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The Salida City Council had a packed agenda for its Nov. 5 meeting, hosting multiple public hearings. One which garnered much comment was its review of inclusionary housing (IH) ordinance one year after it adoption. The ordinance required that any residential project meeting specific criteria provide 12.5 percent of the residences be “affordable.”

The council adopted Ordinance 2018-14 Oct. 2, 2018. Included at that time was a provision that City Council would hold a public hearing within one year of the effective date, to evaluate the impact of the proposed ordinance.

The requirements included annexation properties, planned developments, major or minor subdivisions, or condominiums of five units or more. The key question; what is considered affordable housing?

In Salida, “affordable” is defined as requiring no more than 30 percent of monthly gross income for households earning 80 percent or less of the Chaffee County Area Median Income (AMI).

The ordinance provided development incentives such as allowing increased density, reduced lot sizes and reduced parking requirements. It also allowed other affordable housing alternatives, including fees-in-lieu for affordable housing and dedicated property for affordable units.

According to the packet provided to Council, “For the year the IH ordinance has been in effect, it accounts for seven to 11 units, or $669,645 to $1.5 million of in-lieu fees. This equals approximately 10 to 14 percent of the committed affordable units.”

A second-floor manufactured housing module stands ready to be incorporated into the Chaffee Housing Trust affordable housing project at the Two Rivers development. In the background, a crane prepares to lift a similar module into place (photo by Joe Stone).

With none of the units constructed in the past year, no in-lieu fees have been collected as the projects are still in the design phase. As a comparison, the eight affordable units built by the Chaffee Housing Trust in the Two Rivers project occurred three years after the annexation agreement of the land was approved.

Input was received from the development community, staff and the Planning Commission for Salida City Council to review, which was a part of the Nov. 5 meeting. Some practical issues emerged during the discussions that may affect the ordinance’s impact, including:

  • How does a developer set a price that meets 80 percent AMI?
  • Concerns that minor subdivisions may become a larger percentage of affordable units.
  • Questions about whethere the AMI should be raised to 100 percent or higher to reach the “missing middle.”
  • Concerns that the AMI should be lowered to 60 percent (or less) to address a real need for service worker housing.
  • Questions of whether developers will choose the “fee-in-lieu” option, as it can be passed along to whoever requests a building permit. Therefore, no affordable housing in the project is built.
  • Concerns that the fee-in-lieu is too low.
  • A suggestion that two income households should be able to use only the higher of the two incomes to qualify for 80 percent AMI, so the addition of two incomes will not disqualify a household.
  • Concerns that if multi-family tap fees were assessed like commercial, allowing apartments to be built at 100 percent of AMI, might help solve the problem.
  • There is no requirement as to when the affordable units within a project must be built.
  • A question The in-lieu fee amount should be taken out of the ordinance and put into guidelines, so it can be periodically adjusted based on changing housing costs.

During the public hearing, Salida City Council heard from Planning Commissioner Doug Mendelson, who shared his disappointment in the process of bringing more affordable housing to the Salida community. “The AMI criteria [for new developments] appears to be right at the 80 percent AMI mark. It never goes 60 to 80 percent, when the developers are coming up with the cost. Which I think is a real problem,” said Mendelson.

He suggested the council “consider raising the in-lieu fee. It’s really hard to build an affordable housing unit, and nobody seems to be doing it.”