Glenwood Springs City Council debates developer impact fee breaks
A developer’s proposal to significantly reduce city water and sewer impact fees for multi-unit rental housing projects is causing a philosophical split among Glenwood Springs City Council members.
At a recent council work session to discuss impact fees, council member Matt Steckler said he couldn’t support a fee break that didn’t also come with some type of assurance that apartment rents would be kept affordable for middle-income earners.
“Nobody I’ve talked to is excited about reducing fees for market-rate housing … without some sort of social benefit,” Steckler said.
Councilman Stephen Bershenyi agreed.
“It depends too much on the goodwill of the developer,” he said. “That’s not some place I feel comfortable being.”
But Mayor Mike Gamba countered during that informal discussion that the “social benefit” comes in the size of the apartment units, such as the 88 studio, one- and two-bedroom units planned as part of the Lofts at Red Mountain project that is already approved for Glenwood Meadows.
“By its nature, it’s going to be affordable,” Gamba said. “And it’s something that is dramatically needed in this community.”
Lofts developer Richard Myers of Dallas-based Realty Capital has proposed that his and other projects creating five or more rental units be given a 60 percent reduction in existing water, sewer and emergency services improvements fees over the next five years. He has also approached the Roaring Fork School District about reducing school impact fees by the same amount.
In the case of the Lofts, overall impact fees would drop under the proposal from a little more than $1 million to around $450,000.
“We believe this is an equitable rate that will help the availability and affordability of multifamily rental housing,” Myers wrote in a December 2015 letter to Gamba and City Council members.
The Lofts would be fully sprinkled, which would address fire suppression, he said, and the smaller units would have lower utility usage rates than the current fee calculations suggest, he said.
When the idea was proposed at the time the project first came before council for approval last spring, the city agreed to revisit fees, not just for the Lofts, but for all new development going forward. That could also include a proposed development of nearly 100 apartment units at the former Terra Vista Motel property on Highway 6 & 24, which is still in the planning stages.
Council commissioned a routine water and sewer improvement fee study, which was completed last fall by SGM Engineering. It determined that while fees for water system improvements could be adjusted slightly downward, sewer fees would need to nearly double in order to keep up with costs associated with operating and maintaining the city’s 3-year-old wastewater treatment plant.
That’s what the math says, anyway. The larger question before City Council is one of policy when it comes to finding ways to spur development of smaller, more affordable units, and particularly rental housing, Gamba said at the time the study was released.
“I think we’re in a mode of needing housing in this community … especially housing that regular working people can afford,” he said in a November 2015 interview. “If that is negatively impacted by the (impact) fees that we charge, then that needs to be addressed.”
Gamba also pointed out at the Feb. 4 council work session that, by paving the way for more water and wastewater customers to enter into the system, user rates also help pay for those impacts.
Council will address the fee recommendations and Myers’ proposal during a broader discussion about affordable housing incentives during a 4 p.m. March 17 work session. The public will have a chance to comment during the regular meeting that night beginning at 6 p.m.
“We do have a real need in this community for housing, and we need to figure out how we can help make that happen,” Councilor Kathryn Trauger said during the Feb. 4 work session discussion.
Council member Todd Leahy agreed that the city should find a way to “incentivize more housing development,” and reducing impact fees is one way to do that.
“I don’t think anybody wants to give away the farm, but we also need to keep in mind that we do have a housing problem,” he said. “If we can find a way to encourage smaller units, which equates to affordable, we should do that.”
Leahy also pointed to the Glenwood Green apartment development near where the Lofts are being planned, for which the city did reduce fees.
“We got 60 affordable housing units out of that,” he said.
The difference, Steckler said, is that Glenwood Green is a subsidized low-income rental housing project using federal tax credits that guarantee the units will be kept affordable based on family income.
“We need some assurance that these apartments are going to be rented at a rate that supports the middle-income earner,” he said.
Bershenyi suggested as an alternative approach to free-market developments, allowing them to pay impact fees to the city over time, interest-free.
“That would allow them to utilize a return on their investment,” he said.
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