"The government solution to a problem is usually
as bad as the problem."
-- Milton Friedman
The “more housing” drumbeat continues, and it’s only getting louder. We’re moving toward starting construction of The Lumberyard, so get your “I told ya so’s” ready. Staff recently warned that its Phase 0 budget for “horizontal development” is already outdated and too low, although they don’t say how much they think it will cost now. For some unknown reason, the project’s budget estimates and (more importantly) funding details are being kept tightly under wraps. City Manager Sara Ott seems to prefer the “start building and we’ll figure out how to pay for it later” method. Do you? I didn’t think so.
We’re literally about to spend nearly $1 BILLION to build 277 subsidized housing units. We haven’t determined who they’re for or what need they’ll specifically address. The LY is outside the roundabout and requires a new stoplight on Highway 82, precisely at the chokepoint of the untenable Entrance to Aspen. It will not even put a dent in what has been deemed in Aspen popular culture as “our housing crisis.” Neither will $2 million cobbled together from regional governments for a mere regional 6-12 buy-downs.
Here’s why:
Aspen (and the area) is a highly desirable place to live. Who wouldn’t want to live here? We have unfortunately (yet arguably intentionally) lost our focus on providing housing for workers who do the community’s and resort’s essential jobs, and instead endeavor to “build community” by housing anyone and everyone who merely wants to live here affordably and is willing to play the game to get in. This has exacerbated the perception of a housing crisis when it’s really as simple as the fact that we’ve ceased prioritizing housing the workers who matter. By subsidizing non-essential workers, it’s no longer just the visitors and second homeowners who place increasing demands on the actual already-burdened workforce who are increasingly driven further and further out of town. Do we really owe housing to everyone? The demand is infinite. We must prioritize which jobs get housing, even if this hurts people’s feelings.
Aspen’s workforce has changed. In the 1970s-1980s “ski bum” era, workers held multiple seasonal resort-related jobs and often inhabited free market rentals of varying quality. Sure, there were professionals here, but these were more the exception than the rule. And anecdotally, many folks didn’t plan for the future, yet alone contemplate it. Contrast that with today’s workers who see the housing system entirely differently. It’s all about the future. Today in Aspen, you can be an upwardly mobile professional who makes six figures and that’s BEFORE you get an even better paying local job or a remote one that you do from your living room in Aspen. (This allowed loophole is an unguarded opportunity for lottery winners at the expense of essential community and resort workers.) The key is getting into (ownership) subsidized housing and then you’re set for life. (You can even buy a vineyard in France or a house in St. Barth’s – it’s allowed too.)
Pitkin County now wants its own housing fund. Their nascent plan is to place a property tax measure on the November ballot that will raise about $8.5 million annually for regional housing partnerships, buy-downs, homelessness support and capital reserves support for HOAs (read: bailouts). In an environment where home values have increased 70% and assessed values are up 54%, Pitkin County residents should just say no. Loudly. The county already has a housing program. It’s called APCHA. Just because APCHA operates as a city department, the county can’t just wash its hands of the APCHA mess and levy new property taxes to foolishly go it alone. Commissioner Patti Clapper says lots of small businesses would love to partner to buy units even outside the county. How about allowing local businesses to play the APCHA lottery? At least we’d know the units would be used by local workers!
We have an enormous housing program and no idea what jobs we’re housing. City council refuses to demand an audit of APCHA. They don’t want to know the facts because these would surely destroy their singular focus on “more.” As a result, we know we have 3102 units (1733 ownership/1369 rental) in the APCHA portfolio, but we have no idea where these residents work. Wouldn’t it make sense to find out which jobs we’re housing and which we’re not? It doesn’t take much to make an intelligent assumption that the local jobs we can’t fill are at the lower end of the wage scale. If these jobs truly need to be filled, we should obviously prioritize housing the necessary workers. Instead, we’re just building “more” housing without regard for who will live there.
Our housing portfolio is a maintenance time bomb. And a storm is brewing. No one can compel the various APCHA HOAs to collect reserve funds and maintain their buildings since they are independent LLCs. Most do the bare minimum, if that. One can only guess the state of the HOA insurance coverages in the current insurance environment! APCHA, which serves as buyer and seller agent in every transaction, even taking momentary ownership in the chain of title as well as collecting a 2% fee, says that unit maintenance is the owner’s responsibility. But given the high demand for units, sellers are getting the maximum sales price as a matter of course while also collecting appreciation (3% annually or CPI, whichever is less) for units in dubious condition. This appreciation was originally designed to reimburse sellers for maintenance and upgrades over time. Not anymore. It’s take the money and run, and some units are barely habitable. Some are worse than that. And it finally happened: a subsidized Hunter Creek unit came available recently but the bank demanded 25% down because of its poor condition. Look for more of this to come.
What bank in their right mind would write a mortgage for Centennial? And how soon until entire complexes are condemned?
And buyer beware. The city just triumphed in the Burlingame 2 HOA’s construction defect lawsuit at the Colorado Supreme Court. When the city is developer they officially have governmental immunity, so homeowners have no recourse with the city for their proven shoddy construction, however egregious.
The regional housing buy-down program is a joke. Well intended, the non-profit Western Mountain Regional Housing Coalition (WMRHC) is seeking $2 million from regional governments to fund the buy-down of 6-12 homes for people employed between Aspen and PARACHUTE. In exchange for a subsidy, new owners will place deed restrictions on their properties. With a mission to “increase the availability and accessibility of affordable community housing,” they’ve completely missed the mark. The local housing goal should not be to try to make a couple of housing units in the valley affordable. It should be to house the workforce we need, which is entirely different. Alas, Pitkin County has already committed $1 million and the city is looking at a $450,000 grant, despite no discussion of how WMRHC will manage their portfolio. Will buyers have to maintain their units, or will they come back needing further subsidies for upkeep or to fix the neglect of previous owners? And what about compliance? What’s to stop these homeowners from exiting the local workforce once they too are set for life? Sounds like APCHA 2.0 to me.
Pitkin County currently has 17,407 jobs. So APCHA’s 3102 lottery winners and renters, if they all are working (and we know they’re not), represent just 18% of the local workforce. This number is ostensibly why so many believe we need “more” housing. But this does not include employer-owned units (think: hospital, schools, etc.) so the percentage is actually a lot higher, and growing. Yet with infinite demand, we are never going to be able to deliver subsidized housing in such quantities that the complaining will stop. Everyone wants to be set for life like the lottery winners! A far better use of our resources would be to spend it on the other 82% by increasing unit utilization and improving the efficacy and efficiency of commuter transit options.
We have succeeded in building ski country’s largest subsidized housing program. And it’s become an abject lesson in what not to do. We’ve also socially engineered a middle class in Aspen at the expense of the essential workers the community and resort rely on to operate. Whether it’s $450,000, $2 million or $1 billion, whatever we spend on “more housing” without first determining which jobs we are currently housing and which we need to, the result will simply be “more” of the same. Or worse.
As we approach build-out in the upper valley, the ridiculous scramble to bend zoning rules and chase every shiny new idea is just avoiding properly examining the utilization of what we already have. Local politicos love consultant reports like the debunked regional housing study because building “more” is politically popular. But neither the city, the county or the WMRHC give a flip about the “carrying capacity” of our existing inventory. THIS is what we ought to be optimizing. “More” is limitless. It’s become the lazy answer that fuels these uncoordinated efforts at the margins to eek out a few units here and there.
The actual solution is right under our nose: optimize what we already have and accept that Aspen and most of the upper valley is never going to be affordable for everyone who wants to live here. And for those already in the system, living (subsidized) requires sacrifice, and should not come with the promise or expectation of upward mobility or the flawed notion of wealth creation through subsidized real estate.