members. We also received direct participation from the larger employers, including Aspen Skiing Company, Roaring Fork Transportation Authority, Aspen School District, Auberge Resorts, and Aspen Valley Hospital. • The survey was also posted on the APCHA website and publicized through radio and print advertisements to notify households who may not have received a survey link from their employer about the survey and provide the opportunity for them to respond. P23 I. Policy Study: Aspen/Pitkin County Housing Authority Affordable Housing Guidelines. February 2016 Navigate, LLC; WSW Consulting; Rees Consulting, Inc. Introduction - 22 • Survey invites were emailed to all occupants of APCHA housing to provide the ability for all APCHA residents to respond to the survey. • The survey was also offered in Spanish with the assistance of APCHA and several of the larger businesses within Pitkin County. Over 1,470 responses were received from households occupied by at least one person employed in Pitkin County. Because most respondents have more than one employee living in their household, the number of employees represented by the survey is higher (about 2,870 employees). Also, employees hold about 1.2 jobs on average, meaning that the survey represents about 3,450 jobs, or 16% of all jobs, in Pitkin County. The mix of jobs represented by respondents covers the array of employment in Pitkin County and, although not directly comparable, is similar to the distribution of jobs by industry type reported by local and national jobs sources. Table 2A. Survey Representation – Industry of Employment Survey (Industry of employment for Pitkin County employees) Bureau of Economic Analysis (2013) Colorado Dept. of Local Affairs (2013) Retail, accommodation, food service 29.4% 26.0% 28.0% Ski area, recreation, guiding service, professional athlete 13.4% 10.8% 11.4% Government (excluding education and hospitals) 12.9% 9.5% 10.8% Banking, legal, computers or other professional service company 8.7% 11.2% 8.7% School District, other educational institution* 7.0% 1.7% 1.7% Construction, landscaping 6.9% 4.3% 4.7% Hospital, health care** 6.8% 2.4% 2.8% Real estate leasing and sales, property management 4.9% 14.1% 10.9% Other services, except public administration 5.5% 6.5% 7.8% Other 4.4% 4.9% 4.0% Administrative and waste management services*** Not asked 8.5% 9.2% TOTAL 100.0% 100.0% 100.0% Federal and state sources are based on NAICS industry codes and classify each business accordingly; the survey relies on individuals to report their industry of employment, which may differ from federal classification standards. *State and federal sources include private education only; survey includes public education jobs **May include some contract administrative services, which were not asked in the survey. *** Includes administrative support services hired on contract by other businesses; not asked on the survey, so will be distributed throughout the other categories on the survey. P24 I. Policy Study: Aspen/Pitkin County Housing Authority Affordable Housing Guidelines. February 2016 Navigate, LLC; WSW Consulting; Rees Consulting, Inc. Introduction - 23 The margin of error for survey tabulations is within about 2.5 percentage points at the 95% confidence level. This means that, for tabulations involving the entire sample, there is 95% confidence that any given percent reported is no more than plus or minus 2.5 percentage points from what is actually the case. When estimates are provided for sub-groups, such as owners and renters, the tabulations are less precise Table 2B. Employee Survey Response Summary Survey Responses Received # of Employees Represented # of Jobs Held by Respondent Households Total Pitkin County Jobs (2015)* % of Jobs Represented by the Survey Estimated Margin of Error (95%) 1,474 2,870 3,450 22,000 16% +/- 2.5% *Source: Colorado Dept. of Local Affairs (DOLA) Community Interviews Over 40 interviews with key stakeholders, employers, realtors and lenders in the area were conducted as part of this study. More specifically: • Key stakeholders. More than 25 interviews with key community stakeholders were conducted, including City and County staff, APCHA staff and board members, City Council Members, and County Commissioners. Information was collected on perceptions of the housing program, evolution of the programs, community needs, opportunities, and challenges. • Pitkin County Employers. The larger Pitkin County employers were interviewed, including but not limited to Aspen Skiing Company, Roaring Fork Transportation Authority, Auberge Resorts, and Aspen Valley Hospital. Employers were asked about employee recruitment and retention, experience with and perceptions of APCHA’s housing program, housing needs of their workers, and how APCHA’s housing program can better serve their employees. • Real estate agents and local lenders. Over six interviews were conducted with local and down valley real estate agents and lenders, gathering information on local housing market and home qualification information, local lending standards and products used, problems in lending to local households, or on APCHA products, if any; and where the housing market is falling short of meeting local workforce needs. P25 I. Policy Study: Aspen/Pitkin County Housing Authority Affordable Housing Guidelines. February 2016 Navigate, LLC; WSW Consulting; Rees Consulting, Inc. Introduction - 24 Review of Peer Housing Programs This study included an analysis of housing programs in four high-cost mountain communities. The following communities were selected because they have significant experience providing, managing and maintaining a diversity of housing for their workforce: • Breckenridge, Colorado • Telluride, Colorado • Vail, Colorado • Jackson, Wyoming The purpose was to understand how comparable communities address each primary component of this study, their relative successes and problems, and to identify methodologies that may help APCHA address its program challenges and goals. The results of this analysis are summarized throughout the report, as well as in an easy-to-reference matrix in the Appendix. Secondary Data Analysis of existing reports, policies and data included: • Review of APCHA’s existing housing inventory and program, including the Aspen/Pitkin County Employee Housing Guidelines, Amended and Adopted October 2015, and related program and policy documents and housing data sets from APCHA. • Secondary data sources, including U.S. Census Bureau, Quarterly Census of Employment and Wages (QCEW), Bureau of Economic Analysis (BEA), Colorado Department of Local Affairs (DOLA) and local housing and economic studies. Organization of This Report The analysis of APCHA’s Employee Housing Guidelines 2015 is presented in the following report sections. Report sections are organized around the topics of interest expressed in the Request for Proposals: Section 1: Examination of APCHA’s Affordable Housing Program – which sets the stage for the analysis in later sections by introducing APCHA’s program and housing inventory and using the 2015 Employee Survey results to understand which households APCHA is serving well and where improvements can be made; Section 2: Income, Assets and Housing Categories – which evaluates APCHA’s system for measuring income and assets and their respective limits defined for each Category of housing; P26 I. Policy Study: Aspen/Pitkin County Housing Authority Affordable Housing Guidelines. February 2016 Navigate, LLC; WSW Consulting; Rees Consulting, Inc. Introduction - 25 Section 3: Affordability – which evaluates whether rents and purchase prices for APCHA homes within each Category are affordable to the households that qualify for them, both presently and over time; and Section 4: Household Size and Qualifications to Rent & Purchase – which analyzes APCHA’s dual qualification system for ownership and rental units based on household size and a specific number of bedrooms. Sections 2 through 4 discuss: • APCHA’s present policy expressed in its Employee Housing Guidelines 2015, • Federal and other generally accepted standards for relevant policies, • The effect of APCHA’s policies on meeting its workforce housing goals, and • Practices applied and lessons learned from housing programs in peer mountain communities. Based on this research, specific recommendations are made for changes that could be considered to help APCHA better meet its housing goals. These are summarized at the beginning of the study in the section titled “Executive Summary - Key Issues and Recommendations.” This report also contains the following appendices, providing more detail on the primary research conducted as part of this study: • Appendix A contains additional tables and charts for Section 1. • Appendix B contains additional tables and charts for Section 2. • Appendix C contains additional tables and charts for Section 3. • Appendix D contains a matrix of peer community housing programs. • Appendix E contains a map of the Ownership Exclusion Zone (OEZ).! Definitions American Community Survey – The ACS is part of the Decennial Census Program of the U.S. Census. The survey was fully implemented in 2005, replacing the decennial census long form that has been discontinued. Because it is based on a sample of responses, its use in smaller areas (under 65,000 persons) is best P27 I. Policy Study: Aspen/Pitkin County Housing Authority Affordable Housing Guidelines. February 2016 Navigate, LLC; WSW Consulting; Rees Consulting, Inc. Introduction - 26 suited for monitoring general changes over time rather than for specific demographic counts due to potentially high margins of error. Affordable Housing – As used in this report, housing is deemed to be affordable if the monthly rent or mortgage payment is equal to or less than 30% of gross household income (before taxes). When housing costs exceed 30% of income, the household is considered to be Cost Burdened. Area Median Income (AMI) – A term that generally refers to the median incomes published annually for counties by the US Department of Housing and Urban Development (HUD). AMI varies by household size, an issue covered in this report. HUD uses four income categories as follows: • Extremely Low Income – At or below 30% AMI • Very Low Income –Between 31% and 50% AMI • Low Income – From 51% to 80% AMI • Moderate Income – From 81% to 100% AMI The published incomes for Pitkin County for 2015 are as follows: Table 3. 2015 HUD AMI - Pitkin County AMI 1 Person 2 Person 3 Person 4 Person 5 Person 30% $20,500 $23,400 $26,350 $29,250 $31,600 50% $34,150 $39,000 $43,900 $48,750 $52,650 60% $40,980 $46,800 $52,680 $58,500 $63,180 80% $47,400 $54,200 $60,950 $67,700 $73,150 100% $68,300 $78,000 $87,800 $97,500 $105,300 120% $81,960 $93,600 $105,360 $117,000 $126,300 Source: Department of Housing and Urban Development (HUD) Consumer Price Index (CPI)1 - A measure of the average change over time in the prices paid by urban consumers for a market basket of consumer goods and services, including retail goods and other items. The CPI is published by the Bureau of Labor Statistics (BLS) and is commonly used as an economic indicator of change and to adjust dollar values. APCHA uses CPI to adjust its income limits and for sale and rental home prices for its housing Categories on a yearly basis. The cost of housing is not a factor included in the CPI calculation. Cost Burdened – When housing costs exceed 30% of a household’s gross (pre- tax) income. Housing costs include rent or mortgage and may or may not include utilities, homeowner association fees, transportation or other necessary costs depending upon its application. Households are severely cost-burdened when housing costs comprises 50% or more of gross income. 1 See CPI “Frequently Asked Questions” at: http://www.bls.gov/cpi/cpifaq.htm for more information. P28 I. Policy Study: Aspen/Pitkin County Housing Authority Affordable Housing Guidelines. February 2016 Navigate, LLC; WSW Consulting; Rees Consulting, Inc. Introduction - 27 Department of Housing and Urban Development (HUD) – A U.S. government agency created in 1965 by the Department of Housing and Urban Development Act (42 U.S.C.A. § 3532–3537). It is the principal federal agency responsible for programs concerned with housing needs, fair housing opportunities, and improving and developing U.S. communities. Dependent – According to APCHA Guidelines, a “dependent” is either a “qualifying child” or a “qualifying relative.” A qualifying child is a child (including stepchild, adopted child), or eligible foster child – i.e. minors), or a sibling (or stepsibling) of the taxpayer, or a descendant of either; who has resided in the principal abode of the taxpayer for at least 100 days out of the calendar year; who has not attained age 24 as of the end of the year); and who has not provided more than half of his or her own support for that year. A child who does not satisfy the qualifying child definition may be a “qualifying relative.” Employee Housing Guidelines 2015 – Refers to the Aspen/Pitkin County Employee Housing Guidelines, Amended and Adopted October 2015. Ownership Exclusion Zone – The area where ownership of improved residential real property or a mobile home is prohibited in order to be eligible to own or rent an APCHA deed restricted unit. This is further defined in Appendix E – Ownership Exclusion Zone Map. Resident Occupied Units (RO) – A classification of deed restricted housing intended to serve households earning incomes higher than Categories 1 – 7 but unable to afford free market housing. In practice, RO units often provide housing options for households earning within Category level incomes. RO deed restrictions do not limit the amount of household income and vary on household asset limitations. Target Income Household – An identified segment of the workforce often defined in relationship to a particular income level or a range of incomes within a specified population. It is typically defined by a percentage of the Area Median Income, such as 80% AMI. Qualified Adult – There is no clear definition of Qualified Adult in the APCHA Guidelines, though there are several references to maintaining full-time work in Aspen/Pitkin County. P29 I. Policy Study: Aspen/Pitkin County Housing Authority Affordable Housing Guidelines. February 2016 Navigate, LLC; WSW Consulting; Rees Consulting, Inc. Introduction - 28 Consultant Team The consultant team includes: • Christine Walker, who brings almost 10 years of practical, in-the-trenches experience as Executive Director of the Teton County Housing Authority along with an education in architecture. She understands the complexities of running a housing program in high-cost mountain resort communities, including: program administration and housing occupant qualification, developing and managing affordable rental and deed restricted ownership housing units, and maintaining their operation over time in light of changing community needs and political challenges. • Melanie Rees, a housing consultant who has helped high-cost communities understand their housing needs and create feasible, effective solutions to address them for 25 years. She is driven by a background in economic development and the recognition that workforce housing is crucial for economic success. • Wendy Sullivan, a planner and attorney who has been helping communities identify and address their housing needs for about 15 years. In addition to her solution-oriented data organization and analysis skills, she can assess the many nuances in housing codes and program rules, identify potential unintended consequences and highlight practices that could be open to legal challenge. Acknowledgements We would like to thank all of those who have helped us and have given us their time and assistance. The information presented in this report is a union of data and numbers with the experiences and observations of those living in the community, both of which would not have been possible without such broad local participation. We have enjoyed working with APCHA, the City of Aspen, Pitkin County, its businesses and residents, and we appreciate the opportunity to work with communities that have a desire to understand and better serve the housing needs of local residents and the workforce. Thank you to APCHA staff, APCHA Board members, Aspen City Council members, Pitkin County Commissioners, local and regional employers, realtors, property managers, lenders, and community stakeholders for your cooperation, participation and collaboration. A special thank you to the staff, board, and membership of the Aspen Chamber Resort Association (ACRA) for their assistance in disseminating and participating in the Aspen/Pitkin County Employee Housing Survey. P30 I. Policy Study: Aspen/Pitkin County Housing Authority Affordable Housing Guidelines. February 2016 Navigate, LLC; WSW Consulting; Rees Consulting, Inc. Introduction - 29 ELECTED AND APPOINTED OFFICIALS Aspen/Pitkin County Housing Authority (APCHA) • Ron Erickson, Chair (City Appointee) • Rick Head, Vice Chair (City Appointee) • Marcia Goshorn, Director (County Appointee) • Steve Stunda, Director (County Appointee) • Renee West, Director (Joint City/County Appointee) • Becky Gilbert, Director (Joint City/County Alternate) City of Aspen Council • Steve Skadron, Mayor • Art Daly, City Council • Adam Frisch, City Council • Ann Mullins, City Council • Bert Myrin, City Council Pitkin County Board of County Commissioners • Steve Child, Chair, District 4 • Rachel Richards, Vice Chair, District 2 • Patti Clapper, District 1 • Michael Owsley, District 3 • George Newman, District 5 Administration • Steve Barwick, City Manager, City of Aspen • Jon Peacock, County Manager, Pitkin County • Barry Crook, Assistant City Manager, City of Aspen • Mike Kosdrosky, Executive Director, Aspen/Pitkin County Housing Authority • Cindy Christensen, Deputy Director, Aspen/Pitkin County Housing Authority • Chris Everson, Affordable Housing Project Manager, City of Aspen P31 I. Policy Study: Aspen/Pitkin County Housing Authority Affordable Housing Guidelines. February 2016 Navigate, LLC; WSW Consulting; Rees Consulting, Inc. Section 1- 30 Section I – Examination of APCHA’s Affordable Housing Program Purpose The information in this section establishes the context for the policy analysis presented in later sections by: • Providing an overview of APCHA’s Guidelines and its goals and objectives; • Discussing the evolution of APCHA and present challenges; • Summarizing APCHA’s housing inventory; and • Identifying the segments of the workforce that are both well-served and under-served by APCHA’s current housing inventory and program. By examining how the program and housing issues have evolved over time, current policy and inventory, and gaps in service of the APCHA program, this section helps frame the discussion for later sections by identifying where the program is effective and where policy changes may be needed to better meet program goals. Housing Program The housing program in Aspen/Pitkin County was created in 1974 as two separate entities – the City and County. The consolidated Aspen Pitkin County Housing Authority (APCHA) was later established in November 1982 for the purpose of: …developing and managing housing projects pursuant to a multi- jurisdictional plan to provide residential accommodations at rental or sales prices within the means of persons of low-, moderate- and middle-income who are permanent residents and persons employed in the City and County. An Intergovernmental Agreement (IGA) between the City of Aspen, Pitkin County and APCHA is utilized to define the relationship between and define roles of the three parties.2 APCHA works directly with the City of Aspen and Pitkin County. The APCHA board of directors approves policy decisions on the housing program, but the Aspen City Council and the Pitkin County Board of County Commissioners (BOCC) may call-up the policy for review and revoke any approval by the APCHA board of directors. 2!Currently, APCHA is operating under the Fifth Amended and Restated IGA dated December 18, 2013. ! P32 I. Policy Study: Aspen/Pitkin County Housing Authority Affordable Housing Guidelines. February 2016 Navigate, LLC; WSW Consulting; Rees Consulting, Inc. Section 1- 31 Employee Housing Guidelines 2015 At least every three years APCHA establishes guidelines that govern the development of and qualifications to occupy deed restricted affordable housing units for Aspen and Pitkin County. APCHA is currently working under the Aspen/Pitkin County Employee Housing Guidelines, Amended and Adopted October 2015 (referred to in this report as the Employee Housing Guidelines 2015). These guidelines support APCHA’s goals and do not supersede City or County Land Use Codes. Specifically, the Employee Housing Guidelines 2015 are used to: • Provide information and establish policies and procedures for affordable housing development; • Establish eligibility and qualification procedures for affordable units; • Establish rental policies and procedures including rental rates; • Establish purchase and sale policies and procedures including maximum sales prices; • Set compliance and grievance policies and procedures; and • Develop and prioritize current and long-range housing programs. Housing Program Goal The goal of the APCHA Housing Program has evolved over time, but has consistently focused on providing housing for persons either currently or previously employed in Pitkin County. The current goal, as stated in the Employee Housing Guidelines 2015 is: To provide affordable housing opportunities through rental and sale to persons who are or have been actively employed or self- employed within Aspen and Pitkin County, and that provide or have provided goods and services to individuals, businesses or institutional operations, within Aspen and Pitkin County (prior to retirement and/or disability). Broken into its primary components, APCHA housing should: • Be affordable; • Provide housing for diverse employees that serve the local economy; and • Provide a mix of rental and purchase options. P33 I. Policy Study: Aspen/Pitkin County Housing Authority Affordable Housing Guidelines. February 2016 Navigate, LLC; WSW Consulting; Rees Consulting, Inc. Section 1- 32 Evolution of the Aspen Community and Resulting Housing Challenges Stakeholders indicate that significant changes have occurred in the Aspen area over the past 40 years, such as housing costs that rose quickly to be some of the highest in the country, economic and residential growth, improved transportation infrastructure, and challenges encountered as Aspen approaches build-out. APCHA’s Housing Program has also evolved during this time to address the changing needs of residents and employees, as well as an aging housing stock and population. Over time: • Affordability categories have been added. • Deed-restrictions have been amended. • Income requirements have been changed. • New policies have been added to address gaps in policies, changing needs and shifting priorities. • Existing policies have been amended. • Guidelines have grown in size to address a variety of issues, and • Personnel have been added to manage the larger inventory and increasingly complicated program. The result is that a complex program has been created over many years, which makes management, public education and compliance challenging. Furthering these challenges is an antiquated data management system, an outdated website, and lack of comprehensive, real time understanding of the inventory. APCHA has also seen changes in its inventory of affordable housing during this time, presenting other concerns: • The housing inventory has grown, along with diversity of housing types managed, increasing the complexity of keeping track of and monitoring the growing supply of units. • The housing program has been asked to serve higher and higher household income levels, increasing the diversity and complexity of the product type and deed restrictions. • Inventory is aging. Units that were built 20 or more years ago are posing new challenges in terms of capital needs, aging infrastructure, increased maintenance, and resale complications. • Early concepts of affordable housing as a “step” into free market housing have not materialized. According to stakeholder interviews, the increase “Guidelines have grown bigger as issues have grown bigger” APCHA Attorney P34 I. Policy Study: Aspen/Pitkin County Housing Authority Affordable Housing Guidelines. February 2016 Navigate, LLC; WSW Consulting; Rees Consulting, Inc. Section 1- 33 in market prices of homes has rapidly outpaced growth in incomes over the last few decades, limiting opportunities for movement out of the affordable housing program. APCHA is seeing limited mobility for families who outgrow their homes and older occupants remaining as they near or reach retirement, increasing pressure on the existing affordable housing stock. Table 4. Year APCHA Ownership Units Built Year Built # of Units Before 1970 0.7% 1970-1979 7.9% 1980-1989 21.1% 1990-1999 25.3% 2000-2010 38.3% 2010-present 6.5% TOTAL 100.0% *Redeveloped units categorized based on redevelopment date. **APCHA does not have specific data on year built for rental product. Stated some units built in the 1960’s, some in the late 1980’s, and some in the late 1990’s early 2000’s. Source: APCHA and City of Aspen Community Development Department Inventory of Units APCHA oversees 2,931 units. This figure includes any unit with a deed restriction recorded, some of which are owned and/or managed by other entities. There are additional units for employees in the community that are provided by employers, and not included in this analysis. The APCHA units are classified into seven different Categories, based on a household’s income and assets, and Resident Occupied (RO). Category 1 serves the lowest income level and Category 7, the highest. RO units are intended to fill the gap between Category 7 and the free-market and have no income limits, but impose an asset cap. The Category system is used for both owner and rental units; however, there are no rental units in levels 5-7 at this time. Although intended to target higher household incomes, a large portion of the RO units are priced for households earning within Category income ranges. With the ownership product, this is primarily the result of the product type, as many of these RO units are the result of converting mobile homes to employee housing and have lower price points. The RO rentals are mainly units managed by large employers that rent at lower rates to their employees. Until 2002, the Guidelines contained only Categories 1 through 4 and RO, at which time Categories 5 through 7 were added. P35 I. Policy Study: Aspen/Pitkin County Housing Authority Affordable Housing Guidelines. February 2016 Navigate, LLC; WSW Consulting; Rees Consulting, Inc. Section 1- 34 All deed-restricted housing, of any type or Category, requires an individual to: • Work or have worked full-time in Pitkin County; • Use their home as their primary residence; and • Not own any other developed property within the Ownership Exclusion Zone (OEZ).3 The below table shows how APCHA’s inventory is distributed based on Category and number of bedrooms for ownership and rental units combined. As shown below: • The bulk of APCHA’s inventory are in Categories 1 through 4 and RO, with a comparative handful of units (91 total) in Categories 5 through 7; • About 40% of APCHA’s inventory are smaller units: studios or 1-bedrooms and dorms. These smaller units tend to provide viable options for single persons; and • Detached single-family homes make up 22% of the inventory, but are predominately RO units and unaffordable to most households earning under $200,000 per year.4 These units are larger on average than the attached product (47% of the known inventory are 3-bedroom homes5) and are primarily targeted to families. Table 5. APCHA Inventory of Deed Restricted Housing6 Category 1 2 3 4 5 6 7 RO TOTAL Attached Units: Studio 49 75 88 20 0 0 0 91 323 11% 1-bedroom 30 220 202 84 2 2 0 39 579 20% 2-bedroom 21 145 232 207 3 1 0 151 760 26% 3-bedroom 2 47 118 127 14 5 4 29 346 12% Dorm Units 15 5 12 21 0 0 0 218 271 9% Detached Units: Single-Family 1 1 29 97 0 60 0 464 652 22% Subtotal: 118 493 681 556 19 68 4 992 2931 100% 4% 17% 23% 19% 1% 2% 0% 34% 100% Source: APCHA and City of Aspen Community Development Department 3 See Appendix E for Ownership Exclusion Zone (OEZ) map. 4 See Section 3 – Affordability for more information. 5 Bedroom sizes are known for 37% of the single-family inventory: 253 single-family homes out of 649 total. 6!This inventory table shows the distribution of APCHA units by Category and RO classification, not price point. See Section 2 – Income & Assets & Categories for a table which distributes RO units based on their price into the respective Categories. P36 I. Policy Study: Aspen/Pitkin County Housing Authority Affordable Housing Guidelines. February 2016 Navigate, LLC; WSW Consulting; Rees Consulting, Inc. Section 1- 35 Ownership Units Ownership housing makes up 55% of APCHA’s total inventory. As shown below: • The majority of Category 1 and 2 units are 1-bedroom or smaller. Few 3-bedroom units are available for lower income families. • Category 3 and 4 offer more larger-sized homes (3- and 4-bedrooms). Table 6. APCHA Ownership Inventory Category 1 2 3 4 5 6 7 RO TOTAL Attached Units: Studio 2 9 10 17 0 0 0 0 38 2% 1-bedroom 9 93 77 79 2 2 0 6 268 17% 2-bedroom 7 61 62 187 3 1 0 29 350 22% 3-bedroom 1 26 75 123 14 5 4 22 270 17% 4-bedroom 0 5 2 21 0 0 0 5 33 2% Detached Units: Single-Family 1 1 28 97 0 60 0 462 649 40% Subtotal: 20 195 254 524 19 68 4 524 1608 100% 1% 12% 16% 33% 1% 4% 0% 33% 100% Source: APCHA and City of Aspen Community Development Department Rental Units The rental inventory makes up 45% of APCHA’s inventory with the bulk of this serving as long-term rentals. About 15% of all APCHA rentals (199 units) provide housing for seasonal workers. Other Employers in the valley supplement APCHA’s rental inventory. Of note, the Aspen Skiing Company adds about 600 seasonal beds located throughout the Roaring Fork Valley, which are not included in this analysis. As shown below: • The majority (64%) of APCHA’s rental units are smaller in size: dorms, studios, and 1-bedrooms. • About 1/3 are 2-bedroom units and only 6% have three bedrooms. • The percentage of 2-bedroom units is small compared to that typically seen in most housing markets. For example, in Pitkin County, about 34% of renter-occupied homes are 2-bedroom units (based on 2010-2014 ACS). P37 I. Policy Study: Aspen/Pitkin County Housing Authority Affordable Housing Guidelines. February 2016 Navigate, LLC; WSW Consulting; Rees Consulting, Inc. Section 1- 36 Table 7. APCHA Rental Inventory Category 1 2 3 4 5 6 7 RO TOTAL Attached Units: Studio 47 66 78 3 0 0 0 91 285 22% 1-bedroom 21 127 125 5 0 0 0 33 311 24% 2-bedroom 14 84 170 20 0 0 0 122 410 31% 3-bedroom 1 21 43 4 0 0 0 7 76 6% Dorm Units 15 0 10 0 0 0 0 213 238 18% Detached Units: Single-Family 0 0 1 0 0 0 0 2 3 0% Subtotal: 98 298 427 32 0 0 0 468 1323 100% 7% 23% 32% 2% 0% 0% 0% 35% 100% Source: APCHA and City of Aspen Community Development Department Comparison of APCHA Residents and Pitkin County Working Households This section uses information from the employee survey to compare the demographics of employee households residing in APCHA housing to households employed in Pitkin County overall. Results are shown both for owner and renter households. The purpose of this section is to understand how well APCHA’s inventory of both ownership and rental units are meeting employee needs and which segments of the workforce may be adequately served or under-served by APCHA’s housing in relationship to all Pitkin County working households. In interpreting the data for this section: • Where the percentage of households within a certain demographic (e.g. couples with children) that are occupying APCHA units is lower than that for employee households overall, this means that APCHA units are under- serving this population. • Where the percentage of households within a certain demographic (e.g. adults living alone) that are occupying APCHA units is higher than that for employee households overall, this means that APCHA units are over- serving this population. • If APCHA is serving the same mix of households as those that are employed in Pitkin County in total, then the percentage of APCHA occupants for any demographic will approximately equal that for employed households overall. P38 I. Policy Study: Aspen/Pitkin County Housing Authority Affordable Housing Guidelines. February 2016 Navigate, LLC; WSW Consulting; Rees Consulting, Inc. Section 1- 37 Household Demographics The results from comparing the demographics of APCHA working households to all Pitkin County working households are summarized in the below table. This creates an easy reference to understand which households are being well- served by APCHA housing and which segments are currently under-served for both owner and renter households. The complete data from the survey supporting the conclusions from this section are located in Appendix A, including a description of the analysis methodology, tables, charts and observations. Table 8. Representation in the APCHA Program OWNER HOUSEHOLDS Under-Represented (under-served) Over-Represented (well-served) Household Composition Couples Adults living alone Couples with children Single parent families Household Size 2+ person households 1-person households Age of household members No age groups under-represented No age groups over- represented Household income $100,000 to $200,000 per year $25,000 to $75,000 per year Years worked in Aspen/Pitkin County 1 to 3 years 20 or more years RENTER HOUSEHOLDS Under-Represented (under-served) Over-Represented (well-served) Household Composition Couples Adults living alone Couple with children Unrelated roommates Household Size 3+-person households 1-person households Age of household members Children age 17 or under None Household income $25,000 to $75,000 Under $25,000 $75,000 to $100,000 Years worked in Aspen/Pitkin County Under 7 years 8-years or more Note: The degree to which households are under or over-represented vary. Additional information can be found in Appendix A. Source: Employee Housing Survey 2015 P39 I. Policy Study: Aspen/Pitkin County Housing Authority Affordable Housing Guidelines. February 2016 Navigate, LLC; WSW Consulting; Rees Consulting, Inc. Section 1- 38 Housing Costs APCHA homes are more affordable than units occupied by employed households in total. As shown below: • The average monthly mortgage payment of APCHA owners is over $400 less than all owners. • The average monthly rent of APCHA renters is about $260 less than all renters. Monthly utility payments are also lower for both owner and renter APCHA households. • The only expense that is higher for APCHA occupants is the average monthly HOA dues for homeowners (about $50 more per month). This is likely due to the high number of attached housing units where HOA dues include maintenance of the exterior and common spaces. Table 9. Housing Costs Owners Renters Type Households Employed in Pitkin County Employed APCHA Households Households Employed in Pitkin County Employed APCHA Households Monthly Rent/Mortgage Under $500 2% 3% 4% 4% $500 to $699 3% 8% 8% 7% $700 to $999 10% 22% 17% 30% $1,000 to $1,249 13% 20% 16% 21% $1,250 to $1,499 14% 17% 13% 11% $1,500 to $1,749 14% 12% 14% 14% $1,750 to $1,999 9% 5% 10% 7% $2,000 to $2,499 16% 5% 10% 5% $2,500 to $2,999 9% 3% 6% 1% $3,000 to $3,999 7% 4% 3% 0% $4,000 or more 2% 1% 0% 0% Avg Monthly Rent/Mortgage $1,800 $1,386 $1,460 $1,202 Average Monthly Utilities $227 $182 $179 $132 Average Monthly HOA $238 $286 N/A N/A *Totals may not add to 100% due to rounding. Source: Employee Housing Survey 2015 P40 I. Policy Study: Aspen/Pitkin County Housing Authority Affordable Housing Guidelines. February 2016 Navigate, LLC; WSW Consulting; Rees Consulting, Inc. Section 1- 39 Cost Burdened Households paying less than 30% of their income for rent or mortgage are generally considered to be in housing that is affordable.7 As shown below: • APCHA housing is generally more affordable to its occupants than employee households in total, which is a positive alignment with the program goal of affordability. • An estimated 23% of renters in APCHA housing, however, are cost- burdened by their housing payment. This primarily affects households earning under $50,000 per year. This is explored in more detail in Section 3 – Affordability. Table 10. Cost Burdened Owners Renters Households Employed in Pitkin County Employed APCHA Households Households Employed in Pitkin County Employed APCHA Households Under 30% 81% 90% 72% 77% 30% to 39% 9% 7% 14% 14% 40% to 49% 4% 2% 5% 2% 50% or more 7% 1% 9% 6% *Totals may not add to 100% due to rounding. Source: Employee Housing Survey 2015 Work Location • All employed APCHA households have at least one employee in Pitkin County, with 93% of households having a member that works in Aspen. Only 7% of households also have a worker that holds a job outside of the county. A very small percentage report having a remote worker – one that lives in the area and works outside of the region (less than 2%). • Households with at least one employee in Pitkin County in total are more likely to have workers in their household that hold jobs outside of Pitkin County (21%) than employed APCHA households (7%). 7 See Introduction (Definitions) and Section 3 – Affordability for more information on this definition. P41 I. Policy Study: Aspen/Pitkin County Housing Authority Affordable Housing Guidelines. February 2016 Navigate, LLC; WSW Consulting; Rees Consulting, Inc. Section 1- 40 Table 11. Where do you and others in your household work? Households Employed in Pitkin County Employed APCHA Households Aspen 86% 93% Snowmass Village 14% 12% Woody Creek or Old Snowmass 3% 3% Basalt 7% 4% El Jebel 3% 1% Carbondale 9% 2% Glenwood Springs 6% 2% New Castle, Silt, Rifle or Parachute 1% 0% Other 2% 2% TOTAL 132% 117% *Totals exceed 100% due to multiple job holding and employees working in multiple locations. Source: Employee Housing Survey 2015 Type of Industry The mix of workers employed in each sector in APCHA housing is very similar to that for employee households in total in Pitkin County. Slightly fewer APCHA occupants are employed in “lodging, accommodations” and “construction, landscaping” and slightly more are in “retail and food services” than represented by employed households in total. Overall, APCHA housing is serving a wide range of workers in all industry sectors in the County. P42 I. Policy Study: Aspen/Pitkin County Housing Authority Affordable Housing Guidelines. February 2016 Navigate, LLC; WSW Consulting; Rees Consulting, Inc. Section 1- 41 Figure 1. The Type of Industry for Which You and Others in Your Household Work *Total adds to over 100% due to multiple workers and multiple job-holding. Source: Employee Housing Survey 2015 Local Lending Environment APCHA encourages buyers to use local lenders, as they understand the terms and conditions of the deed restrictions encumbering the property. There are over 20 local lenders familiar with deed-restricted properties in Pitkin County, and they offer a variety of mortgage products to APCHA purchasers, including but not limited to conventional, FHA, VA, CHFA, fixed rate, and adjustable-rate mortgages (ARMs). Loans are often sold to the secondary market (Fannie Mae or Freddie Mac), but many are “portfolio” loans where the bank holds onto the loan, keeping it in their investment portfolio. Portfolio loans are typically adjustable rate mortgages (ARMs). ARMs usually start with a lower initial interest rate, which then increases by a specified index after 3 to 7 years, unlike a fixed-rate mortgage, which maintains the same interest rate over the life of the loan. Despite the long-term risk for homeowners associated with ARMs, lenders stated several reasons why portfolio loans may sometimes be preferred: 5% 3% 4% 6% 8% 9% 9% 11% 16% 17% 18% 18% 8% 2% 5% 6% 8% 9% 6% 11% 16% 18% 21% 14% 0% 5% 10% 15% 20% 25% Other Maintenance and repair (automotive Personal services (massage, hair Real estate leasing and sales, Hospital, health care School District, other educational Construction, landscaping Banking, legal, computers or other Government (excluding education Ski area, recreation, guiding service, Retail, bar, restaurant, food services Lodging, accommodations Percent of Households Employed APCHA Households Households employed in Pitkin County P43 I. Policy Study: Aspen/Pitkin County Housing Authority Affordable Housing Guidelines. February 2016 Navigate, LLC; WSW Consulting; Rees Consulting, Inc. Section 1- 42 1) APCHA homes that are in mixed-use projects cannot be sold to the secondary market; 2) Lower initial interest rate lowers the monthly payment, which may allow buyer to meet debt to income ratio qualification; 3) Some buyers do not plan to reside in units for more than 5 or 10 years; and 4) Buyer preference. The lenders sometimes work with potential buyers before applying for a home through APCHA, but it is more common that lenders help a potential buyer after they have “won” a lottery. Lenders rely on APCHA to determine the sales price and the lenders are responsible for qualifying the buyer for a loan product. Lenders report that while there are a number of common challenges with buyers in the APCHA programs, very few buyers are ultimately denied a loan. When qualifying buyers for APCHA units, lenders noted: • Buyers often have student debt; • Buyers tend to have little for a down payment (e.g. 5% or less), and as many as 50% of APCHA buyers receive down payment gifts from parents; • Loans available to buyers have down payment requirements ranging from 0 to 20%; and • High HOA dues are challenging when trying to qualify for a loan. P44 I. Policy Study: Aspen/Pitkin County Housing Authority Affordable Housing Guidelines. February 2016 Navigate, LLC; WSW Consulting; Rees Consulting, Inc. Section 2 - 43 SECTION 2 – Income, Assets and Categories Purpose APCHA sets income and asset caps for up to eight Categories of affordable housing units. This section: • Presents APCHA’s current income and assets caps for each housing Category and its methodology for updating Category incomes each year; • Reviews APCHA’s system for measuring household income and assets when qualifying households to buy or rent units; • Compares APCHA’s system for setting, updating and measuring incomes and assets within each Category to relevant federal systems and peer communities; and • Discusses the effect of the income and assets caps and income updates on potential housing applicants within each Category and their ability to qualify for housing. Based on the findings from this analysis, recommendations are made on changes to APCHA’s current income, asset and Category system that could help APCHA better meet its housing goals. APCHA Income Limits by Category Income maximums for each Category of housing differ depending upon whether a household is applying for a rental or ownership unit. This divergence occurred at some point in the program to distinguish between roommate situations in rentals and families in for-sale housing. This is unique among affordable housing programs in peer communities, which all use a single standard based on household size. Current income maximums are derived based on an inexact combination of the following information: • A Housing Survey of Pitkin County Employees in 1999 for median income information (e.g., $60,000 per household with 0 – 1 dependent); • Colorado Department of Labor and Employment wages and employment reports; • US Census Bureau data; P45 I. Policy Study: Aspen/Pitkin County Housing Authority Affordable Housing Guidelines. February 2016 Navigate, LLC; WSW Consulting; Rees Consulting, Inc. Section 2 - 44 • Annual Expenditure Per Child report and U.S. Flow of Funds Accounts report; and • Department of Housing and Urban Development data sets. These baseline incomes were produced in 2002 and would be difficult and costly to reproduce. Maximum Renter Incomes • Rental units are only provided for Categories 1 through 4. • Rental income maximums are based on the number of adults in a household. The scaled wages based on the increasing number of adults in a household is intended to capture multiple wage earners. For example, in Category 1, a one-adult household can earn up to $35,000 per year whereas a two-adult household can earn up to $52,000. Table 12. Rentals: Maximum Income Limits, 2015 Category No. of Adults 1 2 3 4 One Adult $35,000 $56,000 $88,000 $145,000 Two Adults $52,000 $81,000 $133,000 $215,000 Three Adults $62,000 $96,000 $156,000 $252,000 Source: Employee Housing Guidelines 2015 Maximum Owner Incomes • Ownership units are provided for Categories 1 through 7, plus RO. • Ownership income maximums are based on the number of dependents in a household. As the number of dependents increases, maximum incomes for each Category also increase to reflect larger families, but to a lesser extent than the “adult” calculation for rentals. For example, in Category 1, a zero-dependent household can earn up to $35,000 per year whereas a one-dependent household can earn up to $42,500. P46 I. Policy Study: Aspen/Pitkin County Housing Authority Affordable Housing Guidelines. February 2016 Navigate, LLC; WSW Consulting; Rees Consulting, Inc. Section 2 - 45 Table 13. Ownership: Maximum Income Limits, 2015 Category # of Dependents 1 2 3 4 0 Dependents $35,000 $56,000 $88,000 $145,000 1 Dependent $42,500 $66,500 $95,500 $152,500 2 Dependents $50,000 $71,000 $103,000 $160,000 3+ Dependents $57,500 $78,500 $110,500 $167,500 Category # of Dependents 5 6 7 RO 0 Dependents $155,000 $169,000 $186,000 NA 1 Dependent $162,500 $176,500 $193,500 NA 2 Dependents $170,000 $184,000 $201,000 NA 3+ Dependents $177,500 $191,500 $208,500 NA Source: Employee Housing Guidelines 2015 Aspen’s income categories are unique. APCHA utilizes an approach that adjusts the income limits each year by the Consumer Price Index (CPI) capped at 3%, which is not linked to changes in incomes or housing affordability. Most affordable housing programs instead tie income categories to the Area Median Income. Annual updating is a simple process using the change in the AMI, which is calculated by HUD. APCHA Income Maximums Translated to Area Median Income (AMI) Area Median Income (AMI) Defined AMI is published annually by the U.S. Department of Housing and Urban Development (HUD) for each county and represents the median family income of an area. This means that the AMI does not incorporate incomes from non- family single and roommate households, which make up 52% of households residing in Pitkin County. As a result, the AMI will generally be higher than the median income of all households. !. Pitkin County – 2015 •Median income for households with a Pitkin County employee = $87,500 •HUD Area Median Income = $97,200 P47 I. Policy Study: Aspen/Pitkin County Housing Authority Affordable Housing Guidelines. February 2016 Navigate, LLC; WSW Consulting; Rees Consulting, Inc. Section 2 - 46 The AMI varies by household size. The median (or middle) family income estimate in an area generally falls on or near the 100% AMI rate for a family of four. In Pitkin County, for example, the AMI in 2015 is $97,200. The 100% AMI level is the “middle” income for a given family size: 50% of family households make more than that amount, and 50% make less than that amount. Income levels are expressed as percentages of that AMI number, such as 80% AMI. HUD uses a range of income levels to define four categories as follows: • Extremely Low Income – At or below 30% AMI • Very Low Income – Between 31% and 50% AMI • Low Income – From 51% to 80% AMI • Moderate Income – From 81% to 100% AMI HUD income limits are used to set income limits and rents for public housing and affordable rental programs in peer communities to determine income eligibility for access. The AMI categories are designed to capture a particular group of underserved households, such as households earning under 50% AMI. The particular group identified is sometimes referred to as the target household income level or “target income household.” Calculation of AMI In contrast to APCHA’s calculation system, HUD calculates income limits based on the number of persons per household. HUD uses a combination of US Census, American Community Survey (ACS) and CPI information to update incomes and makes adjustments for family size and for areas that have unusually high or low income-to-housing-cost relationships. Pitkin County AMI by household size for 2015 is shown below: Table 14. 2015 HUD AMI - Pitkin County AMI 1 Person 2 Person 3 Person 4 Person 5 Person 30% $20,500 $23,400 $26,340 $29,250 $31,600 50% $34,150 $39,000 $43,900 $48,750 $52,650 80% $47,400 $54,200 $60,950 $67,700 $73,150 100% $68,300 $78,000 $87,800 $97,500 $105,300 120% $81,960 $93,600 $105,360 $117,000 $126,360 140% $95,620 $109,200 $122,920 $136,500 $147,420 Source: Dept. of Housing and Urban Development P48 I. Policy Study: Aspen/Pitkin County Housing Authority Affordable Housing Guidelines. February 2016 Navigate, LLC; WSW Consulting; Rees Consulting, Inc. Section 2 - 47 Households With a Pitkin County Employee by AMI When considering housing programs related to AMI, it is helpful to understand the distribution of households within the AMI categories. The distribution of owners and renter households with a Pitkin County employee show that: • A higher percentage of renters earn below 100% AMI than owners, which is typical. • Similarly, owner are more likely to earn incomes over 120%. A high percentage (43%) earn over 140% AMI. • A fairly high percentage of renters earn over 140% AMI than is seen in many peer communities. Figure 2. Households With a Pitkin County Employee by AMI: 2015 Source: Employee Housing Survey 2015 43% 15% 16% 18% 5% 4% 19% 10% 16% 25% 13% 18% 0% 10% 20% 30% 40% 50% 140%+ 120-140% 100-120% 80-100% 50-80% <50% Percent of Households With a Pitkin County Employee AM I R a n g e Renters Owners P49 I. Policy Study: Aspen/Pitkin County Housing Authority Affordable Housing Guidelines. February 2016 Navigate, LLC; WSW Consulting; Rees Consulting, Inc. Section 2 - 48 APCHA Categories Expressed as AMI APCHA’s program is designed to serve households earning from low-income through upper-middle income households. HUD defines alternative categories, as shown below: Table 15. APCHA and HUD Defined Income Levels APCHA Category Target Household Income Level HUD AMI Category Target Household Income Level Category 1 Low-income 30% AMI Extremely low Category 2 Lower moderate 30 to 50% AMI Very low Category 3 Upper moderate 50 to 80% AMI Low-income Category 4 Middle income 80 to 100% AMI Moderate 5, 6, 7 and RO Upper middle 120% AMI Medium or middle Source: Employee Housing Guidelines 2015; HUD; Consultant team It is not possible to directly translate APCHA’s current Category system into HUD AMI ranges; however, AMI percentages can be estimated for each Category using some basic assumptions and information from the 2015 Employee Survey, which is discussed in detail in Appendix B.8 AMI estimates for each Category are presented in Table 15, below. As shown, each Category of APCHA’s rental and ownership housing serve very different AMI ranges: • The ownership product is serving lower AMI levels compared to the rental product. This is unusual as housing programs generally target lower income ranges with rental product compared to ownership. Further, they use the same AMI breakouts for ownership and rental Categories, as there is overlap. For example, households in the middle-income range are both financially capable and interested in renting or buying. • The AMI range of rental households served by Category 4 (about 150% to 240% AMI) encompasses the range of ownership households served by Categories 5 through 7 combined. • Ownership AMI ranges nearly coincide with HUD defined categories (see Table 15, above) for Categories 1 through 4: o Category 1 (50% AMI) equates to HUD very low-income, o Category 2 (84% AMI) slightly exceeds HUD low income, o Category 3 (114% AMI) is just above HUD moderate income and o Category 4 (184% AMI) serves HUD medium or middle incomes and above. 8 Appendix B presents several reasons why APCHA’s system cannot be directly translated to an AMI system and provides support for the methodology used to estimate AMI percentages by Category, presented herein. P50 I. Policy Study: Aspen/Pitkin County Housing Authority Affordable Housing Guidelines. February 2016 Navigate, LLC; WSW Consulting; Rees Consulting, Inc. Section 2 - 49 Table 16. Estimated Upper AMI Limit for Each Category: 2015 !Rentals Ownership !Rentals Ownership Cat 1 62% 50% Cat 5 NA 196% Cat 2 95% 84% Cat 6 NA 213% Cat 3 147% 114% Cat 7 NA 234% Cat 4 240% 184% !!! Note: See Appendix B for more detail on the methodology for these tables. The upper limit AMI represents the weighted average of the AMIs for the average sized household within each adult or dependent-sized Category residing in APCHA units for each Category of rentals. Considerations for Transitioning to an AMI-Based Program Because the current system cannot be directly translated into HUD AMI ranges, any transition will affect existing conditions (such as deed restrictions and leases), current and future households served, and income, rent and sale prices within Categories. These tradeoffs need to be considered in light of the numerous advantages that a simpler program based on AMI could serve over the long term. As APCHA considers moving its program to an AMI system, several factors need to be considered: • Simplicity. The different household income targets and inconsistent AMI levels between the owner and renter programs are highly unusual for a housing program. It complicates program administration by adding complexity to the program and is confusing to applicants. Setting a consistent AMI level allows the ability to track program performance based on Categories and in relationship to other housing programs. • Transparency and Consistency. Because HUD AMI data is from a trusted source, its methodology is readily available and well documented, its use is consistent with federal housing programs and multiple funding sources, and figures are updated yearly, this is the predominate income source used by peer communities for their housing programs. By linking income limits to HUD AMI, this also ensures that the target income households for its housing programs remain constant over time. • Ease of transition. It is preferable to port the ownership program to an AMI system that closely represents the current mix of households being served. This will minimally affect sales prices and associated rights of owners. There is greater flexibility for change with the rental product, as it is easier to change a lease agreement (renters) compared to a recorded deed restriction (owners). APCHA also has a recertification policy in place to P51 I. Policy Study: Aspen/Pitkin County Housing Authority Affordable Housing Guidelines. February 2016 Navigate, LLC; WSW Consulting; Rees Consulting, Inc. Section 2 - 50 allow renters to remain in existing rental units that earn incomes up to 20% higher than the limit. • Portability. An AMI system is consistent with Federal housing programs and multiple funding sources. Because peer communities use it, APCHA could more easily evaluate the performance of its housing programs relative to similar programs. Current AMI equivalent categories for ownership are also similar to defined HUD income classifications, which would be maintained over time. • Program goals. A primary goal is to provide housing affordable to the Pitkin County workforce. Owners are well represented by existing AMI ranges, whereas renters are currently underserved in the lower AMI ranges and experience a higher incidence of cost burden. Shifting rental Categories to the lower AMIs of owner Categories will help to address these issues. The below table shows how the income ranges for each Category for owners and renters would be affected by moving to an AMI system based on the estimated upper AMI limit for owners. It compares the current income maximums for each adult and dependent-sized household within each Category to the maximum income for a one-person up to a five-person household for the HUD AMI range. As shown: • Overall, little shift is seen in the maximum and minimum income ranges for both ownership and rentals in Category 1. • Category 2 and 3 show modest income changes, with more significant shifts seen in Category 4 and higher, particularly on the upper end. • Aside from shifts in the income amounts, because HUD incomes are based on household size, some existing renters and owners within the current program will now qualify for different Categories. For example, under Category 1, a three-adult, three-person household earning $62,000 is equivalent to 81% AMI – this household will be in Category 2 under the new system. Appendix B has tables showing these AMI levels, which can be helpful to understand these changes. Table 17. Estimated AMI Range by APCHA Category: 2015 Cat 1 Cat 2 Cat 3 Cat 4 Cat 5 (5-7) AMI Range: 20% - 50% 51% - 85% 86% - 115% 116% - 185% 186% - 235% NOTE: The calculated upper AMI limit has been adjusted to the nearest 5%. P52 I. Policy Study: Aspen/Pitkin County Housing Authority Affordable Housing Guidelines. February 2016 Navigate, LLC; WSW Consulting; Rees Consulting, Inc. Section 2 - 51 Table 18. Maximum Income Based on Size Category: Current Compared to Proposed AMI (2015) Program Household size Category Cat 1 <50% AMI Cat 2 50.1- 85% Cat 3 85.1-115% Cat 4 115.1-185% Cat 5-7 185.1 – 235% Current Rental 1-adult $35,000 $56,000 $88,000 $145,000 NA 3-adult $62,000 $96,000 $156,000 $252,000 NA Current Ownership 0-dep $35,000 $56,000 $88,000 $145,000 $155,000 3+ dep $57,500 $78,500 $110,500 $167,500 $177,500 Proposed AMI 1-person $34,150 $48,445 $78,545 $126,355 $160,505 5-person $52,650 $74,758 $121,095 $194,805 $247,455 NOTE: The calculated upper AMI limit has been adjusted to the nearest 5%. Measuring Income APCHA Standards APCHA measures the income of households that apply for housing to establish the Category of unit for which a household can qualify. Resident Occupied units, have no defined income caps, but must demonstrate that at least 75% of household income is earned in Pitkin County. To measure income, APCHA verifies the combined gross income of a prospective household that wishes to qualify to purchase or rent an APCHA program unit. Combined gross income includes the income of all individuals that will be occupying the unit regardless of marital or legal status. Gross income is generally defined as: The total income of a person including maintenance and child support, derived from a business, trust, employment, or income- producing property, before deductions for expenses, depreciation, taxes, and similar allowances. Income is measured at the time of initial purchase, and at subsequent sale or transfer for APCHA categorized units. For rental units, income is measured at time of initial lease and every two years. In re-qualifying to rent, a 120% adjustment to the maximum income amount in the respective Category is allowed. This means that an existing tenant can earn up to 20% more than the maximum income permitted and remain in that unit. P53 I. Policy Study: Aspen/Pitkin County Housing Authority Affordable Housing Guidelines. February 2016 Navigate, LLC; WSW Consulting; Rees Consulting, Inc. Section 2 - 52 Federal Standards Income is measured in a variety of ways depending upon the purpose of its measurement and the program to which it applies. Standards for two federal purposes are discussed below: • Income to determine poverty status, and • Income for public housing qualification Poverty Income. The poverty threshold, or poverty line, is intended to show the minimum level of resources that are adequate to meet basic needs. The official poverty measure was developed in the early 1960’s and its calculation has since remained largely unchanged. The official measure includes cash income from all sources, including wages and salaries, Social Security benefits, interest, dividends, pension or other retirement income. The program has been criticized for failing to exclude necessary expenses, such as taxes, health care, commuting costs and child care expenses while parents work, while also failing to include non-cash income from benefits received to help families meet their basic needs, such as food stamps. A supplementary poverty threshold (SPM) has been calculated since 2010 that takes into account non-cash government benefits and necessary expenses. In 2012, the supplemental poverty rate was slightly higher than the official poverty rate. Public Housing Income. Income for the purpose of qualifying households for public housing is established in 24 C.F.R. § 5.609 and requires Public Housing Authorities to consider all amounts that contribute to the families’ annual income. This includes for example gross wage and salary income, overtime pay, tips and bonuses, interest, dividends, Social Security, alimony, and child support. Not included are lump-sum additions to income from, for example, inheritance, capital gains, and insurance payments; nonrecurring income from gifts; and assistance from some programs, such as food stamps.9 Many of the items listed as exclusions from annual income under HUD requirements are items that the IRS includes as taxable income. 9 See Form HUD-50058 Instruction Booklet, “Income and Exclusions Chart,” pp. 25-32 for more detail. P54 I. Policy Study: Aspen/Pitkin County Housing Authority Affordable Housing Guidelines. February 2016 Navigate, LLC; WSW Consulting; Rees Consulting, Inc. Section 2 - 53 Table 19. HUD Income Compared to APCHA Income Inclusions INCLUDED in HUD Income APCHA Program Wage, salary, tips, bonuses (employment pay) Yes NET Income from operation of business or profession (income minus business expenses, loan interest, depreciation) Yes Interest, dividends, income from real or personal property Yes Periodic amounts received from SSI, pension, retirement funds, annuities, disability or death benefits, insurance policies, etc. Yes Payments in lieu of earnings, such as unemployment and disability compensation, worker's compensation and severance pay If applicable Welfare and other public assistance payments If applicable Regular cash or noncash contributions and gifts from one not residing in the residence Yes Alimony or child support Yes EXCLUDED from HUD Income One-time/temporary income, including gifts Yes Contributions paid directly to a child care provider by persons not living in the unit No Value of food provided through meals on wheels, food stamps, school lunch act, WIC, etc. Typically not applicable Source: HUD Occupancy Handbook, 4350.2 REV-1, Chapter 5: Determining Income & Calculating Rent HUD does permit households to adjust their income downward with up to five possible deductions, including: • A deduction for dependents • A child care deduction • A disability assistance deduction • An elderly/disabled family deduction, and • A deduction for unreimbursed medical expenses These deductions are designed to assist families with higher costs due to family circumstances. APCHA does not add similar deductions. Interviews with APCHA staff brought up challenges with calculating income, an outcome of the resort economy where holding multiple and seasonal jobs is common. The primary concern was capturing under-reporting of tip or cash income, an issue not unique to Aspen. P55 I. Policy Study: Aspen/Pitkin County Housing Authority Affordable Housing Guidelines. February 2016 Navigate, LLC; WSW Consulting; Rees Consulting, Inc. Section 2 - 54 APCHA Asset Limits by Category APCHA Asset Maximums Along with income maximums, households must also fall below established net asset caps established for each Category. Asset limits serve several purposes, such as testing a potential buyer’s need to purchase a deed restricted home (e.g., identifying trust-fund recipients) and limiting the resale price of affordable homes, particularly if a price appreciation cap on the unit is not in place. The net asset caps shown in the below table for each Category were established in 2002 and have remained unchanged since that time. Although incomes are adjusted each year based on CPI capped at 3%, the maximum asset remains the same each year. Generally households cannot qualify for APCHA housing if net assets exceed the maximum amounts permitted for the respective Category of housing, with some exceptions.10 Because asset caps were also added to RO units in 2002, the majority of these units are not subject to the $900,000 asset cap. There are currently 520 RO homes, approximately 23% of which (120 total) are affected by the $900,000 asset limitation. Table 20. Net Asset Cap: 2015 Category 1 2 3 4 Net Asset Cap $100,000 $125,000 $150,000 $175,000 Category 5 6 7 RO Net Asset Cap $200,000 $225,000 $250,000 $900,000 Source: Employee Housing Guidelines 2015 While financial asset caps are not unique, they are not as common among peer communities as income limits. Peer communities have found that having employment provisions that require a large percentage of income to be earned locally eliminates the need for asset caps. The Effect of APCHA’s Asset Limits Evaluating asset caps by Category, we see that as incomes increase, the asset caps have the effect of excluding a progressively higher percentage of 10 Please see Aspen/Pitkin County Employee Housing Guidelines (Oct. 2015), Part IV APCHA Eligibility and Qualification, for more information. P56 I. Policy Study: Aspen/Pitkin County Housing Authority Affordable Housing Guidelines. February 2016 Navigate, LLC; WSW Consulting; Rees Consulting, Inc. Section 2 - 55 households within each income range from qualifying for their respective Category. In total, about 36% of households employed in Pitkin County that otherwise earn within targeted APCHA income ranges exceed specified asset limits. Table 21. Assets of Households Employed in Pitkin County by Income: 2015 Household Income Range: Household Assets: Under $25,000 $25 to 49,999 $50 to 74,999 $75 to 99,999 $100 to 149,999 $150 to 199,999 $200,000 or more TOTAL Less than $100,000 86% 78% 64% 60% 37% 22% 7% 50% $100,000 - $124,999 9% 6% 5% 5% 9% 10% 10% 7% $125,000 - $149,999 0% 4% 5% 3% 6% 3% 4% 4% $150,000 - $174,999 0% 1% 2% 4% 2% 5% 2% 3% $175,000 - $199,999 1% 1% 4% 2% 3% 6% 4% 3% $200,000 - $224,999 0% 1% 2% 2% 5% 5% 2% 3% $225,000 - $249,999 0% 0% 3% 3% 3% 0% 0% 2% $250,000 - $299,999 0% 4% 4% 3% 5% 6% 7% 4% $300,000 - $399,999 0% 1% 2% 4% 6% 3% 5% 3% $400,000 - $499,999 0% 0% 2% 3% 5% 9% 5% 4% $500,000 - $599,999 0% 0% 1% 2% 5% 6% 3% 3% $600,000 - $699,999 1% 1% 2% 2% 2% 5% 1% 2% $700,000 - $799,999 0% 0% 1% 2% 1% 1% 8% 2% $800,000 - $899,999 0% 0% 1% 0% 3% 7% 0% 2% $900,000 - $999,999 0% 0% 0% 0% 1% 2% 3% 1% Over $1,000,000 3% 1% 2% 4% 6% 11% 39% 7% General Category: Cat 1 Cat 1 Cat 1 to 2 Cat 2 to 3 Cat 3 to 4 Cat 4 to 6 RO - Percent excluded: 14% 21% 31% 31% 45% 50% 42% 36% Note: Shading denotes households with assets that are too high to qualify for the respective Category. *The table presents conservative estimates of the percentage of excluded households in each category based on firm application of the asset caps. For example, for incomes that cross Category 1 and Category 2, the above assumes that only households with assets above Category 2 asset limits will be excluded, even though in actuality some households earning Category 1 incomes and exceeding the lower Category 1 asset limits would also be excluded. Source: Employee Housing Survey 2015 P57 I. Policy Study: Aspen/Pitkin County Housing Authority Affordable Housing Guidelines. February 2016 Navigate, LLC; WSW Consulting; Rees Consulting, Inc. Section 2 - 56 Several interview and survey comments pointed to the $900,000 cap for RO units as an issue. Households earning over $200,000 per year are largely excluded from all but RO units based on existing income caps for the other Categories. As shown above, about 42% of these households have over $900,000 in assets. In total, however, this comprises no more than about 8% of all working households and less than a quarter of these households are interested in purchasing from APCHA. In other words, few households are excluded from the program based on this asset limitation. Interview comments also revealed that some households with lower incomes, but higher than allowed assets are denied access even though they meet all other criteria. There was a feeling of “being punished” for saving and rewarding those that do not save. To help address this, APCHA has a unique clause that allows a household with lower incomes but assets above the cap to treat a portion of their assets as income to enable them to qualify for certain Category units. This exception helps lower income households gain access to APCHA units. On one hand, this may contribute to the incidence of cost-burden if these households’ incomes cannot support paying for a higher Category of housing. On the other hand, this is fortunate because many of these households, despite having assets larger than the caps, could not afford market housing in the area. For illustrative purposes, the below table shows the maximum affordable purchase price for three-or-more dependent households earning the maximum income for each Category. Even if households were able to apply 100% of the asset limit toward the purchase price, most households could still not afford market housing in the area. This is especially true for households in Categories 4 or below. P58 I. Policy Study: Aspen/Pitkin County Housing Authority Affordable Housing Guidelines. February 2016 Navigate, LLC; WSW Consulting; Rees Consulting, Inc. Section 2 - 57 Table 22. Affordable Purchase Price Given Income and Asset Caps: 2015 Households with 3-or-more Dependents: Cat. 1 Cat. 2 Cat. 3 Cat. 4 Maximum income $57,500 $78,500 $110,500 $167,500 Asset Cap: $100,000 $125,000 $150,000 $175,000 Affordable Purchase Price* $214,224 $292,462 $411,682 $624,043 Purchase Price + Max Assets** $314,224 $417,462 $561,682 $799,043 Households with 3-or-more Dependents: Cat. 5 Cat. 6 Cat. 7 Maximum income $177,500 $191,500 $208,500 Asset Cap: $200,000 $225,000 $250,000 Affordable Purchase Price* $661,300 $713,459 $776,794 Purchase Price + Max Assets** $861,300 $938,459 $1,026,794 * Principal and interest are based on a 30-year fixed rate mortgage at a 5% interest rate and 5% down payment. Taxes, Insurance and HOA comprise 20% of the mortgage payment. **This makes an aggressive assumption, for illustrative purposes, that 100% of the max assets in each Category are applied toward the purchase price of the home. Measuring Assets APCHA Standards Measuring assets refers to the verification of net household assets of a prospective household that wishes to qualify to purchase or rent an APCHA program unit. Net assets are calculated by totaling gross assets and deducting liabilities. Gross assets in the Guidelines are defined as anything which has tangible or intangible value, including: • All cash, such as in checking and savings accounts; • Real and personal property, including automobiles; • Patents and causes of action which belong to any person; • Stock, bonds, mutual funds and other investments; • Interest in the estate of a decedent; • Business assets/property; “Yes, I managed to save some money, outside of retirement monies. This money is to be used in case of emergency, I lose my job, I get injured, for some reason I am unable to work. But, in order to qualify for employee housing, I have to use all of this money on housing. This isn't right. There needs to be some balance”. – Survey Comment P59 I. Policy Study: Aspen/Pitkin County Housing Authority Affordable Housing Guidelines. February 2016 Navigate, LLC; WSW Consulting; Rees Consulting, Inc. Section 2 - 58 • Funds or property held in a living trust or any similar entity or interest, where the person has management rights or the ability to apply the assets to the payment of debts; • The entire property of a person, association, corporation, or estate; and • 60% of a household’s pension plans, retirement accounts, etc. Any assets held in retirement accounts that are subject to early withdrawal penalty are adjusted to 60% of present value. Additionally, assets of household members that are qualified retirees are allowed to adjust the asset cap to 150% of the amount regularly applicable in the respective Category. As shown below: • A similar percentage of households employed in Pitkin County and APCHA households report having no retirement assets in such accounts (about 23%). • About one-half have accounts worth less than $100,000 and 17% of Pitkin County employed households and 12% of APCHA households have accounts valued at $200,000 or more. • As would be expected, retirement account assets increase as the age of household members increase. Table 23. Household Assets Employed APCHA Households Households Employed in Pitkin County NONE ($0) 21% 23% Less than $100,000 53% 48% $100,000 - $149,999 10% 9% $150,000 - $199,999 3% 5% $200,000 - $249,999 4% 3% $250,000 - $299,999 2% 2% $300,000 - $399,999 2% 3% $400,000 - $499,999 2% 2% $500,000 - $599,999 2% 2% $600,000 - $799,999 1% 2% $800,000 - $999,999 1% 2% Over $1,000,000 0% 1% *Percentages may not add to 100% due to rounding Source: Employee Housing Survey 2015 P60 I. Policy Study: Aspen/Pitkin County Housing Authority Affordable Housing Guidelines. February 2016 Navigate, LLC; WSW Consulting; Rees Consulting, Inc. Section 2 - 59 Federal Standards There is no asset limitation for participation in HUD-assisted housing programs. Net assets can affect a household’s income and total tenant payment, however, as follows: • The definition of annual income includes net income from family assets (e.g. interest earned, etc.). • Also, when net family assets exceed $5,000, annual income shall include the greater of the actual income derived from all net family assets or a percentage of the value of such assets based on HUD’s passbook savings rate (currently 2%).11 Therefore, if a household’s net assets are large enough, adding 2% of the asset value to the household’s income may raise their income above the maximum qualification rate. HUD generally defines an asset as cash or a non-cash item that can be converted to cash.12 Appendix B contains a table that more specifically identifies what does and does not qualify as an asset, which can be referenced for more information. In summary, when compared with qualifying APCHA assets, the following primary differences are apparent: • Retirement accounts are treated differently. HUD includes equity in 401K’s and other retirement accounts to which the holder has access. APCHA counts 60% of these accounts; • One-time/non-recurring gifts may or may not be an asset under HUD. APCHA does not include one-time gifts as assets and has no policy restricting them. As peer communities commonly see one-time down payment gifts from families, they sometimes limit one-time gift amounts or treat as an asset; and • Personal automobiles are not included as assets under HUD. APCHA does include personal cars as assets even though cars are necessary for many employees and cannot be easily converted into funds for housing. Negative Perceptions of Income/Asset Qualification Based on interviews and survey comments, there is a perception that some households that do not meet the income and/or asset criteria are able to acquire APCHA housing by skirting or “abusing the system.” Even though the survey indicated that 97.8% of APCHA households have at least one employee working in Pitkin County, the negative perception exists and is 11 24 CFR 5.609(b)(3) 12 24 CFR 5.603(b): Definitions P61 I. Policy Study: Aspen/Pitkin County Housing Authority Affordable Housing Guidelines. February 2016 Navigate, LLC; WSW Consulting; Rees Consulting, Inc. Section 2 - 60 damaging to the credibility of the program. The time required to dispute perceptions places an undue burden on staff, diverts attention away from primary objectives, and can outweigh successes of the organization. Over time, negative perceptions erode confidence in the program. In other resort communities, lack of credibility based on perceptions has affected the ability to create more housing opportunities. Unreported Income APCHA staff conveyed the challenge of calculating income, an outcome of the resort economy where holding multiple and seasonal jobs is common. The primary concern was capturing under-reporting of tip or cash income. Survey comments were similar in nature. Fix that restaurant workers have significant amounts of unreported income. I mean, I know you can't, but it is frustrating. - Survey comment Other communities have addressed this by verifying income with employers and requiring loan documents prior to closing to ensure consistency with income reported to the bank. Trust Funders The other frequent comment is that households that have unearned income from a trust, or “trust funders,” are unfairly accessing APCHA units. In mountain resort communities, this demographic is common, as a large segment of the workforce that moves to these resorts come from highly educated, upper-middle class families. To account for the prevalence of “trust funders”, peer communities often limit the amount of a “gift” down payment, such as 20% of the purchase price. Complexity and Transparency An overly complex program reduces transparency, which creates an environment ripe for negative perceptions. The APCHA program is complex compared to similar housing programs and some applicants describe the system as “overwhelming.” Reducing complexity will help to reduce confusion and both negative and misperceptions. APCHA’s Categories Inventory of APCHA Units by Category To understand how well APCHA unit Categories are serving households with an employee in Pitkin County, this section compares the distribution of APCHA units by Category to locally employed households by Category. Because RO units contribute to the service level of APCHA’s program, the below table redistributes some RO rental and ownership units that fall within Category prices to that respective Category. P62 I. Policy Study: Aspen/Pitkin County Housing Authority Affordable Housing Guidelines. February 2016 Navigate, LLC; WSW Consulting; Rees Consulting, Inc. Section 2 - 61 • Of 268 RO rentals, 50 are known to be in Category 1 (Truscott Phase I renting for between $700 to $750/month). Rents for the remaining 218 rental RO units are not known; most are not managed by APCHA. • About 48% of the 520 RO ownership units are priced at market (e.g., above Category 7). Sale prices for most of the remaining RO units fall within Category 4 (247 units). Another 15 RO units prices fall within Categories 5 through 7, comprising about 14% of the inventory in these three Categories. Table 24. APCHA Redistributed Inventory: 2015 Category 1 2 3 4 5 6 7 RO TOTAL Rentals 148 298 427 32 0 0 0 218 1,123 Ownership 20 197 262 771 25 70 11 252 1,608 TOTAL (#) 168 495 689 803 25 70 11 470 2,731 TOTAL (%) 6% 18% 25% 29% 1% 3% 0% 17% 100% Rentals exclude 200 seasonal units in Marolt and Burlingame. Rental reclassifies 50 RO units into Category 1. Source: APCHA and City of Aspen Community Development Department, Consultant team Distribution of Units and Employed Households by Category The below charts compare the percentage distribution of owner and renter households that have at least one employee in Pitkin County to APCHA units based on Category. Where the percentage distribution of units is similar to that of households, this indicates that APCHA is providing units in relationship to employed household incomes. This shows that: • The distribution of APCHA rentals is light in Category 1 and Category 4 compared to employed households. This generally coincides with the observation that APCHA rental units are underserving households earning under $25,000 and between $75,000 to $100,000 per year in Section 1. • While more low-income rentals are likely needed, many households earning at or near Category 4 incomes may be looking to buy, exhibiting lower demand for rentals. • There appears to be a good distribution of Category 2 and 3 rentals compared to households in each Category. • It is possible that some of the unclassified RO units are helping to fill the gap in Category 1 and Category 4, but more information is needed to be sure. P63 I. Policy Study: Aspen/Pitkin County Housing Authority Affordable Housing Guidelines. February 2016 Navigate, LLC; WSW Consulting; Rees Consulting, Inc. Section 2 - 62 Figure 3. Distribution of APCHA Rental Units Compared to Households Employed in Pitkin County by Category: 2015 ! Note: some households whose incomes are within a Category may qualify for higher Category housing (i.e. a household with Category 2 income may qualify for a Category 3 unit). Source: APCHA, Employee Housing Survey 2015, Consultant team • The distribution of ownership units is heavy in Category 4 compared to households and a little light in Categories 3, 5 and 7. This generally coincides with the observation that APCHA ownership units are underserving households earning between $100,000 to $200,000 per year in Section 1. • The upper (over $100,000) income households may be limited from purchasing because of asset caps (about 35%), plus there are desirable options down valley. 13% 27% 38% 3% 19% 0% 5% 10% 15% 20% 25% 30% 35% 40% Category 1 Category 2 Category 3 Category 4 Other (unclassified RO) Pe r c e n t o f U n i t s o r H o u s e h o l d s APCHA Housing Category APCHA Rental Units Renter Households Employed in Pitkin County P64 I. Policy Study: Aspen/Pitkin County Housing Authority Affordable Housing Guidelines. February 2016 Navigate, LLC; WSW Consulting; Rees Consulting, Inc. Section 2 - 63 Figure 4. Distribution of APCHA Ownership Units Compared to Households Employed in Pitkin County by Category: 2015 Note: some households whose incomes are within a Category may qualify for higher Category housing (i.e. a household with Category 2 income may qualify for a Category 3 unit). Source: APCHA, Employee Housing Survey 2015, Consultant team Comparison to Peer Communities (Breckenridge, Jackson, Telluride, Vail) Income Categories and Limits All of the towns except Vail have established a series of income categories based on AMI that are used to determine sale prices and rents, and to qualify applicants for those units. In Aspen and Jackson, the number of categories increased over time as market home prices increased and workforce housing was needed for middle-income households. The number of categories ranges from three in Telluride up to seven in Aspen, and Jackson but do not necessarily reflect the range of incomes served. While Aspen and Jackson have a similar number of categories, the range of incomes served in Aspen is much broader and extends to lower income households. Area Median Income (AMI) is used to define the categories in all other communities. It is common for a portion of units in workforce housing inventories 2% 13% 18% 47% 1% 4% 1% 14% 0% 5% 10% 15% 20% 25% 30% 35% 40% 45% 50% 1 2 3 4 5 6 7 Other (RO) Pe r c e n t o f U n i t s o r H o u s e h o l d s APCHA Housing Category APCHA Ownership Units Owner Households Employed in Pitkin County P65 I. Policy Study: Aspen/Pitkin County Housing Authority Affordable Housing Guidelines. February 2016 Navigate, LLC; WSW Consulting; Rees Consulting, Inc. Section 2 - 64 to not have income limits. Income restrictions are often relaxed, as workforce housing income targets are increased in response to market prices rising above the levels affordable to professionals/ managers. Sometimes older units developed in the early years of a town’s involvement in housing may not have income caps. Private developers often try to eliminate or increase income caps to increase the pool of buyers/renters for units they produce, although experience has shown that this is not necessary; income caps have not impeded home sales in any of these towns. Asset Limits Asset Limits vary widely. Breckenridge and Vail impose no limits on assets, aside from prohibiting ownership of other residential real estate. More typical is the use of flat fees, a multiplier of the original sales price or a multiplier of incomes to establish asset limits. Retirement funds may or may not be counted; if counted, this can disincentivize some households to save for retirement. See Appendix E for additional information on peer communities. P66 I. Policy Study: Aspen/Pitkin County Housing Authority Affordable Housing Guidelines. February 2016 Navigate, LLC; WSW Consulting; Rees Consulting, Inc. ! ! Section 3 - 65 SECTION 3 – Affordability Analysis Purpose This section evaluates the affordability of each of APCHA’s eight Categories of affordable housing units to the households that the Categories are intended to serve. This section: • Introduces federal, industry and peer community standards to understand the affordability of ownership and rental units to households and discusses what APCHA should consider in applying affordability standards; • Evaluates the affordability of APCHA rentals and ownership housing both for its current occupants and for qualified households for newly restricted properties. Affordability is analyzed based on the rent or mortgage payment, as well as rent or mortgage including utilities and homeowner association fees. How other issues such as deferred maintenance, capital improvements and interest rates affect affordability are also presented; and • Discusses how peer communities have measured and addressed housing affordability issues. Based on this analysis, recommendations are made on adjustments that could be made to APCHA’s rents and sales prices based both on applied affordability standards and current rents and sales prices to help APCHA better meet its housing goals. Standards of Affordability There is no single “gold standard” for measuring affordability. Multiple measures exist, and each is designed to serve an intended purpose. The following three groups are evaluated to demonstrate standards: • Government agencies • Mortgage lenders • Peer resort communities While the purpose for having affordability standards varies slightly among these groups, they all: • Utilize standards to ensure that housing costs are affordable given incomes; P67 I. Policy Study: Aspen/Pitkin County Housing Authority Affordable Housing Guidelines. February 2016 Navigate, LLC; WSW Consulting; Rees Consulting, Inc. ! ! Section 3 - 66 • Express the standard as a maximum percentage of income that can be spent on the housing payment for it to be considered affordable; and • Set their standard at or near 30% without consideration for unit location, household income levels and the cost of other necessities. Government Agencies Government agencies, such as the Department of Housing and Urban Development (HUD) and Colorado Housing and Finance Authority (CHFA), use affordability measures to determine the allocation of public funds by measuring the level of cost burden in communities and to regulate access to and set rental rates for public housing units. HUD utilizes a simple share of income approach stating that housing is not affordable if housing costs exceed 30% of the household’s gross (pre-tax) income.13 This standard originated for HUD public housing programs in the United States Housing Act of 1937. The 30% ratio has evolved over time, beginning at 20% in 1940, rising to 25% in1968 and to 30% in 1981.14 A household is defined as cost-burdened by their housing payment when housing costs exceed 30% of a household’s gross (pre-tax) income. Households are severely cost-burdened when rent or mortgage comprises 50% or more of gross income. Cost burdened households, particularly those in lower income groups, may be forced to make tradeoffs to meet other necessary household expenses, such as food, medical, and transportation and in the safety, quality, and location of their housing to make ends meet. The application of the 30% ratio of housing costs to income varies. The calculation may compare just rent or mortgage to a household’s income or may include the cost of utilities in the calculation. For example: • For rents in public housing projects, federal regulations limit the amount of rent plus an allowance for utilities to be no more than 30% of income.15 • The Colorado Housing and Finance Authority permits rents plus utilities for low-income housing tax credit rentals (LIHTC) to comprise up to 40% of a qualifying household’s income.16 13!Income is measured for public housing programs as defined in 25 C.F.R. § 5.609. See Section 3 – Income and Assets in this report. 14 See the Housing and Urban Development Act of 1968 and Housing and Community Development Amendments of 1981, Public Law 97-35 (8/13/81), 95 Stat. 400. 15 Reference CFR sections here. 16 See Colorado Housing and Finance Authority LIHTC Regulations, http://www.chfainfo.com/arh/asset/Pages/lihtc-compliance.aspx! P68 I. Policy Study: Aspen/Pitkin County Housing Authority Affordable Housing Guidelines. February 2016 Navigate, LLC; WSW Consulting; Rees Consulting, Inc. ! ! Section 3 - 67 Although HUD’s standard is applied with some variation and has some deficiencies, this standard is the most widely used by federal and state housing programs. It is computed from readily available data (income and housing costs), is easy to understand and easy to track over time. Mortgage Lenders Lending standards are important to consider because buyers of APCHA housing must obtain mortgages. These standards and the inputs used in calculating them are designed to determine an individual household’s ability to pay their mortgage. They also create the secondary market for mortgages by setting the underwriting criteria on which mortgages are pooled and mortgage backed securities are issued. If housing programs do not adhere to these standards, mortgages from portfolio lenders with typically higher, adjustable interests rates could be the only option for buyers. To measure a household’s ability to pay, lending institutions rely on lending standards to minimize risk. If a household meets certain standards, they are less likely to default on the mortgage. Therefore, housing programs often rely on lenders to ensure that buyers are capable of paying the mortgage on their home. Mortgage applications are typically document heavy, requiring multiple years of income tax returns, verification of accounts and savings, identification of debts and assets, among other documents to obtain a complete picture of an applicant’s obligations and resources. Standards set by lending institutions for government-backed and conventional, fixed-rate mortgages typically require: • A limit on size of the loan. The general national limit is $417,000; however, the Pitkin County limit is $625,500 based on an adjustment applied to high cost areas. • The applicant’s housing debt does not exceed approximately 30% of income. The Federal Housing Administration (FHA) applies a limit of 29% and conventional Fannie Mae is generally up to 32% or 33%. This ratio is looked at in isolation to determine whether the buyer will be able to pay the mortgage over time; • The ratio of the applicant’s debt to income does not exceed a specified maximum. Debt may typically comprise up to 45% of a household’s income and includes student loans, car loans, credit card debt, and other obligations; P69 I. Policy Study: Aspen/Pitkin County Housing Authority Affordable Housing Guidelines. February 2016 Navigate, LLC; WSW Consulting; Rees Consulting, Inc. ! ! Section 3 - 68 • A down payment be provided (typically 0 to 20%), with government or private mortgage insurance if less than 20%; and • The applicant’s credit score be adequate for the loan being sought (a higher credit score usually translates to a lower interest rate). Mortgage companies do not include utilities when calculating whether a housing payment is affordable. Homeowner’s association fees, however, are typically included when calculating the debt-to-income ratio. A mortgage that exceeds the loan limit of $625,500 is known as a jumbo loan. Because different standards apply to Jumbo Loans, they are not purchased by Government Sponsored Enterprises (GSEs) like Fannie Mae or Freddie Mac. Also, because the risk is higher to lenders, mainly due to the larger loan amount, interest rates and down payments are generally higher. However, debt-to- income standards are often less restrictive, meaning a household is able to pay a higher percentage of their income toward housing costs. This is because households with higher incomes purchase higher priced homes and they have more funds available to pay for housing and still afford non-housing essentials. Lending standards recognize the variations in a household’s ability to pay housing costs based on the household’s financial condition and obligations. Because of this, there is more flexibility in measuring affordability than with HUD’s 30% measure. Peer Resort Communities Determining an affordability standard is a common challenge for policy makers in resort communities. Selecting a measure that minimizes the subsidy to create the unit, while ensuring that housing is a source of financial stability to the occupant is a delicate balance. All of the peer communities reviewed use the 30% ratio of income-to-housing cost as the basis for measuring affordability. Because they all use HUD data in other aspects of their housing program (i.e., AMI data to set income limits, household size, percentage of AMI to define category ranges) this standard is an easy method to track affordability of the program. They also use the 30% figure as the primary input for setting rental rates and sales prices, although not with consistency. Home prices/rents may be set based on multiple factors including development costs, subsidies available and developer negotiations. If the units are income capped, the prices may be close to top end of the affordable range, requiring applicants to obtain assistance (usually from parents) or obtain an ARM that will make the payment affordable for the initial year or two. P70 I. Policy Study: Aspen/Pitkin County Housing Authority Affordable Housing Guidelines. February 2016 Navigate, LLC; WSW Consulting; Rees Consulting, Inc. ! ! Section 3 - 69 Peer communities vary their assumptions for inputs in the calculations (persons per bedroom, point within the category range, interest rate, down payment, etc.), but are generally transparent about the methodology used to calculate amounts. Inputs for Housing Cost Calculation The inputs used in calculating the 30% standard vary among housing agencies and peer communities: • The interest rate is a variable that greatly impacts the percentage. Lenders use the rates they currently charge even if that rate will increase later through an adjustable rate mortgage. Peer communities tend to use a rate slightly higher (often one percentage point) than current market rates as a buffer to interest rate increases. Summit County uses 7.5% for extra cushion. • Utilities are not included in any ownership programs. • None of the peer communities include utilities in either ownership or rental housing, though Low Income Housing Tax Credit (LIHTC) is handled differently by its own standard (40% of income on rent including utilities). • HOA fees are considered, but may be adjusted if the fees are atypically large (e.g., they cannot be covered by a standard percentage assumed for taxes, insurance and HOA). While HUD is the standard applied by all of the peer resort communities, the high cost of housing requires that these housing programs serve higher-income households than the HUD standard is generally intended to measure. Many communities have created units without price caps to address this. Unfortunately, common experience has shown steep appreciation in prices on units without a cap and all peer communities now impose a price cap, even on units intended to serve higher-income groups. Weaknesses in the 30% Affordability Standard The simple 30% ratio has criticisms, mainly regarding its ability to explain true housing affordability, including: 1) Non-housing essentials. Households earning $100,000 per year have much more left over after paying 30% of their income for rent or mortgage to cover other necessary costs than do households earning less than $30,000 per year. The flat 30% ratio does not take into account the varying ability for households at different income levels to afford non-housing essentials such as food, clothing, transportation, healthcare and childcare. P71 I. Policy Study: Aspen/Pitkin County Housing Authority Affordable Housing Guidelines. February 2016 Navigate, LLC; WSW Consulting; Rees Consulting, Inc. ! ! Section 3 - 70 2) Cost of living. The 30% ratio does not account for the cost differences in food, shelter, transportation, and other living expenses that occur from one housing market to another, affecting the total cost of living in an area and, therefore, what a household can realistically afford to pay for housing to meet other expenses. 3) Condition and location of housing. The 30% ratio does not take into consideration the physical condition, safety, nor location tradeoffs that households must make or are willing to make to afford their housing. Nor does it consider investments that owners may need to make to repair substandard properties. Restructuring the approach for determining affordability has long been debated without resolution. Stepping up the percentage as household incomes increase has been suggested since the residual income for non-housing necessities also increases as incomes rise. High cost communities such as Pitkin County and peer communities where housing programs must serve higher-income households than the HUD standard is generally intended to serve may provide the environment for this type of scaled residual-income approach. No housing agencies or communities have been identified, however, that have adopted this approach. Affordability of APCHA Housing The affordability of APCHA’s housing is analyzed in two parts: 1. Rental Affordability and 2. Ownership Affordability. This section applies the affordability standard of no more than 30% of income paid toward rent or mortgage (excluding utilities) to determine when housing may be considered unaffordable. The purpose of this section is to determine whether APCHA can consider changes in its rents or sales prices to better meet its goals. The affordability of these units is evaluated by: 1. Comparing the household incomes of existing occupants of APCHA rentals and owned homes to their rent or mortgage payment. 2. Comparing the rents and sale prices established by APCHA in its Guidelines to Category incomes, which will primarily impact how new housing is priced. 3. Examining permitted resale prices to determine whether APCHA homes remain affordable under current appreciation allowances. 4. Examining changes in APCHA’s rents, sales prices and incomes to determine if they have retained relative affordability over time. P72 I. Policy Study: Aspen/Pitkin County Housing Authority Affordable Housing Guidelines. February 2016 Navigate, LLC; WSW Consulting; Rees Consulting, Inc. ! ! Section 3 - 71 Part 1 - Rental Affordability To keep rents affordable to tenants, APCHA limits the amount of rent that can be charged for Employee Housing units that falls under APCHA oversight. The rent includes the cost of common utilities, snow removal, landscaping, condominium dues, management costs and taxes, but not individually metered utilities or trash. The rental rate is the same for both furnished and unfurnished units. This practice is typical among peer communities; although in seasonal worker housing utilities are generally included, and trash is often covered in all apartment rentals. APCHA’s inventory of more than 1,300 units has several different rental rates within each Category, as well as between Categories. Rental rates were originally based on an amount per square foot. The amount per square foot was adjusted over the years, and new units placed into service had rental caps based on the square footage of the unit and its Category. In 2002, the current baseline rent was established to represent household incomes at that time. • For units placed in service, rents are allowed to annually increase at CPI or 3%, whichever is less. Prior to 2002, the CPI was not capped. From 1978 to 2015, the annual increase in rent has been as little as zero and as much as 6.6% with an average annual increase of 1.61%. Table 25. Permitted Increase in Rent for Existing Affordable Rentals Year Increase Year Increase Year Increase Year Increase 1978 0.00% 1988 0.00% 1998 0.73% 2008 3.00% 1979 0.00% 1989 4.70% 1999 0.54% 2009 0.70% 1980 0.00% 1990 3.00% 2000 1.08% 2010 2.30% 1981 0.00% 1991 0.00% 2001 1.40% 2011 1.30% 1982 0.00% 1992 2.00% 2002 1.63% 2012 3.00% 1983 6.60% 1993 1.20% 2003 2.15% 2013 1.70% 1984 5.00% 1994 1.00% 2004 1.60% 2014 1.10% 1985 3.30% 1995 1.10% 2005 3.00% 2015 1.10% 1986 0.00% 1996 0.99% 2006 3.00% 1987 0.00% 1997 1.31% 2007 1.70% Source: Employee Housing Guidelines 2015 For newly income-restricted rental units, APCHA establishes maximum rents each year, also based on CPI. Once units are placed into service, they may appreciate as defined above. In 2015, established rents range from a low of less than $500 to nearly $3,000 per month, as shown in the below table. P73 I. Policy Study: Aspen/Pitkin County Housing Authority Affordable Housing Guidelines. February 2016 Navigate, LLC; WSW Consulting; Rees Consulting, Inc. ! ! Section 3 - 72 Table 26. 2015 APCHA Maximum Monthly Rental Rates Unit Type Category 1 Category 2 Category 3 Category 4 RO Studio $492 $875 $1,307 $1,734 $2,379 1 Bedroom $608 $1,028 $1,457 $1,903 $2,545 2 Bedroom $720 $1,180 $1,610 $2,057 $2,697 3 Bedroom $834 $1,320 $1,767 $2,210 $2,853 SF Detached $951 $1,489 $1,918 $2,284 $2,929 *Includes cost of common utilities, condominium dues, management costs and taxes. Source: Employee Housing Guidelines 2015 APCHA also establishes maximum yearly incomes that occupants may earn to qualify for rentals in each Category. Incomes vary based on the number of adults in the household.17 Income maximums are used to qualify households for both existing and newly-restricted APCHA units. The below table shows the range of incomes that households may earn to qualify for each Category of housing. Table 27. 2015 Category Incomes for APCHA Rentals Number of Adults Cat1 Cat2 Min* Max Min Max 1-Adult $14,000 $35,000 $35,001 $56,000 2-Adults $23,000 $52,000 $52,001 $81,000 3-Adults $28,000 $62,000 $62,001 $96,000 Number of Adults Cat3 Cat4 Min Max Min Max 1-Adult $56,001 $88,000 $88,001 $145,000 2-Adults $81,001 $133,000 $133,001 $215,000 3-Adults $96,001 $156,000 $156,001 $252,000 *The minimum income for Category 1 was estimated based on the spread of incomes permitted in Category 2. APCHA does not define a minimum income for Category 1 households, but does require occupants to work full time (1,500 hours per calendar year), meaning that the vast majority of qualifying households earn at least $15,000 ($10/hour) or more per year. Source: Employee Housing Guidelines 2015 Affordability for Renters in Existing Units Cost-burden is a problem for a portion of current APCHA renters. APCHA’s affordable rental housing is not affordable for all who occupy it. 17 See Section 2 – Income, Assets & Categories for more information on APCHA income maximums. P74 I. Policy Study: Aspen/Pitkin County Housing Authority Affordable Housing Guidelines. February 2016 Navigate, LLC; WSW Consulting; Rees Consulting, Inc. ! ! Section 3 - 73 About 23% of existing APCHA renters are cost-burdened (pay more than 30% of their income) for rent. This is only somewhat lower than for households employed in Pitkin County overall (28% of renters are cost-burdened).18 When utilities are added, the percentage of cost-burdened APCHA renters increases to 27.5%. Evaluated by Category of unit and household type: • Cost-burden mostly affects households occupying units in Category 1 (61.5% of households) and Category 2 (32.4% of households). • One-adult households find units less affordable than other households -- 30% are cost-burdened. When utilities are added to the rent or mortgage payment, low income and one- adult households are still disproportionately cost burdened. Data on the impact of including utilities is provided in Appendix C. Table 28. Households Paying Over 30% of Income for Rent: APCHA Renters 2015 1-adult 2-adults 3-adults Total Households % Cost-Burdened 29.9% 18.0% 9.1% 23.0% Category 1 Category 2 Category 3 Category 4 % Cost-Burdened 61.5% 32.4% 0.3% 0.0% Source: 2015 Employee Survey Rents for New Units Compared to APCHA Category Incomes In general, APCHA’s specified rents in relation to maximum incomes for every Category are affordable. Some variations are seen when households earn less than the maximum incomes in some Categories: • Households earning near the minimum income for Category 1 and one- adult households in Categories 2 and 3 have trouble affording rents. • For all other households and Categories, it would be possible to increase rents under the current income ranges and not compromise the general affordability of the program based on the 30% housing payment standard. 18 See Section 1 – APCHA Affordable Housing Program for this data. “Stop raising the rent!! I was in my employee housing for 3 months and the rent was raised 5%!!! I'm lucky if I get a 2% raise......I never get a 5% raise....please stop!!” – Survey comment P75 I. Policy Study: Aspen/Pitkin County Housing Authority Affordable Housing Guidelines. February 2016 Navigate, LLC; WSW Consulting; Rees Consulting, Inc. ! ! Section 3 - 74 The below table provides a simple overview of the average affordability of APCHA’s rental program. By dividing the average maximum income for each Category into the average of rents for all unit types, a ratio of average rent to average income is generated. This shows that rents are set within affordable ranges, based on the 30% standard, with affordability generally increasing as the Categories increase. In other words, Category 4 is relatively more affordable to households that income-qualify for units (12% average rent to income) than Category 1 (17% average rent to income). Table 29. Average Affordability of APCHA’s Maximum Rents: 2015 Cat1 Cat2 Cat3 Cat4 Average income range* $49,667 $77,667 $125,667 $204,000 Average rent** $721 $1,178 $1,612 $2,038 Ratio of monthly rent to monthly income*** 17% 18% 15% 12% *Simple average of 1-, 2- and 3-adult maximum incomes specified by APCHA. **Simple average of maximum rents specified for each unit type. ***Ratio of average rent divided by average income. This general observation is supported by the more detailed analysis presented below, which compares the incomes that one-, two- and three-adult households can earn to qualify for each Category unit to the rents for each unit type. This shows that: • Rents in each Category are generally affordable for households earning at or near the maximum incomes. Theoretically, one-adult households renting single family homes in Category 1 or 2 would pay over 30% of their income for rent but, with only three single-family rentals, this seems unlikely. • Affordability problems occur for households earning near the minimum incomes in Category 1, including: o No units are affordable to one-adult households; o Only studios are affordable to two-adult households; and o Three-adult households can only afford a 1-bedroom (which they cannot occupy due to two persons per bedroom restrictions). • Affordability is also a problem for one-adult households earning near the minimum incomes in all but Category 4. One-adult households earning the minimum income In Categories 2 or 3 could only afford a studio unit. This may work fine for a 1-person household, but is unsuitable for a single- parent household. This supports the need to base household size (and incomes) on total occupants, not just adults as explored in Section 4. P76 I. Policy Study: Aspen/Pitkin County Housing Authority Affordable Housing Guidelines. February 2016 Navigate, LLC; WSW Consulting; Rees Consulting, Inc. ! ! Section 3 - 75 • Rents in most Categories are priced affordable for the full range of incomes. For example, a two-adult household earning between the minimum and maximum income in Category 2 could afford to rent a Category 2 studio, 1-bedroom or 2-bedroom unit. Only one-adult households earning at or near the minimum income for each Category have significant limitations on selection. Table 30. Percent of Monthly Income Spent on Rent by Qualifying Households: New APCHA Rentals, 2015 Cat1 Cat2 Cat3 Cat4 Adults / Unit Min Max Min Max Min Max Min Max 1 / Studio 42.2% 16.9% 30.0% 18.8% 28.0% 17.8% 23.6% 14.4% 1 / 1BR 52.1% 20.8% 35.2% 22.0% 31.2% 19.9% 25.9% 15.7% 1 / 2BR 61.7% 24.7% 40.5% 25.3% 34.5% 22.0% 28.0% 17.0% 1 / 3BR 71.5% 28.6% 45.3% 28.3% 37.9% 24.1% 30.1% 18.3% 1 / SF 81.5% 32.6% 51.0% 31.9% 41.1% 26.2% 31.1% 18.9% 2 / Studio 25.7% 11.4% 20.2% 13.0% 19.4% 11.8% 15.6% 9.7% 2 / 1BR 31.7% 14.0% 23.7% 15.2% 21.6% 13.1% 17.2% 10.6% 2 / 2BR 37.6% 16.6% 27.2% 17.5% 23.9% 14.5% 18.6% 11.5% 2 / 3BR 43.5% 19.2% 30.5% 19.6% 26.2% 15.9% 19.9% 12.3% 2 / SF 49.6% 21.9% 34.4% 22.1% 28.4% 17.3% 20.6% 12.7% 3 / Studio 21.1% 9.5% 16.9% 10.9% 16.3% 10.1% 13.3% 8.3% 3 / 1BR 26.1% 11.8% 19.9% 12.9% 18.2% 11.2% 14.6% 9.1% 3 / 2BR 30.9% 13.9% 22.8% 14.8% 20.1% 12.4% 15.8% 9.8% 3 / 3BR 35.7% 16.1% 25.5% 16.5% 22.1% 13.6% 17.0% 10.5% 3 / SF 40.8% 18.4% 28.8% 18.6% 24.0% 14.8% 17.6% 10.9% Source: Aspen/Pitkin County Housing Authority, Consultant Team APCHA households pay an average of $132 per month in utilities.19 When the average cost of utilities is added to the maximum rents for each Category, households earning the maximum income for each range are still generally able to afford APCHA rentals. As shown below: • A few households earning the maximum income in each Category pay over 30% for rent plus utilities, but no household pays more than 40% for rent plus utilities; • As expected, the affordability for households earning at or near the minimum for each Category decreases. One-adult households have the most affordability problems, along with all lower income households in Category 1. 19!Source: Employee Housing Survey 2015; see Section 1 – Examination of APCHA’s Affordable Housing Program for this data. P77 I. Policy Study: Aspen/Pitkin County Housing Authority Affordable Housing Guidelines. February 2016 Navigate, LLC; WSW Consulting; Rees Consulting, Inc. ! ! Section 3 - 76 Percent of Monthly Income Spent on Rent Plus Utilities by Qualifying Households: New APCHA Rentals, 2015 Cat1 Cat2 Cat3 Cat4 Adults / Unit Min Max Min Max Min Max Min Max 1 / Studio 53.5% 21.4% 34.5% 21.6% 30.8% 19.6% 25.4% 15.4% 1 / 1BR 63.4% 25.4% 39.8% 24.9% 34.0% 21.7% 27.7% 16.8% 1 / 2BR 73.0% 29.2% 45.0% 28.1% 37.3% 23.8% 29.8% 18.1% 1 / 3BR 82.8% 33.1% 49.8% 31.1% 40.7% 25.9% 31.9% 19.4% 1 / SF 92.8% 37.1% 55.6% 34.7% 43.9% 28.0% 32.9% 20.0% 2 / Studio 32.6% 14.4% 23.2% 14.9% 21.3% 13.0% 16.8% 10.4% 2 / 1BR 38.6% 17.1% 26.8% 17.2% 23.5% 14.3% 18.4% 11.4% 2 / 2BR 44.5% 19.7% 30.3% 19.4% 25.8% 15.7% 19.8% 12.2% 2 / 3BR 50.4% 22.3% 33.5% 21.5% 28.1% 17.1% 21.1% 13.1% 2 / SF 56.5% 25.0% 37.4% 24.0% 30.4% 18.5% 21.8% 13.5% 3 / Studio 26.7% 12.1% 19.5% 12.6% 18.0% 11.1% 14.4% 8.9% 3 / 1BR 31.7% 14.3% 22.5% 14.5% 19.9% 12.2% 15.7% 9.7% 3 / 2BR 36.5% 16.5% 25.4% 16.4% 21.8% 13.4% 16.8% 10.4% 3 / 3BR 41.4% 18.7% 28.1% 18.2% 23.7% 14.6% 18.0% 11.2% 3 / SF 46.4% 21.0% 31.4% 20.3% 25.6% 15.8% 18.6% 11.5% Source: Aspen/Pitkin County Housing Authority, Consultant Team The following charts show the range of rents that each sized household can afford to pay given the income range for each Category. This range is compared to the APCHA rents for each sized home, visually displaying where Category rents may exceed a household’s ability to pay. This analysis supports the above findings that households earning below maximum incomes Category 1 and Category 2 have difficulty affording rents. One-adult households earning: • The maximum income in Category 1 can afford to pay up to $875 in rent, which is higher than the rents for all available unit types. • The minimum income for Category 1 can afford to pay $350 per month, which is lower than the rents for all APCHA units – no rentals would be affordable to this household based on the 30% standard. • The only Category in which minimum-income 1-adult households can afford more than a studio is in Category 4. P78 I. Policy Study: Aspen/Pitkin County Housing Authority Affordable Housing Guidelines. February 2016 Navigate, LLC; WSW Consulting; Rees Consulting, Inc. ! ! Section 3 - 77 Figure 5. Rent Affordable to Households Within the Permitted Income Range for Each Category Compared to APCHA Rents: One-Adult Household20 Source: Aspen/Pitkin County Housing Authority, Consultant Team. Two-adult households earning: • The maximum income in all Categories can afford any unit type. • At any point within the income range in Categories 3 and 4 can afford any unit type. • The minimum income in Category 2 can afford up to $1,300 in rent. Studios, 1- and 2-bedroom units rent for less than this amount. • The minimum in Category 1 can afford $575 per month. Only studio units rent for less than this amount. 20 Based on the standard that no more than 30% of income is used for rent. Category 1 minimum rents are calculated from the estimated minimum incomes in Table 30, above. $350 $876 $1,401 $2,201 $875 $1,400 $2,200 $3,625 $0 $500 $1,000 $1,500 $2,000 $2,500 $3,000 $3,500 $4,000 Category 1 Category 2 Category 3 Category 4 Re n t 1-Adult Household by Category Minimum income rent Studio 1BR 2BR 3BR SF Maximum income rent P79 I. Policy Study: Aspen/Pitkin County Housing Authority Affordable Housing Guidelines. February 2016 Navigate, LLC; WSW Consulting; Rees Consulting, Inc. ! ! Section 3 - 78 Figure 6. Rent Affordable to Households Within the Permitted Income Range for Each Category Compared to APCHA Rents: Two-Adult Household Source: Aspen/Pitkin County Housing Authority, Consultant Team. Three-adult households earning the minimum income can easily afford any type unit in any Category excluding Category 1. Category 1 minimum- income earners can pay $700 per month, which would include a studio or 1- bedroom unit. Figure 7. Rent Affordable to Households Within the Permitted Income Range for Each Category Compared to APCHA Rents: Three-Adult Household Source: Aspen/Pitkin County Housing Authority, Consultant Team. $575 $1,301 $2,026 $3,326 $1,300 $2,025 $3,325 $5,375 $0 $1,000 $2,000 $3,000 $4,000 $5,000 $6,000 Category 1 Category 2 Category 3 Category 4 Re n t 2-Adult Household by Category Minimum income rent Studio 1BR 2BR 3BR SF Maximum income rent $700 $1,551 $2,401 $3,901 $1,550 $2,400 $3,900 $6,300 $0 $1,000 $2,000 $3,000 $4,000 $5,000 $6,000 $7,000 Category 1 Category 2 Category 3 Category 4 Re n t 3-Adult Household by Category Minimum income rent Studio 1BR 2BR 3BR SF Maximum income rent P80 I. Policy Study: Aspen/Pitkin County Housing Authority Affordable Housing Guidelines. February 2016 Navigate, LLC; WSW Consulting; Rees Consulting, Inc. ! ! Section 3 - 79 Based on the above, APCHA may: • Raise rents, particularly in Categories 3 and 4. This may be desirable if a goal is to decrease subsidies to the program. Decreased subsidies to the higher income Categories may permit increased subsidy to lower income households and help alleviate some of the cost-burden among households in Categories 1 and 2 in particular. • Decrease incomes. Depending upon program goals and target market incomes to serve, it may be appropriate to decrease qualifying incomes for Categories 3 and 4 in particular. Category 4 rental incomes span the same range as Category 5 through 7 for ownership. These decisions are at least as much tied to policy as they are to calculations. Estimated AMI Rents The below presents one option that APCHA could consider. This shows the change in rents that would occur if APCHA changed to an AMI system based on the porting methodology presented in Section 2 – Income, Assets and Categories.21 The calculation represents the mid-point rent for the AMI range, meaning that some rents will be lower than the calculated rent and some will be higher. As shown: • Rents for Category 1 are estimated to be about the same as current APCHA rents; • Rents would increase based on permitted affordability for each higher Category. The largest change is seen in Category 4, with most rents doubling (or more) from their current rates.22 • Part of the reason for this large increase is related to the assumption that households will pay no more than 30% of their income for rent for it to be affordable. This contrasts with APCHA’s current program, which shows average rent affordability to be low, averaging between 12% and 18% of monthly income (see Table 30 at the start of this section). A change in this assumption, which may be related to policy as much as process, would affect the AMI rent rates. 21 See Appendix C for details on the calculation methodology and assumptions made. 22 Appendix C has a detailed table showing the percentage change in rents for each unit type. P81 I. Policy Study: Aspen/Pitkin County Housing Authority Affordable Housing Guidelines. February 2016 Navigate, LLC; WSW Consulting; Rees Consulting, Inc. ! ! Section 3 - 80 Figure 8. Estimated AMI Rents Compared to Maximum APCHA Rents AMI Rent represents the mid-point rent for the AMI range. Some rents may fall below this price point and some above, but average rents will equal those in the table. Source: Aspen/Pitkin County Housing Authority, Consultant Team. Part 2 - Ownership Affordability To keep ownership units affordable long-term, APCHA establishes the maximum purchase price for housing units that it oversees. APCHA determines this price at the time of initial sale and upon each transfer of ownership. The initial sales price is calculated to be affordable to the household income category it is designed to serve. In 2002, the current baseline was established to represent current household incomes at that time and to take into account other housing costs (property taxes, insurance, HOA dues, interest rate, etc.). The method of calculation used is unclear. This baseline has been adjusted annually based on CPI capped at 3% to determine the maximum price at resale. The initial sales price on RO units is determined on a case-by-case basis with the developer usually setting the price. If another affordable housing unit is developed in association with the RO unit, the average sales price of both units is not allowed to be greater than the Category 3 maximum. The Maximum Sales Prices for newly deed-restricted units and lots (i.e., those first sold in 2015) established by APCHA are as follows: $0 $1,000 $2,000 $3,000 $4,000 $5,000 $6,000 $7,000 Mid-point rent APCHA rent Mid-point rent APCHA rent Mid-point rent APCHA rent Mid-point rent APCHA rent Category 1 Category 2 Category 3 Category 4 Mo n t h l y R e n t Studio 1-br 2-br 3-br Single Family P82 I. Policy Study: Aspen/Pitkin County Housing Authority Affordable Housing Guidelines. February 2016 Navigate, LLC; WSW Consulting; Rees Consulting, Inc. ! ! Section 3 - 81 Table 31. 2015 APCHA Maximum Sales Prices Unit Type Category 1 Category 2 Category 3 Category 4 Studio $40,000 $93,000 $155,000 $262,000 1 Bedroom $52,000 $111,000 $169,000 $280,000 2 Bedroom $63,000 $137,000 $200,000 $311,000 3 Bedroom $72,000 $168,000 $234,000 $344,000 SF Detached $87,000 $199,000 $264,000 $371,000 SF Lot n/a n/a n/a n/a Unit Type Category 5 Category 6 Category 7 RO Studio $365,000 $407,000 $457,000 n/a 1 Bedroom $395,000 $438,000 $488,000 n/a 2 Bedroom $429,000 $471,000 $522,000 n/a 3 Bedroom $457,000 $498,000 $549,000 n/a SF Detached $489,000 $532,000 $579,000 n/a SF Lot $105,000 $146,000 $152,000 $186,000 Source: Employee Housing Guidelines 2015 APCHA also establishes maximum yearly incomes that occupants may earn to qualify to own in each Category. The below table expresses the range of incomes that can qualify for each Category of housing. Table 32. 2015 Category Incomes for APCHA Ownership Dep end ents Cat1 Cat2 Cat3 Cat4 Min* Max Min Max Min Max Min Max 0 $14,000 $35,000 $35,001 $56,000 $56,001 $88,000 $88,001 $145,000 1 $18,500 $42,500 $42,501 $66,500 $66,501 $95,500 $95,501 $152,500 2 $29,000 $50,000 $50,001 $71,000 $71,001 $103,000 $103,001 $160,000 3 $36,500 $57,500 $57,501 $78,500 $78,501 $110,500 $110,501 $167,500 Dependents Cat5 Cat6 Cat7 Min Max Min Max Min Max 0 $145,001 $155,000 $155,001 $169,000 $169,001 $186,000 1 $152,501 $162,500 $162,501 $176,500 $176,501 $193,500 2 $160,001 $170,000 $170,001 $184,000 $184,001 $201,000 3 $167,501 $177,500 $177,501 $191,500 $191,501 $208,500 *The minimum income for Category 1 was estimated based on the spread of incomes permitted in Category 2. APCHA does not define a minimum income for Category 1 households, but does require occupants to work full time (1,500 hours per calendar year), meaning that the vast majority of qualifying households earn at least $15,000 ($10/hour) or more per year. Source: Employee Housing Guidelines 2015 P83 I. Policy Study: Aspen/Pitkin County Housing Authority Affordable Housing Guidelines. February 2016 Navigate, LLC; WSW Consulting; Rees Consulting, Inc. ! ! Section 3 - 82 Current APCHA Owners Cost-burden is not a significant problem for current APCHA owners. Only 10% of current APCHA owners are cost-burdened (pay more than 30% of their income) for mortgage. This is lower than for owners employed in Pitkin County overall (19% total).23 When HOA fees are also added, APCHA cost- burden rises to 15%. Evaluated by Category of unit and household type: • Cost-burden mostly affects households occupying units in Category 1 (55.4% of households) and Category 2 (23.8% of households). • A similar percentage of households by dependent type are cost burdened by their mortgage payment, ranging between about 8% and 11%. This rises to near 16% for zero- and one-dependent households when HOA fees are added. Table 33. Households Paying Over 30% of Income for Mortgage: APCHA Owners 2015 0- dependents 1- dependent 2- dependents 3- dependents* TOTAL owners % cost-burdened 10.8% 10.6% 7.5% 11.0% 10.0% Including HOA 15.6% 16.6% 9.3% -- 15.0% *Small sample size for 3+ dependent households, consider this with interpretation. Category 1* Category 2 Category 3 Category 4 Categories 5 - 7** % cost-burdened 55.4% 23.8% 4.7% 4.1% 1.3% *Category 1 has a small sample size, consider this with interpretation. **Categories 5, 6, and 7 are consolidated due to small individual sample sizes. Source: 2015 Employee Survey New For-Sale Homes Compared to APCHA Category Incomes The below table provides a simple overview of the average affordability of APCHA’s ownership program. By dividing the average maximum income for each Category into the average of sale prices for all unit types, a ratio of average sale price to average income is generated. • The below generally shows that sale prices are set within affordable ranges. 23 See Section 1 – APCHA Affordable Housing Program for this data. P84 I. Policy Study: Aspen/Pitkin County Housing Authority Affordable Housing Guidelines. February 2016 Navigate, LLC; WSW Consulting; Rees Consulting, Inc. ! ! Section 3 - 83 • Typically households can afford to purchase homes that are at least three-times and, with current low interest rates, near 4-times their income based on the 30% affordability standard. • Calculated ratios show sale prices average between 1.48- and 2.68-times the maximum household incomes for each Category, indicating relatively affordable prices. Table 34. Average Affordability of APCHA’s Maximum Sale Prices: 2015 Cat1 Cat2 Cat3 Cat4 Cat5 Cat6 Cat7 Average income range* $42,501 $64,501 $95,501 $152,501 $162,501 $176,501 $193,500 Average sale price** $62,800 $141,600 $204,400 $313,600 $427,000 $469,200 $519,000 Ratio of sale price to income*** 1.48 2.20 2.14 2.06 2.63 2.66 2.68 *Simple average of 0-, 1-, 2- and 3-dependent maximum incomes specified by APCHA. **Simple average of maximum sale prices specified for each unit type. ***Ratio of average sale price divided by average income. Source: Employee Housing Guidelines 2015, Consultant Team. This general observation is supported by the more detailed analysis presented below, which compares the incomes that zero- through three+-dependent households can earn to qualify for each Category unit to the maximum sale prices for each unit type. This shows that: • Sale prices in each Category are generally affordable for households earning at or near the maximum incomes. • Affordability problems occur for households earning near the minimum incomes in Category 1 for zero-dependent households. These households could afford a 1-bedroom or smaller home. • Minimum income earners in Category 2 with zero- or one-dependent generally could not afford 3-bedroom or single-family homes. • Home choices for which households can qualify based on their size are generally available to the remaining households in other Categories. “Affordable housing in Pitkin County is not affordable. You cannot afford to raise a family in Aspen anymore with just one job. Homeowner's Association fees are ridiculous. We were on the list for Burlingame Phase 2 but chose to purchase down valley because of how expensive HOA fees were predicted to be for the unit”. – 2015 Employee Housing Survey Comment P85 I. Policy Study: Aspen/Pitkin County Housing Authority Affordable Housing Guidelines. February 2016 Navigate, LLC; WSW Consulting; Rees Consulting, Inc. ! ! Section 3 - 84 Table 35. Percent of Monthly Income Spent on Mortgage and HOA24 by APCHA Households: 2015 Dependents / Unit Cat1 Cat2 Cat3 Cat4 Cat5 Cat6 Cat7 Min Max Min Max Min Max Min Max Min Max Min Max Min Max 0 / Studio 21.9% 8.7% 20.3% 12.7% 21.2% 13.5% 22.8% 13.8% 19.3% 18.0% 20.1% 18.4% 20.7% 18.8% 0 / 1BR 28.4% 11.4% 24.3% 15.2% 23.1% 14.7% 24.3% 14.8% 20.8% 19.5% 21.6% 19.8% 22.1% 20.1% 0 / 2BR 34.4% 13.8% 29.9% 18.7% 27.3% 17.4% 27.0% 16.4% 22.6% 21.2% 23.2% 21.3% 23.6% 21.5% 0 / 3BR 39.3% 15.7% 36.7% 22.9% 32.0% 20.3% 29.9% 18.1% 24.1% 22.6% 24.6% 22.5% 24.9% 22.6% 0 / SF 47.5% 19.0% 43.5% 27.2% 36.1% 22.9% 32.3% 19.6% 25.8% 24.1% 26.3% 24.1% 26.2% 23.8% 1 / Studio 16.5% 7.2% 16.7% 10.7% 17.8% 12.4% 21.0% 13.1% 18.3% 17.2% 19.2% 17.6% 19.8% 18.1% 1 / 1BR 21.5% 9.4% 20.0% 12.8% 19.4% 13.5% 22.4% 14.0% 19.8% 18.6% 20.6% 19.0% 21.2% 19.3% 1 / 2BR 26.1% 11.3% 24.7% 15.8% 23.0% 16.0% 24.9% 15.6% 21.5% 20.2% 22.2% 20.4% 22.6% 20.6% 1 / 3BR 29.8% 13.0% 30.2% 19.3% 26.9% 18.7% 27.6% 17.3% 22.9% 21.5% 23.4% 21.6% 23.8% 21.7% 1 / SF 36.0% 15.7% 35.8% 22.9% 30.4% 21.1% 29.7% 18.6% 24.5% 23.0% 25.0% 23.1% 25.1% 22.9% 2 / Studio 10.6% 6.1% 14.2% 10.0% 16.7% 11.5% 19.5% 12.5% 17.5% 16.4% 18.3% 16.9% 19.0% 17.4% 2 / 1BR 13.7% 8.0% 17.0% 12.0% 18.2% 12.6% 20.8% 13.4% 18.9% 17.8% 19.7% 18.2% 20.3% 18.6% 2 / 2BR 16.6% 9.6% 21.0% 14.8% 21.5% 14.9% 23.1% 14.9% 20.5% 19.3% 21.2% 19.6% 21.7% 19.9% 2 / 3BR 19.0% 11.0% 25.7% 18.1% 25.2% 17.4% 25.5% 16.4% 21.8% 20.6% 22.4% 20.7% 22.8% 20.9% 2 / SF 22.9% 13.3% 30.4% 21.4% 28.4% 19.6% 27.6% 17.7% 23.4% 22.0% 23.9% 22.1% 24.1% 22.0% 3 / Studio 8.4% 5.3% 12.4% 9.1% 15.1% 10.7% 18.1% 12.0% 16.7% 15.7% 17.5% 16.3% 18.3% 16.8% 3 / 1BR 10.9% 6.9% 14.8% 10.8% 16.5% 11.7% 19.4% 12.8% 18.0% 17.0% 18.9% 17.5% 19.5% 17.9% 3 / 2BR 13.2% 8.4% 18.2% 13.4% 19.5% 13.8% 21.5% 14.2% 19.6% 18.5% 20.3% 18.8% 20.9% 19.2% 3 / 3BR 15.1% 9.6% 22.4% 16.4% 22.8% 16.2% 23.8% 15.7% 20.9% 19.7% 21.5% 19.9% 21.9% 20.1% 3 / SF 18.2% 11.6% 26.5% 19.4% 25.7% 18.3% 25.7% 16.9% 22.3% 21.1% 22.9% 21.3% 23.1% 21.2% Source: Aspen/Pitkin County Housing Authority, Consultant Team. 24!Principal and interest are based on a 30-year fixed, 5% rate with 5% down. Taxes, Insurance and HOA comprise 20% of the mortgage payment. HOA dues average $286 per month for APCHA households based on the 2015 Employee Housing Survey. P 8 6 I . Policy Study: Aspen/Pitkin County Housing Authority Affordable Housing Guidelines. February 2016 Navigate, LLC; WSW Consulting; Rees Consulting, Inc. ! ! Section 3 - 85 APCHA owners pay an average of $182 per month in utilities.25 When the average cost of utilities is added to the maximum mortgage plus HOA payment for each Category, households earning the maximum income for each range are still generally able to afford APCHA homes. As shown below: • Zero- and one-dependent households earning the maximum income in Categories 1 through 4 pay over 30% for rent plus utilities for some 3- bedroom and single family homes. None of the maximum income households pay more than 40% for mortgage/HOA plus utilities; • As expected, the affordability for households earning at or near the minimum for each Category decreases. o Zero-dependent households have the most affordability problems, along with most lower-income households in Category 1. o Three-dependent households within qualifying income ranges would still pay less than 40% of their income to purchase a home in any Category.! 25 Source: Employee Housing Survey 2015; see Section 1 – Examination of APCHA’s Affordable Housing Program for this data.! P87 I. Policy Study: Aspen/Pitkin County Housing Authority Affordable Housing Guidelines. February 2016 Navigate, LLC; WSW Consulting; Rees Consulting, Inc. ! ! Section 3 - 86 Percent of Monthly Income Spent on Mortgage, HOA and Utilities26 by APCHA Households: 2015 Cat1 Cat2 Cat3 Cat4 Cat5 Cat6 Cat7 Dependents / Unit Min Max Min Max Min Max Min Max Min Max Min Max Min Max 0 / Studio 26.8% 10.7% 22.3% 13.9% 22.7% 14.5% 23.8% 14.4% 20.0% 18.7% 20.8% 19.0% 21.4% 19.4% 0 / 1BR 35.8% 14.3% 27.2% 17.0% 25.2% 16.1% 25.7% 15.6% 21.8% 20.4% 22.5% 20.6% 23.0% 20.9% 0 / 2BR 44.9% 18.0% 34.1% 21.3% 30.3% 19.3% 28.9% 17.5% 23.8% 22.3% 24.4% 22.3% 24.8% 22.5% 0 / 3BR 51.7% 20.7% 41.7% 26.0% 35.7% 22.7% 32.3% 19.6% 25.7% 24.0% 26.0% 23.9% 26.3% 23.9% 0 / SF 61.1% 24.4% 48.9% 30.6% 40.4% 25.7% 35.0% 21.2% 27.8% 26.0% 28.2% 25.8% 28.2% 25.6% 1 / Studio 20.3% 8.8% 18.4% 11.7% 19.1% 13.3% 21.9% 13.7% 19.0% 17.8% 19.8% 18.2% 20.5% 18.7% 1 / 1BR 27.1% 11.8% 22.4% 14.3% 21.3% 14.8% 23.7% 14.8% 20.7% 19.4% 21.5% 19.8% 22.0% 20.1% 1 / 2BR 34.0% 14.8% 28.1% 18.0% 25.5% 17.7% 26.6% 16.7% 22.7% 21.3% 23.2% 21.4% 23.7% 21.6% 1 / 3BR 39.1% 17.0% 34.3% 21.9% 30.0% 20.9% 29.7% 18.6% 24.4% 22.9% 24.8% 22.9% 25.2% 23.0% 1 / SF 46.2% 20.1% 40.3% 25.7% 34.0% 23.7% 32.3% 20.2% 26.5% 24.8% 26.9% 24.7% 27.0% 24.6% 2 / Studio 12.9% 7.5% 15.6% 11.0% 17.9% 12.4% 20.3% 13.1% 18.1% 17.0% 18.9% 17.5% 19.7% 18.0% 2 / 1BR 17.3% 10.0% 19.1% 13.4% 19.9% 13.7% 22.0% 14.1% 19.7% 18.6% 20.5% 19.0% 21.1% 19.3% 2 / 2BR 21.7% 12.6% 23.9% 16.8% 23.9% 16.4% 24.7% 15.9% 21.6% 20.3% 22.2% 20.5% 22.7% 20.8% 2 / 3BR 25.0% 14.5% 29.2% 20.5% 28.1% 19.4% 27.6% 17.7% 23.3% 21.9% 23.7% 21.9% 24.1% 22.1% 2 / SF 29.5% 17.1% 34.2% 24.1% 31.9% 22.0% 29.9% 19.2% 25.2% 23.7% 25.7% 23.7% 25.9% 23.7% 3 / Studio 10.3% 6.5% 13.6% 9.9% 16.2% 11.5% 18.9% 12.5% 17.3% 16.3% 18.1% 16.8% 18.9% 17.3% 3 / 1BR 13.7% 8.7% 16.6% 12.1% 18.0% 12.8% 20.5% 13.5% 18.9% 17.8% 19.7% 18.2% 20.3% 18.7% 3 / 2BR 17.2% 10.9% 20.8% 15.2% 21.6% 15.3% 23.0% 15.2% 20.6% 19.5% 21.3% 19.7% 21.8% 20.1% 3 / 3BR 19.8% 12.6% 25.4% 18.6% 25.4% 18.1% 25.7% 16.9% 22.2% 21.0% 22.7% 21.1% 23.2% 21.3% 3 / SF 23.4% 14.9% 29.8% 21.8% 28.8% 20.5% 27.9% 18.4% 24.1% 22.7% 24.6% 22.8% 24.8% 22.8% 26 Principle and interest are based on a 30-year fixed, 5% rate with 5% down, and 20% of payment to insurance, taxes and HOA. Utilities are estimated at $0.15 per square foot based on an average of $182 per month for APCHA households, as reported by employees on the Employee Housing Survey 2015. P 8 8 I . Policy Study: Aspen/Pitkin County Housing Authority Affordable Housing Guidelines. February 2016 Navigate, LLC; WSW Consulting; Rees Consulting, Inc. ! ! Section 3 - 87 The following chart show the range of sale prices that zero-dependent households can afford to pay given the income range for each Category, with charts for other household sizes (one- through three+ dependents) in Appendix C. The affordable range of sale prices is compared to APCHA sale prices for each type of home, visually displaying where Category prices may exceed a household’s ability to pay. This analysis supports the above findings that households earning below maximum incomes Category 1 and Category 2 have difficulty affording maximum sale prices. For zero-dependent households: • The maximum income in Category 1 can afford to purchase a home for about $137,000. This is higher than the sale prices for all available unit types. • The minimum income for Category 1 can afford to purchase a $55,000 home. This household could afford to buy a studio based on current APCHA prices based on the 30% standard. • The ability for zero-dependent households earning the minimum income increases with each Category. This type of household can afford up to a one-bedroom unit in Category 2, a two-bedroom in Category 3 and larger homes in all remaining categories. Figure 9. Sale Prices Affordable to Households Within the Permitted Income Range Compared to Maximum APCHA Sale Prices: 0-Dependent Household27 27 Based on the standard that no more than 30% of income is used for housing payments, including mortgage principal, interest, taxes, insurance and estimated HOA. Category 1 minimum sales prices are calculated from the estimated minimum incomes in Table 35, above. $54,904 $137,260 $219,616 $345,111 $568,649 $607,866 $662,770 $729,440 $0 $100,000 $200,000 $300,000 $400,000 $500,000 $600,000 $700,000 $800,000 Category 1 Category 2 Category 3 Category 4 Category 5 Category 6 Category 7 Sa l e P r i c e 0-Dependent Household by Category Minimum income price Studio 1BR 2BR 3BR SF Maximum income price P89 I. Policy Study: Aspen/Pitkin County Housing Authority Affordable Housing Guidelines. February 2016 Navigate, LLC; WSW Consulting; Rees Consulting, Inc. ! ! Section 3 - 88 Remaining household sizes (one-dependent through three+-dependent) show a similar pattern of rising affordability as Categories increase. Only one-dependent households are limited in their selection in Category 1, with generally good options for other dependent-sized households across each Category. Based on the above, APCHA may want to consider raising sale prices, mostly in Categories 2 or higher, though all Categories have room for increase. This may be desirable if a goal is to decrease subsidies to the program. Decreased subsidies to create the higher income Categories may permit increased subsidies to create lower income Categories. Estimated AMI For Sale Prices The below presents one option that APCHA could consider. This shows the change in sale prices that would occur if APCHA changed to an AMI system based on the porting methodology presented in Section 2 – Income, Assets and Categories.28 The calculation represents the mid-point sale price for the AMI range, meaning that some prices will be lower and some will be higher. As shown: • Sale prices are estimated to increase across the board, with proportionately higher increases in Category 1 than in other Categories. Increases average between about 55% to 90% across Categories.29 • Part of the reason for this large increase is related to the sale price assumptions, resulting in households being able to afford homes that are about 3.9 times larger than their incomes. As shown in Table 31 at the beginning of this section, average APCHA sale prices average much less than this. • The interest rate of a loan can have a large impact on affordability, generally reducing a household’s purchasing power by just over 5% for every 0.5% rise in the interest rate. High HOA dues, which are common in high cost resort communities, can also affect affordability. 28 See Appendix C for details on the calculation methodology and assumptions made. 29 Appendix C has a detailed table showing the percentage change in rents for each unit type.! P90 I. Policy Study: Aspen/Pitkin County Housing Authority Affordable Housing Guidelines. February 2016 Navigate, LLC; WSW Consulting; Rees Consulting, Inc. ! ! Section 3 - 89 Figure 10. Estimated AMI Sale Prices Compared to Maximum APCHA Sale Prices Affordable sale price estimated based on principal and interest for a 30-year fixed rate mortgage at 5% interest rate, 5% down payment and 20% of mortgage for insurance, taxes and HOA and a mortgage payment that comprises 30% of household income. Source: Employee Housing Guidelines 2015, Consultant Team. APCHA Re-Sales For re-sales of APCHA homes, the deed restriction recorded on the unit controls the maximum resale price. There are appreciation caps on the Category units and some RO units. This appreciation cap varies by property and may allow a fixed 3%, 4% or 6% increase per year; the lesser of CPI or 3%; or the lesser of CPI or 6%. It is uncommon for a seller to obtain less than the maximum allowable sales price despite the condition of the property, as there are typically multiple bidders. The buyer purchases “as is” based on strong demand and limited supply. Comparing the average appreciated value for homes in each Category, plus permitted Capital Improvements, the average permitted sale price for existing homes in 2015 falls in the middle of the permitted range for new unit sales, except for Category 1. Only homes in Category 1 have appreciated to sale prices that exceed the targeted price range for new Category 1 units. $0 $200,000 $400,000 $600,000 $800,000 $1,000,000 $1,200,000 Mi d - p o i n t p r i c e AP C H A p r i c e Mi d - p o i n t p r i c e AP C H A p r i c e Mi d - p o i n t p r i c e AP C H A p r i c e Mi d - p o i n t p r i c e AP C H A p r i c e Mi d - p o i n t p r i c e AP C H A p r i c e Mi d - p o i n t p r i c e AP C H A p r i c e Mi d - p o i n t p r i c e AP C H A p r i c e Category 1 Category 2 Category 3 Category 4 Category 5 Category 6 Category 7 Ho m e S a l e P r i c e Studio 1-br 2-br 3-br Single Family P91 I. Policy Study: Aspen/Pitkin County Housing Authority Affordable Housing Guidelines. February 2016 Navigate, LLC; WSW Consulting; Rees Consulting, Inc. ! ! Section 3 - 90 Figure 11. 2015 Resale Value Compared to APCHA Sale Prices by Category: 2015 Source: Employee Housing Guidelines 2015, Consultant Team. The below table compares the incomes needed to afford the average maximum resale prices to APCHA income limits. This shows that the average income needed to afford an average resale unit in all Categories falls below the maximum income limit for zero-dependent households. This indicates that resale prices on average would be affordable to APCHA Category households. Table 36. Incomes Needed to Afford Current Sales Prices Income Limits by Number of Dependents Category 2015 Average Resale Price Income to Afford* 0 1 2 3+ 1 $93,478 $23,836 $35,000 $42,500 $50,000 $57,500 2 $126,994 $32,382 $56,000 $66,500 $71,000 $78,500 3 $194,051 $49,481 $88,000 $95,500 $103,000 $110,500 4 $273,368 $69,706 $145,000 $152,500 $160,000 $167,500 5 $430,457 $109,762 $155,000 $162,500 $170,000 $177,500 6 $302,754* $77,199 $169,000 $176,500 $184,000 $191,500 7 $520,777 $132,793 $186,000 $193,500 $201,000 $208,500 RO $906,376 $231,117 N/A N/A N/A N/A Affordable purchase prices are based on a 30-year fixed, 5% rate loan with 5% down, principal, interest, insurance, HOA and taxes are assumed to be 20% of the monthly payment. *Category 6 includes some mobile homes in Woody Creek, which are priced below Category 6 rates, lowering the average value. Source: Aspen/Pitkin County Housing Authority; Consultant team. Category 1 Category 2 Category 3 Category 4 Category 5 Category 6 Category 7 APCHA Minimum Sale Price (studio) $40,000 $93,000 $155,000 $262,000 $365,000 $407,000 $457,000 2015 Average Resale Value $93,478 $126,994 $194,051 $273,368 $430,457 $302,754 $520,777 APCHA Maximum Sale Price (single family) $87,000 $199,000 $264,000 $371,000 $489,000 $532,000 $579,000 $0 $100,000 $200,000 $300,000 $400,000 $500,000 $600,000 $700,000 Sa l e P r i c e o f A P C H A H o u s i n g P92 I. Policy Study: Aspen/Pitkin County Housing Authority Affordable Housing Guidelines. February 2016 Navigate, LLC; WSW Consulting; Rees Consulting, Inc. ! ! Section 3 - 91 The below chart better illustrates the discrepancy between APCHA’s sale prices and specified incomes for each Category. This chart distributes APCHA’s inventory by AMI based on their labeled Category30 and compares this to the unit distribution by AMI based on its actual sale price. This shows that that sale prices are set very affordable relative to the maximum incomes specified for each Category. For example, only 2% of units are classified as “Category 1” but 21% of units are priced affordable to households that income qualify for “Category 1.” This means that prices should be able to be increased without compromising affordability for income-qualifying Category households. Figure 12. AMI Affordability of APCHA Units Based on Income Category Designation and the Resale Price of Units: 2015 Source: Employee Housing Guidelines 2015, Consultant Team. Affordability of New APCHA Units Over Time Two additional factors relate to the affordability of APCHA’s housing program: 1) The affordability of the program to individuals applying to the program over time, and 2) The affordability of APCHA’s Categories to the group of Pitkin County working households as a whole over time. 30 For example, the income needed to qualify for Category 1 is about equivalent to a 50% AMI level on average – all Category 1 units were placed into the 50% AMI bin regardless of their specified price point. 2% 13% 18% 47% 1% 4% 1% 14% 21% 29% 32% 4% 1% 1% 1% 12% 0% 5% 10% 15% 20% 25% 30% 35% 40% 45% 50% Under 50% ($165,000) 50 to 85% ($255,000) 85 to 115% ($381,000) 115 to 185% ($612,000) 185 to 195% ($645,000) 195 to 215% ($711,000) 215 to 235% ($778,000) Over 235% (Over $778,000) Pe r c e n t o f A P C H A O w n e r s h i p U n i t s AMI Category (Maximum Affordable Price in Parentheses) Units by AMI (based on Category) Units by AMI (based on sale price) P93 I. Policy Study: Aspen/Pitkin County Housing Authority Affordable Housing Guidelines. February 2016 Navigate, LLC; WSW Consulting; Rees Consulting, Inc. ! ! Section 3 - 92 Affordability to Individuals Over Time. This is analyzed by determining whether APCHA’s maximum rents and sales prices have changed at a similar, faster or slower rate than Category incomes for newly deed restricted units. If, for example, maximum rents and sale prices increased at a faster rate than qualifying maximum incomes, then this means that the affordability of new deed restricted units has decreased over time for qualified households. The average income and housing price change is presented below. With few exceptions, rents have increased at either the same or slightly lower rate on average than incomes since 2000.31 This indicates that the base affordability of the program for new applicants occupying newly restricted rentals has remained fairly consistent over the years. Table 37. Average Percent Change in APCHA Maximum Rents and Maximum Incomes by Category: 2000 to 2015 Time Period Category 1 Category 2 Category 3 Category 4 % change 2000 - 2005 Income 13% 13% 12% 12% Rent 12% 12% 12% -3% % change 2005 - 2010 Income 12% 10% 11% 11% Rent 11% 11% 11% 11% % change 2010 - 2015 Income 9% 10% 8% 9% Rent 8% 8% 8% 8% Source: Aspen/Pitkin County Housing Authority, Consultant Team. For ownership, sale prices have been permitted to increase at faster rates than incomes on average. This varies by Category and unit type, however. Incomes for households with two or more dependents have increased more slowly than households with fewer dependents, indicating affordability of new homes for larger families has decreased over time. Based on the affordability tables presented above, however, units within each Category are more affordable to these larger households than to households with fewer dependents, indicating that sale prices had room to grow and still remain affordable for these households. 31 The year 2000 was chosen because this was the first year in which APCHA calculated different income requirements for rentals (based on the number of adults in the household) and ownership (based on the number of dependents in the household). P94 I. Policy Study: Aspen/Pitkin County Housing Authority Affordable Housing Guidelines. February 2016 Navigate, LLC; WSW Consulting; Rees Consulting, Inc. ! ! Section 3 - 93 Figure 13. Average Percent Change in APCHA Maximum Sales Prices and Maximum Incomes by Category: 2000 to 2015 Source: Aspen/Pitkin County Housing Authority, Consultant Team. Affordability to Working Households Over Time. This is analyzed by determining whether the change in APCHA’s incomes has continued to serve the same target-income households over time. If, for example, the specified income range for each Category has increased to serve a higher target-income household group over time, then this means that the affordability of the program to Pitkin County workers as a group has decreased. Under the current adult/dependent and income-calculation system, APCHA’s defined incomes have targeted varying income levels of households over time for every Category of housing. An advantage of linking income limits to HUD AMI is that the target income market would remain constant over time. The below chart shows how the target income level changes over time under APCHA’s system. The graph shows the maximum AMI level that has been served by Category 1 for one-adult (renters) and two-dependents (owners) households since the year 2000 (in five-year increments). It also shows what AMI level would have been served each year if APCHA’s system had been based on HUD’s AMI system, targeting Category 1 to serve 50% AMI households. As shown: • The HUD AMI system would have resulted in the program targeting 50% AMI households in each successive year regardless of household size; 0% 5% 10% 15% 20% 25% Income Sales Price Income Sales Price Income Sales Price % change 2000 - 2005 % change 2005 - 2010 % change 2010 - 2015 Pe r c e n t C h a n g e Category 1 Category 2 Category 3 Category 4 P95 I. Policy Study: Aspen/Pitkin County Housing Authority Affordable Housing Guidelines. February 2016 Navigate, LLC; WSW Consulting; Rees Consulting, Inc. ! ! Section 3 - 94 • APCHA’s current income-calculation method results in a program that does not consistently serve the same target income market each year. As shown, maximum AMI levels have fluctuated from 42% to 50% for one- adult renter households and from 56% to 64% for two-dependent owner households; and • A similar pattern occurs for all adult and dependent-sized households across all Categories. Figure 14. Change in Maximum AMI for Category 1: 2000* to 201532 *The year 2000 was selected as a start date because this is the first year for which incomes were defined for households by both number of adults and number of dependents. Source: Aspen/Pitkin County Housing Authority, Consultant Team. Other Impacts to the Affordability of APCHA’s Units The focus of affordability is often isolated to the initial sales price and the appreciation cap. As the housing program has evolved, it has become evident that other aspects affect the ability to preserve affordability over time, including deferred maintenance, capital improvements, and interest rates. 32!See!Appendix!C!for!charts!showing!similar!changes!for!Categories!2,!3,!and!4.! 50% 50% 50% 50% 46% 42% 49% 52% 64% 56% 63% 61% 0% 10% 20% 30% 40% 50% 60% 70% 2000 2005 2010 2015 Ta r g e t I n c o m e H o u s e h o l d ( M a x A M I l e v e l ) Year 50% AMI Level APCHA Max AMI (1-adult) APCHA Max AMI (2-dependents) P96 I. Policy Study: Aspen/Pitkin County Housing Authority Affordable Housing Guidelines. February 2016 Navigate, LLC; WSW Consulting; Rees Consulting, Inc. ! ! Section 3 - 95 Deferred Maintenance As the housing inventory matures, challenges with deferred maintenance have become apparent. In most housing markets, deferred maintenance results in a reduced sales price. This frequently does not occurred upon resale of APCHA units. Because deed restricted units are in limited supply, priced well below market and in such high demand, units have often sold for their maximum resale prices regardless of their condition and maintenance history and APCHA’s best attempts to enforce minimum standards for maximum sale price. In some instances, sellers have issued a credit to buyer’s closing costs (for inspection items) and/or made particular repairs and/or replacements. But in many instances because owners can collect maximum resale prices despite unit condition, there is little to no incentive for the owner to maintain the unit. APCHA does require the homeowner to maintain their unit in good repair and, if a member of an HOA, to pay dues to enable the association to maintain the exterior and common elements of any shared property. APCHA’s enforcement of both of these standards, however, is difficult because of vague minimum standards, limited communication between APCHA and the HOAs, and APCHA’s only remedy to cure a violation is to force a sale, which is very heavy handed. If maintenance is not performed over time, the cost of homeownership can quickly become unaffordable. As units have transferred ownership over the years and awareness of the need to maintain units has increased, APCHA is now confronted with the challenge of addressing costly deferred maintenance within the system. Capital Improvements An increase in the maximum sales price for certain capital improvements is used as an incentive to maintain and improve deed restricted units. APCHA adopted a Capital Improvement policy about 5 years ago that allows a 10% increase in the maximum sales price for each new owner. Any capital improvements associated with health and safety, energy efficiency, water conservation, and green building products are exempt from the 10% cap. All improvements are depreciated based on the Marshall Swift Residential Handbook. Although Capital Improvements cut down on maintenance expenses, the increase in appreciation makes units less affordable over time. “There is desperation in the lottery - happy to take a D+ property – at any price and condition” – Interview comment P97 I. Policy Study: Aspen/Pitkin County Housing Authority Affordable Housing Guidelines. February 2016 Navigate, LLC; WSW Consulting; Rees Consulting, Inc. ! ! Section 3 - 96 Interest Rates Interest rates can significantly impact affordability. Even if prices rise faster than incomes, the units may still be affordable if interest rates drop. Interest rates peaked in the early 1980’s during the beginning of the APCHA housing program, and have trended down since then with an extended period of historically low levels. It is likely that interest rates will increase in coming years giving purchasers less buying power making homes less affordable. Comparison to Peer Communities – Breckenridge, Jackson, Telluride, Vail All five communities have often grappled with the question, “What is affordable?” For years, they focused on initial prices and capping annual appreciation at no more than 3%. More recently, their concerns about preserving affordability over time are expanding to take into account the cumulative impacts of annual appreciation in combination with capital improvements, special assessments and the need to address deferred maintenance. Initial Prices/Rents Towns have learned through a common mistake that prices must be set at some point within the range rather than at the maximum allowed, as has been pushed when trying to minimize subsidies. Prices at the upper end of the category eliminate most of the potential buyers/renters with incomes that fall within the category or they force buyers to stretch their resources and potentially own homes they really cannot afford. Towns have learned to set prices below income caps. Breckenridge includes a 10% price differential – units with income caps of 90% AMI are priced at 80% AMI. Telluride has an even wider range – Tier 1 units have income limits of 120% AMI and targets prices at 70% AMI for one bedroom and 90% AMI for two and three bedrooms. Price Appreciation Limits These five towns are committed to preserving affordability over time through limits on appreciation; however, these limits may not be imposed on all units, they may vary by project or even within developments, and may vary on their effectiveness at maintaining the affordability of units over time. Price caps are sometimes derived by compromise between officials who advocate that workforce housing owners should have the same rights for return on investment as others, or that the market should interfere as little as possible, especially on units developed by the private sector. In Aspen and Telluride, all units produced in recent years are price capped. In Vail, the majority of the inventory does not P98 I. Policy Study: Aspen/Pitkin County Housing Authority Affordable Housing Guidelines. February 2016 Navigate, LLC; WSW Consulting; Rees Consulting, Inc. ! ! Section 3 - 97 have price or rent limits. In Jackson, “attainable” units serving higher income categories are not price capped. Resale Price Guarantees The Recession and softening of workforce housing prices in some communities (though not in Vail) caused some residents of workforce housing to realize that their 3% caps on annual appreciation were not guarantees of 3% appreciation, despite provisions in their deed restrictions. These inaccurate perceptions still persist in some towns. In Breckenridge, the lessor of 3%, or the change in the AMI, is strictly enforced even when the AMI decreases. If the AMI decreases, it is treated as 0% appreciation permitted for that year. However, in Jackson, if the AMI decreases the home is depreciated by the change in AMI. Evaluating Affordability over Time Changes in affordability over time have not been regularly evaluated by comparing the AMI required to afford the initial price to the AMI needed for subsequent purchases. Price is not the only factor in this evaluation. Interest rates significantly impact affordability. So even if prices rise faster than incomes, they may still be more affordable if interest rates have dropped. With interest rates relatively steady in recent years, this had not been much of an issue but will likely impact affordability to a greater extent long term. Capital Improvements Capital improvements are allowed with limitations. Each town has a list of improvements, the cost for which can be added to the resale price. Luxury improvements are not allowed. Towns vary as to the eligibility of additions and to depreciation of improvements. The Town of Breckenridge allows up to 15% to be added to the resale price for approved and, in some cases, specified capital improvements for the life of the property – once capital improvements exceed 15% more than the sale price to the first owner, then the price of capital improvements cannot be added to the resale value. Special Assessments Special Assessments can be added to the resale price in Vail, where major roof repairs were needed on one development due to design/construction issues. Adding the cost of special assessments to the price encourages homeowners to make the extensive work needed rather than opting for a less expensive but short-term solution. There are problems with across-the-board application of this approach, however. Special assessments make the homes less affordable over P99 I. Policy Study: Aspen/Pitkin County Housing Authority Affordable Housing Guidelines. February 2016 Navigate, LLC; WSW Consulting; Rees Consulting, Inc. ! ! Section 3 - 98 time. If the assessments are due to deferred maintenance, it could be a form of bail out for the HOA. Deferred Maintenance Deferred Maintenance is starting to become a problem as inventories age, not only in Aspen but in other communities as well. Jackson requires a third party inspection requiring a standard level of maintenance and allowing some negotiations between seller and buyer on price. Good communication with property managers/HOAs will become increasingly important. Vail is concerned about HOA’s holding fees steady and not being prepared for costly improvements when inevitably needed in the future. Breckenridge has learned that HOA’s are needed to maintain exteriors on projects other than just condominiums. Towns have required initial capitalization of reserves, with Telluride providing seed funding. Towns have not, however, assumed on-going responsibility for monitoring HOA’s and ensuring that fees are increased as needed over time to adequately maintain properties. P100 I. Policy Study: Aspen/Pitkin County Housing Authority Affordable Housing Guidelines. February 2016 Navigate, LLC; WSW Consulting; Rees Consulting, Inc. Section 4 - 99 Section 4 – Household Size and Qualifications Purpose This section analyzes APCHA’s system for establishing eligibility for housing. Applicants for both ownership and rental housing must qualify for a specific income category and number of bedrooms. Income qualification and bedroom size qualification are based on different standards: • Income qualification is based on a dual system with separate criteria for owners and renters and is not measured by the total number of persons in the household, but rather the number of adults (for renters) or the number of dependents (for owners). • The number of bedrooms an applicant is allowed to rent or purchase, on the other hand, is determined based on the total number of persons in the household for both ownership and rental. The focus of this section is on how income size is determined and impacts APCHA’s housing programs. It covers in order: • The basis for income compared to bedroom qualifications; • The different methodologies for income qualification for owner and renter households, analyzing the pros and cons of two methodologies versus a single calculation for household size. • The basis for qualifying households for a specific number of bedrooms. The methods employed by peer communities and HUD programs are reviewed in each section. This section builds upon information presented previously, identifying issues that should be considered when reviewing APCHA’s system for qualifying households. Different Income and Bedroom Qualifications The two ways by which household size is determined for income category and the number of bedrooms qualifications were created for distinct reasons: • The income system was designed to recognize the differences between households that rent compared to those who own. Counting only dependents in ownership housing was done since relatively more families own, while counting only adults in rentals was due to a relatively high proportion of singles living alone or with income-earning roommates. P101 I. Policy Study: Aspen/Pitkin County Housing Authority Affordable Housing Guidelines. February 2016 Navigate, LLC; WSW Consulting; Rees Consulting, Inc. Section 4 - 100 • The bedroom qualification system based on total household size was designed to maximize utilization of the units by minimizing unused bedrooms while preventing overcrowding. The result is a unique, confusing and administratively burdensome system. Specifically: • Neither HUD nor any peer community has different methods for determining household size. All base household size on the total number of occupants that will reside in the home. While there may be slight variation in the way that dependent children are counted when they divide their time between divorced/separated parents, the calculation is generally very straightforward. • Employees who want to live in APCHA housing would have to go through three household size calculations to determine the number of bedrooms for which they would qualify and how much they could earn to qualify for a rental or ownership unit. This is confusing to applicants. • The time it takes for staff to perform the three household size calculations and to explain why different methodologies are used to the applicants contributes to high staffing levels. APCHA has roughly three to four times the staff members as do housing authorities in peer communities. The large size of APCHA’s inventory is a prime reason for the large staff; however, this large inventory also compounds the administrative burden of its complicated system – multiple calculations of household size for nearly 3,000 units adds up to a lot of staff time. Income Qualification - Distinction between Owners and Renters As described earlier, Aspen quantifies household size differently when establishing income Category eligibility for both ownership and rental housing: • For rental housing, the income Category is based on the number of adults. • For home ownership, only the number of dependents is counted regardless of the number of income earners. The definitions for Qualified Adults and Dependents are in the appendix. Differences between a dual system as compared to a single calculation methodology based on the total number of persons residing in the household is summarized in the following table. P102 I. Policy Study: Aspen/Pitkin County Housing Authority Affordable Housing Guidelines. February 2016 Navigate, LLC; WSW Consulting; Rees Consulting, Inc. Section 4 - 101 Table 38. Dual and Single-System Comparison Dual System Adults in Rental Dependents in Ownership Single System Total Persons in Household Equity in Housing the Workforce Disfavors families Removes household type from the factors influencing who is housed Affordability Rents less affordable for households with dependents; Purchase prices less affordable for larger family households in upper Categories. If incomes are the same, rents would be the same regardless of household type – bedrooms would become the only variable Income Categories May qualify for homes in different ownership and rental Categories. Consistent categories for owners and renters Compatibility with AMI Not compatible Compatible Fair Housing Raises concerns about discrimination based on familial status Not based on familial status Administration More complicated Less complicated Equity in Housing the Workforce The extent to which the dual system for household size calculation has been effective at achieving its purpose is difficult to measure because of the significance of other factors, primarily product type and bedroom mix, and the lack of historic occupancy data for comparative evaluation. • It appears that the current system is not effectively contributing to housing families in ownership. More than 20% of APCHA owner households are adults living alone. There are relatively fewer single-parent families, couples and couples with children residing in APCHA ownership than among all households working in Pitkin County (75% compared with 85%). • Renters living alone or with roommates continue to dominate occupancy of rental housing (64% of units) and will likely to do so under the current system that bases income qualification on multiple income earners with no dependents Families are under served by APCHA’s rental housing – 56% of Pitkin County employee households are families, yet families reside in only 36% of APCHA’s rental units. P103 I. Policy Study: Aspen/Pitkin County Housing Authority Affordable Housing Guidelines. February 2016 Navigate, LLC; WSW Consulting; Rees Consulting, Inc. Section 4 - 102 Table 39. Household Makeup by Owners and Renters Owners Renters Type Households Employed in Pitkin County Employed APCHA Households Households Employed in Pitkin County Employed APCHA Households Adult living alone 12% 21% 26% 43% Single parent with child(ren) 5% 10% 5% 5% Couple, no child(ren) 35% 27% 27% 19% Couple with child(ren) 42% 37% 18% 11% Unrelated roommates 1% 1% 17% 21% Immediate and extended family members 3% 1% 6% 1% Other 1% 1% 1% 1% Average Household Size 2.7 2.5 2.5 2.0 Source: Employee Housing Survey 2015 Peer communities address the varied housing needs of their workforce primarily by unit design and bedroom mix. They apply an analysis of their workforce household demographics to decisions targeting units to meet different households with product variety and bedroom mix. Affordability With the current dual system, affordability must be analyzed separately for rental and ownership housing. Rental This system works to the disadvantage of families since each Category is relatively less affordable to households with dependents than adult-only households. For example, one adult can be a person living alone or a single- parent household (one adult, one child). Both households can earn up to $35,000 and qualify for Category 1; however, the single parent is supporting two people with that same income. Using the recommended single system applied to AMI would better serve households with dependents. For example, as shown below, a roommate household with two people will be placed in a Category 1 unit. A single-parent household with two people earning $40,000 will be placed in a more expensive rental unit under Category 2. In a revised AMI system both households would qualify for a Category 1 rental unit. P104 I. Policy Study: Aspen/Pitkin County Housing Authority Affordable Housing Guidelines. February 2016 Navigate, LLC; WSW Consulting; Rees Consulting, Inc. Section 4 - 103 Table 40. Rental: Category 1 APCHA vs AMI Household Type Persons in Household APCHA Household Group Household Income APCHA Rental Category AMI Rental Category Single Parent Family 2 1-adult $40,000 Cat. 2 Cat. 1 Roommate Household 2 2-adult $40,000 Cat. 1 Cat. 1 Source: Employee Housing Guidelines 2015, Consultant Team. Ownership APCHA’s scaled incomes based on number of dependents works to the disadvantage of larger families (with the exception of Category 1 and to some extent Category 2). As family size increases, the maximum AMI that that family can earn to be eligible for Categories 3 or higher decreases. Each Category of housing above Category 2 is relatively less affordable to progressively larger families. Compatibility with AMI Multiple reasons have been put forth in this report for converting from current income categories to ones based on AMI. For this conversion, switching from a dual renter/owner system for calculating household size is also necessary. AMI is based on the total number of persons per unit. Counting only some of the occupants (the adults or the dependents) would not result in classifications appropriate for the household. Impact on Income Categories The dual calculation method could result in applicants being classified in different income Categories. The incomes in each Category are higher for renters than owners. This is a function of the larger increases permitted for renters that add another “adult” compared to owners who add another “dependent.” For example, a Category 1 renter might only be allowed to qualify to purchase a Category 2 home. Table 41. Income Categories: Rental vs Ownership Household type APCHA size class Household’s Income Category 1 Max Income Qualification Category Rental Couple, no kids 2-adult $50,000 $52,000 Cat 1 Ownership Couple, no kids 0- dependent $50,000 $35,000 Cat 2 Source: Employee Housing Guidelines 2015 P105 I. Policy Study: Aspen/Pitkin County Housing Authority Affordable Housing Guidelines. February 2016 Navigate, LLC; WSW Consulting; Rees Consulting, Inc. Section 4 - 104 Fair Housing Concerns Families are a protected class under the Fair Housing Act. This means that Familial status is one basis for discrimination under Fair Housing regulations. There can be no preference for one type of household over another. A rule or policy need only have a discriminatory effect to violate the Fair Housing Act; discriminatory intent is not required.33 The current system of basing qualification and APCHA-calculated income limits for ownership on number of “dependents” and for rental on number of “adults” disadvantages larger families and may raise Fair Housing Act concerns. More specifically: • Income caps calculated for ownership Categories do not equitably reach households within the same AMI group. Specified income caps allow a household with no dependents to earn a higher AMI (or relative income) in most Categories than households with one or more dependents. This was illustrated in a table in Appendix B (Dependent Households in Estimated AMI Categories: 2015). • Basing rental categories on the number of adults disadvantages households with children. Households with children may have the same number of income earners as one- or two-adult households, but must support more persons with their income. This was illustrated above in Table 41. In contrast to APCHA’s income calculation system, HUD AMI limits are calculated for every area with adjustments for family size. Family size adjustments are made to meet the intent of Congress that income limits within each AMI range should be higher for larger families and lower for smaller families. The same family size adjustments are used for all income limits, as follows: Table 42. Percentage Adjustments for Family Size: 2015 Number of Persons in Family 1 2 3 4 5 6 7 8 70% 80% 90% Base 108% 116% 124% 132% Source: HUD, “FY2015 HUD Income Limits Briefing Material,” Office of Policy Development & Research, p.9. As a result, to base income qualification on the number of adults only or the number of dependents only could open the door to complaints of discrimination. Using the total number of persons regardless of familial status as done by HUD and peer communities would address this concern. 33 See Department of Housing and Urban Development, “Implementation of the Fair Housing Act’s Discriminatory Effects Standard,” 78 Fed. Reg. 11460 (February 15, 2013). P106 I. Policy Study: Aspen/Pitkin County Housing Authority Affordable Housing Guidelines. February 2016 Navigate, LLC; WSW Consulting; Rees Consulting, Inc. Section 4 - 105 Administration A dual system complicates administration and takes additional staff time in several ways: • Calculating and applying different household sizes if applicants are considering both ownership and rental housing options. • Explaining the two methods to employees who need to explore all of their options for living in Aspen and Pitkin County. • Updating two sets of income tables annually instead of just one. • Evaluating program performance by complicating the factors that influence outcomes; i.e. the more variables, the greater the difficulty of understanding the impact of any one of them. Bedroom Qualification Federal Household Size Restrictions and Fair Housing The Department of Housing and Urban Development (HUD) does not have a fixed standard to define occupancy minimums or maximums in HUD subsidized properties. Minimum standards are typically put into place to prevent abuse of the system – e.g. by a single-person occupying a two- or three-bedroom unit based on one income, then illegally renting out one of the bedrooms. Maximum standards are often used to prevent overcrowding of units. Owners of HUD subsidized properties must develop occupancy standards that specify the unit size and number of bedrooms appropriate for different family sizes. Occupancy standards ensure that tenants are treated fairly and consistently, and receive adequate housing space. An example of occupancy standard is a limit of two persons per bedroom. Maximum occupancy limits can raise Fair Housing Act concerns, whereas occupancy minimums are neither required nor prohibited by the Fair Housing Act. While HUD has stated that “an occupancy policy of [no more than] two-persons per bedroom, as a general rule, is reasonable under the Fair Housing Act,” other factors, such as the number and size of bedrooms, age of children, the overall size of the dwelling unit, and state and local laws need to be considered in determining a reasonable level of occupancy. In general, an occupancy policy which limits the number of people per bedroom is more likely to be considered reasonable than one that limits the number of children in light of Fair Housing concerns.34 34 See Department of Housing and Urban Development Occupancy Standards Statement of Policy, 63 Fed. Reg. 70,256 (December 18, 1998). P107 I. Policy Study: Aspen/Pitkin County Housing Authority Affordable Housing Guidelines. February 2016 Navigate, LLC; WSW Consulting; Rees Consulting, Inc. Section 4 - 106 CHFA Household Size Limits Similarly, affordable rentals constructed under the Low Income Housing Tax Credit (LIHTC) program35, at least since 1990, do not have program-specified unit maximum or minimum occupancy limits, although limits may be imposed by individual property owners/managers. All units receiving current LIHTCs have rent restrictions based on number of bedrooms, imputed household size (an assumed 1.5-persons per bedroom) and AMI. The scaled rents and AMI income requirements helps control for ‘under-occupancy’ of units. For example, a single- person household earning within the targeted AMI level would typically not income-qualify for a higher-rent three-bedroom unit. APCHA’s Qualifications Aspen, like most peer communities, uses criteria to match the size of applicant household to the number of bedrooms they are qualified to own or rent. The total number of persons in a household, including qualified adults and dependents, are counted in determining the unit size for which an APCHA applicant may qualify. The priority is one qualified person per bedroom; however, applicants may in some cases qualify for a larger unit. In a two-person household of two adults only (no dependents) both adults must be working in Pitkin County to qualify for an additional bedroom. APCHA also has a maximum size limit of two persons per bedroom in rental product to prevent overcrowding. APCHA maintains specific criteria related to dependents including, among other things, custody and unborn children. Below is the example in the Guidelines to assist potential buyers/renters on how the household size is determined to qualify for bedrooms: 35 The LIHTC is an indirect federal subsidy that finances low-income housing. The program provides tax incentives to encourage individual and corporate investors to invest in the development, acquisition, and rehabilitation of affordable rental housing. See in Section 42 of the Internal Revenue Code for LIHTC provisions. P108 I. Policy Study: Aspen/Pitkin County Housing Authority Affordable Housing Guidelines. February 2016 Navigate, LLC; WSW Consulting; Rees Consulting, Inc. Section 4 - 107 Ownership Units The household size standards apply at time of purchase for ownership units. This process creates a high occupancy rate at time of purchase or lease and reflects the household makeup at that specific time. Households are not static, and the occupancy of the unit, as measured by occupied bedrooms, changes over time. Since APCHA’s housing program has a long history, household composition has changed for many residents yet, with limited opportunities to move into larger or smaller homes, mismatches between household size and number of bedrooms occurs. Examples include empty nesters in 3-bedroom units and families with children in 1-bedroom units. Rental Units The household size standards apply at time of lease for rental units, and require requalification every two years. For example, for a two-adult household to maintain a 2-bedroom unit, both adults must show full-time employment in Aspen/Pitkin County until reaching retirement age. Roommates are permitted, and individuals residing in 2- or 3-bedroom units must have each bedroom filled with qualified tenants, meaning 1 qualified adult or dependent per bedroom. There is more oversight ability with rental units to maintain a high occupancy rate. For families, however, this is challenging. Growing families may need more space and seek a larger unit, if available; shrinking families (empty nesters) may be forced to lease a bedroom to another qualified tenant or risk losing their rental. There is limited stability over the long-term. •Two qualified adult applicants in a single household qualify for a two-bedroom unit. •One qualified adult with a single dependent in the household qualify for a two-bedroom unit. •Two qualified adults with two dependent children in the household shall qualify for a four bedroom. •A qualified adult married to a non-qualified spouse qualify for a one-bedroom unit. •A qualified adult married to a spouse caring for dependent children in the household shall qualify for one bedroom per adult and one bedroom per dependent. P109 I. Policy Study: Aspen/Pitkin County Housing Authority Affordable Housing Guidelines. February 2016 Navigate, LLC; WSW Consulting; Rees Consulting, Inc. Section 4 - 108 Peer Community Comparison (Breckenridge, Jackson, Telluride, Vail) Household Size Calculations All peer communities calculate the size of the household based on total persons that will reside in the home. Breckenridge uses this only for income qualification purposes and does not match the number of persons per household with the number of bedrooms. Bedroom Occupancy Standards Standards are typically used to match households with available homes (Breckenridge is an exception). For example, a single person living alone can buy a studio or 1-bedroom unit while only families with three or more members can buy 3-bedroom units. This practice was created because demand for affordable housing in these communities outweighs availability. Minimum occupancy requirements help increase the utilization rate of limited resources, ensure larger households have access to the larger homes and protect against potential fraudulent use of units (e.g. illegal rental of unoccupied bedrooms). This practice can be problematic, however. If opportunities to move up or down within the workforce housing inventory are inadequate, as is usually the case, it is difficult to serve households as their needs change over time. The high utilization rate only reflects the household’s conditions at the time of purchase. Designs with flex space can offer an alternative. At the Wellington neighborhood in Breckenridge, some units were constructed with unfinished space. The cost to finish this space and increase the usable floor area of the home as families grow could then be added to the sale price as an allowable capital improvement. P110 I. Policy Study: Aspen/Pitkin County Housing Authority Affordable Housing Guidelines. February 2016 Navigate, LLC; WSW Consulting; Rees Consulting, Inc. Section 4 - 109 Table 43. Peer Community Bedroom Occupancy Standards Peer Community Bedroom Occupancy Standards Minimum Maximum Aspen 1 qualified person per bedroom (adult or dependent) 2 persons per bedroom in rental product Breckenridge None None Jackson Rental: 1 person per bedroom; Ownership: 3+ persons per 3 bedroom, no other minimums None Telluride 1 bedroom - 1 person 2 bedrooms - 1 person 3 bedrooms - 2 persons 4 bedrooms - 3 persons None Vail 3+ household members for 3 BR units; no other minimums 2 persons per bedroom P111 I. Policy Study: Aspen/Pitkin County Housing Authority Affordable Housing Guidelines. February 2016 Navigate, LLC; WSW Consulting; Rees Consulting, Inc. ! Appendix A - 1 Appendix A: Supporting Data for Section 1 – Examination of APCHA’s Affordable Housing Program This Appendix summarizes the demographics of employee households residing in APCHA housing to households employed in Pitkin County overall based on information from the 2015 Employee Survey. The findings from this analysis are presented in the report (Section 1 – Examination of APCHA’s Affordable Housing Program). This Appendix presents the data behind the findings. The purpose of this analysis is to understand how well APCHA’s inventory of both ownership and rental units are meeting employee needs and which segments of the workforce may be adequately served or under-served by APCHA’s housing in relationship to all Pitkin County working households. In interpreting the data for this section: • Where the percentage of households within a certain demographic (e.g. couples with children) that are occupying APCHA units is lower than that for employee households overall, this means that APCHA units are under- serving this population. • Where the percentage of households within a certain demographic (e.g. adults living alone) that are occupying APCHA units is higher than that for employee households overall, this means that APCHA units are over- serving this population. • If APCHA is serving the same mix of households as those that are employed in Pitkin County in total, then the percentage of APCHA occupants for any demographic will approximately equal that for employed households overall. Household Composition and Size The composition of ownership and renter households shows distinct differences. Owners are more likely to be comprised of couples or couples with children, whereas renters have a higher percentage of adults living alone and roommate households than owners. These are important considerations when designing units for employee occupancy. Comparing occupants of APCHA ownership housing to employed households overall: P112 I. Policy Study: Aspen/Pitkin County Housing Authority Affordable Housing Guidelines. February 2016 Navigate, LLC; WSW Consulting; Rees Consulting, Inc. ! Appendix A - 2 • A higher percentage of APCHA owners are “adults living alone” and “single parents with children” than employed households overall, meaning that these households are being well-served by APCHA housing. Single-parent households typically face more significant housing struggles than other household types, meaning that over-serving this population with affordable housing may be desirable. • A lower percentage of APCHA owners are “couples without children” and, to some extent, “couples with children” than employed households overall, meaning that these households are being under-served by APCHA housing. This is consistent with both survey and interview comments that suggest a need for more desirable options for families. Desirable for families was defined in interviews and survey responses as larger (2+ bedrooms), pet friendly, parking, storage, like the Aspen School District units, townhomes or single family homes with outdoor space. For renter households: • “Couples” and “couples with children” are both under-served by APCHA housing. • There is a comparatively high percentage of adults living alone (43%) in APCHA units, which is not surprising since 46% of APCHA’s inventory are studio and one-bedroom units. • APCHA renters have a much lower average household size than employed renters in total, which is consistent with the large number of studio and one-bedroom rentals. APCHA also does not permit more than two persons per bedroom to occupy rentals, avoiding the overcrowding that may otherwise occur in the rental market. Per interviews with stakeholders and employers, renters often have more people living in the unit than appear on the lease. P113 I. Policy Study: Aspen/Pitkin County Housing Authority Affordable Housing Guidelines. February 2016 Navigate, LLC; WSW Consulting; Rees Consulting, Inc. ! Appendix A - 3 Household Composition Owners Renters Type Households Employed in Pitkin County Employed APCHA Households Households Employed in Pitkin County Employed APCHA Households Adult living alone 12% 21% 26% 43% Single parent with child(ren) 5% 10% 5% 5% Couple, no child(ren) 35% 27% 27% 19% Couple with child(ren) 42% 37% 18% 11% Unrelated roommates 1% 1% 17% 21% Immediate and extended family members 3% 1% 6% 1% Other 1% 1% 1% 1% Average Household Size 2.7 2.5 2.5 2.0 *Totals may not add to 100% due to rounding. Source: Employee Housing Survey 2015 Renter Household Size *Totals may not add to 100% due to rounding. Source: Employee Housing Survey 2015 9% 15% 18% 35% 23% 2% 10% 14% 35% 39% 0% 5% 10% 15% 20% 25% 30% 35% 40% 45% 5+-persons 4-persons 3-persons 2-persons 1-person Percent of Renters Nu m b e r o f P e r s o n s i n H o u s e h o l d Employed APCHA Households Households employed in Pitkin County P114 I. Policy Study: Aspen/Pitkin County Housing Authority Affordable Housing Guidelines. February 2016 Navigate, LLC; WSW Consulting; Rees Consulting, Inc. ! Appendix A - 4 Age of Household Members • As would be expected, owner households are older on average than renters. For employed households overall, 65% of owner households have at least one person age 45 or older compared to only 23% of renters. • The relative mix of ages for occupants age 18 or older is similar between APCHA households and employed households overall. Age of Household Members Owners Renters Type Households Employed in Pitkin County Employed APCHA Households Households Employed in Pitkin County Employed APCHA Households Age 5 or younger 20% 19% 15% 8% 6 to 17 23% 26% 15% 6% 18 to 29 16% 18% 43% 43% 30 to 44 47% 45% 52% 51% 45 to 64 54% 56% 20% 19% 65 and over 9% 7% 3% 4% TOTAL 169% 171% 148% 131% *Totals add to over 100% because the data reports the age of all household members, not just the head of the household. Source: Employee Housing Survey 2015 Household Incomes APCHA households are fairly representative of the mix of incomes of employee households in total. The exceptions are: • Renters earning under $25,000 are slightly under-served in APCHA units; • Owners earning over $100,000 are also under-served in APCHA units; and • Both owners and renters earning between $25,000 and $75,000 are over- served by APCHA units. P115 I. Policy Study: Aspen/Pitkin County Housing Authority Affordable Housing Guidelines. February 2016 Navigate, LLC; WSW Consulting; Rees Consulting, Inc. ! Appendix A - 5 Household Income (Gross) Owners Renters Type Households Employed in Pitkin County Employed APCHA Households Households Employed in Pitkin County Employed APCHA Households Under $25,000 1% 1% 7% 5% $25,000 to $49,999 5% 11% 19% 28% $50,000 to $74,999 15% 23% 23% 25% $75,000 to $99,999 20% 20% 23% 19% $100,000 to $149,999 35% 30% 21% 21% $150,000 to $199,999 16% 9% 5% 2% $200,000 or more 9% 6% 3% 0% *Totals may not add to 100% due to rounding. Source: Employee Housing Survey 2015 Years Worked • Occupants of APCHA housing have been employed in the area longer, on average, than employed households in total. This indicates that APCHA housing is helping to retain workers in the area and reduce employee turnover. • Of potential concern is that the percentage of renters employed in the area less than 4 years may be underserved by APCHA rentals. This is consistent with interview comments that suggest new recruits have difficulty accessing APCHA housing. Years Worked in Aspen/Pitkin County Owners Renters Households employed in Pitkin County Employed APCHA Households Households employed in Pitkin County Employed APCHA Households Less than one year 1% 1% 19% 14% 1 to 3 years 9% 4% 28% 22% 4 to 7 years 10% 10% 21% 18% 8 to 11 years 22% 17% 15% 21% 12 to 15 years 12% 14% 7% 9% 16 to 19 years 10% 11% 4% 6% 20 or more years 35% 44% 6% 10% *Totals may not add to 100% due to rounding. Source: Employee Housing Survey 2015 P116 I. Policy Study: Aspen/Pitkin County Housing Authority Affordable Housing Guidelines. February 2016 Navigate, LLC; WSW Consulting; Rees Consulting, Inc. ! Appendix B - 1 Appendix B: Supporting Data for Section 2 – Income, Asset and Categories APCHA Categories Expressed as AMI Direct Translation Not Possible Discussion It is not possible to directly translate APCHA’s current Category system into HUD AMI ranges. This is due to several reasons, including: • APCHA household size characterizations by number of adults and number of dependents include households with varying number of persons. Neither Category fits succinctly into one AMI household-size category. This is because households measured by the number of adults may have one or more children. Likewise, a household measured by number of dependents may have one or more adults. Average Household Size of APCHA Households: 201536 Renters Owners # of Adults Average # Persons # of Dependents Average # Persons 1 1.1 0 1.6 2 2.4 1 2.8 3 3.4 2 3.8 3 4.9 Source: Employee Housing Survey 2015 • APCHA’s income calculations based on the number of adults differs from its calculation based on number of dependents. Neither income calculation matches HUD AMI calculations based on household size. • APCHA maximum incomes for each Category do not change depending upon the total number of persons within each adult or dependent household type – a one-adult household can earn a maximum of $35,000 in Category 1 whether it has one-person or three-persons in their household. Incomes for each HUD AMI category vary based on the number of persons in the household. 36 See Section 4 – Household Size and Qualifications for more detail on household size by number of adults and dependents. P117 I. Policy Study: Aspen/Pitkin County Housing Authority Affordable Housing Guidelines. February 2016 Navigate, LLC; WSW Consulting; Rees Consulting, Inc. ! Appendix B - 2 APCHA Income and HUD Income by Number of Persons in Household: 2015 1-person 2-persons 3-persons 4-persons APCHA max income (Category 1, 1-adult or 0- dependent) $35,000 $35,000 $35,000 $35,000 HUD 50% AMI $34,150 $39,000 $43,900 $48,750 Source: Employee Housing Guidelines 2015; HUD All of these factors complicate the ability to translate APCHA Categories into HUD AMI estimates. The net result is that as household size increases within each defined adult or dependent-sized household, the respective household must earn a lower AMI percentage to be able to qualify for housing. The table below provides an example by showing the equivalent AMI level for varying sized one-adult households in Category 1. This shows that: • A one-adult household in Category 1 can earn a maximum of $35,000. • If the one-adult household consists of one person, then this household can earn up to 51% AMI to qualify for a unit. • If the one-adult household has three persons, then the household can only earn up to 40% AMI to qualify for a unit. This same pattern occurs for all sized adult and dependent households within each Category. Translation of APCHA Income to HUD AMI: Category 1, 1-Adult (2015) 1-person 2-persons 3-persons 4-persons APCHA max income (Category 1, 1-adult) $35,000 $35,000 $35,000 $35,000 HUD 100% AMI $68,300 $78,000 $87,800 $97,500 APCHA Equivalent AMI (APCHA income/HUD 100% AMI) 51% 45% 40% 36% Source: Employee Housing Guidelines 2015; HUD; Consultant team Estimated Translation to AMI Although a direct porting of APCHA’s system to AMI is not possible, it is possible to estimate AMI percentages for each Category using some basic assumptions and information from the 2015 Employee Survey. The upper AMI percentage for each Category of housing for renters (by number of adults) and for owners (by number of dependents) was estimated for both the maximum AMI and the average AMI: • The maximum AMI is based on the smallest-sized household that can occur within each adult and dependent category earning at the top of P118 I. Policy Study: Aspen/Pitkin County Housing Authority Affordable Housing Guidelines. February 2016 Navigate, LLC; WSW Consulting; Rees Consulting, Inc. ! Appendix B - 3 the permitted income range (e.g. a one-person, one-adult household earning $35,000 in Category 1). All current households within this Category will earn at or below this AMI level. This AMI estimate skews high and would have the effect, if adopted, of pulling many households into lower Categories that, under the present adult/dependent system, now qualify for higher Categories. • The average AMI is calculated from the average-sized household of APCHA occupants for each adult and dependent Category earning at the top of the permitted income range (e.g. an average 1.1-person, one- adult household earning $35,000 in Category 1). Some households within each Category will earn above the average AMI level and some will earn below. This is the best AMI estimate to capture the core range of households served by the APCHA program for each Category. As shown below: • The AMI for adult households increases as the number of adults in the household increases; • The AMI for dependent households in Categories 3 or higher decreases as the number of dependents in the household increases. Category 1 shows the opposite effect, and Category 2 shows fairly consistent AMIs for all dependent Categories. Adult Households in Estimated AMI Categories: 2015 Adults / Unit Cat1 Cat2 Cat3 Cat4 Max AMI* Average AMI** Max AMI Average AMI Max AMI Average AMI Max AMI Average AMI 1 52% 51% 88% 87% 129% 127% 212% 209% 2 76% 71% 104% 99% 171% 162% 276% 262% 3 81% 77% 109% 105% 178% 170% 287% 275% Average*** 65% 62% 97% 95% 152% 147% 248% 240% *Max AMI is the AMI of the smallest permitted household size within each Adult category. For a one-adult household, this would be one person; two-adult household would be two persons and three-adult household would be three persons. **The Average AMI is based on the average sized household within each Adult Category residing in APCHA rentals. ***The overall average is a weighted average based on the distribution of current APCHA renters by number of adults. About 41% are one-adult households; 53% are two-adult households; 7% are three-or-more-adult households. P119 I. Policy Study: Aspen/Pitkin County Housing Authority Affordable Housing Guidelines. February 2016 Navigate, LLC; WSW Consulting; Rees Consulting, Inc. ! Appendix B - 4 Dependent Households in Estimated AMI Categories: 2015 Cat1 Cat2 Cat3 Cat4 Depend ents / Unit Max AMI* Avg AMI** Max AMI Avg AMI Max AMI Avg AMI Max AMI Avg AMI 0 52% 47% 88% 84% 129% 119% 212% 196% 1 57% 50% 90% 85% 122% 111% 196% 178% 2 61% 54% 87% 83% 117% 108% 182% 167% 3+ 64% 58% 87% 84% 113% 106% 172% 160% Average *** 56% 50% 88% 84% 124% 114% 200% 184% Cat5 Cat6 Cat7 Dependents / Unit Max AMI* Avg AMI** Max AMI Avg AMI Max AMI Avg AMI 0 227% 209% 247% 228% 272% 251% 1 208% 189% 226% 206% 248% 225% 2 194% 178% 210% 193% 229% 210% 3+ 182% 170% 196% 183% 214% 199% Average*** 213% 196% 232% 213% 254% 234% *Max AMI is the AMI of the smallest permitted household size within each Dependent category. For a zero-dependent household, this would be one person; one-dependent household would be two persons; two-dependent household would be three persons; and 3+-dependents would be four- persons. **The Average AMI is based on the average sized household within each Dependent category owning APCHA homes. ***The overall average is a weighted average based on the distribution of current APCHA owners by number of dependents. About 51% are zero-dependent households; 22% are one-dependent households; 21% are two-dependent households; 6% are 3-or-more-dependent households. P120 I. Policy Study: Aspen/Pitkin County Housing Authority Affordable Housing Guidelines. February 2016 Navigate, LLC; WSW Consulting; Rees Consulting, Inc. ! Appendix B - 5 Measuring Assets – Federal Standards (HUD) HUD Compared to APCHA Asset Inclusions APCHA Program Cash held in savings, checking accounts, safe deposit boxes, etc. Yes Stocks, bonds, mutual funds, money market accounts, etc. Yes Equity in Real Property (owned or bequeathed) Yes Equity in other capital investments Individual retirement, 401K, Keogh Accounts (when the holder has access to the funds even if a penalty may be assessed) 60% included Revocable trusts Yes Retirement and pension funds (if employed: only that amount the family can w/draw w/out retiring or terminating employment; if retired: periodic receipts are income – the remaining amount is NOT an asset; lump-sum receipts are assets) 60% of valid pension plan Lump-sum or one-time receipts (capital gains, inheritance, lottery winnings, etc.) NOTE: non-recurring gift may/may not be an asset – if put as cash into savings or some verifiable investment, then it is an asset; if used to pay bills, not an asset Not included: Gifts (i.e. down payment gifts) Not Included: Necessary personal property (e.g., furniture, cars, clothing, etc.) Included: autos Assets part of an active business Yes Source: HUD Occupancy Handbook, 4350.2 REV-1, Chapter 5: Determining Income & Calculating Rent, Exhibit 5-2. Only select assets of most relevance to the APCHA program are included above. Reference the Handbook for more information. P121 I. Policy Study: Aspen/Pitkin County Housing Authority Affordable Housing Guidelines. February 2016 Navigate, LLC; WSW Consulting; Rees Consulting, Inc. ! Appendix C - 6 Appendix C: Supporting Data for Section 3 – Affordability Analysis Part 1 - Rental Affordability Affordability for Renters in Existing Units Households Paying Over 30% of Income for Rent: APCHA Renters 2015 1-adult 2-adults 3-adults Total Households % Cost-Burdened 29.9% 18.0% 9.1% 23.0% Including utilities 37.6% 19.3% 14.3% 27.5% Category 1 Category 2 Category 3 Category 4 % Cost-Burdened 61.5% 32.4% 0.3% 0.0% Including utilities 75.0% 40.0% 4.6% 0.0% Source: Employee Housing Survey 2015 Part 2 - Ownership Affordability The following chart show the range of sale prices that one- through three+ dependent households can afford to pay given the income range for each Category (the chart for zero-dependent households is in the main report document). The affordable range of sale prices is compared to APCHA sale prices for each type of home, visually displaying where Category prices may exceed a household’s ability to pay. The below charts show that for one-dependent through three+ dependent households, affordability rises as Categories increase. Only one-dependent households are limited in their selection in Category 1, with generally good options for other dependent-sized households across each Category. P122 I. Policy Study: Aspen/Pitkin County Housing Authority Affordable Housing Guidelines. February 2016 Navigate, LLC; WSW Consulting; Rees Consulting, Inc. ! Appendix C - 7 Sale Prices Affordable to Households Within the Permitted Income Range Compared to Maximum APCHA Sales Prices: One-Dependent Household37 Source: Aspen/Pitkin County Housing Authority, Consultant Team. Sale Prices Affordable to Households Within the Permitted Income Range Compared to Maximum APCHA Sales Prices: Two-Dependent Household Source: Aspen/Pitkin County Housing Authority, Consultant Team. 37 Based on the standard that no more than 30% of income is used for housing payments, including mortgage principal, interest, taxes, insurance and estimated HOA. Category 1 minimum sales prices are calculated from the estimated minimum incomes in Table 35 (in the main report document) for all one- through three+- dependent charts. $72,552 $166,673 $260,794 $374,524 $598,062 $637,279 $692,183 $758,852 $0 $100,000 $200,000 $300,000 $400,000 $500,000 $600,000 $700,000 $800,000 Category 1 Category 2 Category 3 Category 4 Category 5 Category 6 Category 7 Sa l e P r i c e 1-Dependent Household by Category Minimum income price Studio 1BR 2BR 3BR SF Maximum income price $113,730 $196,086 $278,442 $403,937 $627,475 $666,692 $721,596 $788,265 $0 $100,000 $200,000 $300,000 $400,000 $500,000 $600,000 $700,000 $800,000 $900,000 Category 1 Category 2 Category 3 Category 4 Category 5 Category 6 Category 7 Sa l e P r i c e 2-Dependent Household by Category Minimum income price Studio 1BR 2BR 3BR SF Maximum income price P123 I. Policy Study: Aspen/Pitkin County Housing Authority Affordable Housing Guidelines. February 2016 Navigate, LLC; WSW Consulting; Rees Consulting, Inc. ! Appendix C - 8 Sale Prices Affordable to Households Within the Permitted Income Range Compared to Maximum APCHA Sales Prices: Three+-Dependent Household Source: Aspen/Pitkin County Housing Authority, Consultant Team. This section describes the methodology used to calculate affordable rents and sales prices from estimated rental AMI categories presented in Section 2, as follows: APCHA Rentals and Ownership Estimated Upper AMI Limit for Each Category: 2015 ! Rentals Ownership ! Rentals Ownership Cat 1 60% 50% Cat 5 NA 195% Cat 2 95% 85% Cat 6 NA 215% Cat 3 150% 115% Cat 7 NA 235% Cat 4 240% 185% !!!Estimated AMI limits were rounded to the nearest 5% point in the above table. Estimated AMI Rents Methodology: • Because it is desirable that Category 1 and 2 rents remain affordable and many of these renter households are cost-burdened, the low end of the range was selected for Categories 1 (25% range) and Category 2 (30% range). The midpoint was selected for Categories 3 and 4. This results in mid-point AMI levels as follows: ! $143,143 $225,499 $307,855 $433,350 $656,888 $696,105 $751,009 $817,678 $0 $100,000 $200,000 $300,000 $400,000 $500,000 $600,000 $700,000 $800,000 $900,000 Category 1 Category 2 Category 3 Category 4 Category 5 Category 6 Category 7 Sa l e P r i c e 3+-Dependent Household by Category Minimum income price Studio 1BR 2BR 3BR SF Maximum income price P124 I. Policy Study: Aspen/Pitkin County Housing Authority Affordable Housing Guidelines. February 2016 Navigate, LLC; WSW Consulting; Rees Consulting, Inc. ! Appendix C - 9 AMI Low- or Mid-Point Used Per Category AMI basis for rents Cat 1 30% Cat 2 71% Cat 3 120% Cat 4 193% • CHFA household size limits were used to determine the number of persons permitted per bedroom to determine income and rent calculations. CHFA Occupancy Limits for Rent Calculations (2015)38 # of Persons Studio 1 1-bedroom 2 2-bedroom 3 3-bedroom 5 Single family 6 • Category 1 minimum AMI was assumed to be 20%, which is about equivalent to a one-person household earning $14,000 per year. This is based on the requirement that qualified applicants must work at least 1,500 hours per year. At $10 per hour this would be $15,000 per year. This minimum income is not established by APCHA, but it was stated that incomes earning substantially below $15,000 call into question whether the work requirement is being met. • Rents are based on the affordability standard that no more than 30% of income is applied toward rent. 38 Source: Colorado Housing and Finance Authority, “LIHTC Qualified Allocation Plan,” 2016. Available at: http://www.chfainfo.com/arh/lihtc/LIHC_Documents/CHFA_QAP_2016.pdf ! P125 I. Policy Study: Aspen/Pitkin County Housing Authority Affordable Housing Guidelines. February 2016 Navigate, LLC; WSW Consulting; Rees Consulting, Inc. ! Appendix C - 10 APCHA Max Rents and AMI Category Rents Compared Category 1 (20% to 60% AMI) Category 2 (60.1- 75%) Category 3 (95.1- 145% AMI) Category 4 (145.1 - 240% AMI) APCHA Rent (2015) Studio $492 $875 $1,307 $1,734 1-br $608 $1,028 $1,457 $1,903 2-br $720 $1,180 $1,610 $2,057 3-br $834 $1,320 $1,767 $2,210 Single-family $951 $1,489 $1,918 $2,284 AMI Rent (estimated) Studio $512 $1,080 $2,049 $3,287 1-br $585 $1,235 $2,340 $3,754 2-br $659 $1,389 $2,634 $4,225 3-br $848 $1,790 $3,393 $5,443 Single-family $907 $1,913 $3,627 $5,818 % Change Studio 4% 23% 57% 90% 1-br -4% 20% 61% 97% 2-br -9% 18% 64% 105% 3-br 2% 36% 92% 146% Single-family -5% 28% 89% 155% AMI Rent represents the mid-point rent for the AMI range. Some rents may fall below this price point and some above, but average rents will equal those in the table. P126 I. Policy Study: Aspen/Pitkin County Housing Authority Affordable Housing Guidelines. February 2016 Navigate, LLC; WSW Consulting; Rees Consulting, Inc. ! Appendix C - 11 Estimated AMI Sale Prices Methodology: • Because it is desirable that Category 1 and 2 sale prices remain affordable, the low end of the AMI range was selected for Categories 1 (25% range) and Category 2 (30% range). The midpoint was selected for Categories 3 and 4. ! AMI!Low(!or!Mid(Point!Used!Per!Category AMI basis for sale prices Cat 1 27% Cat 2 60% Cat 3 100% Cat 4 150% Cat 5 190% Cat 6 205% Cat 7 225% ! • Category 1 minimum AMI was assumed to be 20%, which is about equivalent to a one-person household earning $14,000 per year. This is based on the requirement that qualified applicants must work at least 1,500 hours per year. At $10 per hour this would be $15,000 per year. This minimum income is not established by APCHA, but it was stated that incomes earning substantially below $15,000 call into question whether the work requirement is being met. • CHFA household size limits were used to determine the number of persons permitted per bedroom to determine income and rent calculations (see Table above - CHFA Occupancy Limits for Rent Calculations (2015)). • Sale prices are based on the affordability standard that no more than 30% of income is applied toward mortgage. An assumption of a 5% interest loan, with 5% down payment and 20% of the monthly payment toward taxes, insurance and HOA. The interest rate assumption can have a significant impact on affordable prices. For example, increasing the interest rate by just 0.5% can decrease the amount that a household can pay for a single family home by between about $10,000 (Category 1) to over $50,000 (Category 7). P127 I. Policy Study: Aspen/Pitkin County Housing Authority Affordable Housing Guidelines. February 2016 Navigate, LLC; WSW Consulting; Rees Consulting, Inc. ! Appendix C - 12 APCHA Max Sale Prices and AMI Category Sale Prices Compared Cat 1 (20 - 50% AMI) Cat 2 (50 - 85%) Cat 3 (85 - 115%) Cat 4 (115 - 185%) APCHA Sale Price (2015) Studio $40,000 $93,000 $155,000 $262,000 1-br $52,000 $111,000 $169,000 $280,000 2-br $63,000 $137,000 $200,000 $311,000 3-br $72,000 $168,000 $234,000 $344,000 Single-family $87,000 $199,000 $264,000 $371,000 AMI Sale Price Studio $73,471 $151,773 $267,853 $401,780 1-br $106,633 $173,420 $305,894 $458,841 2-br $120,031 $234,187 $344,327 $516,490 3-br $143,955 $251,405 $412,957 $619,435 Single-family $154,618 $268,720 $443,546 $665,320 % Change Studio 84% 63% 73% 53% 1-br 105% 56% 81% 64% 2-br 91% 71% 72% 66% 3-br 100% 50% 76% 80% Single-family 78% 35% 68% 79% AMI Rent represents the mid-point sale price for the AMI range. Some sale prices may fall below this price point and some above, but average sale prices will equal those in the table. P128 I. Policy Study: Aspen/Pitkin County Housing Authority Affordable Housing Guidelines. February 2016 Navigate, LLC; WSW Consulting; Rees Consulting, Inc. ! Appendix D - 1 Appendix D: Matrix of Peer Community Housing Programs P 1 2 9 I . Policy Study: Aspen/Pitkin County Housing Authority Affordable Housing Guidelines. February 2016 ! Navigate, LLC; WSW Consulting; Rees Consulting, Inc. ! !Appendix D - 1 ! Appendix D: Matrix of Peer Community Housing Programs ! Workforce!Housing!in!Mountain!Resort!Towns:!A!Peer!Community!Comparison! ! Aspen,!Breckenridge,!Jackson,!Telluride!and!Vail! ! !! The!following!tables!are!organized!into!color4coded!sections:! !! Policies!and!Goals! Strategies!and!Implementation!!! Workforce!Housing!Inventories! Qualifications!and!Occupancy!!! Prices!and!Affordability! Development!Standards! Impact!Mitigation!and!Fees!in!Lieu! Management/Oversight! ! Abbreviations!used!in!these!tables!include:! ! ADU!–accessory!dwelling!unit!HH!–!household! AH!–!affordable!housing!Hrs!–!hours! AMI!–!Area!Median!Income!Mos!4!months! Avg!–!average!Pmt!4!payment! BR!–!bedroom!SF!–!square!feet! DR!–!deed!restriction!Wk!4!week! EDU!–!employee!dwelling!unit!Yr!–!year! ! P 1 3 0 I . Policy Study: Aspen/Pitkin County Housing Authority Affordable Housing Guidelines. February 2016 ! Navigate, LLC; WSW Consulting; Rees Consulting, Inc. ! !Appendix D - 2 Policies!and!Goals! ! ! !! !Housing!Goal!Policies/Priorities!Objectives! As p e n ! Provide!affordable!housing!opportunities!through!rental! and!sale!to!persons!who!are!or!have!been!actively! employed!or!self4employed,!and!that!provide!or!have! provided!goods!and!services!to!individuals,!businesses!or! institutional!operations,!within!Aspen!and!Pitkin!County.! Regulatory!requirements! Development!coordinated!by!the!City!or!County! APCHA!manages!inventory! Development!Priorities.!Private!Sector:!1)! Ownership:!1!and!24bed!units!in!Cat!1!43!w/! associated!RO!units!2)!Ownership:!34bed!units!in! Cat!3!&!4.!!!Public!Sector:!1)!Entry4level!rental:!1! bedroom!units!in!Cats!1!&!2;!2)!Ownership:!1!&! 24beds!in!Cats!2!&!3;!3)!Ownership:!3!beds!in! Cats!3!&!4.! Reduce!pressures!on!the!valley4wide!transportation! system! Reduce!air!quality!impacts!associated!with!a!commuting! workforce! Ensure!a!vital,!demographically!diverse!year4round! community!critical!to!a!viable!economy! New!AH!includes!all!infrastructure!costs!(transportation,! government!services,!schools,!and!other!basic!needs)! Control!growth!and!job!generation!to!reduce!the!pressure! to!provide!AH! Br e c k e n r i d g e ! Vision:!To!have!a!diversity!of!permanently4affordable! housing!integrated!throughout!the!community,!which! provides!a!variety!of!housing!options!to!sustain!the!local! economy!and!preserve!the!character!of!the!community.!! ! Goal:!The!primary!goal!of!the!Plan!is!to!insure!that!900! additional!workforce!housing!units!are!approved!and/or! constructed!in!the!Upper!Blue!by!the!time!the!community! reaches!full!build!out.!!! Policies:!Assure!that!workforce!housing:! • Has!a!variety!of!densities!and!styles,!is! accessible!to!all!members!of!the! community,!is!dispersed!and!concentrated! in!local!neighborhoods;! • Helps!reduce!impacts!of!commuting!and! provides!the!labor!for!local!businesses!to! succeed.!! • Is!provided!for!a!wide!diversity!of!income! levels!in!ownership!and!rentals!that!support! the!local!economy!and!preserves!a!vibrant! middle!class.!! Priorities:!! • Housing!employees!who!work!in!the!Upper! Blue!–!not!telecommuters,!remote!workers,! or!unemployed.! • Sharing!responsibility:!1)!development!by! the!private!sector,!2)!land!acquisition!3)! payment!of!fees!to!the!Town! House!not!less!than!47%!of!the!employees!working!in! Town;! Maintain!at!least!25%!of!homes!occupied!by!primary! residents;! Increase!the!homeownership!rate!above!the!current!rate! of!41%;! Provide!housing!for!all!income!levels!up!to!180%!AMI.!! P 1 3 1 I . Policy Study: Aspen/Pitkin County Housing Authority Affordable Housing Guidelines. February 2016 ! Navigate, LLC; WSW Consulting; Rees Consulting, Inc. ! !Appendix D - 3 ! Policies!and!Goals! ! Ja c k s o n ! Ensure!a!variety!of!workforce!housing!opportunities!exist! so!that!at!least!65%!of!those!employed!locally!also!live! locally! Regulatory!requirements! Housing!Authority!initiated!developments! incentives!(25%!density!bonus!for!AH)! Partnerships!with!private!sector!(non4profit!and! for4profit)! 1)!Maintain!a!diverse!population! 2)!Strategically!locate!a!variety!of!housing!types! 3)!Reduce!the!shortage!of!housing!that!is!affordable!to! the!workforce! 4)!Use!a!balanced!set!of!tools.! Te l l u r i d e ! Provide!for!the!construction!and!maintenance!of! affordable!housing!within!the!Town!and!the!Region!which! serves!both!permanent!population!and!seasonal! employees!and!includes!choice!for!both!rental!and! ownership,!in!a!mixture!of!locations!and!unit!types.! Ensure!a!minimum!of!70%!of!those!working!in! the!Telluride!Region!reside!within!it,!achieved! through!mitigation,!incentives!and!Town! development!using!sales!tax!with!a!roughly! equal!share!of!public!and!private!resources! 2010!4!2015:!construct!70490!units!at!approx!12/yr,! explore!additional!funding!sources,!re4evaluate!overall! demand!and!targeted!groups.!201642020:!same!as!for! 2010!4!2015.! Va i l ! Vail!20/20!Housing!Goal:!“The!Town!of!Vail!recognizes!the! need!for!housing!as!infrastructure!that!promotes! community,!reduces!transit!needs!and!keeps!employees! living!in!town,!and!will!provide!enough!deed4restricted! housing!for!at!least!30%!of!the!workforce!through! policies,!regulations!and!publicly!initiated!development.”!! Regulatory!requirements;!Town!initiated! development;!regional!partnerships! Address!needs!generated!by!development!&! redevelopment;!address!catch4up!needs;!integrate!DR! housing!at!time!of!development;!house!emergency!and! key!workers;!ensure!housing!remains!economically! competitive;!place!employees!closer!to!work;!plan!for! housing!with!transportation! ! !! !Housing!Goal!Policies/Priorities!Objectives! P 1 3 2 I . Policy Study: Aspen/Pitkin County Housing Authority Affordable Housing Guidelines. February 2016 ! Navigate, LLC; WSW Consulting; Rees Consulting, Inc. ! !Appendix D - 4 Strategies/Implementation! ! !Adopted!Plans!Timeframe!Review/Updating!Prioritization!Process! As p e n ! 2012!Aspen!Area!Community!Plan! 2002!Aspen!Housing!Strategic!Plan! 10!years!Guidelines!are!updated!at!least!every!3! years!and!generally!reviewed!annually! ! Br e c k e n r i d g e !2008!Affordable!Housing!Action!Plan!Build!out!!Track!progress!annually:! • #!units!produced/preserved! • age!groups!served! • incomes!served!! • #!units!lost!annually! Modify!strategies!as!appropriate.! ! Ja c k s o n ! Jackson/Teton!County!Comprehensive!Plan! 2012;!Housing!Action!Plan!2015! 10!years!or!less!if!65%! goal!is!not!being!achieved! Annual!Indicator!Report:! 4!Workforce!Housing!%! 4!Affordability!of!Housing! 4!Workforce!Housing!Stock! 4!Jobs,!Housing!Balance! ! Te l l u r i d e !Telluride!Master!Plan!2006,!revised!2012! (contains!strategies)! Telluride!Affordable!Housing!Strategic!Plan! (TAHST)!2004!(examines!needs)! 5!yr!objectives!through! 2020! Guidelines!are!modified!regularly!as! needed! Va i l ! Vail!20/20!Strategic!Action!Plan,!2007! Employee!Housing!Strategic!Plan,!2008! 5410!yr!planning!horizon;! 143!yr!action!steps! Annual!but!skipped!2013414!Council/HA!Board! Implementation!Matrix!4!action,!who,!cost,! when,!priority! ! ! !! P 1 3 3 I . Policy Study: Aspen/Pitkin County Housing Authority Affordable Housing Guidelines. February 2016 ! Navigate, LLC; WSW Consulting; Rees Consulting, Inc. ! !Appendix D - 5 Strategies/Implementation! ! !Housing!Strategies! As p e n ! 1) Reserves!for!major!repairs!and!capital!projects! 2) Utilize!units!to!the!maximum!degree!possible!and!for!as!long!as!possible,!considering!functionality!and!obsolescence! 3) Provide!education!to!potential!and!current!homeowners!regarding!the!rights,!obligations,!responsibilities!of!home!ownership! 4) Emphasize!the!use!of!durable!and!environmentally!responsible!materials,!recognizing!the!realistic!lifecycle!of!the!buildings! 5) Bolster!socioeconomic!diversity!through!housing!inventory! 6) Prepare!for!the!growing!number!of!retiring!Aspenites! 7) Employers!should!participate!in!the!creation!of!seasonal!rental!housing! 8) Assume!proportionate!responsibility!for!maintenance/management!when!employers!provide!housing!through!publicly4owned!seasonal!rental!housing! 9) Redefine!and!improve!buy4down!policy! 10) Eliminate!Accessory!Dwelling!Unit!program!unless!mandatory!occupancy!is!required;! 11) Ensure!fiscal!responsibility!in!the!development!of!publicly4funded!housing! 12) Promote!broader!support!and!involvement!in!the!creation!of!non4mitigation!AH,!including!public4private!partnership! 13) Design!AH!for!energy!efficiency!and!livability! 14) Locate!AH!in!Urban!Growth!Boundary! 15) Prefer!on4site!mitigation! 16) Track!trends!in!housing!inventory!and!job!generation!for!policy!discussions! 17) Design!AH!to!optimize!density!while!being!compatible!with!massing,!scale!and!character!of!the!neighborhood! 18) Treat!AH!and!market!owners!In!mixed!income!neighborhoods,!fairly,!equitably!and!consistently!(parking/pets)! 19) Make!rules,!regulation!and!penalties!of!AH!clear,!understandable!and!enforceable! 20)!Ensure!effective!management!of!AH!assets! Br e c k e n r i d g e ! 1) Building!development!fee!waivers! 2) Free!density!for!employee!units! 3) Land!banking;!annexation!fee!waivers! 4) No!plant!investment!fees!for!water!service! 5) RETT!exemption! 6) Positive!points!for!other!non4workforce!housing!projects!(performance!zoning)! 7) Housing!impact!fee!and!sales!tax!(Voter!approved!2006!and!2015)! 8) Housing!fund!w/!yearly!appropriations!from!the!Town's!General!Fund!(created!2007)! 9) Acquisition/buy!downs! 10) Annexation!policy!_!80%!of!new!units!should!be!affordable! ! !! P 1 3 4 I . Policy Study: Aspen/Pitkin County Housing Authority Affordable Housing Guidelines. February 2016 ! Navigate, LLC; WSW Consulting; Rees Consulting, Inc. ! !Appendix D - 6 !Housing!Strategies! J ac k s o n ! 1)!Evaluate!qualifying!criteria!based!on!full4time!workers!with!priority!to!critical!service!providers! 2)!Improve!perception!of!workforce!housing!through!education! 3)!Identify!locations!for!all!housing!types,!in!particular!multifamily! 4)!Update!guesthouse!and!accessory!residential!unit!regulations! 5)!Complete!a!new!nexus!study! 6)!Update!mitigation!requirements! 7)!Adopt!a!10_year!coordinated!workforce!housing!action!plan! 8)!Evaluate!the!appropriate!governmental!structure!of!the!housing!authority! 9)!Update!land!development!regulations!to!reduce!barriers!to!development!of!housing! 10)!Evaluate!and!update!existing!workforce!housing!incentives! 11)!Explore!a!funding!source!to!create!workforce!housing! 12)!Continue!to!pursue!State!&!Federal!grants!to!develop!workforce!housing! 13)!Increase!collaboration!with!employers!to!produce!workforce!housing! !!! Te l l u r i d e ! 1) Maintain!appropriate!mitigation!rates!for!development! 2) Refine!regulations!to!assure!all!employment!sources!contribute!equitably!to!housing! 3) Generate!a!range!of!units!types!affordable!to!a!range!of!AMI!groups! 4) Ensure!affordable/employee!housing!is!a!units!by!right!in!all!zone!districts!except!Open!Space/Parks! 5) Participate!with!developers!and!homeowners! 6) Increase!effectiveness!of!density!bonuses!in!Commercial!and!Accommodations!zones! 7) Improve!incentives!for!"back!yard"!and!secondary!units! 8) Leverage!funds!and!legal!powers!for!the!region! 9) Continue!cooperation!w/!regional!jurisdictions! 10) Maintain!geographic!distribution!through!site!identification/evaluation! 11) Consider!out4of4town!mitigation!for!in4town!projects!w/!reduced!credit! 12) Guide!production!through!the!Telluride!Affordable!Housing!Strategic!Plan!(TAHSP)! ! Va i l ! 1) Commercial!linkage! 2) Inclusionary!housing! 3) Housing!district!zoning!designation! 4) Acquisition/buy!downs! 5) EHU!exchange!program! 6) Rezoning!and!vacant!land!review! 7) Support!DR!projects!developed!by!others! 8) Explore!dedicated!funding!source! 9) Create!baseline!data!on!existing!conditions! 10) Monitor!local!occupancy!of!market!homes! 11) Demographic!survey!of!current!residents! 12) Provide!list!of!essential!services! 13) Homebuyer!education!! ! !! P 1 3 5 I . Policy Study: Aspen/Pitkin County Housing Authority Affordable Housing Guidelines. February 2016 ! Navigate, LLC; WSW Consulting; Rees Consulting, Inc. ! !Appendix D - 7 ! ! Workforce!Housing!Inventories! ! ! ! ! Total! Units! Owner! #! Renter! #! Owner! %! Renter! %! Eff.!1!BR!2!BR!3!BR!4+!BR! As p e n !2,931!1,608! ! 1,323! ! 55%! ! 45%!11%!20%!26%!12%!22%! Br e c k e n r i d g e !838!623!215!74%!26%!1%!18%!36%!35%! Ja c k s o n !1,504!538! ! 966! ! 36%!64%!12%! ! 26%!37%!23%!2%! Te l l u r i d e !310!106!204!37%!72%!1%!35%!41%!20%!3%! Va i l ! 737!86!651!12%!88%!14%!22%!46%!12%!6%! ! ! ! !! P 1 3 6 I . Policy Study: Aspen/Pitkin County Housing Authority Affordable Housing Guidelines. February 2016 ! Navigate, LLC; WSW Consulting; Rees Consulting, Inc. ! !Appendix D - 8 Qualifications!and!Occupancy! ! !#!of!Categories!AMI!Ranges!Asset!Caps!Household!Size!Criteria! As p e n ! 5!rental! 8!ownership! AMI!not!used.! Cat!1:!low4income! Cat!2:!lower!moderate!income! Cat!3:!upper!moderate!income! Cat!4:!middle!income! Cat!5!4!7!and!RO:!upper!middle!income! Established!in!2002!and!increased!annually!by!CPI!or! 3%,!whichever!is!less! Cat!1:!$100,000! Cat!2:!$125,000! Cat!3:!$150,000! Cat!4:!$175,000! Cat!5:!$200,000! Cat!6:!$225,000! Cat!7:!$250,000! RO!$900,000! Caps!have!not!been!changed!since!2002! Same!for!rental!and!ownership! Retirement!accounts!discounted!at!60%!! 1!qualified!adult/dependent!per!bedroom! Dependent!requires!custody!100!days/! year.! Pregnancies!counted! Br e c k e n r i d g e !6!≤60%!AMI! 60!–!80%!AMI! 80!–!100%!AMI! 100!–!110%!AMI! 110!–!120%!AMI! 120!–!160%!AMI! None!None! Ja c k s o n ! 7!Cat!1:!≤80%!AMI! Cat!2:!81!4!100%!AMI! Cat!3:!101!4!120%!AMI! Cat!4:!≤!140%! Cat!5:!≤!175%! Cat!6:!≤!200%! Employment4Based!4!no!income!limits! Cat!1:!$145,120! Cat!2:!$181,400! Cat!3:!$217,680! Cat!4:!253,960! Cat!5:!$317,450! Cat!6:!$362,800.! Based!on!2x!the!44person!income!cap! Retirement!accounts!not!counted!!! Rental:!!1!person!HH!=!1!BR,!2!person!HH!=! 1!or!2!BR,!3!person!HH!=!1,!2!or!3!BR.! Ownership:!!3+!household!members!for!3! BR,!no!HH!min!for!1!or!2!BR! Pregnancies!not!counted! Te l l u r i d e ! 3!Tiers!Tier!1:!≤120%!AMI;!target!70%!1!BR;!90%!2!&!3!BR! Tier!2:!≤150%!AMI;!target!90%!1!BR;!110%!2!&!3!BR! Tier!3:!!≤200%!AMI! AMI!targets!vary!by!bedroom!since!AMI’s!do!not! vary!proportionately!by!HH!size!(the!24person!AMI!is! not!double!the!14person!AMI)! Total!household!assets!including!business! cannot!exceed!2x!the!original!purchase!price;! may!be!forced!to!sell!within!1!year!if!assets! grow!above!limit.!! Min:!1!BR!4!1!person;!2!BR!4!1!person;!3!BR! 4!2!persons;!4!BR!4!3!persons! ! Va i l ! No!income! categories! 7!types!by!zone! None!None!3+!household!members!for!3!BR!units!4!no! min.!HH!size!for!other!units! No!more!than!2!persons/!bedroom! Pregnancies!counted!! !! P 1 3 7 I . Policy Study: Aspen/Pitkin County Housing Authority Affordable Housing Guidelines. February 2016 ! Navigate, LLC; WSW Consulting; Rees Consulting, Inc. ! !Appendix D - 9 Qualifications!and!Occupancy! ! !Employment!Other!Criteria!–!Disabilities,!Retirees!Preferences! As p e n ! Work!full4time!(1500!hours!per!calendar!year)!in!Pitkin! County! Legal!resident! Primary!residence! Disabled!or!Senior!if!met!employment!requirements! immediately!prior.! Ownership:!Years!worked!in!Aspen/PC:!!4!4!7! years!=!5!chances,!8!4!11!years!=!6!chances;! 12!4!15!years!=!7!chances;!16!4!19!years!=!8! chances;!20+!years!=!9!chances.! HH!size/BR!match! In4complex! Mobility!disabled!for!accessible!units! Displaced!residents.!!Emergency!workers! Rental:!Duration!of!work!history!unless:! emergency!worker,!mobility!disabled!in! accessible!units,!senior!at!Aspen!Country!Inn,! displaced!residents.!! Br e c k e n r i d g e !A!person!eighteen!(18)!years!of!age!or!older!who!earns!his!or! her!living!by!working!in!Summit!Co.!an!avg!of!at!least!30! hours/week,!together!with!such!person's!spouse!and!minor! children,!if!any.!Must!remain!locally!employed!during!term!of! occupancy.!! Age!55+!working!15+!hours!in!Summit!County! Age!62+!no!longer!working!the!required!number!of! hours,!but!occupied!the!residential!unit!as!a!qualified! occupant!for!at!least!74years!prior.! None! Ja c k s o n ! 1!household!member!must!demonstrate!an!average!of!30! hours!per!week!employment!in!Teton!County,!WY! Senior!(at!least!62!yrs)!4!employed!in!TC!a!min!of!2! consecutive!years!during!their!current!residency!or! disabled.!!1!member!must!be!a!US!Citizen!or!prove! permanent!residency!in!US.!Rental:!Primary!residence! (11!months!per!year)!Ownership:!Primary!residence!(9!! months!per!year)! Rental:!min.!4!consecutive!years!working!in! county!immediately!prior!to!application! Critical!Service!Provider!is!exempt!from! employment!preference.!Ownership:! priorities!for!4!years!of!employment!in!TC,! critical!service!provider,!number!of!times! applied,!and!in4complex! Te l l u r i d e ! Ownership!4!1!HH!member!must!work!1,400!hrs/yr!for!past! 12!mos!or!5!of!7!past!years!within!district;!10!hrs!of!volunteer! service!can!be!counted! Rental!4!1!HH!member!works!or!intends!to!work!at!least!1000! hrs/yr!within!the!district!or!is!employee!of!Qualified!Owner.!! Disabled!and!resident!for!at!least!12!prior!months! immediately!prior!or!for!at!least!5!of!the!previous!7! years!or!elderly!and!met!employment!requirements! immediately!prior! Established!history!of!employment!in!District! 4!3!yrs!qualifies!for!second!lottery!entry! Va i l ! Work!for!licensed!business!within!Eagle!County;!avg.!30! hrs/wk! Primary!residence! 75%!of!income/earnings!from!Eagle!Co!business! ! Years!of!employment!and!residency!in!Vail! 3:1!over!Eagle!County;!highest!bid!also!stated! in!Guidelines!but!all!bids!are!for!max!price! since!buyers!willing!to!pay!max!prices! outnumber!supply! ! !! P 1 3 8 I . Policy Study: Aspen/Pitkin County Housing Authority Affordable Housing Guidelines. February 2016 ! Navigate, LLC; WSW Consulting; Rees Consulting, Inc. ! !Appendix D - 10 Qualifications!and!Occupancy! ! !Owning!Other!Real!Estate!Selection!System!Recertification!Misc:!Exceptions,!Renting!Bedrooms! As p e n ! Not!allowed!to!own!any!interest!in! residential!real!estate!in!the! Ownership!Exclusion!Zone!(OEZ).!!This! has!expanded!over!the!years!to! include!further!down!valley.! APCHA!prequalifies/defines!category! Ownership:!Most!sold!through!APCHA,! some!RO!through!realtors.!!Weighted! lottery!based!on!preferences.! Developer!can!identify!1/3!of!buyers,! but!must!be!top!priority.!No!lender! pre4qualification! Rental:!most!managed!by!private! party,!APCHA!managed!selection!by! bid,!occupancy!&!most!years!worked.!!! Rental:!every!2!years!for! employment,!primary!residency,! ownership!of!property!in!OEZ,! and!income/asset!cap!for! category!of!unit! Max!gross!income!increased!to! 120%!for!recertification!! Rental:!one!year!to!come!into!compliance!if! income/assets!are!exceeded!or!if!actively!bidding! to!purchase!a!DR!unit!4!but!rent!is!increased!to! increased!category! Can!have!roommates!that!are!qualified! employees!but!cannot!rent!to!visitors!via!Airbnb! or!other!means.! Br e c k e n r i d g e !Most!deed!restrictions!prohibit! ownership!of!other!residential! property.!No!restriction!on!the! ownership!of!commercial!property.! ! ! Prequalified!by!SCHA!SCHA!sends!a!letter!annually!to! owners!requiring!signed!affidavit! that!they!are!DR!compliant.! Annual!for!LIHTC!rental!units! Short4term!renting!of!units!or!rooms!not!allowed.! May!rent!to!another!Qualified!Occupant!if!renter! occupies!unit!with!the!owner.! ! Ja c k s o n ! Affordable:!Not!allowed!at!time!of! purchase! Employment8Based:!!Not!allowed! while!own!DR!unit.!!Can!apply!to! purchase!a!DR!unit!4!must!list!other! real!estate!for!sale!if!selected!to! purchase!DR!unit! Weighted!lottery!for!rental!and! ownership,!Lender!pre4qualification!&! homebuyer!education! Affordable:!other!real!estate! ownership!and!work!requirement! at!time!of!purchase!only,!DR! allows!for!re4certification!but!no! resources!budgeted! Employment8Based:!Eligibility! remains!during!ownership!and! DR!allows!recertification! annually,!not!done!based!on!lack! of!resources! Cannot!rent!a!room!or!portion!of!the!home.! Te l l u r i d e ! May!own!property!if!value!does!not! exceed!asset!cap.!If!DR,!must!sell.!If! not!DR,!must!sell,!rent!to!qualified! household!or!obtain!an!exceptions! Lotteries!for!new!units! Mortgage!prequalification!required! Owners!can!list!with!broker!or!sell! directly!Consultation!with!Housing! Authority!advised! 604day!notice!to!sell!required! Rental!units!4!every!time! occupancy!changes! Exceptions!to!qualification!criteria!have!been! common!due!to!the!number!of!rules!(Town!staff)! Additional!eligibility!criteria!may!be!imposed!on! any!project! Exchanges!between!sellers/buyers!limited!to!price! of!home!! Va i l ! Not!allowed!unless!a!DR!unit!that!will! be!sold! For!resale:!one!application!period!in! April!each!year!creates!a!permanent! reserve!lottery!list;!separate!lotteries! held!for!new!units! Annual!re4certification!by!Town! for!owners!4!non4compliance! rarely!discovered.!! Annual!for!all!DR!rental!units! completed!by!management!cos.! Renting!bedroom(s)!to!roommates!or!to!visitors! via!Airbnb!is!OK!though!short!term!renting!seldom! done! Reporting!by!neighbors!is!the!main!way!non4 compliance!is!discovered! ! !! P 1 3 9 I . Policy Study: Aspen/Pitkin County Housing Authority Affordable Housing Guidelines. February 2016 ! Navigate, LLC; WSW Consulting; Rees Consulting, Inc. ! !Appendix D - 11 Qualifications!and!Occupancy! ! !Leave!of!Absence!Mortgage!Debt!Survivability!of!Deed!Restrictions! As p e n ! Up!to!one!year!for!bona!fide!reason!with!possible!1! year!extension!but!no!appreciation!during!the!2nd!year.!! Owner!may!rent!DR!home!to!qualified!tenant! Retirees!allowed!to!rent!6!months!each!year!with! approval!from!APCHA!(this!option!has!not!been!utilized)! Local!lenders!recommended,!no!restrictions!on!type!of! mortgage! Debt!cannot!exceed!the!Maximum!Resale!Price! No!pre4qualification! Co4owners/co4signers!must!be!approved.!!! Do!not!survive!foreclosure! Homebuyer!Education!&!Intro!to!Community! Association!Living!required!! Br e c k e n r i d g e !May!rent!for!a!max!of!14year!during!term!of!ownership! to!another!Qualified!Applicant!if!owner!is!not!present.! No!restrictions!Do!not!survive!foreclosure! Town!reserves!right!to!cure! Ja c k s o n ! Up!to!1!year!allowed!for!specific!reasons!(school,!care! give!out4of4town!family!member,!travel!opportunities,! etc.)! Must!rent!to!qualified!employee.!!Additional!time!with! TCHA!Board!approval.! Qualified!Mortgage!required!(approval!by!TCHA),!must!be! institutional!lender!and!cannot!exceed!95%!of!the!Maximum! Resale!Price,!debt!to!income!ratio!cannot!exceed!45%! without!approval!from!TCHA!Board.! Co4owners/co4signers!must!be!approved.!!! Do!not!survive!foreclosure! Te l l u r i d e ! Up!to!2!yrs!w/!bona!fide!reason!and!commitment!to!re4 occupy! Conventional!Fannie!Mae!lenders!must!be!used! Debt!cannot!exceed!100%!of!original!price!or!103%!as!part!of! public/non4profit!closing/down!pmt!assistance!or!for!capital! improvements! Co4owners/co4signers!must!be!approved! Survive!foreclosure! Va i l !Leave!of!absence!may!be!granted!for!1!yr.!No!restrictions! Most!loans!are!ARM’s!obtained!through!local!portfolio! lenders! Do!not!survive!foreclosure! ! !! P 1 4 0 I . Policy Study: Aspen/Pitkin County Housing Authority Affordable Housing Guidelines. February 2016 ! Navigate, LLC; WSW Consulting; Rees Consulting, Inc. ! !Appendix D - 12 Prices!and!Affordability! ! !Appreciation!Cap!Transaction!Fees!&!Sales! Commissions! Capital!Improvements!Other!Price! Adjustments! As p e n ! Standard!is!3%!or!CPI!whichever!is! less,!not!compounded.!!(CPI!–!all! items,!US!City!Average,!Urban!Wage! Earners!and!Clerical!Workers)! Also!have!fixed!3%,!4%!or!6%!and! the!lesser!of!CPI!or!6%.! 2%!to!APCHA!10%!cap,!depreciated!by!Marshall!Swift!handbook!with!exemptions! for!energy!efficiency!&!safety! ! Br e c k e n r i d g e ! Current!policy:!!lesser!of!0.25%!per! month!of!ownership!(3%!per!year)! OR!%!change!in!100%!AMI!from!time! of!purchase!to!time!of!sale!to!track! AMI!and!avoid!price!creep.!Some! early!deed!restrictions!guaranteed! 3%!(Wellington)!and!5%!(Monarch).!! Varies:!Realtor!sales! commission!not!to!exceed!3%! to!7%;!if!SCHA!sells!the!unit,! they!charge!a!2%!commission.! 15%!cap!on!Certified!improvements!based!on!the!first!sale!price!of! the!home;! Subsequent!owners!can!make!improvements,!but!can!only!re4coop! up!to!15%!above!what!the!initial!buyer!bought!the!home!for;! Capital!Improvement!application!must!be!filed!and!approved!by! Town!who!then!issues!a!"certificate!of!improvement"!!! ! Ja c k s o n !Varies!4!2.5%!compounded!is! standard! 2%!to!TCHA!10%!cap,!depreciated!by!Marshall!Swift!handbook! Pre4approval!required! Recently!sent!notice!to!all!owners!with!deadline!to!submit!any! Capital!Improvement!requests!to!achieve!a!baseline.! ! Te l l u r i d e !3%!or!CPI4W!whichever!is!less!Brokers!commission!&!1%! transaction!fee!to!housing! authority!not!added!to!price! 5%!of!original!purchase!price,!or!up!to!30%!if!increases!ability!to! house!additional!occupants! Varies!slightly!by!type! Pre4approval!required! Special!Improvement! District!assessments! Va i l ! Up!to!3%!per!year!–!no!index!used! (bids!for!max.!allowed!appreciation! always!obtained)! 2%!to!Town!4!not!added!to! price! 15%!of!purchase!price!every!10!yrs!from!purchase!date!4!no! depreciation! Luxury!items/upgrades/decks!not!permitted! Appliances/flooring/countertops!depreciated!over!5!yrs.!! Town!approval!required!before!price!increased.! Special!assessments! ! ! !! P 1 4 1 I . Policy Study: Aspen/Pitkin County Housing Authority Affordable Housing Guidelines. February 2016 ! Navigate, LLC; WSW Consulting; Rees Consulting, Inc. ! !Appendix D - 13 Prices!and!Affordability! ! !Rent! Mid!range!2!BR! Sale!Price! Mid!range!2!BR! HOA!Initial!Capitalization!Deferred!Maintenance!Misc!Price!Considerations! As p e n ! $1610!! $200,000! Capital!reserve!study!as!part!of!the! initial!HOA!docs,!and!HOA!docs!contain! a!separate!capital!reserve!fund!be! established!and!maintained.!!! Owners!must!maintain!their!units!in! good!repair,!including!but!not!limited! to!roof,!boiler,!water!heater,! appliances,!and!fixtures.!!! No!guarantee!of!ability!to!receive!max!sales! price!in!Guidelines/Restrictions;!however,! perception!that!seller!"deserves"!max!sales! price! Considered!a!violation!of!deed!restriction!if! delinquent!on!HOA!dues! Br e c k e n r i d g e ! !$279,516! !A!few!deed!restrictions!provide!that! the!cost!to!remedy!any!health,!safety! issues!due!to!disrepair!can!be!deducted! from!the!max!sales!price.!No!provisions! otherwise.!Recommends!HOA!be! established!to!maintain!exterior!of! units.! No!guarantee!of!ability!to!receive!max!sales! price!written!into!some!(not!all)!restrictions! Ja c k s o n ! $1112!$245,175! 6!months!to!1!year!operating!and! reserves!negotiated!with!developers! 3rd!party!inspection!with!standard! level!of!maintenance;!some! negotiations!with!Seller!and!Buyer,! good!communication!with!property! mgmt/HOAs,!strong!stance!at!sales!to! help!ensure!adequate!reserves! No!guarantees!of!the!subsequent!owner’s! ability!to!sell!or!rent!for!maximum!price! stated!in!guidelines/restrictions! Not!often!that!homes!sell!below!max!price,! but!seller's!often!have!to!make!repairs!or! contribute!funds!to!buyer!at!closing! Considered!a!violation!of!deed!restriction!if! delinquent!on!HOA!dues! Te l l u r i d e ! $1925!$296,650! Town!seeds!HOAs!on!projects!it! develops.!For!mitigation!units,!HOA! dues!cannot!exceed!1.25%!of!original! purchase!price!and!must!be! proportional!to!market!units!or!lot!size! Has!not!had!problems!thus!far;!owners! seem!to!be!aware!that!upkeep!is! important! No!guarantees!of!the!subsequent!owner’s! ability!to!sell!or!rent!for!maximum!price! stated!in!guidelines! Va i l ! $1378!$247,500! 3!months!from!buyers!at!closing!HOA!dues!held!steady;!reserves!likely! inadequate! A!special!assessment!was!used!for!major! roof!repairs!and!improvements;!enabled! residents!to!make!the!big!fix!instead!of!a! patchwork!of!improvements! Note:!In!Vail,!the!rents!and!sale!prices!are!averages!of!recent/current!amounts!charged!for!existing!units.!In!other!towns,!amounts!are!current!rates!charged!for!mid!range! income!categories!(the!categories!that!include!100%!AMI).! ! !! P 1 4 2 I . Policy Study: Aspen/Pitkin County Housing Authority Affordable Housing Guidelines. February 2016 ! Navigate, LLC; WSW Consulting; Rees Consulting, Inc. ! !Appendix D - 14 ! Development!Standards! ! !BR!Target!Eff!SF!1!BR!SF!2!BR!SF!3!BR!SF!Unit!Type!Quality/Design! As p e n !Ownership:!!1!&!2!BR!in!Cat!1!4! 3!with!associated!RO!units! 3!BR!in!Cat!3!&!4! 500!min!700!min!900!min!1,200!min!Mostly!attached! product! Single!family!min! 1,500!SF! Converted!units:!interior!exterior!freshly!painted:!appliances! and!carpet!less!than!5!yrs!old!and!in!good!condition;!window,! heating,!plumbing!and!electrical!systems,!fixtures!and! equipment!in!good!condition!and!working!order!and!brought! up!to!the!current!code;!landscaping!and!yard!in!satisfactory! condition;!roof!in!good!repair!with!10!years!remaining!useful! life;!APCHA!must!approve!unit!and!all!HOA!docs! Br e c k e n r i d g e !Changes!based!on!needs! Specified!by!Town! Development!code!specifies!250!SF!min!for!all! employee!housing!units! No!standards!by!bedroom.! Development!code!does!not!apply!to!most!new! development!–!town!is!built!out.!!! Town!staff!works!with!developers!to!design! units!required!through!annexation,! redevelopment,!or!other!policies/agreements.! Diverse!supply!All!employee!housing!units!shall!have!a!living!area!containing! at!a!minimum:!a!kitchen!sink;!cooking!appliance!and! refrigeration!facilities,!each!having!a!clear!working!space!of! not!less!than!thirty!inches!(30")!in!front;!sleeping! accommodations;!a!separate!closet!with!a!door;!and!a! separate!bathroom!with!a!door,!lavatory,!and!a!bathtub!or! shower! Ja c k s o n ! R e n t a l !None!350!min! 550!max! 550!min! 750!max! 750!min! 1,050!max! 950!min! 1,350!max! Tends!to!be!condos!10!SF!of!enclosed!storage!space!per!bedroom,!access!to! outdoor!space!(deck,!patio,!or!common!green!space!=!2%!of! the!size!of!the!unit)!Dorms:!!150!net!livable!SF.!!Each! additional!bedroom!150!4!250!SF.!!Can!request!a!20%! reduction!in!SF!if!100%!above!grade,!above!avg!natural!light! (exterior!windows!in!living!space!&!bedrooms),!layout! maximizes!livable!space!(no!more!than!15%!stairs!or! hallways).! Ja c k s o n ! O w n !None!400!min! 600!max! 600!min! 800!max! 850!min! 1,100!max! 1,200!min! 1,500!max! SF,!Townhome,! condo! Each!additional!bedroom:!150!4!250!SF.!Can!request!a!20%! reduction!in!SF!if!4!100%!above!grade,!above!average!natural! light!(exterior!windows!in!living!space!&!bedrooms),!layout! maximizes!livable!space!(no!more!than!15%!stairs!or! hallways).! Te l l u r id e !None!450!min! 600!max! 450!min! 600!max! 750!min! 950!max! 950!min! 1,200!max! Diverse!–!apts,!ADU’s,! duplexes,!condos! At!least!243!BR!per!1,000!full!sq!ft!intervals,!kitchens!and! bathrooms,!above!grade!minimums!(70%)! Va i l !None!438!min!613!min!788!min!1,225!min!Condos,!duplex,!apt,! accessory!4!no!single! family! Own!entrance,!kitchen/kitchenette,!bathroom!! ! !! P 1 4 3 I . Policy Study: Aspen/Pitkin County Housing Authority Affordable Housing Guidelines. February 2016 ! Navigate, LLC; WSW Consulting; Rees Consulting, Inc. ! !Appendix D - 15 ! Impact!Mitigation!and!Fees!in!Lieu! ! !Commercial!Linkage!Residential!Linkage!Inclusionary!Zoning!Compliance!Options! As p e n ! Lodging:!10%430%!of! net!livable!area/10%4 60%!employee! mitigation.!Varies!by! avg!size!of!lodge!units! Commercial:!4! employees!exempt,! 30%!for!4!48! employees.!60%!above! 8! $79/SF!for!additional! single!family/duplex! square!footage! 60%!of!units/30%!floor! area!or! 70%!of!units/70%!of! bedrooms! Prioritized:!!1)!on4site!units!constructed!or!converted!next!to!or!attached!to!the! proposed!development;!2)!Off4site!constructed!or!converted!at!a!separate!location! within!the!Aspen!core!(a!single!off4site!DR!unit!in!a!free4market!complex!is!not!allowed);! 3)!Use!of!affordable!housing!credits;!4)!APCHA!approved!buy4down!units;!and!5)! Payment!in4lieu!to!the!City!or!payment!of!Impact!Fee!to!the!County;!or!land!conveyance! of!vacant!property!to!the!city!or!APCHA.! ! Br e c k e n r i d g e !N/A!N/A!N/A!Performance!zoning!awards!0!or!negative!points!for!anything!5%!or!less:!!up!to!10! points!for!9.5%!or!more.! ! Ja c k s o n ! 25%!of!peak!seasonal! employees! N/A!25%!of!total!units! ! In!order!of!preference:!!On!site,!off4site,!fee!in4lieu! ! Te l l u r i d e ! 40%!commercial.!hotels! 60%!other! accommodations! ! 60%!4!all!units! Job!generation!for! hotels!applied!to! multifamily/mixed!use! residential!units! ! N/A!350!SF/employee!provided!on!or!off!site,!land,!deed!restricting!market!units,!fees!in!lieu! ! Va i l ! 20%!4!all!uses! ! N/A!10%!of!gross!residential! floor!area! ! Code:!≥50%!on!site;!property!on!site;!EHU's!off!site!(equal!#);!fees!in!lieu;!property!off! site.!Actual:!2!units!on!site,!7!units!off!site,!$1,457,942!fees!in!lieu!since!2007! ! ! ! !! P 1 4 4 I . Policy Study: Aspen/Pitkin County Housing Authority Affordable Housing Guidelines. February 2016 ! Navigate, LLC; WSW Consulting; Rees Consulting, Inc. ! !Appendix D - 16 Impact!Mitigation!and!Fees!in!Lieu! ! ! !Income!Targets!Use!Categories!Applicability!Exemptions!Fees!in!Lieu! Calculation!Method! Fees!in!Lieu!! Amounts! As p e n ! Categories!1!4!4!Category!4!!!Construction!Cost!–! Affordability!Gap! Last!calculated!in!2001!w/! annual!CPI!updates! Cat!1!4!$295,077!! Cat!2!4!$246,881! Cat!3!4!$232,946! Cat!4!4!$144,393! ! Br e c k ! N/A!N/A!N/A!N/A!N/A!N/A! Ja c k s o n ! Linkage:!Cat!1!or!<80%! AMI! IZ:!Cat!1!4!3!or! <120%!AMI!split! equally!among!the!3! categories! ! Conventional!lodging,!short4term! rental,!office,!retail,!service,! restaurant/bar,!heavy! retail/service,!industrial!and! other!uses!by!independent! calculation.! Net!new!!Institutional!uses,! agricultural!uses,! redevelopment!of! preexisting!uses! Market!Cost!–!Affordability! Gap!Cat!1!4!$145,098! Cat!2!4!$109,403! Cat!3!4!$73,742! Employee!Housing!(Comm)!4! $114.40/SF! ! Te l l u r i d e ! <1000!SF!4!Tier!1! 100042000!SF!–!1,000! min!Tier!1!plus!Tier!2!! >2000!SF!4!50%!Tier!1! Commercial!and!public!uses! Hotels!and!accommodations! Multi4family!dwellings!and!mixed4 use!residential! One!and!two4family!dwellings! ! Town!wide!Redevelopment/chang es!in!use!without! increase!in!job! generation! Affordable!EDU's! Construction!Cost!–! Affordability!Gap! Last!updated!in!2009! ! $228/SF! 10%!limit!unless!mitigation! is!≤500!SF!or!for!portion!of! development!>15%!of!floor! area! Va i l ! None! Fee!in!lieu!calculation! based!on!120%!AMI! Eating/drinking!establishment;! Accommodation!unit/limited! service!lodge!unit;!Retail! store/personal!service/repair! shop;!Business/professional! office;!Real!estate!office;! Conference!facility;!Health!club;! Spa! Developments! requiring! mitigation!of! 1.25+!employees! in!3!core!districts! Redevelopment!with! no!increase!in!square! feet.!AHU's.! Multiple!zone!districts! Market!Cost!–!Affordability! Gap! Last!updated!in!2013! ! $74,481/employee!or! $134.65/SF! ! !! P 1 4 5 I . Policy Study: Aspen/Pitkin County Housing Authority Affordable Housing Guidelines. February 2016 ! Navigate, LLC; WSW Consulting; Rees Consulting, Inc. ! !Appendix D - 17 ! Management/Oversight! ! !Political!Commitment!Education/PR!Regional!Cooperation!Partnerships! As p e n ! Strong! Many!policy!makers!and!large!voting!block! live!in!deed!restricted!housing! Solid!funding!source!makes!development! less!challenging! !City!and!County!4!but!City!has!most!of! the!funding.!!Desire!to!have!a!more! coordinated!regional!approach!with! restricted!housing!down!valley.! Strong!funding!source!limits!the!necessity!to! partner.!!Some!emphasis!to!have!employers! share!in!fiscal!responsibility!to!produce!seasonal! housing.! Br e c k e n r i d g e !Strong! Continued!program!monitoring,! management!and!upkeep!keeps!Town!on! task! Solid!funding!sources!and!commitment,! Strong!policies!and!dedicated!oversight! Yearly!updates!on! housing!progress,! publications!made!to! public,!information! updated!and!available.! Have!periodic!SCHA/regional!board! meetings!4!strives!for!coordination.! Public/private!partnerships!widely!used!in!past! to!develop!and!presently!4!Town!acts!as! developer,!but!hires!project!manager/contractor.! Ja c k s o n ! Mixed/Changing! High!level!of!community/stakeholder! Slow!to!reach!decisions! Looking!for!free!market!solutions! Transitioning!to!more!control!by!the!Town!of! Jackson! No!dedicated!source!of!public!funding! Limited!though!a!major! strategy!of!the!Strategic! Plan!! Housing!Authority!has! helpful!web!site!and! email!blasts!when!homes! become!available! Limited!to!Regional!Housing!Needs! Assessment! Labor!force!dependent!on!commuter! communities! Have!not!extended!strategic!planning! and!solutions!to!regional!commute!shed!! Partner!with!non4profit!and!for4profit!developers! to!leverage!funds!for!AH!production! Habitat!for!Humanity!and!the!Jackson!Hole! Community!Housing!Trust!are!active!producers! of!housing! Te l l u r i d e ! Strong! Consistent!policies!over!decades! Firm!support!for!price4capped!deed! restrictions! Solid!revenue!source!(sales!tax)!leveraged!by! bond!issue! The!San!Miguel!Regional!Housing! Authority!manages!the!housing! programs!and!inventories!of!3! jurisdictions:!Telluride,!Mtn.!Village!and! the!County! !! Va i l ! Unclear! Lack!of!consensus!on!Town!roles!and! responsibilities!for!employee!housing! No!dedicated!funding!source Helped!fund!County!project!down!valley! in!Edwards! Communicates!regularly!with!Eagle! County!Housing!Office!&!Valley!Home! Store!for!county!wide!collaboration! Has!supported/subsidized!apartment! development!by!the!private!sector! A!Working!Group!has!been!formed!by!the! majors,!town!managers!and!county! commissioners!for!potential!joint!ventures! ! ! !! P 1 4 6 I . Policy Study: Aspen/Pitkin County Housing Authority Affordable Housing Guidelines. February 2016 ! Navigate, LLC; WSW Consulting; Rees Consulting, Inc. ! !Appendix D - 18 Management/Oversight! ! !Town!Council!Role!Town!Staff!Role!Housing!Authority!Role!Staffing!! As p e n ! Set!policy,!hire!APCHA!ED!City!Manager!provides!direction!and! oversight!of!APCHA!ED! Recommend!policy,!implement/manage! units!created!through!City/County! development!and!mitigation! 14!4!Executive!Director,!Operations! Manager,!Sales!Manager,! Qualifications!Specialist,! Administrative!Assistants!(2);! Property!Manager:!(4),!Property! Maintenance!(4)! Br e c k e n r i d g e !Town!council!directed!4!set!the!policy.!Town!Staff!implement!the!policies!and! now!moving!toward!developing! projects!rather!than!through! partnerships! Town!pays!SCHA!a!fee!to!do!income!and! purchase!qualifications! Manage!Town!buy4down!rental!units! compliance!monitoring! One!(Town);!five!(SCHA)!shared!with! Summit!County!and!3!other! municipalities!! Ja c k s o n ! Teton!County!Commissioners!4!appoint! TCHA!Board!members,!approve!funding! and!projects! Agreement!underway!between!Town!of! Jackson!and!Teton!County!to!share! oversight!and!funding!of!Regional!Housing! Authority! Implement!housing!land!development! regulations!with!support!of!TCHA!staff;! Resources!to!TCHA!4!IT,!legal,! engineering,!HR,!policies!and! procedures! Manage!restrictions,!recommend!policy! Develop!housing! Review!development!applications! Update!in4lieu!fees! Conduct!housing!studies!to!support! regulations! 4!4!Executive!Director,!Sales!and! Compliance!Coordinator,! Administrative!Assistant,!Housing! Specialist! Te l l u r i d e ! Set!policy,!approve!guidelines!and! mitigation! Review!development!applications,! impose!mitigation!requirements,! design/build!units! Manage!deed!restrictions! Qualify!applicants! Calculate!resale!prices! Administer!Section!8!rent!subsidies! Provide!homebuyer!education! Apply!for!State/Federal!project!financing! 1!project!coordinator/developer! Shandoka!Apt!management! HA!staff!sharing!time!w/!Mtn.!Village! &!County! Va i l ! Approve!all!facets!of!housing!program!Review!development!applications! Impose!mitigation!requirements! Administer!deed!restrictions! Administer!buy!down!and!exchange! programs! Update!strategic!plan! Unclear!4!in!transition!2!Plus!property!managers!and! maintenance!at!privately!owned! apartments! ! ! P 1 4 7 I . Navigate, LLC; WSW Consulting; Rees Consulting, Inc. ! Appendix E - 1 Appendix E: Map of Ownership Exclusion Zone I-70 US 6 I-70 CO 8 2 Silt Glenwood Springs Rifle New Castle NOTE: Data source for this map: Federal/State Lands, Private Parcels, Municipalities, Roads and Water Features from Garfield County GIS Department. Colorado River from USGS National Hydrography Dataset Program. This map/drawing/image is a graphical representation of the features depicted and is not a legal representation. The accuracy may change depending on the enlargement or reduction. Copyright 2010 Aspen/Pitkin GIS 031.5 Miles Legend Roads Colorado River (Project Area) Water Features Adjusted 5 mi Buffer Actual 5 mi Buffer Private Parcels Municipalities BLM STATE OF CO DEPT OF ENERGY USFS APCHA OWNERSHIP EXCLUSION ZONE P148 I. AGENDA ITEM SUMMARY  WORK SESSION DATE:  February 16, 2016  AGENDA ITEM TITLE:  Aspen Energy Challenge Affordable Housing Program  RESPONSIBLE PARTY:  Ryland French, City of Aspen Efficiency Specialist; Mona Newton, CORE  Executive Director  THRU: Cindy Houben, Pitkin County Community Development Director; David Hornbacher,  Director of City of Aspen Utilities and Environmental Initiatives    ISSUE STATEMENT    City of Aspen staff will present a proposal to upgrade the energy efficiency in a portion of affordable  housing rental units in Aspen over the next several months using Renewable Energy Mitigation Program  (REMP) funds. The CORE Board of Trustees has approved requesting a one‐time appropriation of REMP  funds for this use; however, formal approvals would still be required from the Pitkin County Board of  County Commissioners (BOCC) and the City of Aspen City Council.  REQUEST OF BOARD AND COUNCIL   Permission to return to the BOCC and City Council in respective individual meetings to make a formal  request for approval to use $500,000 of REMP funds for the Aspen Energy Challenge Affordable Housing  Program.   BACKGROUND   A program of significant magnitude bringing energy efficiency improvements to affordable housing units  in Aspen has the potential to make a positive impact on the community’s affordable housing stock in  terms of energy savings, building longevity, and occupant comfort, health, and safety. Staff and  leadership from the City of Aspen Canary Initiative, City of Aspen Utilities Agency, City of Aspen  Affordable Housing Office, City of Aspen Asset Management Department, Pitkin County, and the  Community Office for Resource Efficiency (CORE) are developing such a program, with support from the  Aspen City Manager, Aspen City Council’s Best Year Yet (BYY) top ten goal number 8, and the CORE  Board of Trustees. Representatives from these entities comprise a project team to guide and oversee  this Aspen Energy Challenge Affordable Housing Program.   In addition to the benefits this program will bring to the community, it is timely, as it supports the Aspen  Energy Challenge. The Aspen Energy Challenge (AEC) is a collaboration between the City of Aspen, CORE,  Holy Cross Energy, and SourceGas to lead Aspen’s effort to win the $5,000,000 Georgetown University  Energy Prize (GUEP). Aspen is currently in third place among fifty communities across the nation  competing from 2015 through 2016 to save the most electricity and natural gas in their homes, schools,  and municipal buildings through innovative, replicable, and equitable approaches.  The project team will need to remain sensitive to what is realistic and feasible in terms of staff and  organizational capacity, funding, regional workforce and building stock logistics; and to develop and  P149 I. implement a high quality program within those bounds. However, this program can capitalize on the  political will and community support that currently exists for energy efficiency efforts.  OBJECTIVE STATEMENT   Transform the quality and livability of affordable housing stock in the Aspen area by improving energy  efficiency, enhancing tenant wellbeing, and lowering utility bills, while tracking results.   PHASING  Staff proposes the implementation of a Phase 1 of this program over the next several months. This  phase of the program will deliver energy efficiency improvements to Marolt Seasonal Housing,  Burlingame Seasonal Housing, and Truscott Housing (Truscott Place I, Truscott Place LLLP II), to the  greatest degree possible with the funds available. These properties represent a total of 396 units, or  18% of the total 2163 affordable housing units in Aspen. Recommended improvements have been  identified, and are in the process of being prioritized.  Based on the success of Phase 1, a Phase 2 may be developed that applies a similar program design to  other affordable housing units in Aspen.   It is noteworthy that, independent of this program, an additional 40 affordable housing rental units at  Aspen Country Inn will receive substantial energy efficiency upgrades through a general building  rehabilitation project taking place in 2016‐2017.   Phase 1 Property Details Matrix  Legend: AH (City of Aspen Affordable Housing), AM (City of Aspen Asset Management), COA (City of  Aspen), PPM (Preferred Property Management)    Truscott Place (I) Truscott Place LLLP (II) Marolt Ranch Burlingame Seasonal  Number of Units 109 87 100 100  Owned By COA Private COA COA  Managed By AH, AM AH, AM AH, AM PPM  APCHA Category Cat 2: 21; Cat 3: 27; RO:51 2 RO RO      FUNDING   P150 I. On December 17th, 2015, the CORE Board passed a motion to approve ‘supplemental budget of  $500,000 from the REMP fund to support the Aspen Energy Challenge, specifically to improve energy  efficiency in affordable housing in the upper valley, starting with rentals, as phase one of this program.’  The CORE Board passed an additional motion that ‘no more than 10% of the $500,000 may be spent on  administrative costs, with the requirement that APCHA be responsible for funding administrative costs  beyond 10%. ‘    The “administrative costs” reference project management costs, yet to be identified.   The text, “APCHA be responsible for funding administrative costs beyond 10%,” is meant to  assign responsibility to the City of Aspen Affordable Housing Office to identify a funding  mechanism for administrative costs beyond that percentage, be that the City of Aspen 620 fund,  the City of Aspen 150 fund, or any other funding mechanism.   The City of Aspen BYY Goal #8 team presented at the Aspen City Council work session on February 1st,  2016. At that work session, an overview of this program was presented to Council.   At this time, staff requests permission to return to the BOCC and City Council in respective individual  meetings to make a formal request for approval to use $500,000 of REMP funds for the Aspen Energy  Challenge Affordable Housing Program  Funding from Energy Outreach Colorado (through SourceGas and Holy Cross Energy) and additional local  utility rebates will be pursued. These funds will be in addition to the REMP funds, enhancing the total  amount invested in efficiency improvements through this program. The additional funding secured will  be dependent on the energy efficiency improvements chosen to be implemented.   As costs are determined for prioritized improvements, it may be possible that investment of Pitkin  County funds and City of Aspen funds may be warranted if the wishes of the BOCC and City Council are  to maximize the scope and impact of this program.  PROJECT MANAGEMENT   The question of how the project management role will be fulfilled for this program is currently being  discussed, and will be determined before the formal REMP budget request at the BOCC and City Council  individual meetings.   PHASE 1 ENERGY EFFICIENCY IMPROVEMENTS  Energy assessments have been conducted on the Phase 1 properties, providing recommended energy  efficiency improvements for each property.     CORE staff have prioritized and categorized the recommended improvements into the following lists:   No or low cost, beginning measured   Mid‐cost, intermediate measures   Higher‐cost, advanced measures  Ultimately, improvements to be implemented will be chosen and finally prioritized based on a balance  of:   Prioritization and categorization of the recommended improvements by CORE staff  P151 I.  Acceptable impacts on staff time    Acceptable access to facilities and units    Currently pending work or ownership changes   Potential for additional funding sources   With approval of this REMP funding request, energy efficiency measures would be completed according  to the final prioritization of improvements and the total funds available.  Example Improvement Matrix: to Change Based on Actual Improvements Chosen and Funds Secured     REMP  Funds  EOC/Utility  Funds  Heating  Systems Insulation, Air  Sealing,  Ventilation   Doors Lighting  Fridges Total  Truscott Place I: $175,000  $35,000  $5,000  $80,000  $50,000  $25,000  $50,000 $210,000  Truscott Pl II  LLLP:  $110,000  $35,000  $5,000  $80,000    $20,000  $40,000 $145,000  Marolt: $50,000  $35,000  $5,000  $60,000    $20,000    $85,000   Burlingame  Seasonal:  $115,000  $25,000  $60,000 $60,000    $20,000    $140,000  Totals: $450,000  $130,000           Totals:   $75,000 $280,000  $50,000  $85,000  $90,000 $580,000     TIMELINE   Draft Phase 1 Timeline: to Change Based on Actual Improvements Chosen    IMPACTS    Impacting 396 units, equaling 18% of affordable housing units in Aspen    Achieving an estimated reduction of xxx kWh’s and xxx Therms (TBD based on improvements  chosen)   Reduced utility bills (TBD based on improvements chosen)   Reduced environmental impact (TBD based on improvements chosen)  P152 I.  Improved comfort, health and safety  TRACKING  A transparent tracking document will be maintained to demonstrate how funds are spent and to  demonstrate the impacts of the program. Community level data reported for the GUEP will be useful as  well.  APPENDIX   APCHA Rental Units Income Categories    P153 I. Page 1 of 3 MEMORANDUM TO: Mayor, City Council, & Board of County Commissioners FROM: Chris Forman, Parks Operations Manager Gary Tennenbaum, Assistant Director Open Space & Trails THRU: Tom Rubel, Parks and Open Space Director Dale Will, Director Open Space & Trails DATE OF MEMO: February 4, 2016 MEETING DATE: February 16, 2016 RE: Hunter Creek Prescribed Burn REQUEST OF COUNCIL: There is no formal request of Council or Board of County Commissioners. This memo and presentation is designed to provide an update on the collaborative management efforts in the Hunter Creek-Smuggler Mountain plan area, specifically as it pertains to the prescribed burn planned in spring 2016. SUMMARY: The U.S. Forest Service is planning to conduct a prescribed fire in the Hunter Creek Valley in the spring of 2016 (Attachment A). The project is to be implemented under the Hunter-Smuggler Cooperative Plan, which was finalized in early 2014 after all of the requirements of the National Environmental Policy Act (NEPA) were met. The fire will target Gambel oak, mountain shrub, and aspen ecotypes and will reduce fuel loading, improve wildlife habitat, and improve forest resiliency. A total of 1,100 acres has been defined for this burn, though it is expected that not all of this acreage will burn due to snow and moisture levels across the various aspects of this area. The fire will only occur under very specific, favorable weather and wind conditions with the anticipated burn time to occur over a 1-3 day period. Recreational users will be diverted from the area during the fire event. BACKGROUND: The Hunter Creek-Smuggler Mountain Cooperative Plan outlines a series of projects and improvements to the Hunter Creek/Smuggler Mountain study area. Developed through an open and cooperative approach of community and local agency involvement, the Plan addresses important needs in this area such as recreational opportunities, forest health, wildlife habitat, and fuel loading. The prescribed fire proposed this spring is one of many management P154 I. Page 2 of 3 tools specified in the Plan and will provide an ecologically sound, cost effective path to achieve the goals mentioned above. Historically, fire has been the primary disturbance agent in the Gambel oak, mountain shrub, and aspen ecotypes. Due to the proximity to the City of Aspen and homes within the wildland urban interface, natural fire ignitions in this area are extinguished as soon as possible. These natural ignitions are not encouraged to burn across this landscape due to variations in weather, humidity, wind, and location which make it much more difficult to manage by fire specialists. The prescribed fire scenario provides an opportunity to effectively manage the timing, location, and intensity of the fire since the burn will only occur under favorable conditions set forth within the USFS burn plan. In addition to all of the safety parameters built into the burn plan, there will be USFS fire specialists as well as Aspen Fire District staff and equipment present throughout the prescriptive timeframe. A similar project was successfully completed on Basalt Mountain in April 2015. A public relations and outreach group has been identified consisting of members from several partners in the project, including the Forest Service, Wilderness Workshop, Aspen Center for Environmental Studies, Pitkin County, and City of Aspen. In the upcoming months, there will be many publications within the newspapers, announcements on local radio, public open houses, website updates, and other means of providing information to the public about the burn. In addition, the Pitkin Alert System will be utilized on the day(s) of the event as well as a centralized call center will be in place for anyone to obtain real time information. DISCUSSION: The entire management area consists of 4,681 acres of National Forest lands, of which, 1,100 acres have been targeted for ignition in late April or early May 2016. The actual date of the burn cannot be predicted at this point as it is dependent upon weather and moisture conditions. In addition to these parameters, the fire will not move forward unless the air quality standards and conditions are met within the smoke permit issued via the State of Colorado Air Pollution Control Division. US Forest Service fire specialists will utilize ground and air techniques for ignition within the burn area, while Aspen Fire Protection District staff and equipment will be stationed in Hunter Creek between the burn area and the built environment of Red Mountain and the City of Aspen. Anticipated burn time will last for 1 to 3 days, after which fire officials will declare the area safe for recreational activity. As mentioned previously, it is not anticipated that all 1,100 acres will burn during this year’s event. In fact, if the weather conditions are not favorable, the burn will not occur this spring at all and will be shelved for amenable conditions in future years. FINANCIAL/BUDGET IMPACTS: This project is being funded through a partnership between the US Forest Service, Aspen Center for Environmental Studies, Pitkin County, and the City of Aspen. City and County costs for this project have been approved within the 2016 budget. ENVIRONMENTAL IMPACTS: This area has lacked integrated, cohesive management and vision, and thus, is now seeing degradation of wildlife habitat and forest health, as well as increased fuel loading. A prescribed burn will most closely mimic a natural disturbance and begin the process of restoring the landscape and addressing those issues mentioned above. P155 I. Page 3 of 3 RECOMMENDED ACTION: Staff is recommending that Council and Board of County Commissioners continue their support of the Hunter Creek-Smuggler Mountain Collaborative Plan and the management prescriptions defined within the plan. ALTERNATIVES: Much of the targeted area is too steep to mechanically treatment, therefore without the use of prescribed fire, no management can occur. In addition, mechanical treatment is more expensive and impactful to the recreational user. ATTACHMENTS: A. Prescribed Fire Project Area Map P156 I. The U.S. Forest Service is planning to conduct a prescribed fire in the Hunter Creek Valley in the spring of 2016. The project is to be implemented under the Hunter-Smuggler Cooperative Plan, which was finalized in early 2014 and seeks to improve wildlife habitat, forest resiliency and recreation in the Hunter Creek Valley and surrounding landscape. Where, when and how long will the burn occur? Where: The attached map on the back shows the areas where the prescribed burn will take place. We are asking the public to refrain from recreating in the Hunter Creek-Smuggler area for approximately 1-3 days during the prescribed burn. When: The project will be implemented when conditions are ideal for a safe and effective prescribed fire. Conditions are considered suitable when the snow has melted off the south- facing aspects (slopes) in Hunter Creek and all other surrounding areas still retain moisture and snow. These conditions typically occur in April or early May. Other environmental factors such as wind, temperature and relative humidity will be key elements. Duration: Please note that the work will take place over a 1-3 day period. After which, officials will declare the area safe to recreate in. What to expect during the prescribed fire? On the day of the burn please do not call 911. There may be large volumes of smoke visible at times in the Hunter Creek valley and people may even see flames. Recreation and trail use: For your own safety, please refrain from recreating in the Hunter Creek Valley until the area is declared safe. Updates will be available at the White River National Forest Twitter account @WhiteRiverNews, the White River National Forest website: http://www. fs.usda.gov/whiteriver or by calling the Sopris Ranger Station (970) 963-2266. Smoke: Prior to burning, a smoke permit is obtained through the state of Colorado - Air Pollution Control Division. The Upper Colorado River Interagency Fire Unit (UCR) works hard to minimize smoke impacts on surrounding communities. If you have a smoke sensitivity, please contact Jim Genung at 970-404-3150 so we can keep you informed of smoke conditions. Prescribed fire smoke may affect your health. For more information, please visit: https://www.colorado. gov/pacific/cdphe/wood-smoke-and-health. Where can I get more Information and sign up for alerts? • For general information, please visit www.aspennature.org • Real-time updates will be available on Twitter @WhiteRiverNews or @UCRFireCenter • Sopris Ranger Station: 970-963-2266 • Aspen Fire Department: Parker Lathrop, 970-925-5532 • Pitkin County Alert System: Information about the prescribed burn will be disseminated via the Pitkin Alert system. To sign up for the alert system visit www.PitkinAlert.org. • Garfield and Eagle County Alert Systems: The Garfield and Eagle County alert systems will also provide information during the prescribed fire. More information on those systems is available here: Garfield County: http://garco911.org/ • Eagle County Emergency Alert: https://www.ecalert.org/index.php?CCheck=1 Hunter Creek Prescribed Fire: Information & Frequently Asked Questions (FAQs) P157 I. Crews patrol the April 2015 prescribed fire on Basalt Mountain. Prescribed fires burn slowly and close to the ground, clearing out the understory while leaving much of the overstory intact. Regrowth from the same prescribed fire, four months later. Plentiful spring precipitation quickly re-greened the landscape and provided fresh forage for wildlife. P158 I.