Chaffee Housing Trust promotes a diverse community

The following letter from Read McCulloch, Director of the Chaffee Housing Trust, is a response to a recent letter by Joe Judd, a local developer and builder.

For many years now, Chaffee County has struggled with the issue of providing affordable housing to essential workforce members of the community. Market forces have driven the cost of home ownership out of reach for low- and moderate-income residents, removing the first rungs of the ladder to the American Dream. Instead of being able to imagine raising a family in the community where they work and live, all too many people are left out, watching the now unattainable dream being sold off to the highest bidder.

It would be contradictory to the values of this community, and an act of gross negligence, for us to fail to act to preserve the character and quality of our community while we can still do something. The Chaffee Housing Needs Assessment (January 2007) revealed that 64% of residents “strongly agreed” that workforce housing needed to be addressed, 59% “strongly agreed” that low-income housing needed to be addressed, and 85% of employers placed the highest priority on entry-level for-sale housing. As laid out in this carefully researched study, the Needs Assessment identified several steps that the community could take. Those recommendations included: the creation of a community land trust to provide home ownership, changing ordinance to require and incentivize inclusion of affordable units in new development, and providing county owned land for affordable housing. Elected officials have responded to this grassroots demand for action.

Eighteen months after the publishing of the Chaffee Housing Needs Assessment, the City of Salida and the County are putting that plan into action. The nonprofit Chaffee Housing Trust was formed, based on a strictly democratic governance model that cedes control to the community. The City of Salida has taken the lead on bringing the development community to the table by proposing a housing ordinance that will be inclusive of low- and moderate-income residents. The County has contributed to the effort by jump-starting construction with the donation of a lot that could be leveraged to build more units than a developer could do on their own.

By any measure, this has been a rational, carefully-vetted process, in plain view of all the stakeholders, with transparency and open dialogue. Unfortunately some members of the community have failed to notice this movement, and fail to appreciate the common benefits it will bring. Joe Judd’s lengthy posting to the Salida Citizen reflects this position. Mr. Judd’s complaints are numerous and well-intentioned, but fail to accurately portray the issues or the facts.

The proposed Crestone Heights development is the Chaffee Housing Trust’s (CHT) first project, after a lengthy consideration of several options. The County agreed to donate the land contingent upon the sale of the neighboring lot to the CHT and the development of much-needed affordable units. As any developer does, the CHT negotiated the sale of this lot and the development of the two contiguous lots with the land owner. In return, the land owner gave up the opportunity to sell the lot at a profit, or to develop the lot at a potentially-significant profit. Together, the developer and the CHT will create 9 units, 8 of which will be restricted for sale to qualified buyers (earning 80% Area Median Income or less, as identified in the Housing Needs Assessment). This deal lowers the developer’s risk proportionate to the diminished profit margin. There is no undue or disproportionate benefit to a single developer. Any developer who is as willing to come to the table will be treated the same way. In fact, Mr. Judd himself has approached the CHT about partnering on a project. There is significant benefit to the entire community, thus meriting the County’s donation. The project is no different than what could be built if it was entirely owned by a private developer. The negotiations have been no different that what would typically take place between land owners, contractors, and developers. The fact that it is designated as affordable housing has no bearing on the property values of Mr. Judd’s neighboring development, as studies have borne out. The process was above-board, discussed in public hearings, and strongly supported by the community and the commissioners.

Mr. Judd mischaracterizes the City of Salida’s efforts to create a zoning ordinance and incentives that will foster more inclusive housing. His assertion that an ordinance drives up housing costs are not supported by research. In fact, in many places where similar efforts were made, it increased the stock of available housing that was affordable. Inclusionary Zoning creates a level playing field for all developers, with predictable outcomes. Mira Monte may not have been the contentious issue it became had there been such ordinance in place. The City needs to establish rules that put the burden of new development fairly upon those who benefit (new homeowners and developers) and share the equity in our sought-after community fairly (inclusion of low- and moderate-income residents in new housing developments). Fees in lieu are another piece of the puzzle that makes it fair for small and large developers alike, but does not burden existing homeowners. If the City doesn’t set the rules, then who will? Clearly the marketplace has failed to provide affordable housing, forcing the City to act on behalf of all citizens in pursuit of the common good – a sustainable, inclusive, diverse, equitable community.

To his credit, Mr. Judd did create affordable units in his Triangle Court project a few years ago. While four of the units were affordable at first sale, that affordability was then lost, and the next buyers will pay full market price. The critical aspect of the Chaffee Housing Trust that must be understood is that units that become part of the CHT’s inventory will stay affordable in perpetuity. Each successive buyer will also pay an affordable below-market price. Each seller will still realize some equity that is reflective of the market increase in value, but some of that equity is also kept with the home. This eliminates the need for any ongoing subsidy to retain affordability, removing the burden on government to provide housing subsidy year after year for each unit. So the value of the County’s land donation to the Crestone Heights project will never be lost. It was a one-time donation with perpetual benefit. This is wise and prudent fiscal management of collective resources. A one-time sale of the lot would have brought a short term infusion of cash. By putting the lot into the CHT’s inventory, the benefit is realized over and again with each sale and resale of a unit on that property. As steward of the public good, the CHT retains control of the land (and its value) in perpetuity.

The rising costs of development are a result of the market forces at play. There is an increasing demand to live in our community that is stressing the capacity of government to provide the expected services. Sustaining a healthy community requires that government fund services (water, sewer, schools, etc.) to meet demand. It is fair to ask that the source of the stress on services be asked to pay its fair share. If growth is the source of the problem, then growth should bear proportionate weight of the solutions.

It is precisely to avoid the situations in Aspen, Vail, and Summit County that the current effort to address affordable housing has been initiated. In fact, inclusionary housing ordinances in these areas are far more punitive and costly to developers than anything currently under consideration in Chaffee County. They waited too long, and acted too late. We have the privilege of time to act now, before we become like them. If we fail to act, then we will lose our lower- and middle-income residents, and the quality of our community just as Mr. Judd fears.

This is just the beginning of the dialogue that is needed between all stakeholders in our community. It must be open, based on accurate information, fair, and equitable. This means that all sides must concede something in order to get something. The Chaffee Housing Trust is open to critical feedback and debate, and will continue to invite any interested parties to grab a seat at the table. But this must be a solution-oriented process. With the Chaffee Housing Needs Assessment as a guide, and the Chaffee Housing Trust as conduit for action, the other pieces of the puzzle will need to be put in place. This includes private enterprise, developers, government, financial institutions, nonprofits, and most importantly concerned citizens.

Feel free to contact me if you have any questions, or would like to be involved in creating affordable housing for Chaffee County.

Read McCulloch
Director, Chaffee Housing Trust

The Citizen is happy to provide a forum for comments and discussion. Please be civil, truthful, and relevant. Please suggest removal of comments that violate these standards. Real names are appreciated.

2 Responses to “Chaffee Housing Trust promotes a diverse community”

  1. Bill Donavan

    I have enjoyed reading both yours and Mr. Judd's discussion on this topic. Having spoken to you both, as well as Mr. Damman on City Council, I have to laugh as I realize how little you disagree on these issues. If there were any disagreements, they could be summarized as mechanics. The beauty of your efforts are that the community is so behind the mission. I applaud your efforts Mr. McCulloch, and am heartened, after having spoken with Mr. Judd, that essentially the tone of the discussion has been so constructive with all parties recognizing the value of this organization. As a community, this feels right.

    With real estate prices out of reach of the majority of locals, thank you both for being involved and caring about this vital issue.

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  2. Joe Judd

    While I agree with the need and the desire to provide Affordable Housing, I simply want to make the case for a sensible, well thought-out plan.

    After looking over the studies you referenced, I found that they both admited that studies on this subject have been very few, and not very thorough.

    Given that, I will cite the studies you've linked on a couple of points. On page 10 of the report cited, from the Furman Center For Housing Policy, in studying Inclusionary Zoning policies, it states: "more flexible IZ policies- those that grant density bonuses or exempt smaller projects- were associated with a greater production of affordable units".

    This backs up one of the items I feel is critical to this discussion. The concept of threshold is very important. I feel it is much more appropriate to set a threshold higher, to indeed put more of the burden on those more able to spread the risk (i.e.- larger developements). I feel that setting a threshold of one, or two, or even 3-4 units will come mostly at the cost of what I see as "local developers". These are generally local business people, who provide more jobs to local contractors and subs. While larger, out of town developers tend to bring in crews from other locations. Of course, these could be seen as generalizations. But, in practice, this has often been the case in Salida over the last several years.

    On another point, the same study (also on page 10), also makes a case for some instances where affordable housing CAN cause the price of maket-rate housing to rise. It says, "Both theoretical analysis and our analysis of IZ suggests that, in some settings, IZ programs may lead to impacts on the price and supply of market-rate housing that reduces its affordability."

    I'm not suggesting that inclusionary zoning WILL cause a spike in home prices for the general market. I sincerely hope it will not. I just feel that this plan needs to be well thought-out, before agreed to and implememted. In August, the County chose to donate land to this project, with no understanding of the parameters, or requirements for a plan to provide affordable housing.

    One point that I find particularly upsetting is the general tone of discussion on ths topic. During a city council work session, I repeatedly heard the sentiment that the city must MAKE developers do this. This was echoed by many of those supporting affordable housing, as well as some members of the Coucil. Wouldn't it be a much better approach to bring these developers to the table, so that it benefits all involved. Building more housing can certainly be a benefit to the local construction industry. If developers are happy and the citizens are happy, the program will have a much better chance of success. There should be a win-win approach. Not a "take the carrot, or we'll beat you with a stick" approach.

    I do welcome a plan to provide affordable housing in Chaffee County. Unfortunately, I feel that when I attend these discussions, I am branded as the "evil developer", and seen as being against affordable housing. In fact, I have been the only developer that has cared enough to be present at some of these discussions. As I have done in the past, I will continue to put my money where my mouth is, to provide such housing options to the lower end of the market, as well as the mid-price sector. The most important thing, as I'm sure all will agree, is to make an affordable housing plan work, and work well. No one wants another layer of buearacracy to wade through, with nothing relevant to show for the effort.

    I would like to ask all local builders, of any size, to join and be present at these discussions, as they continue. I also think every citizen should be informed as to the implications of this discussion.

    The construction industry is vital to the economy in this county, for better or for worse. Let's make affordable housing something that can provide benefits to the construction industry, as well as those that need an affordable housing option.

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