Would Require Mitigation on Residential Development

TELLURIDE – Despite misgivings voiced by two Telluride Town Council members that the present economy may not be the right time to impose new affordable housing mitigation fees (nor raise those that already exist), council voted unanimously on Tuesday to approve the first reading of an ordinance that could do just that.

Councilmember David Oyster abstained from the vote because he was not present for the entire discussion.

“I’m just uncomfortable with the fact that we’re raising fees in this economic climate,” said Councilmember Jill Masters.

While affordable housing mitigation was not previously required on residential developments, if approved on second reading next month, the ordinance would impose a 60 percent mitigation rate on single family and duplex residential developments, including those within mixed-use projects like penthouses over commercial spaces in the downtown commercial core.

“I share your concerns,” Mayor Stu Fraser agreed with Masters. “I just kept thinking about the economy right now…,” he said, questioning the amount of new residential construction the town will see in the near future.

“I don’t know whether this will have much of an impact at all,” he said.

“It’s time that we walk our talk,” said Planning and Zoning Commission Vice-Chair Kathy Green, encouraging council to act on the ordinance.

“We’ve said that development should pay it’s own way…single family [and] duplex residential have gotten off the most easy,” she continued. “This should have been done 20 years ago.”

In May council directed the P&Z to update the town’s affordable housing regulations with the goal of creating mitigation requirements for single family and duplex developments.

The direction grew out of a protracted battle over proposed changes to the Land Use Code that would allow for a reduction to some of the affordable housing mitigation requirements for commercial developers in exchange for the public benefit of additional commercial and office space in Planned Unit Developments located in the downtown commercial core.

First approved by council in a 4-3 vote last December and remanded weeks later in January under threat of referendum, the changes were renegotiated in subsequent worksessions and finally re-approved in April in another contentious 4-3 vote.

Ultimately council resolved 7-0 to let the voters decide the matter this fall.

“It isn’t imperative that we do this immediately, I think; but it’s certainly worth a discussion,” said Councilmember Bob Saunders, who lobbied heavily for residential mitigation requirements during the PUD discussions.

“I think we need to prepare for the future when [the real estate market] does come back,” he said.

In an unusual departure from the voting patterns of the present council in which Mayor Pro-Tem Andrea Benda and Councilmember Lulu Hunt typically join with Masters and Fraser to form a majority on split votes, Benda pushed for the discussion to continue.

“Now’s the time to plan these things, but maybe we can plan them so they go a little slower,” she said. “I’m just interested in moving this ahead; what’s missing for those of you who don’t want to push this to second reading?”

While the P&Z recommended to council that multi-family, accommodations and commercial affordable housing mitigation increase from their present 40 percent to 60 percent, because the state property tax system disproportionately burdens commercial property compared to residential, and because business activity has decreased in the current economic climate, as approved on Tuesday the ordinance maintains their current mitigation rate of 40 percent, hotels being the one exception.

As an incentive for hotels to remain in single ownership, council pronounced that if they later convert to condo-hotel or another use they must mitigate for the remaining 20 percent.

A provision of the ordinance allows required mitigation amounting to less than 500 square feet to be met by payment in-lieu.

While the P&Z recommended that the existing $171 per square foot payment in-lieu fee be increased to $309, council did not make a decision on the proposal because it does not require an LUC amendment.

Instead, town staff will present a fee schedule increase for the affordable housing mitigation fee that reflects the current cost to develop affordable housing units at a future council meeting – perhaps as early as next month.

The ordinance eliminates the waiver of an on-site parking space for a required mitigation unit and the “Additional Incentives” section that, “Provides staff or the Telluride Housing Authority discretion to waive key requirements of the LUC or to significantly increase density above that permitted in the underlying zoning,” as Town Planning and Building Director Chris Hawkins wrote in a memo to council.

The San Miguel Regional Housing Authority also asked council to consider whether any for-sale mitigation units should be required to be placed into a public lottery, however council did not agree.

“I would be strongly opposed to that, I think it would tie your hands,” advised Town Manager Frank Bell.

If approved on second reading the ordinance will not go into effect until July, 2010 – a date suggested by Benda in an attempt to find a compromise between both points of view.