The city of Durango’s Fair Share Program has always struggled to convince developers to build more affordable housing units, thanks to a convenient alternative baked into the program: The option to pay a fee in lieu of affordable units.
However, changes to the city’s inclusionary zoning program, including increased fees in lieu of units, could provide the push developers need to contribute to the city’s affordable housing stock.
Durango Housing Innovation Manager Eva Henson and Molly Fitzpatrick, managing director for Root Policy Research, discussed the changes pitched for the city’s Fair Share Program during Tuesday’s public forum at Durango Public Library.
The Fair Share Program, which launched in 2009, is a policy the city uses to increase its inventory of affordable housing. The policy as is requires developers to accept deed restrictions on 16% of units for developments of four or more homes, but developers can also opt to pay a fee in lieu of building the affordable units or donate land to the city instead.
The proposed changes wouldn’t remove the land donation or fee in lieu options for developers, but it would make them think twice about foregoing building affordable units because of a higher fee in lieu.
The price increase would be calculated using a cost of construction methodology versus the affordability gap methodology the city currently uses, Henson said.
With the affordability gap method, fees in lieu are calculated by finding the difference between market rates and affordable rates.
The cost of construction method is more accurately aligned with Durango real estate in that it directly factors in the real cost of constructing a unit.
With a higher fee in lieu per unit, developers will see more value in actually building affordable units, Henson said. To compensate for the emphasis placed on building affordable units, another recommendation is to decrease the number of affordable units a developer would need to build from 16% of total units to 12%.
A summary of recommended changes provided at Tuesday’s public forum says since Fair Share’s start in 2009, just one developer has opted to build affordable units over paying the fee in lieu.
“Almost everybody who has gone through the program has paid the fee in lieu,” Fitzpatrick said. “And so we would recalibrate the trade-offs between how hard is it to build the units on a developer versus how hard is it to pay the fee.”
Other proposed changes include expanding the Fair Share Program to include rental developments, reduced parking requirements in residential developments, an affordable density bonus and priority development review for Fair Share participants, Henson said.
Root Policy Research was careful to avoid creating new barriers to workforce and middle-income housing when crafting the recommendations, Fitzpatrick said.
Durango is a tricky place to write housing policy because it’s a blend of different communities, part mountain town, part college town, part city, surrounded by a sea of rural space.
“Across Colorado, communities are really struggling right now with affordability,” Fitzpatrick said. “The current interest rate market has really exacerbated that. I would say, yes, in some ways Durango is on par for similar types of things. But it’s really just different in every community.”
The city is making many investments into affordable housing, despite the challenging housing market and unique circumstances it must deal with, she said.
“This Fair Share policy for sure is not a way to address all housing needs across the city. It’s one tool the city has in its toolbox and we’re just trying to make it that tool work a little better,” she said.
The recommendations will be presented to the Durango Planning Commission on Jan. 22.
They will go before Durango City Council at its Feb. 6 regular meeting, with a first reading of an ordinance planned for Feb. 20.