Town of Castle Rock - File #: DIR 2020-021

Date	Ver.	Action By	Action	Result	Action Details	Meeting Details	Video/Audio
6/2/2020	1	Town Council	Approved	Pass	Action details	Meeting details	Video

To: Honorable Mayor and Members of Town Council

From: Matt Gohl, Special Projects Manager

Title

Discussion/Direction: Douglas County Housing Partnership Fee Waiver Request

Body

________________________________________________________________________________

Executive Summary

Town staff received a fee waiver request (Attachment A) from Douglas County Housing Partnership (DCHP) in a letter dated May 4, 2020. The fee waiver request is for the Oakwood Senior II project which consists of 53 affordable senior housing units. The site development plan (Attachment B) for this project was approved by Town Council in October 2019. This project is located at 501 Oakwood Drive, just south of Douglas County High School, and is situated within Councilmember Bower’s District (District 4). Douglas County, the Castle Rock Senior Activity Center and Aging Resources of Douglas County have provided letters of recommendation for this project, also included in Attachment A. The location of this project is shown in blue in the map below.

Town code allows up to 100 percent of applicable fees to be waived for attainable housing projects. Fees that can be waived include application and permitting fees, development impact fees and system development fees. Total fees for this project, as stated in the DCHP request, are estimated to be $978,099. However, after further review, the estimated fee total is $961,449 and DCHP is requesting a fee waiver of $200,000. The Town approved a fee waiver in 2013 for attainable senior housing at Auburn Ridge. Fee waivers have also been used to assist other development projects in Castle Rock.

Staff recommends approval of the DCHP fee waiver request assuming the applicant pulls necessary permits by December 31, 2020.

Discussion

Project Information

Currently, the Oakwood Apartment complex is a 64-unit affordable senior living community owned by the Douglas County Housing Partnership. The original Planned Development Plan and Zoning Regulations were established in 1983 allowing for 64 units and the community was built in 1985. In 2006, Douglas County Housing Partnership acquired Oakwood Apartments in order to preserve the attainability of the units. In June 2018, Town Council approved an amendment to the Oakwood Apartments Planned Development Plan and Zoning regulations. This amendment allows for an increase to 109 total units, increasing the maximum building height to 42 feet (the maximum height remained at 28 feet from the eastern property line out 100 feet west), and shortens the south setback by 10 feet.

In October 2019, Town Council approved an amendment to the Site Development Plan that would remove one existing apartment building, the clubhouse and leasing center. In their place, a new centrally located three-story building that would contain the leasing center, amenity center and 53 apartment units would be built, resulting in 109 overall units onsite. Douglas County Housing Partnership has submitted construction documents for staff review and is in the process of submitting building permits.

The fee waiver request submitted by DCHP estimates the project to cost $15,869,022, and states that Town fees are estimated to be $978,099. After further review of applicable fees, the revised fee total is $961,449 for this project. Funding sources for the project include mortgages, grant funding, tax credit equity and others. The tax credit mechanism has been in place since 1986 for the purpose of supporting development of low-income attainable housing. This tax credit equity financing is estimated to fund 69 percent of this project.

DCHP has requested waiver of $200,000 of Town fees in order to fully finance this project. The request identifies that the Town’s impact fees have increased by $308,599 since last year when DCHP was applying for tax credits. The fee waiver request specifically identifies the estimated transportation impact fee of $380,610 which they believe is too high for a senior development, stating that only 70 percent of current Oakwood residents own a car. DCHP additionally states that only 13 of the existing 64 units use vehicles daily for part-time jobs.

Waiver Authority

Town code provides for development impact fee (§3.16.050) and system development fee (§13.12.080J) reductions of up to 100 percent for attainable housing projects. Per code, “A qualifying attainable housing project and unit shall be defined as a housing project or unit participating in an attainable or affordable housing program through the Douglas County Housing Partnership, Colorado Housing Finance Authority or other certified local, state or federal attainable housing program.” Waivers of this type require Town Council approval. Additionally, section 15.01.030 allows Town Council to waive, reduce or defer payment of building fees if it determines “in its sole and exclusive discretion, that there are unique and compelling circumstances that render the imposition of such fees in strict accordance with this Chapter inequitable with respect to a particular application, site or building.” Full text of applicable Town code sections is available in Attachment C.

For projects other than attainable housing, Town Council is authorized by Town code to approve waivers for various project costs including development impact fees (§3.16.070) and development services fees such as building permit and inspection fees (§15.01.030). Note that waiving use tax is not permitted, but is not applicable to DCHP’s request due to the applicant’s tax exempt status.

In the past, the Town has utilized the General Fund, Economic Development or DDA TIF Fund to compensate other funds for waived fees. This is not required per Town code, but the practice has been followed for fee waivers with both attainable housing and other economic development projects.

Use of Fee Waivers

The Town has utilized the fee waiver programs for attainable housing and economic development projects in the past. In 2013, Town Council approved a development impact fee waiver of $200,000 related to the Auburn Ridge project that included construction of 80 affordable housing units. The Town utilized the General Fund to backfill impact fee funds that were impacted by the waiver. As noted previously, this is not required by Town code. The decision to offset fee waivers can be made at the time of each request, factoring in available funds and the best interest of the Town at the time.

The Town has utilized fee waiver programs to provide economic assistance for other projects in Castle Rock. Support has included $290,000 to Mercantile Commons, $3.6M for Riverwalk and $2.65M for the Encore development. It is important to note that these amounts are being repaid to the Town through the tax-increment financing (TIF) mechanism in the downtown area. Because of this, the initially waived fees will be fully repaid to Town funds.

Budget Impact

Approval of the requested fee waiver would result in $200,000 less revenue for Town funds. Given current economic uncertainty related to the COVID-19 pandemic, affected funds will not be made whole for lost revenue. Waived fees would reduce impact and system development fees proportionally as shown in the following table:

Recommendation

Staff recommends approval of Douglas County Housing Partnership’s fee waiver request totaling $200,000 of fees, distributed proportionally across the Town’s impact fee and system development fees. Additionally, staff recommends the fee waiver be applicable only if the applicant pulls necessary permits by December 31, 2020.

Proposed Motion

“I move to approve a $200,000 fee waiver for Douglas County Housing Partnership related to the Oakwood II attainable senior living project assuming the applicant pulls necessary permits by December 31, 2020.”

Attachments

Attachment A: Douglas County Housing Partnership Request

Attachment B: Site Development Plan

Attachment C: Town Code - Fee Waivers