Current ordinance provides incentives for fees in lieu of housing construction
Moab City Planning Commissioners last week forwarded a positive recommendation on a compromise ordinance proposal that would give city officials leeway on individual projects to approve, on a project-by-project basis, loosening of the rules that bind lodging developers as they build workforce housing.
The proposal is the product of discussions — some of which, as The Times-Independent reported previously, included a planning commissioner using an expletive toward the architect of a hotel project — over how to loosen regulations enough to allow developers to build workforce housing themselves.
In lieu of building such housing, every lodging developer in the city that has been subject to the regulation has opted to pay a fee to the city, contributing to the city fund that will back its planned Walnut Lane housing project and, potentially, similar public housing projects in the future.
Developers have opted to pay the fee rather than building housing directly because the cost of building to the city’s workforce housing specifications is so much more expensive than the fee, according to developers and city planning officials including Henry Shaw Hotel Architect Elizabeth Boone, Moab City Planning Director Nora Shepard and others.
Boone has been working with Shepard and the planning commission in hopes of changing the city’s workforce housing ordinance to accommodate her plans to build 426-square-foot apartments for future Henry Shaw Hotel employees. The matter went before the Moab City Council on Tuesday, Feb. 25.
When a developer pays the fee in lieu of building housing, it creates problems for both the city and the developer, according to Mayor Emily Niehaus.
A developer carries forward no equity when it pays a fee to the city in lieu of building housing, and the local housing market faces higher demand (and higher prices) whenever a developer opens a new business but pays a fee in lieu of building housing for the newly expanded workforce.
On the other hand, if a lodging developer built housing for its own workers each time it opened a new business, the local housing market would face less pressure, and the developer would get to keep the money it invests into the real estate as equity.
As for why building workforce housing is more expensive than the fee in lieu, Moab City Council Member Kalen Jones says it is because the city’s regulations on workforce housing call for developers to build units that are, on average, 1,000 square feet in size. His idea: Get rid of this average size requirement and set up a minimum size requirement that allows developers to build studio apartments, a real estate product that he said the city lacks.
“There’s a shortage of studios,” Jones said during a meeting Tuesday, Feb. 25 in which he pitched the idea. “There are a lot of single people and couples who do not want to share a house, so let’s allow developers to build those.”
Jones said that he needed some time to work out exactly how he would change the city’s workforce housing ordinance to meet this goal, so the city tabled a discussion of the matter until its next meeting, which is scheduled for March 10.
In the meantime, Boone will have to wait to see whether the city passes new rules that allow architects like her to move forward with building studio apartments for employees.