Developers: Proposed fee schedule still falls short
A proposal to adjust city of Glenwood Springs water and sewer impact fees in an effort to spur “attainable” multifamily housing development could actually end up costing developers more in the long run, some in the development community are saying.
City Council two weeks ago approved on first reading a schedule applying the city’s recently adopted new residential unit equivalent (EQR) rate for water and sewer usage to a range of unit sizes, from studio apartments to three-bedroom houses and larger.
That plan is expected to be further scrutinized when council convenes again Thursday night, after development interests pointed out what they viewed as flaws in the recommended new schedule and council members put forward a counterproposal.
If the goal is to incentivize smaller housing units, and particularly rentals, then the city should lower impact fees across the board to a level that will accomplish that, Chad Lee, a local land-use attorney who represents a variety of development interests, said at the April 7 council meeting.
As recommended by city staff and consultants, the new fee schedule does reduce costs for units smaller than 1,000 square feet, he acknowledged.
But costs rapidly escalate for units larger than that, to the point that a project with a mix of unit sizes would be more expensive to build, as a whole, than under the previous schedule, Lee argued.
“It’s not just a technical decision in front of you, but a policy decision,” Lee said. He suggested council look no farther than the city’s comprehensive plan to encourage development of a mix of housing types.
The comprehensive plan, updated in 2011, “was the product of hundreds of hours of citizen comment and participation,” Lee wrote in a letter to council members.
“The comprehensive plan acknowledges a dearth of housing in Glenwood,” he wrote. “It also acknowledges the market’s inability to deliver both affordable and attainable housing.”
Part of the problem, he said, is Glenwood Springs’ affordable housing mandate, which requires developers of free-market, for-purchase housing to build a certain number of below-market, deed-restricted units as well.
That provision is likely to be given a close look as the city begins the process of rewriting its development code.
“But part of the problem was also Glenwood’s historically high impact fees in relation to the ultimate price at which housing product can be delivered,” Lee also wrote.
The comprehensive plan explicitly says the city “will use incentives and regulations to encourage attainable housing,” he said.
Mayor Michael Gamba agreed that the recommended fee schedule falls short of achieving council’s goal, and put forward a counterproposal based on actual water usage for some existing housing developments.
He pointed to several developments in Glenwood that would actually pay more in water and wastewater system improvement, or impact fees, under the new schedule, than what they paid under the old schedule.
“I think it’s important that we come up with a schedule … that doesn’t end up being an increase to what we already have,” Gamba said.
Other council members agreed to take a closer look at the proposal when it comes up for discussion again this week.
One project that would benefit from whatever fee reductions come about is the proposed 116-unit Oasis Creek Apartments, which is also before council on Thursday.
That project has its own hurdles to clear, including a recommendation for denial by the city’s Planning and Zoning Commission, primarily due to the developer’s requested building height and parking code variances.
If approved, though, any fee reductions would be a break the developer would welcome to help bring the project to fruition, said Ron Liston of Land Design Partnership, land planner for the Oasis Creek project.
One- and two-bedroom apartments in the development are expected to range between 600 and 900 square feet, which would bring them under the 1,000-square-foot EQR threshold.
“We have trusted that whatever council decides on that would apply across the board, including our project,” said Liston, who has not been directly involved in the impact fee discussion.
“No question, I am always shocked at how expensive it is to build something in Glenwood Springs, and fees are a part of that,” he said. “Anything we can do to reduce the cost would be helpful if we are to build more attainable housing.”
Last summer, City Council began reviewing not only water/wastewater fees but impact fees for such things as emergency services and schools, in an effort to encourage more multifamily housing for middle-income earners.
The conversation was spurred by a proposal from the developer of the already-approved, 88-unit Lofts at Red Mountain rental project at Glenwood Meadows to reduce fees it and other similar projects by 60 percent.
When it comes to rental housing, though, some council members have argued that without some agreement from developers to keep rents within a certain range, fee breaks are inappropriate.
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