Aspen City Council Regulates Home Building to Boost Affordable Housing

Aspen City Council this week approved tough regulations limiting short-term rentals and easing the process of affordable housing development, concluding seven months of work to curb a housing market frenzy that is selling homes for up to 6,000 $ per square foot.

“Are we a community or a commodity? Aspen councilwoman Rachel Richards asked at the end of a marathon meeting on Tuesday night. “Is Aspen fair so that as many people as possible can come and earn as much as they can as fast as they can and then leave us in the dust? The dust is our community.

City of Aspen staff have spent 5,600 hours over the past seven months meeting with residents, business owners, developers and realtors, drafting legislation that will replace moratoriums approved last December that suspended short-term rental licenses and all new home construction.

The new legislation, which the five-member council unanimously approved at meetings on Tuesday and Thursday, will reduce the number of short-term rental permits, limit the number of annual home demolitions, rezone residential plots to allow higher density and will impose residential development charges to pay for workforce housing.

“This is the most aggressive community in the country to tie climate policy to land use policy and reduce barriers to affordable housing development,” said Phillip Supino, Aspen’s director of community development.

Dirt replaces a lawn as the finishing touches await a newly remodeled property on the corner of E. Hyman Ave. and S. West End Street in Aspen on June 30, 2022. (Kelsey Brunner, special for The Colorado Sun)

A range of local residents, business owners, brokers, builders and developers lined up against the regulations on Tuesday night, pleading with the council to delay action to allow for further study.

The new regulations attempt to increase residential development fees to pay for affordable housing, just as commercial development pays to house the employees needed for new hotels, restaurants or offices. Mitigation fees could be as high as $500,000 per home for new construction and retrofits. This fee is based on a report showing how residential development in Aspen creates more employees than most other industries.

“You’re about to do something you’ve never done before,” said Chris Bryan, an attorney at Garfield & Hecht, a law firm involved in litigation with Aspen and hired a consultancy to review city studies detailing the number of employees created by building homes.

Bryan said the mitigation charge is likely to be challenged legally.

“I know everything you do comes from good intentions,” he said. “I would really recommend that you proceed with caution and humility and slowness with this. I don’t think it’s ready yet and I don’t think you want an unbaked cake.

The Aspen real estate market has reached new levels of irrationality over the past two years, with the hyper-rich selling and buying homes at astronomical prices. In the first five months of this year, 94 Aspen homes sold for a total of over $1 billion. Sales are setting records, with some properties selling for over $6,000 per square foot.

Contractor Adrian Gomez installs a towel rack in the bathroom of a renovated rental property at Chateau Blanc in Aspen on Thursday, June 30, 2022. (Kelsey Brunner, Special for The Colorado Sun)

Aspen’s elected leaders on Tuesday approved an ordinance limiting short-term rentals and two ordinances Thursday that limit demolitions and clear the way for more affordable housing to be added to residential neighborhoods.

New regulations reduce the overall number of permits for short-term rentals. Permits will be issued to individuals, not businesses, and permits will not transfer when a home sells. The new ordinance reduces permits outside downtown areas with hotels and condominiums by 25% and increases STR fees by 15%. Last year, with new rules requiring business and sales tax licenses, the city issued 1,319 STR licenses. The new law would reduce the percentage of Aspen homes used for short-term rentals to 8% from 11%.

“Short-term rental allows me to keep Aspen as my home,” said attorney Stephanie Holder, who has a permit for a condo she owns in the city. “Short-term rentals have become a boogieman for reasons I don’t understand.”

Nearly every community in Colorado is cracking down on short-term rental properties, which local leaders say have shifted homes typically rented by local workers to housing for visiting vacationers.

“Short-term rentals have changed the dynamic of any type of labor housing for working-class people in any community,” Richards said.

Aspen’s Centennial Affordable Mountain and City View Apartments on June 30, 2022. (Kelsey Brunner, special for The Colorado Sun)

The council is also considering a potential measure for the November ballot that could impose a 13% tax on short-term rentals, which would raise about $10 million a year for housing and other city infrastructure.

Councilors in Aspen on Thursday capped the number of permits allowing home demolitions to six per year for all homeowners and two for homeowners who have lived in their home for at least 35 years. Last year there were 15 scrapes, the first year demolitions topped 10.

To obtain one of these demolition permits, new construction will need to meet progressive building and fire codes that divert waste from landfill and meet high standards for energy efficiency. Many builders have warned the council that limiting scuffs will lead to more renovations, which do not have to follow stricter rules around waste and energy-efficient building.

The third ordinance changes building codes to make it easier for developers to build triplexes and four-unit properties for affordable housing on any single-family home site in the city. Another part of this order increases housing mitigation fees paid by homeowners who renovate or build new homes.

Aspen isn’t alone in the nearly 50-year-old trend towards commoditization. People began buying homes in cool mountain towns to make money in the 1980s, urging early pioneers to settle there for the lifestyle and proximity to outdoor recreation. For nearly half a century, Colorado villages at the end of the road like Aspen, Crested Butte and Telluride have navigated the clash between commodities and community with all kinds of fees, caps and regulations designed to protect affordability and local culture. And nothing has really worked, with property prices climbing as demand increases and the supply of new homes stagnates under regulation.

Madian Erwin, project manager for SH Built, removes plastic from a counter to reveal the finished product at a renovated rental property at Chateau Blanc in Aspen on June 30, 2022. (Kelsey Brunner, Special for The Colorado Sun)

“Aspen didn’t become a commodity yesterday. I made that statement in the 80s,” said Bill Stirling, who was mayor of Aspen from 1983 to 1991 and now runs a real estate company.

All board members have acknowledged that they will be adjusting many parts of the new legislation as the rules are settled.

“We will learn a lot from the implementation of these and they can be adjusted,” said Aspen Mayor Torre, who goes by only one name. “The important thing here is that we do something and move forward in the direction that the community has supported. I’m excited that we’re taking steps forward.

Two councillors, Ward Hauenstein and John Doyle, noted that limits on new construction would likely prevent them from redeveloping their own older homes in the city. Councilor Skippy Mesirow, who works as a property manager for a short-term rental company, said measures taken by councilors to limit personal gain demonstrate “the community first”.

Mesirow said the new rules would not immediately transform the city but would “create the conditions for much greater change”.

“While it’s not perfect, it brings significant change for our environment, for our community and for our affordable housing,” Mesirow said. “It’s been quite a trip.”

Supino, whose team crafted the bylaws — and this week’s 551-page agenda package for city council — told council on Tuesday that the bold bylaws will have unexpected impacts. He suggested that future amendments and adjustments could help offset unforeseen issues.

“Our land use planning code is a living document; a living document. Every time it moves, there are unintended consequences,” Supino said, noting that no one could have predicted decades ago that homes would sell at recent prices. “We don’t think the consequences should prevent the council from acting tonight.”

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