The city of Aspen and its development partner in three affordable-housing projects received a heavy dose of criticism Tuesday for attempting to, at the eleventh hour, pull in the Aspen-Pitkin County Housing Authority as an operating partner so they can benefit from its nonprofit status and get millions of dollars in tax breaks.
“I feel like the city is coming to us last minute shoving this down our throats,” said APCHA board member Chris Council at a special meeting convened Tuesday. “I take serious issue with this.”
Council said it’s unfair to be presented with a 289-page document Monday that has three separate operating agreements outlining APCHA being a minority partner in housing rental units at 488 Castle Creek, 802 W. Main St., and 517 Park Circle.
“I cannot in good faith vote,” he said. “I’m not comfortable.”
There is urgency for the city and its partner, Aspen Housing Partners LLC, because they were preparing to close on construction loans, and development agreements with Shaw Construction on Thursday.
Jason Bradshaw, who represents Aspen Housing Partners, said he’s trying to get the deal done to avoid financial implications next year on tariffs affecting construction costs.
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If APCHA became a minority partner, Bradshaw’s group and the city would save between $1.5 million and $2 million in breaks from property, use and sales taxes, if the state approves tax-exempt certificates.
If APCHA does not become a partner, it will fall onto the city to make that shortfall up.
“If we say ‘no,’ we’re effectively costing the city $1.5 million in the (housing development fund), which is for building affordable housing,” Council said.
To create the 45 units across the three properties, the city will lend approximately $25.2 million in construction loans. When the units become occupied, the city will receive back approximately $9.2 million, thus leaving about $16 million in permanent financing toward the projects.
The group’s state and federal tax credits will produce approximately $5.8 million, and there will be roughly $3.5 million in first mortgage loans from conventional banks.
Members of the APCHA board, visibly frustrated, asked how much Bradshaw stands to make on the deal.
He responded that it’s a very low profit margin in the coming decades but acknowledged he has a $2.7 million fee to build the units.
APCHA board Chairman Ron Erickson pointed out that nowhere in the operating agreements are the financial proformas.
“You are asking us to be your partner,” he told Bradshaw and Chris Everson, the city’s affordable-housing project manager, at Tuesday’s meeting. “There’s a lot of holes in the agreement.”
What’s also missing, board members said, is a stated financial contribution from the developer to cover APCHA’s costs for being an operating partner and taking on 45 units more units into the inventory.
Tenants have to be qualified through the APCHA office and the deed restrictions on the units have to be managed, said APCHA Executive Director Mike Kosdrosky, adding that there other costs as well, including legal fees.
“It’s an ongoing burden on APCHA,” he said. “From an operational view, it would be nice to capture the costs upfront.”
Erickson said he’s disappointed that APCHA was an afterthought by the city and Aspen Housing Partners.
The APCHA board approved the land-use applications for the projects in 2017.
“We have heard nothing on this project (in a year),” he said, adding the blame should go to the city manager’s office and the city’s asset management department for not being out in front of it. “I think it’s very unfair.”
The board agreed to table the resolution approving the operating agreements until Dec. 19 so the city and Bradshaw can address its concerns, while pushing the closing date for the construction loans and development agreements beyond Dec. 13.
City asks last-minute for housing authority to partner to get tax exempt status