ISSUE # 22 ... AFFORDABLE FOR WHOM?
January 6 -The City's Public Works Director gets a mini-ranch for life, while the taxpayers foot the bill.
-The taxpayer subsidies at the much-troubled Burlingame complex are planned to exceed well over $400,000 per unit, (and total over $100 million when financing costs are considered.) with unknown costs to complete the construction problems still outstanding.
ASPEN'S "AFFORDABLE" (??) HOUSING
According to the Housing Office website (www.aspenhousingoffice.com), affordable housing, synonymous with "employee housing," exists to help Pitkin County workers seeking home ownership or short- and long-term rental opportunities, who would not otherwise have the opportunity to build a life as part of our community. Managed by the City of Aspen, reporting up to the City Manager, and with some oversight by a housing board, the Aspen Pitkin County Housing Authority (APCHA) is responsible for approximately 2800 dwelling units (1500 occupant owned, 1300 rented to occupants). (Pause and consider the fair market value of that much real estate in Pitkin County. All under management of the city government.)
The City of Aspen has 45 units in its own inventory, separate from APCHA. Units were built or acquired in the early 90's when it was discovered that only one police officer was living within 20 miles of Aspen. Most city-owned housing is supposedly occupied by first responders and sanitation workers.
THE TAXPAYER'S STAKE IN WORKFORCE HOUSING
If you've purchased property in Aspen since 1989, you're essentially a shareholder of the APCHA affordable housing program. Your purchase price included a 1.5% RETT, with one third (the .5%) going to the Wheeler Opera House endowment fund, and two thirds (the 1%) going toward APCHA affordable housing. The RETT subsidizes the rents and sales prices of affordable housing units. Recent years have seen RETT and related housing taxrevenue grow from just over $2M in 1997, to just over $4M in 2004, to over $11M in 2007. And a portion of your general sales taxes, property taxes and lodging taxes goes to build the City's housing fund.
The seemingly endless stream of RETT revenue has empowered recent and current City Councils to play fast and loose with affordable housing construction and expenditures: buying property with cash at above-market prices with no appraisal ($18.25 million BMC land purchase in 2008 ), understating the taxpayer subsidy by $75M at the most recent housing development (Burlingame), building a project whose units were subsidized over $400K each (Burlingame Phase I), constructing dwellings whose roofs are not properly engineered nor constructed to support Aspen's snowfall therefore necessitating six-figure "fixes" (Annie Mitchell Project)...to name just a few. And in 2008 when the RETT money ran out, city council "borrowed" ( in another questionable deal) $8M from the Wheeler's RETT account to cover top-of-the-market "land banking!" (As you can imagine, 2008's RETT revenues are not as rosy - recently forecasted by the city at just over $5M ... and declining further in 2009.)
DO YOU QUALIFY FOR AFFORDABLE HOUSING?
All "full-time" employees working in Pitkin County, who meet specific income and asset guidelines qualify for rental or purchase of affordable housing units. Full-time is defined by APCHA as working 1500 hours/year - approximately 30 hours/week or 40 hours/week for 9 months. Individuals must maintain their employee housing as their sole residence and may not own other residential property WITHIN the Roaring Fork Valley. (Apparently condos in Hawaii are exempt.)
APCHA has developed an income/asset matrix (see this at www.aspenhousingoffice.com) that illustrates the qualification levels for its 8 categories of affordable housing. Here are just a couple of examples. With rental units, the highest-earning qualified adult makes $129K max and may not have assets in excess of $175K. For ownership units, the income scale is based upon number of dependents; household income cannot exceed $189,500 with 3+ dependents and net assets may not exceed $250K. The highest housing category is called "Resident Occupied," which does not stipulate gross income, but caps net assets at $900K. Little professional level income/asset verification is done, allowing some applicants to easily hide assets or income.
WHERE DID ALL THE SKI BUMS GO?
A recent (2008) survey commissioned by the city shows that the average affordable housing dweller is 44 years old (40 for renters, 48 for owners) and has a median household income of $63K (significantly less than the Pitkin County median $97,600).
UNINTENDED CONSEQUENCES
Retirement: Aspen's aging workforce, and the fact that APCHA has elected to sell over 50% of its inventory to workers as opposed to leasing it (thereby retaining the asset), creates the dilemma of retirement in affordable housing. If affordable housing is publicly subsidized and built to house local workers, what happens when workers retire? In short, as City Manager Steve Barwick told the Aspen Daily News in 2007, retirement in affordable housing creates the need for more affordable housing. The recent city survey found that 75% of affordable housing owners and 34% of renters plan to work in Aspen until they retire. The vast majority of retirees in owned units planned to stay there.
APCHA policy dictates that affordable housing residents may grow old in their units if they work until they're 65, but if they retire early, they must move out. While initially intended to be a "stepping stone" to free market ownership, the program has become the long-term solution for most residents. To this point in time, APCHA has not made any exceptions to its rule, but a large demographic shift is coming and the policy is a hot topic of discussion. If a city employee who lives in city-owned housing (not APCHA-controlled housing) resigns, that employee has 6 months to vacate. There is no policy that provides for retirees in city-owned affordable housing.
Inheritance: After qualifying for affordable housing and purchasing a $200K, 1 bed/1 bath affordable housing unit, what happens when Grandma Lou leaves the owner $5 million, beachfront property in Laguna, a chateau in France, or all three? Nothing. There is not a re-qualification requirement to meet income and asset levels for those who have purchased and own their affordable housing unit. They must only meet APCHA's employment criteria, which we understand are loosely monitored.
RENT DON'T SELL!
The Ant fully supports employee housing as a critical component of our community. We definitely need housing for the people who make Aspen tick! We seriously question however, City Council's preference for selling its RETT-subsidized affordable housing to occupants. If all affordable housing units were rentals, the control of the housing asset would remain with the city/county, all rent-subsidized units would be used by members of the workforce, and employment/income/asset compliance could be easily monitored.
Furthermore, as affordable housing owners who are close to retirement can attest, the purchase of employee housing is a LOUSY investment. Capped at 3% (or CPI, whichever is less) appreciation in value, the resale of units hardly provides for a sunny retirement elsewhere. Some of our retirees in affordable housing say that they are here because they can't afford to leave and buy elsewhere, as the market anywhere has outpaced the value of their investment here!!
While many residents are happy with the deal they made in exchange for affordable housing, many others are bitter about the cap on their investment and the disincentive to improve and maintain the property, as those improvements don't count toward their appreciation. In short, the purchased-housing scheme is considered by many to be a long term trap from which they cannot escape.
In our view, there are many creative alternatives which could be explored to help those who want to buy area free market starter homes, including bridge loans, combined with private developer incentives for developing starter homes as other communities are doing
A $14 MILLION EXCEPTION AND A DANGEROUS PRECEDENT
In May 2007, Aspen's public works director was awarded a five year contract and housing for life (!!) in a prime city-owned property in order to keep him from taking a job elsewhere. This controversial and unprecedented policy change by City Manager Steve Barwick (with subsequent approval by the prior Council) provided Phil Overeynder and his wife with the only house on the Marolt Open Space for as long as either of them live. (This includes the plowing of the long driveway to the house at city expense.)
In the deal, Overeynder, then 58, committed to 5 years of full-time work for the city and 5 years of part-time work (15 hours/wk) after that. The Overeynders will continue paying approximately $1540/month rent, but if Overeynder dies before his wife, she may remain in the house for the rest of her life. The tax assessor's last valuation of that mini-ranch property is $13.4 million, and according to the assessor's office, the house itself is valued at $4.4 million!
RETAINING MANAGERS OR RECKLESS FISCAL POLICY?
While we support the need to attract and retain key managers, we have to ask whether restricting millions of dollars of property for what may be 30 years or more to one retired manager's housing is a wise use of those millions. A five year work commitment in exchange for lifetime housing on a private $14 million mini-ranch? Ask your friends the real estate industry what the market value of that housing arrangement might be. Overeynder has clearly become the most highly compensated manager in local government, and probably 98% of most regional private enterprise as well.
City Manager Barwick felt that Overeynder was "not replaceable," and city attorney John Worcester agreed that City Council was within its rights to bless Barwick's policy change in a closed-to-the-public executive session. In further appearance of a back-alley deal, Barwick did not inform his executive staff (including the human resources department); rather the 280+ city staffers read about what Barwick called "a simple business decision" in the newspaper!
The Ant wants to highlight situations where accountability lines get blurred at City Hall, and the "housing for life" deal is a classic example. Per Aspen's City Charter, City Council makes policy and the City Manager executes it. In this case, Barwick swerved waaaay out of his lane telling council that HE was making a one-time change to policy.
The law requires that the transfer of government-owned real estate be put to a vote of the citizens. Given that the exclusive use of this mini-ranch was effectively granted to the Overeynder for likely decades, the Ant views this very long term lease as an effective transfer of City owned real estate done in a way to skirt the law. Frighteningly, current councilman Jack Johnson, who was also on the council that approved this controversial action, believes that there are several other city employees who are "equally indispensable" whom he'd like to reward with a similar deal!!
The line forms here...!!
EYES ON THE PRIZE?
Several citizens have offered the Ant another interesting observation which they feel sheds some light on the current tight relationship between the Council, City Manager and City Attorney on other financial mismanagement and cover-ups like Burlingame. It seems that Barwick and Worcester are neighbors in a city-owned duplex on Cemetery Lane. And both are approaching retirement age.
-The City costs the taxpayers another $15 million+ in granting veto rights to Burlingame residents, who can limit the development to 236 units (in the midst of 190 acres of open space), althoughvoters were told that up to 330 units could be built,when asked toapprove the plan in 2005.Andin November 2008,voters clearly told the City that they wantedincreased density(300 units) at Burlingame. Little has been written or disclosed about this ridiculous use of housing funds and taxpayer dollars.
But first a little background for our visitors and part-time residents who fund the local workforce housing program:
Reader Comments (1)
Thank you for bringing back Phil Overeynder to the front page. He should have been (and still should be) fired for failing to create a governmental department able to operate in the event of his death. As should any city employee who fails to put systems in place to guarantee the operation of the government in the event of their unexpected death